Amazon and the Small Retailer; E-Commerce and Bricks-and-Mortar Unite!?

Richardglobalheader (4)
I am  hearing more and more concern coming from small retailers that Amazon is, for all extents and purposes, using them as showrooms.  Consumers come in the stores to look at products and then once finding something they like; go to their cell phones to find them on line.  In short, the store provides the service and Amazon gets the business. 

If you think about it, every retail store is providing Amazon with quantifiable value without being compensated for it.  Think of what it would cost Amazon to provide literally tens of thousands of showrooms.  Makes you wonder if Amazon couldn’t help the economy and their brand image by doing something to compensate these retailers.  That, however, is fodder for another posting.

It appears, however, that it is not just the small bricks and mortar retailer who is suffering.  Smaller ecommerce providers are complaining as well.   Stephanie Clifford and Claire Cain Miller have a great article on the subject in the January 16, 2012 New York Times.  Entitled “Rooting for the Little Guy,” the article makes the point that:

Giant e-commerce companies like Amazon are acting increasingly like their big-box brethren as they extinguish small [on line] competitors with discounted prices, free shipping and easy-to-use apps. Big online retailers had a 19 percent jump in revenue over the holidays versus 2010, while at smaller online retailers growth was just 7 percent.

I wonder how many local bricks and mortar retailers think of small ecommerce providers as their brethren in the fight against the giants.  After all, the smaller ecommerce providers see themselves as “local” too.  As the article puts it:  “Folks are exercising their desire to support local stores where local is not just in their town, but anywhere in the country… A large number of Americans have a general suspicion of bigness in the economic world — they equate bigness with power, monopoly.”

Now, before you get ready to write me that “local” is a geographic designation and those small ecommerce providers are not really "local," it may be time to take a step back, take a breath and think it over.  Why, because commonalities of interest may outweigh the differences; particularly if you are a bricks and mortar retailer with an ecommerce component.  Who knows, small bricks and mortar retailers getting together with small ecommerce providers could create synergies that we have not even thought of in competing with not just Amazon but Wal-Mart too.

In my next posting, I will list some of the efforts that small ecommerce are taking in battling with the giants.


7 thoughts

  1. One of the most important factors when planning your e-business strategy is the company or product you choose to help you. No matter what you sell, however, an e-commerce site must provide the same basic services your customers would expect.

  2. It’s disappointing that customers can enter a small B+M store, browse, do their searhces and leave without being engaged by the owner and/or their staff.
    Surely there always was service as a key part of the B+M offer. Big box was a problem if you wanted to stock the same lines, so you differentiated yourself through your product selections.
    The weird thing to me is that when I started looking at Amazon (in UK), many of the toy lines are more expensive on Amazon than in B+M. Really surprising until you look at Amazon’s pricing structures – and here in Europe, Amazon take their commission on the sales tax inclusive price so their marketing commission is heading up to 20% of ticket. Fulfilment comes on top of this.
    So if you want to do an MMP (15000 lines at Amazon USA under FBA is claimed), the room for manoevre is pretty limited if you want to be an online retailer that is profitable.
    B+M has a big role to play, and it is more than filling shelves because the online environment cannot provide the sale experience of personal one-to-one contact.

  3. Dear Richard:
    A great article.
    One glaring exception that must be addressed in Congress is the Sales Tax issue. So long as Amazon can enjoy general Sales Tax amnesty, they will continue to have at least a 5 – 9% price advantage over any B&M retailer.
    Several retailers are using Amazon on a Third Party basis, which has given them some opportunity to compete.
    Also, Manufacturers should be using and enforcing Minimum Allowable Advertised Pricing to help protect margins on the down side. Amazon will comply with these pricing rules.

  4. I would encourage every B&M Retailer to send Amazon a bill for your show floor space for the dates of their advertised promotion.
    Follow it up in 30 days with a past due notice, then again at 60, 90 then take them to small clams court.
    Thousands of small claims in local courts across the country over the next 12 months would cripple them. They will ignore the invoices, so make sure that you include a clear dispute clause on them.

  5. Use in house UPC code stickers and
    ban cellphone photos in stores for a start.
    Then step up your customer service and be less of a buyer and more of a curator. Put your unwavering support behind the producers of unique non-mass products and never display those goods in less than perfect settings.
    Have you been in any of the multitude of special shops in Tokyo or Seoul where online shopping offers same day delivery?
    The big online monsters do well but can’t touch small shops when it comes to success with boutique selections.
    You’ll never see plush in a dusty bucket in Tokyo.

  6. It’s funny that you should write this right now. In the last week I have heard a small “mom and pop” toy store owner, and book store owner and an employee of Best Buy say the exact thing about being used as Amazons show room. There needs to be a little more thought put into how we use our dollars and who we want to support.

  7. Great article Richard! As the retail/ecommerce space keeps evolving more and more rapidly I’m very interested in where/how “User Experience” will fit into the future of retail. Looking forward to your next posting on this.

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