The Amazon Effect – what does it mean for small retailers


Amazon effect

The Amazon effect has been a hot topic amongst businesses over 2019 as the retail giant has seen massive expansion and dominates many industries online but they also have an effect on the high street as well.


What is the Amazon effect

The Amazon effect is the term used to describe the disruption of how we now shop for goods. Consumer behaviour has changed and instead of people going shopping and spending a full day browsing shops they are more likely to purchase goods online.

High street shops are seeing a decline in buyers, with some shoppers looking at items then buying online to get the best deal, some people shop online only so stores that don’t have the overheads of a physical store have bigger margins to offer discounts. This does have its downside, especially in the fashion industry where shoppers will buy a number of items to try at home before sending most of them back once they have decided their favourite. Stores that only have a high street presence are missing out on consumers who shop online.

The biggest online retailer is Amazon, who have not only dominated search engines with their presence, but also offer low prices, perks such as next day and Sunday delivery, cheap goods offers that can be bolted onto a larger order, and no quibble returns and refunds.

The online giant has a huge platform for selling and buying power to bulk buy, has no shops so only has the overheads of warehouses and warehouse staff and has extra perks such as TV and music streaming when you sign up to their loyalty scheme ‘Amazon Prime’ which gives you net day delivery for free on a lot of the products. They have expanded their services to include some fashion items and also Amazon Pantry so you can get your groceries and food shopping delivered from them.

All of this is very hard to compete with if you are a small retailer and therefore the ‘Amazon Effect’ has seriously disrupted consumer behaviour and the way retailers operate.

What does the Amazon effect mean for Shop owners?

With 9 out of 10 British consumers buying from Amazon, Amazon already has a large monopoly on the British public as current customers. So how does this affect the British high street?

The Amazon effect has been blamed for the closing down of many high street stores, blaming Prime delivery and the cheap prices, however, in reality, this isn’t necessarily the case. Amazon offers convenience but there are still shoppers who like to browse and buy in an actual store. Amazon is hailed as being cheap but it is possible to shop around on some products and find them cheaper elsewhere.

Whilst Amazon has disrupted shopping, there are still opportunities for small businesses online and in the high street.

How can you compete with Amazon?

There are many ways you can thrive as a shop owner against the Amazon effect:

  • Promote your USP’s – If you are a high street store promote the in-store customer service and added value of seeing in person, if you are a family business promote that, your prices may be cheaper than Amazon or bigger eCommerce giants, these are ways you can win customers. Big brands dominate sales but not everyone likes them, being different and unique is a good thing.
  • Become a market place seller – Amazon has a huge budget and presence for online marketing; if you offer something unique and at a good price you can use their platform to raise brand and product awareness, as a market place seller customers buy from you so you have the opportunity to gain them as a customer who may come to you directly again.
  • Learn from Amazons experiments – Amazon has invested a lot into user behaviour on their website the biggest usp is convenience, the app, the free delivery, subscribe and save, make sure you take note of what you can do to make their findings work for you, make sure you offer free delivery, do you have a web app? Can you make your website or customer service quick and convenient?
  • Reward customer loyalty – one of the big things Amazon does with Prime is reward loyalty, this is easily replicated with a loyalty scheme, email offers etc, customer retention is a lot cheaper in terms of marketing spend and conversions than new business.

If you are worried about your business, we can help you streamline your costs and get out of debt. Speak to us today.