Amazon a threat or opportunity for SMEs in Europe?

Let’s find the answers to this topic…

According to recent statistics, the retail market in Europe is growing by approx 3.2% year on year. In comparison, the ecommerce market is growing by an impressive 11.3%.  However, and despite this significant gap, the percentage of sales online today is only 8.8%, which means people still prefer to shop offline. This figure is expected to grow and is forecasted to reach 11.4% by 2021.

What does this tell us about the current retail environment?

There is no denying that ecommerce is becoming more and more relevant and consumers are enjoying the convenience of being able to shop both online and offline. However, the key fact here remains that both channels are still popular with consumers. This is somewhat different to the stories we keep hearing from the US about the so-called “death of retail”. Often this statement is mentioned with specific reference to  “Amazon” and its successful online retail model. Such stories ultimately raise an alarm in our minds about the status of retail in Europe too. Are we headed in the same direction? Will retail eventually die here too? Will everything be sold online in the future?

Well it is not that simple! Before you start panicking, keep in mind that Amazon already operates at a large scale in Europe with 30% of its revenue deriving from this part of the world. What this tells us is that Amazon is already one of your competitors!

The retail giant’s biggest European markets are Germany and UK according to an article on CNBC, although according to its business statement the company has aggressive expansion plans for the region. In order to compete with Amazon, first it is important to analyze its business strengths and core strategy.

What makes it all tick for Amazon?

A key to Amazon’s success is distribution and price. The company currently delivers to over 50 countries in Europe and continues to heavily invest in further building its distribution channel to reach even more countries. This is the reality that we’ve had to live with for a while now but retailers can adjust like they did before, when Amazon entered the retail space in the 90s.

Yes, its true Amazon is a giant online retailer in the US, but in Europe we have our own strong ecommerce brands, so it will not be a similar shock. Although the company’s continued success and expansion might scare some people, by acting smartly and keeping up with the latest trends, SMEs you can compete with Amazon and even become more successful. Example retailers from the UK that have successfully entered the online retail sphere include missguided, ASOS, Zalando and many more…

Accordingly, the growth of Amazon should not be seen as a threat but more of an opportunity. So let’s not panic and try to act instead! Just think first of what you can’t compete on!

 

Our tips on how SME’s can go-live with Amazon

According to research, customers shopping at Amazon like shopping on the platform for the price and the never-ending assortment. Thus rule number one, ever try to compete with Amazon on price and the “have it all” assortment. Instead look at other areas that also matter to the consumer such as localization factor and the  “near me” search for goods, which according to Google searches increased by over 500% between 2015-2017.

So our advice; to succeed as a local SME, focus on becoming the “near me” go to place.

Here are 7 ideas to start with:

  1. Focus on convenience and personal touch: As a local merchant, you have the advantage of offering speed and quick service, so rather than waiting a few days to receive their order, you’re able to have their items ready in no time. All your communication needs to emphasize this key factor and even consider offering same-day delivery if that is within your ability.
  2. Create a niche in the market and provide services that local people need, which online vendors or big brands can’t always offer. This could be an exclusive personal service, the ability to stock locally produced products, and even organizing events, offering people the chance to attend a private sale or meet local designers for example. This is a chance for you to connect with shoppers on a personal level and offer them the individual shopping experience that they won’t get with Amazon.
  3. Reward your loyal customers: create an attractive loyalty program that will ensure customer retention and gives them a reason to always come back to your store. Also, use your database to communicate offers and special discounts to your subscribers or followers via engaging, informative and catchy emails. Email marketing is one of the most effective and economical ways of communication if you know how to use it to engage with customers. Best of all, you’ll also be able to measure response and open rate and tailor your offerings to what interests them the most!
  4. Work with your retail neighbours to create marketing campaigns and promotions that would drive customers to shop in-store: Retailers need to work collectively to encourage customers to support their local shops and instill a feeling of pride in being part of a community. You can create a fun marketing campaign, which utilizes social media to spread the word using hashtags e.g. “#supportyourlocalshop”. Such collaborative initiatives provide shoppers with an intensive to shop locally.
  5. Inspire customers and use your expert opinion in your specific industry to create content that will interest customers and make them want to visit your store and learn from you. You can use social media posts to promote stories about your business and the various products and services that you can offer them better than anyone else. You will be surprised, how much people are interested! For example, if you are a local beauty salon, you can create short videos offering beauty tips, or write a blog on the latest nail trends or even how they can style their hair. Obviously, always include a call to action and ask them to visit your shop to learn more.
  6. Run special and personalized offers based on the products and services you sell. For example, a food store can run a promotion on Saturday nights, ‘Dinner for two for only 10 euros’ giving, or if you’re a sports shop, you can start a running club for regular customers and give away free trainers once a month for the fastest? Even an eyewear store can offer e.g. “Buy glasses in-store and get a one-year free insurance included etc”. These kinds of offers provide shoppers with a reason to shop with you and not online.
  7. Create your own online presence and make it stand out. If you don’t have a website, create one. It only takes a few hours but will increase your brand awareness. Add your business to “google my business” i.e. put your shop on the map. Start a small online shop with your top 10 sellers and build both learning and business from there. The new technologies are not only available to support the big retailers; they are also within your reach and at an amazing price. Feel free to contact us for a free demo on how you can grow your business with an online presence (include a link to CCV online shop).

Above (except 7) are things Amazon can never compete with. This is your playground. Go and get it! And remember, we are here to help as your business partner for SME in Europe. Call us! We would be delighted to hear from you…

One thing looks certain is that both online and offline retailers are here to stay