Is the Amazonification of Retail a Good or Bad Thing?

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We get it. Online shoppers love Amazon. The fact is, as an online retailer, they just get so many things right. It’s easy to use, their customer service is about as close to perfect as such a large company could hope for and they push themselves to constantly re-invent retail.

Whether it’s mobile shopping, next day (or increasingly same day) delivery or simply creating mass demand for digital products (eBooks, streaming movies or music), Amazon makes, shapes and leads the world of online retail.

For many independent online retailers, Amazon is also a vitally important route to market. However, in a typically terrifying (all eggs in one basket) situation for many online retailers, Amazon is their single most important source of business and this can present a significant risk for many online businesses.

Note: Despite all of this, Amazon is not a perfect shopping environment. It certainly isn’t the cheapest for consumers or the most profitable for retailers.  Flubit.com (SKU Cloud’s online marketplace) helps consumers get more bang for their online shopping buck. If Amazon was (as many people believe) the cheapest place to buy branded products online and SKU Cloud weren’t able to provide retailers with profitable opportunities to reach new consumers, we wouldn’t have a business.

How Amazon Threatens Your Online Business

  1. A Smart Competitor: Amazon is not a benevolent dictator. It owns every single one of your transactions and is only too willing to use the data it collects against you. Essentially, independent retailers are providing valuable market research for the eCommerce giant, enabling it to make smart commercial decisions for its own retail operations based on your success. If it sees an opportunity to exploit a product category which your business has found success in – it will. Amazon makes no apology for the fact it can and will have its cake and eat it.
  2. An Unlevel Playing Field Driving Prices Down: Not all sellers on the Amazon platform are professional retailers. Amateur or home-based retailers (who are not VAT registered) and sellers of second-hand and refurbished products can saturate the market and drive your products prices down. When a marketplace is as popular as Amazon, the race to the bottom mentality played by many “busy fools” will impact on your margin and potentially destroy your business.
  3. Tax Efficient Loopholes: Nobody enjoys paying tax but very few businesses get away with paying huge swathes of tax like Amazon do thanks to their clever accounting and business practices. There is a good chance, your small business might actually be paying more tax in the UK than Amazon. This puts your business at a huge disadvantage to the multi-national company (who if you remember point #1) is actively competing against you.

Note: We would never recommend a retailer stop selling on Amazon – the opportunity is too large to ignore. However, online retailers should take a more strategic view of how Amazon can help them grow their business. Amazon should be a component in wider eCommerce strategy which embraces multiple eCommerce channels. As a business, you want your fingers in many different pies. The moment you find yourself drawing revenue from a single dominant player is the moment you have lost control of your business.

Amazon Goes Beyond Online Retail

Amazon has recently announced the launch of a revolutionary, real world retail experience by re-inventing convenience shopping.

Amazon Go (see the video below explaining the concept below) solves the one problem every shopper hates when nipping out for a sandwich or pint of milk from their local convenience store – standing in line to pay.

Amazon Go has done away with the checkout, using instead a clever mobile app to gain access to their stores and pay for good. The technology (as you would expect from Amazon) is nothing short of brilliant and seems to be receiving universal praise on social media.

Could Amazon’s approach to high street retail provide the much-needed shot in the arm the sector needs? Probably, but it will come at a cost, particularly to those who rely on low-wage and part-time jobs offered by many retailers.

Note: Checkout operators – notice has been served, you have officially been digitally disrupted.

Traditional retailers will have to adapt their practices if they are to keep pace with Amazon and many will struggle to match the technological advancements, buying power and tax (there’s that word again) efficiencies employed by the soon-to-be omnipresent retail giant.

This will mean embracing smarter retail technology in their high street stores, promoting the expertise of their in-store staff and also compete with Amazon in their own environment – and that means expanding their presence online.

How SKU Cloud Can Help Your Business Fight the Amazon faction of Retail?

Savvy retailers and consumers alike know that Amazon is not the only game in town.

SKU Cloud is proud to be leading the fight to keep the UK retail landscape a diverse and engaging environment by creating multiple opportunities for retailers to compete against large online eCommerce platforms like Amazon and remain competitive in terms of price, reach, delivery and insight.

For more information about how SKU Cloud can help your retail business check out our retail whitepaper or contact us here.

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