Worried about Competing Against Amazon? Don’t Be.

Posted on August 26, 2009. Filed under: Amazon | Tags: , , , , |

I talk all the time to ecommerce sellers who tell me that they won’t sell on the Amazon platform because they think it is wrong for Amazon to compete with the third party sellers.  Even eBay uses it as a selling point to attract new sellers by publicly stating that they do not sell product themselves and would never directly compete with their sellers.

As a mail order company who sells on Amazon, I am definitely okay with Amazon being my competition.  First, because Amazon DOES use its own platform to sell product (unlike eBay) it means that Amazon is much less likely to do stupid stuff to the platform to make it difficult or impossible for me to sell my items since it would mean Amazon would also find it difficult or impossible to sell their items.  And, second, and most important is that I don’t mind competing against Amazon on their own platform because I can still win.  Why would I make a bold statement like that?  For three reasons:

1. I can package better than Amazon

Yep, you read it correctly.  I can package better than Amazon.  I cannot package faster or cheaper but I can do it “better” as defined by the customer.

As a customer, I have ordered direct from Amazon and  have received items that they packaged and although I have always received my items satisfactorily, I am definitely not impressed with the packaging.  I have not yet had anything arrive damaged but the items I have ordered (video games, microphone and guitar stands, books) haven’t really been fragile items.  Many of the items I sell, however, are kinda fragile.

As a mail order customer, I LOVE receiving packages.  It is almost a little like receiving a gift for my birthday or for Christmas when a package arrives.  It doesn’t matter that I know what is inside (clothes, video games, etc) but rather it is the emotional high I get when I open the box that someone else packed up and shipped me.

When our mail order company ships items out, we package them well.  Not only do we package them securely but we prepare them so that our customers feel they are unwrapping a gift, even if that gift was paid for by them.  We use tissue paper and bubble wrap, when appropriate, and we use new clean packing supplies.  Whereas Amazon does put a guitar stand (in its original manufacturer box) inside another huge box with just one piece of wadded up paper, we always choose the appropriate size box and we fill the entire box with packing material so that the customer feels that we took great care with their item.  Our Amazon feedback is filled with customers who rave about our packaging skills.

2. I can provide more product variety and better customer service than Amazon

The items I sell on Amazon are hobby related and I also sell the parts and accessories that help support the main items.  While Amazon could compete with me by offering the same items, they won’t.  Amazon is going to offer those items that are high margin because they sell in so many different categories and carry so many different skus.  I, however, offer a breadth of inventory in a very specific niche to support the hobbyist after their initial purchase and I have the knowledge to help the customer know what it is that they need to buy.  Some of the accessories and parts are very high margin and some are low margin but without the variety of product which includes low margin products, it is much harder to sell the high margin items.  Thus, I have an advantage over Amazon because of the variety we offer and the product knowledge and experience that we have.

3. I can use Amazon’s large size to my advantage

As a small business owner, I can and will do things that Amazon won’t do to improve customer service and to improve the bottom line.  For example, we noticed right away that many people on Amazon order gifts that they pay for and have shipped directly to the recipient.  And it makes sense that shoppers would order gifts from Amazon since they trust Amazon to deliver a great item in a timely manner.

So, we sat around and brainstormed about how we should make changes to our business model to support this Amazon phenomenon which was pretty much nonexistent on eBay.  Right away we knew we needed to recognize that shipping a gift meant that we had two customers and that we needed to satisfy both customers. 

When we ship a gift package, we include a huge label on the outside of the box with something like “Gift from Aunt Edna”.  We do so for a variety of reasons.  First of all, not every gift recipient knows that the package is coming and they might refuse the package we send from FedEx if they think the package is being delivered in error.  With the big label on the outside of the box informing the recipient that the package is a gift, this doesn’t occur.  And, also, we want the gift recipient to be excited about their package right away.  Inside the package, we include a packing slip without dollar amounts and we also make sure to include information letting the gift recipient know how to contact us if they need assistance with the item they received.  This prevents them from having to contact Aunt Edna to ask how to put together the item or get it to work which only makes Aunt Edna wonder if she made a good choice in buying the item. 

In addition, we inform the purchaser that we have given our contact information to the gift recipient in case they need assistance.  And we send the purchaser an email letting them know what day the package is expected to arrive even though the purchaser could use the tracking information we provide to look up the information themselves.  And in that email we let the purchaser know that we want the gift recipient to be completely satisfied with the item and we are here to help in any way that we can in order to make their gift recipient 100% completely satisfied.

Now, I cannot imagine that Amazon would give that kind of service to every customer who purchases a gift.  But we are just small enough that we can provide that kind of unique service.  And we provide the same special “gift service” no matter whether the purchaser buys a $50 item or a $500 item.  And it pays off.  Since we began doing the things I described above, we have not had one package returned as undeliverable or refused and we have had glowing feedback left from purchasers.  We have also noticed some gift recipients return to us and order directly from us to support their new hobby.   

When I sell an item on Amazon, I pay a percentage to Amazon.  While I do compete with Amazon to get “the sale”, it is still a win-win situation for Amazon because they make money even if they don’t get the sale themselves.  So, I am not worried that Amazon is on a mission to put me out of business.  Sure, Amazon is my competitor but it’s a fair fight and I have no problem winning my share of the sales.   My sales on Amazon have increased so signficantly and I anticipate having one of the best holiday season’s sales ever.  As an ecommerce seller who sells on the Amazon platform, as well as other platforms, competing against Amazon is the very least of my worries.

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3 Responses to “Worried about Competing Against Amazon? Don’t Be.”

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My sales on Amazon have now surpassed my sales on eBay, and I just opened on Amazon a few months ago!

How do you know when it’s a gift, though?

[…] Worried about Competing Against Amazon? Don’t Be. « TheBrewsNews thebrewsnews.com/2009/08/26/worried-about-competing-against-amazon-dont-be – view page – cached #TheBrewsNews RSS Feed TheBrewsNews » Worried about Competing Against Amazon? Don’t Be. Comments Feed TheBrewsNews The Noise from the Hostile eBay Environment (an eBay OldTimer’s thoughts) An Insider’s Guide to the eBay Best Offer Selling Option — From the page […]

What you fell to realize is that Amazon is using your company to gather data on who products are moving and what are not. They are letting you do the hard work. Once they have gather enough data, your store will start to disappear from their search and be replaced with their own results carrying your product. Once they undercut you out of business then prices start going back up.

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