Last Updated: December 7, 2020
At this point, we all know the impact eCommerce has made on the retail scene. And of course, no retail brand has had a bigger impact than Amazon. While most big-box retailers have seen sharp declines in market values and revenue over the past decade plus, Amazon has grown enormously (about a 2000% increase in market value since 2006). In fact, experts predict that Amazon will have 39.7% of the online market share in 2021 with sales reaching nearly $300 billion.
To be sure, this has been extremely problematic for some brick and mortar stores. Former giants such as Sears, JCPenney, and Toys “R” Us, among others, have famously lost billions in the years since Amazon’s rapid rise.
But what many aren’t discussing are the brick and mortar retailers who have succeeded in the face of this rapidly evolving market. Walmart and Target have managed to keep pace with Amazon, in part by creating a more robust omnichannel experience, but also by sticking to the basics of what made them successful from the beginning. And many small businesses have done the same. So how can smaller retail stores compete with Amazon? Let’s check out some ways that SMBs have stood their ground and kept business profitable.
Table of Contents
- Make the Shopping Experience Fast and Easy
- Sell More and Be Different
- Offer Loyalty Programs and Memberships
- Partner with Your Neighbors and Landlord
- Offer Services to Increase Convenience and Improve Customer Service
- Lower Prices Where You Can But Don’t Ruin Your Margins
- Start or Build Your eCommerce Platform
1. Make the Shopping Experience Fast and Easy
Convenience and ease are the biggest obstacles brick and mortar retailers face in competing with eCommerce stores. Amazon, in particular, offers unparalleled convenience with online shopping. The membership plan is straightforward, product search is advanced, recommendations are on point, and finalizing a purchase is just a simple click. There’s a reason that all of us who swear to cut back on Amazon purchases never really do.
While brick and mortar obviously can’t offer all of this, there are certain things you can change to make the customer experience faster and easier.
Start with Your Checkout Area
Make your checkout area more efficient. Keep enough cashiers on any given shift to prevent lines from backing up. Studies have shown that the average customer only has the patience to wait in line for 5-10 minutes. As a result, retailers are losing a great amount due to long checkout lines. To be specific, they are causing retailers to lose $37.7 billion every year in potential sales.
So get creative and take inspiration from stores like Target. Just recently, they came up with a new feature for customers to avoid waiting in line by having them visit a website to reserve a spot whenever a line is forming outside. Once it’s their turn to enter the store, Target will notify them via text.
Invest in Your Point of Sale
Add new point of sale terminals if you have space in your retail store. It also might be worth considering mobile POS systems (mPOS) on tablets that can be used to complete transactions anywhere in the store.
Get retail POS software that has fast transaction speeds. Too often, we see retailers struggling with slow EMV transactions or glitchy contactless payments. Make sure your system doesn’t slow you down.
Offer to buy online pick-up in-store (BOPIS) options to bridge the gap between brick and mortar and eCommerce. It saves customers the time of looking for the item and waiting in line but allows you to keep prices down and avoid shipping dilemmas. Customers are demanding a curbside pick-up option as well so be as flexible as you can. Feel free to follow our guide on how you can get started and ensure your retail store runs smoothly with curbside pick-up.
Overall, the easier and more seamless you can make the in-store experience, the better your sales will be. Customers will leave happy and be more likely to return and spread the word to their friends.
Focus on finding some products that none of your competitors sell to set your business apart. Even better, find products to offer that are locally made or sourced, and reward the artist or creator more than other retail outlets do. Amazon is facing great scrutiny over its business operations, shipping and packaging waste, and merchant relations. Make it clear to your shoppers that you operate differently.
Find consumer niches that you can attract. Part of selling more is to reach a new customer base. With Amazon branding itself as the “everything store,” it’s impossible to offer as many products as they do. But you can sell unique products in a different way.
Branding your store and product lines can go a long way. Consumers are much more likely to trust a recommendation from a knowledgeable brick and mortar retailer than possible fake Amazon reviews/recommendations.
Finally, think about other marketplaces that you can sell on. Many small businesses resign themselves to selling products directly on Amazon, allowing the retail giant to earn a passive profit. Check out other avenues, though. Etsy, Wayfair, Bonanza, and Rakuten, to name a few. There are a TON of marketplaces out there aside from Amazon. Find the right niche for your product line and brand.
Amazon has in part become the success that it is because of its subscription service. Amazon Prime customers spend over twice the amount on the eCommerce site than non-members. Prime is a straightforward membership service with clear and defined rewards, making it a loyalty program of sorts, too.
While it won’t make sense for every type of retailer to offer a subscription service, consider it if it does for your store. Subscription services incentivize more spending and encourage brand loyalty. They are particularly effective when they are fairly priced and have automatic renewal.
Whether or not a subscription service makes sense for your store, get a great loyalty program. Simply put, they work. And, while Prime, in a way, doubles as a loyalty program, Amazon doesn’t offer an exact loyalty program.
Loyalty programs are designed to benefit both the customer and the retailer. Customers enjoy rewards and feelings of appreciation. It’s exciting to earn free products, discounts, or exclusive offers. And it personalizes the shopping experience. Meanwhile, retail businesses increase their brand loyalty, customer base, and, at the end of the day, total sales.
Moreover, loyalty programs give businesses a channel to collect customer information and build their customer relationship management (CRM). This data is invaluable for building targeted marketing campaigns and reconnecting with past shoppers.
It’s important for small businesses to stand together and build a community together. Retail doesn’t always have to be cutthroat, even between direct competitors. And building a sense of camaraderie and community organization around your store will give you an immediate leg up on Amazon, which has none of that.
First, consider the location of your store. Are you in an indoor shopping mall, strip mall, farmer’s market, or another heavily concentrated retail area? These are perfect opportunities to work with your neighbors to market as a collective. Bringing foot traffic into the area will benefit each tenant. So even if another store sells similar products, you will each be likely to see an increase in sales.
Many larger American cities are seeing this sort of trend. Shopping experiences are being built in city centers, including New York’s Brookfield Place, Kansas City’s Power and Light District, and Las Vegas’s Fremont Experience. Each offers a unique sort of shopping experience for the customers while also creating a community-based and local market.
You might also consider organizing a marketing plan with your landlord if you’re renting a space in a mall or complex. Getting more foot traffic in the area will benefit each of you. Typically, the shopping area will have its own marketing presence that it can leverage to help draw in more customers. They can also host mall-wide or complex-wide events and promotions that will take some of the burden off of you and still bring in more shoppers.
Services and in-person customer service are two things that Amazon simply cannot compete with. So it’s important that every brick and mortar retailer take advantage.
Start with the services. Is there anything that your team can offer that will add to the overall experience? Even simple services, like sizings/fittings can go a long way. If you sell products that can be tested, offer samples as often as you can. People love trying before they buy. Choose a few products that you need to move through and try it out soon!
Focus on great staff training as well so that you can offer a more personal experience and strengthen your brand identity. Train each team member on how to approach and engage shoppers. You don’t want to be pushy or salesy, but you do want to show each customer that you are well-staffed and helpful.
Relatedly, find ways to host educational events, like tastings, presentations, and DIY classes. It offers another level of care and service and is a fun way to get more shoppers in your store.
Bigger retailers, like Walmart, are well-known for their price matching strategies. And while it’s worked for them (not without some pretty serious blowback), it’s simply not feasible for any smaller businesses. Often, it will come at the cost of all profits, and sometimes, result in losses.
So get creative with pricing, promotions, and other features of your store.
Work with your vendors to see if there are any options for bulk ordering or product combinations that would lower your costs. If you have the inventory storage space, ordering a large number of goods will often mean a lower per-item price.
See if there are other ordering costs that you can eliminate. Narrowing the number of your vendors can save you money on shipping or delivery and lead to greater wholesale discounts.
Devise creative pricing strategies with certain items. Rather than offer storewide discounts and slash prices across the board, find a few items to promote and discount. This protects you from a large profit loss, while still offering an alluring deal. Build promotions and discounts into your loyalty program, too, so you’re not rewarding one-time shoppers.
With that being said, there are instances where it’s not even worthwhile to try to beat Amazon with pricing. Rather, focus on building your brand and marketing in other directions. Lori Hulshof, the owner of the North Carolina beauty shop, SkinProLori, gives a great example of how retailers need to pick and choose their pricing and marketing battles:
“My marketing team works closely with the beauty blogger community and Facebook groups to promote my products. I’m fortunate to have a marketing team who is honest with me about SEO and rankings; instead of throwing money away trying to outrank Amazon on high-search volume products, I know they are spending time building up my brand in local circles and with bloggers who have the right audience for my skincare line.”
Don’t kill profits in the name of competing with Amazon. There are more productive ways of growing your business.
While there is a lot that you can do with your brick and mortar store to compete with Amazon, it’s also important to compete on their level.
Start by building an eCommerce store if you don’t already have one. There are a plethora of eCommerce platforms available, but find one that fully operates and integrates with your point of sale so that your inventory is consolidated and accurate.
Focus on the Structure of the Website
Make it easy to navigate and quick to check out. Don’t add requirements at the end of the process, like registering with your website, or any additional information. This will deter the final purchase.
Improve Product Descriptions and Photos
Keep everything on brand and uniform, while making it organized and clean-looking. You want each item to stand out like it would on a display in your physical store. Plus, many of Amazon’s product descriptions are lackluster or incorrect, so it’s an easy front to one-up them.
Add Product Reviews Directly to Your Site
Doing this will foster more brand trust and allegiance. You can integrate with a review platform or host them yourself directly on the site.
Make Returns Simple and Free
It will cost you some sales and additional shipping charges, but in the long run will pay off. Shoppers will feel much more comfortable making a purchase knowing they have the option to return if they’d like to. And, as many of us know, making that return, even if it’s free, can be a nuisance and we just keep the product even if we’re not entirely happy with it.
Figure Out Your Shipping Rates
Most small retailers cannot afford to offer free shipping unless it’s built into the product prices. If you do have to include shipping prices on the final bill, make sure they’re not extravagant. Find ways to minimize them. And consider offering free shipping for orders over a certain price threshold. It incentivizes greater spending, negating the shipping costs that you would have to eat.
How to Compete with Amazon in Retail with KORONA
Your point of sale software can help with some of these strategies. This is especially important for ensuring a fast checkout experience, as well as finding an eCommerce platform that fully integrates. But your POS system is also important for determining your pricing and promotions.
Monitor profits and many other sales metrics with advanced reporting and reliable, robust inventory management. This will make sure that you’re never losing too much profit for the sake of a discount.
To find out more, click below to set up your free trial of the software and to schedule a demo with one of our product specialists. They’ll walk you through all of the features relevant to your retail vertical.
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