An alarming number of e-store owners react to the coming of Amazon with nothing but a shrug, a little bit like the Finnish TV network MTV3 reacted to Netflix and Nokia to iPhone. If the local e-commerce is willing to survive, a lot more is needed than “ok” performance. You have to be a winner – not by benchmarking your business to Amazon’s, but by looking for a way to your customers’ hearts.
A while ago, with the help of a short questionnaire, I scouted the attitudes of Finnish e-store owners towards the coming of Amazon. I asked: “What do you think? How would it affect Your business?” All 82 respondents believed it would have no to even a positive effect.
I felt like shouting: ”Wake up!” As if someone was going to open a mall next to the village shop, and the shop owner would say that nothing’s going to change.
The human mind is strange. It gets nervous over little things but oftentimes refuses to acknowledge the bigger changes, clearly visible on the horizon. Everywhere Amazon has arrived, it has changed the structures of retail and e-commerce irreversibly. Boston Consulting Group recently estimated that in the next ten years, Amazon will bite a chunk of 5-10 % of the Nordic e-commerce. Furthermore, you need to keep in mind that Amazon is in it for the long run. In the United States, it already holds over 50 % of the market.
Last fall Kim Weckström of Avaus, a digital marketing and sales company, familiarized himself thoroughly with the operational logic of Amazon and its resources and was forced to give an overwhelmed comment in the financial newspaper, Kauppalehti:
“Amazon’s ability to invest in infrastructure, product development, and marketing is out of this world. These numbers are rarely used in daily dialogue. They are so big that they are completely abstract.”
And a player of this magnitude wouldn’t affect the local businesses when it finally arrives here?
It reminds me of how, back in the day, the CEO of MTV3, Heikki Rotko stated that Netflix was to face heavy competition in Finland, as we already have so many free movies available, or how Anssi Vanjoki of Nokia announced that Apple will remain a niche manufacturer of mobile phones.
It is completely plausible to believe that Amazon’s launch in a country will grow the size of the market, in parallel with Amazon Marketplace offering a new sales channel for local merchants. The prize, however, will be high: the merchant becomes dependent on Amazon, and the client data will be left in Amazon’s hands.
The world is changing, but not entirely. I am confident that the one who owns the client relationship will continue to own the business in the future. If you want to have a business, you need to find a way to your client’s heart. It won’t be until after that, that they will reach for their wallets.
Amazon’s dominance regarding the consumer is based on price, speed, and selection. It is not worth your while to try to beat Amazon in these areas, as they are all a game of volumes and out of reach for the local e-sellers.
In the future, Amazon will set the rules of the game, and if you wish to stay in the game, you need to sell at given prices and deliver within the given time. Naturally, being in the game is not enough when it comes to business – you must win some, as well. With one argument or another, you must get the client to make their purchase with you. To me, the big stars of local e-commerce in Finland are Valtteri Lindholm of Varusteleka and Mikko Rosen of Kaalimato. Another example to add is Vladimir Tokoi and his rapidly growing e-store, Suojakalvotukku. These brands have been built around a distinctive customer promise and outstanding delivery. The niches have been so carefully defined, that within the niche the brands are able to offer a wide selection. If Amazon takes hold of 10 % market share in the Nordics, there are still 90 % left, but the playing field and consumer expectations will be changed. In this world, such players as Varusteleka, Kaalimato, and Suojakalvotukku, who operate as skillfully as Amazon, but are more significant to their target segments, will stand on even more solid ground than before.
Those, who didn’t understand to invest in the superior customer experience in time, Amazon will eat for breakfast – and it won’t even pay taxes, unlike the players it just wolfed down. Instead of burying their heads in the sand and waiting for Amazon to arrive, they should do everything in their power to develop their stores while they still have the time. Will you be the first one to pop into a consumer’s mind when they are looking to buy? Is each touchpoint from landing to checkout executed brilliantly? Are your clients left on their own devices, or will you provide personal service as you would in a brick-and-mortar? Can you distribute with speed and flexibility?
Back in the day, I founded the first professional team in halfpipe snowboarding in Finland. Before that, everyone had been practicing on their own or with a group of friends – whichever suited them best. For many, this meant that their development stood still. In my mind, Finnish e-commerce is in the same situation. As members of the halfpipe team, the shredders were enjoying the benefits of new ideas, guided training, tailored exercises, and systematicity. They were able to step up their level quickly, and after a few years, we were already celebrating two world champions and a large number of world cup podiums. Essential for the success was that the team members learned from each other.
The same improvement of level and preparation to face the world’s toughest competition is possible in e-commerce, as well. We at Upseller work with AI in support of sales. It learns from everything that it comes across, and its performance enhances continuously. Once the AI is combined with marketing, selection, and non-stop development of agile logistics, even the smallest of e-stores can step up their game. You still have time, but not much longer.