Initiatives to compete against Amazon from eCommerce emerging players.
As the pioneer of eCommerce, Amazon has change the game of eCommerce but it’s now disrupt by a lot of initiatives from emerging actors.
As the pioneer of eCommerce, Amazon has change the game of eCommerce but it’s now disrupt by a lot of initiatives from emerging actors.
One sentence about competition I love to quote is :
If a competitor makes an improvement, you must make an equal or greater improvement just to stay neck-and-neck with them. Stay the same and you fall behind.
Matt Ridley, author of The Red Queen Effect,
Standing still is the fastest way of moving backwards in a rapidly changing world.
So what are initiatives from emerging players ?
Launched in 1994, Amazon captured 31.4% of all US e-commerce retail sales, according to Digital Commerce 360.
In US, Walmart reported a 69% growth in its e-commerce business in Q4’20 while Target reported a 155% growth in digital sales in Q3’20. In addition, many small- and medium-sized businesses have had to grapple with survival, including rising e-commerce players looking to prevent their own disruption.
As competition heats up in the e-commerce market, key trends for smaller e-commerce players looking to capture some of Amazon’s market share to note include:
- Consumers want a community connection
- Sustainability is critical for eco-focused customers
- Assortment relevance is being prioritized over mass variety
- More app-based retailers are tapping into the needs of a mobile-first generation
To face to this new demand from consumers,
1.Niche assortment
Companies focus on a narrow product assortment and gain a following among fanatics. Compared to big retailers, companies focusing on a specific niche have the advantage of credibility and focus, and thus can foster greater customer loyalty.
2. Distinctive convenience
Companies strive to deliver ease and speed as a service. With people staying at home more than ever, services that deliver convenience above all else are becoming increasingly popular.
Tovala, for example, delivers prepared meals that can be cooked exactly the way they need to be cooked in its smart oven.
3.Social connection
Companies home in on the community and social aspects to promote product discovery, connection, and sales. Social commerce has taken off, with companies like YouTube, Instagram, and Shopify focusing on integrating social and commerce over the past year to drive sales.
Glossier not only markets its products through collaborations with social media influencers, it also engages more directly with its followers by allowing buyers the chance to be featured on its Instagram feed if they tag the company in their posts.
4.Personalization
Companies focus on merchandising (product recommendations and search) and product customization (tailor a product specifically to a customer). Amazon relies on the spearfishing experience of search — shoppers browsing to find what they want have to sift through the platform’s catalog.
Prose, for example, leverages an online quiz that asks users about hair and scalp condition, treatments, lifestyle, and preferences to make custom blends of shampoos/ conditioners.
Function of Beauty also launched in 2015 as a custom hair care products brand, but it has since expanded into skincare and body lotion.
5.Sustainability
Companies strive to reduce material waste, add more efficient products and services, and incorporate more transparent messaging. Sustainability is top of mind for consumers. Over half (57%) say they’re willing to change their shopping habits “to help reduce negative environmental impact,” according to a study from the National Retail Federation
Cotopaxi, which recently announced its goal to switch over completely to only responsible, recycled, or repurposed materials by next year, and Rothy’s, which makes shoes out of recycled plastic.
One niche within sustainability that’s gained traction is fresh and organic grocery. Imperfect Foods focuses on selling vegetables that are too “ugly” for conventional markets, highlighting its mission to reduce food waste.
Four resale marketplaces reached unicorn valuations in 2019 — Vinted, StockX, Poizon, and Vroom.
6.Amazon market jockeys
Amazon Market Jockeys companies that buy and scale up third-party marketplace brands on Amazon. Rather than Amazon proofing, these companies are riding the wave of Amazon’s success. For some companies, the best way to avoid being disrupted by Amazon — which captures about 40 cents of every dollar spent online in the US — is to embed themselves within the Amazon ecosystem itself.
Last year, Amazon made $80B in revenue from third-party seller services, and third-party paid units made up 55% of Amazon’s total unit sales mix as of Q4’20.
Thrasio, founded 2018, became a newly minted unicorn in 2020 and saw $100M in profit on $500M in sales last year.
Perch, which was founded in 2019, has garnered nearly $134M and acquired more than 30 brands.
Heyday launched in November 2020 with a $175M Series A and expects to cross $200M in revenue by the end of 2021.
Full read available on CBInsight
