I sit here typing about Amazon while millions of people are shopping on Amazon, taking advantage of the Amazon Prime Days specials. To say that Amazon disrupted the retail climate would be like saying Jesus got a few people to think differently about God.
Oh, everyone thought it would kill brick & mortar. That’s what we all heard behind the gnashing teeth of the worry mongers. But it didn’t happen. E-commerce was only 13% of all retail shopping in 2017 (source).
Some retailers learned how to adjust to the new retail climate. Some didn’t. Those that survived and thrived did it using one or more of these four tactics.
FIND NICHE PRODUCTS
In the early days, before everything was online, savvy retailers looked for products on which they didn’t have to compete online. Customizable products, hard-to-find products, bespoke products, and niche products from vendors who recognized the value of the brick & mortar seller filled these showrooms.
Unfortunately, as e-commerce expands, those products become harder and harder to find. Most new vendors now launch directly online (and through Amazon).
Niche products are still out there, though, Artisan works, hand-crafted items, impulse buys (no one does price comparisons on impulse items), and truly hand-sell items that need to be shown still sell best in specialty brick & mortar.
OUT-SERVICE AND OUT-SELL THEM
One area Amazon will never be able to compete with a top-level brick & mortar is Selling (and by Selling, I mean Serving the customer). Oh, hey, they do know a thing about being customer-friendly and customer-focused. But there is only so much you can do online. Having a customers-who-bought-this-also-bought-that section is not up-selling or, as I prefer, completing the sale.
Smart retailers sank extra money into training their employees, paying for better employees, and creating a culture where those people want to work. Their staff are rock stars and their customers become so loyal, they do all the marketing for these stores in terms of repeat and referral business.
OFFER NEW SERVICES
Some stores took the approach of offering services you cannot get from an online seller. Shoe stores have orthotic services. Book and game stores have lending libraries. Clothing stores offer custom-fittings and personal shoppers. Baby stores do car seat installations.
As a toy store, we were already offering programs such as a Teacher Loaner Program that allowed teachers to borrow items for free for a week in their classroom. We also already had layaway, gift-wrapping, delivery, assembly, and UPS shipping. As a team we were always looking for new ways to help the customer.
If a customer asked, “Can you do this …?” we pretty much said, “Yes!”
If you can’t beat ’em, join ’em. Several retailers took this approach and started selling their own stuff on Amazon either as Merchant Fulfilled (MFN) where it comes out of your stock, or Fulfilled by Amazon (FBA) where you send it to them to box up and ship out.
Some are making a killing at it. Some are augmenting the sales they lost. Some are using it to stay on top of trends and shifts in buying habits.
Some are losing money at it. The two downsides to “join ’em” are first, it often becomes its own business with its own rules needing its own time and energy, and second, you can get deep into it only to lose the line that made most of your cash flow.
The real point here is that the smart retailers (and vendors) adapted. They found new ways to work within the new climate. With any disruption in any industry there will always be winners and losers. You can usually spot the losers because they are the ones gnashing their teeth. The winners are already plotting how to turn it to their advantage.
PS Our market share in 2007 was 16.5%. Amazon really hit its stride in toys around 2011-2012. By 2015, however, our market share had only dropped to 15.7%. Not quite the retail apocalypse the worry mongers were threatening.