3 Ways To Prepare Your E-Commerce Company Before A Potential Amazon Breakup
By Fang Cheng, Linc Global
In the United States, Amazon’s dominance in e-commerce is no longer up for debate. In 2018, the shopping behemoth made up 43.5 percent of online retail, and it was set to capture nearly half of the market by the end of 2019.
Amazon’s success has transformed retail, online and off. Giant corporations like Walmart are struggling to carve out a space for themselves online, and other merchants who did the original legwork of figuring out what consumers wanted are forced to sell their items on Amazon or risk being forgotten.
The effect Amazon’s stranglehold has had on competitors has not escaped the attention of higher-ups in government. Some state attorneys are already looking to begin antitrust investigations, while the Federal Trade Commission was recently given the authority to investigate Amazon and Facebook. Sen. Elizabeth Warren has even gone so far as to turn the breaking up of tech giants (including Amazon) into a presidential campaign promise.
Businesses looking to carve out a niche for themselves might have some of the work done for them if the government chooses to break up Amazon. The question will be figuring out how to fill the vacuum the e-commerce leviathan leaves behind.
A Breakup Might Be More Likely Than It Seems
While it might seem like the breaking up of Amazon is a pipe dream, it’s not without precedent. In 1982, the government succeeded in splitting up telecom giant AT&T, dividing its long-distance and regional services into separate companies and providing some breathing room for other telecom services trying to make their mark.
More recently, Amazon itself was forced to bow to legislation in India that made it so that foreign online marketplaces couldn’t invest in the products sold on it. The idea was to tamp down on an anticompetitive practice that gave companies like Amazon an unfair pricing advantage on a variety of products. Amazon is set to lose $250 million or more in revenue as a result, but other merchants are now more able to compete.
In theory, this is what would happen if Amazon were forced to separate into several smaller companies. The playing field would be, if not leveled, at least no longer quite as steep.
What A Future Without Amazon Could Mean
More and more businesses are choosing an “if you can’t beat ’em, join ’em” approach, selling their products through Amazon because they can no longer make it on their own. The problem with this is that Amazon isn’t necessarily playing fair. It acts as a competitor to brands that sell on the site while charging fees to other businesses to be on that marketplace in the first place. It’s essentially a hostile work environment for anyone not named Amazon.
In theory, with Amazon broken into pieces, retailers would be able to break free again, no longer finding themselves in a race to the bottom when it comes to price or being forced to follow Amazon’s rules.
Instead, they’d be able to set their own prices, promote their products as they wish, and not worry about customers going directly to Amazon first. Retailers could, once again, build out niches and create social followings, potentially earning lifetime customers.
To do this, of course, companies will need to be prepared to step up to the plate once Amazon is forced to step back.
How To Successfully Navigate A Post-Breakup World
Here are a few ways businesses can prepare for a future without a giant:
1. Build A Better Customer Experience
Online, Amazon sets the bar for shipping, tracking, returns, and the overall customer experience. E-commerce businesses that want to become the new kings of customer satisfaction should be looking to automate these tasks in order to easily provide the seamless experience that customers prefer.
That’s not the only place businesses can provide a stellar customer experience, however. Where businesses can beat Amazon — even in today’s environment — is brick and mortar. It might sound old-fashioned, but customers still value the convenience and immediacy of physical stores. According to one survey, 65 percent of shoppers said during the holiday season last year that they planned to frequent local stores.
2. Collect Data Responsibly
One of the reasons Amazon continues to beat the competition is because of the mounds of data it has collected over the years. Companies that use data to customize the user experience significantly outpace the competition in sales growth by as much as 85 percent.
In order to provide the same level of service as Amazon, brands should set up data tracking that will help them create a holistic customer profile based on past data and shopping and search trends.
Just make sure your data collection practices are transparent and above board, or you might become the next business to come under government scrutiny.
3. Make The Experience Quicker And Easier
Businesses are already trying to find ways to compete against Amazon by bringing the shopping experience to wherever the customer is. According to a study from small business software firm Broadly, 34 percent of customers between 18 and 34 years old prefer to text businesses when they can, and 55 percent of small businesses are using texts with more regularity.
Businesses that want to become the next Amazon will have to embrace emerging conversational technologies like messaging and smart voice assistants. Brands that let shoppers make purchases where and when they want will be the ones that stay top of mind when it comes to making the next purchase.
The breaking up of Amazon is far from a certainty, but businesses should still be taking these steps to stay competitive now and be ready for a possible future where Amazon is no longer as powerful as it once was. For retailers to be successful, it might not have to surrender to Amazon after all.
About The Author
Fang Cheng is the CEO and cofounder of Linc Global, an omni-channel shopper assistance platform that helps brands differentiate themselves with automated services and experiences across the channels shoppers prefer. Linc Global has served more than 15 percent of U.S. shoppers, creating a competitive advantage, reducing customer service costs, and turning service interactions into new engagement and revenue. Linc Global's clients include Carter’s, eBags, Stein Mart, Lamps Plus, JustFab.com, Tarte, Vineyard Vines, and P&G Shop.