How to Compete with Amazon

How to effectively sell on both Shopify and Amazon.

U.S. toy retailer Toys "R" Us entered into a 10-year agreement with Amazon, valued at $50 million per year plus a cut of sales, under which Toys "R" Us would be the exclusive supplier of toys and baby products on the service, and the chain's website would redirect to Amazon's Toys & Games category. In 2004, Toys "R" Us sued Amazon, claiming that because of a perceived lack of variety in Toys "R" Us stock, Amazon had knowingly allowed third-party sellers to offer items on the service in categories that Toys "R" Us had been granted exclusivity.(Wikiepedia) 

On September 18, 2017, Toys "R" Us, Inc. filed for Chapter 11 bankruptcy. (Wikiepedia)

Do you sell your products on Amazon and Shopify? Typically, you will see better margins with your own storefront on Shopify than selling anything through Amazon. With subscription costs at $.99 per item to $39.99 per month plus a “referral” fee of 8-15% on each item sold, Amazon can be a costly place to sell. 

There is no better analogy to David and Goliath than your Shopify store vs Amazon. It can be nearly impossible to compete with Amazon’s low price guarantee, free 1-2 day shipping for Prime members, or subscribe and save discounts. 

Consider this:

Amazon will account for nearly 40% of the U.S. ecommerce market this year. (IndsiderIntelligence.com)

66% of consumers start their product searches on Amazon. (JungleScout.com)

22% of Amazon’s total revenue is attributed to third-party sellers. (Amazon.com)

So, why would a customer buy from your Shopify Store? Although there are a lot of benefits to shopping on Amazon, here are the strategies I recommend giving your Shopify store a chance to compete with Amazon. 

Amazon Only Product(s):

One of the best ways to ensure that customers will come to your Shopify site is to only sell Amazon-only products on Amazon. This does not mean you have to recreate another product. It can be achieved many different ways such as:

• Create a different quantity of items for sale on Amazon (24ct vs 12ct)

• Bundles: Sell individually on Shopify and only in bundles on Amazon

• Just sell a variety/sample pack or low cost option on Amazon (teaser products)

• If you sell 50 skus, make 10 of them only available on Amazon

Implementing this plan will help drive traffic to your Shopify site while simultaneously, reducing the likelihood of someone going from your Shopify store to Amazon. 

Keep in mind, similar results can be achieved through 3rd party sellers as well. If you don’t sell directly through Amazon (Seller or Vendor), be sure that you only allow 3rd parties to sell specific skus.

Never Showcase Discounted Price: 

Amazon dynamic pricing can work against you if you’re not careful. Amazon is constantly taking in multiple variables and adjusting their price every minute. This may provide the best consumer experience, but as a seller, it can eat away at your margins.

It’s important to remember that the price on your site will have an impact on your Amazon listing price. If you want to do promotions, always do it via coupon codes - never by just discounting the price online. Reducing the retail price online can cause Amazon to stay competitive, reducing their price point. 

Amazon to Shopify: 

Looking to retarget to those customers who purchase on Amazon? Well, there are some very strict policies around what you can and cannot do. You are never allowed to direct an Amazon customer to your website. The exact language on what you can and can’t do is below:

 

Any attempt to circumvent the established Amazon sales process or to divert Amazon users to another website or sales process is prohibited. Specifically, any advertisements, marketing messages (special offers) or "calls to action" that lead, prompt or encourage Amazon users to leave the Amazon website are prohibited. This may include the use of email or the inclusion of hyperlinks, URLs or web addresses within any seller-generated confirmation email messages or any product/listing description fields.

Amazon.com

 

But there are some great workarounds:

1. Inserts - Card inserts within shipments are a great way to increase the likelihood of a customer going to your Shopify site. Offer a warranty on your product where customers must fill out a form online. Ask customers to follow you on social media. Provide tutorials or links to reviews. All of these methods will increase your chances of customers going directly to your Shopify store without explicitly directing them there. 

2. Great Customer Service - provide a small insert that provides 100% satisfaction guarantee with contact information (email, phone number, etc.) Great customer service will turn customers into superfans. Just remeber, don’t direct customers to your website, just provide the opportunity for them to reach out to you via email, SMS, or phone.

3. Contests or Giveaways- Another great way to increase engagement and encourage Amazon customers to shop your brand in other places than Amazon, is to run contests or giveaways. Ask them to follow you on social media or enter their email address via a website like gleam.io. These Amazon-compliant marketing practices will increase the likelihood of a customer visiting your Shopify site without directly sending them there.

Eliminate 3rd Party Sellers or MAP:  

Depending on what you’re selling, you may be in a situation where you are competing with other 3rd party sellers. These sellers can help or hurt you depending on the relationship. 

It’s important to remember that some third party sellers are willing to work on smaller margins because they sell a variety of items. 

If you typically receive a 20% margin on your products, the 3rd party seller may be willing to accept 10-15% margins because they’re receiving 80-100% on another item they’re selling. 

So, what do you do?

Introducing a MAP pricing strategy will decrease the likelihood of this happening. Enforcing it can be complicated, but there are countless softwares online that are affordable to help keep things in check. 

Amazon is here to stay, and the best way to grow your business both on and off Shopify is to establish a plan for how they can both grow together, rather than competing with each other. Obviously, all the above can be compounded by combining these strategies and increasing profits on Amazon and Shopify. 

Now go and grow.

J

Recommended Apps:

A great way to decrease the chances of Amazon finding your discounted price is by creating offers that are triggered by bundles or multiple items in your cart. Unlimited Bundles & Discounts is a great app to assist with setting these up.

Learn More

 

As mentioned above, software like Gleam can help you create giveaways and contests where users can enter by following you on social media or by entering their email address.