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What I’m Thankful For INSIDE THIS ISSUE 1 2 3 4 Year-End Tax Planning in Uncertain Times Around the Firm What You Can Learn from Amazon’s Business Tactics
to Gain an Advantage in Your Marketplace
HOW YOU CAN USE AMAZON’S TACTICS
If you’re in retail, you’re likely aware of the Amazon effect, an ongoing disruption of the retail market. It affects prices
volume of sales. How do you compete with businesses like this? How do you overcome the Amazon effect?
The good news is the answer is simple. The bad news is, like everything else, it takes a lot of effort. But that’s also good news, because anything that takes a lot of work is unlikely to be quickly or easily copied. You need to remember one simple formula: R + E + E + I = Profit. Let’s break each section down. Relationship: If you want to stand out among your competitors, it starts by building a relationship to make the customer immune to offers from others. You don’t want customers to shop around. Some people will argue that they can keep a customer from shopping simply by being the low-price leader. That’s not the case, though, because the low-price leader position isn’t defendable. Another business could undercut your prices right now, if they wanted. Entertainment: To get people to consume your message, you need to be entertaining. We live in a world where the next exciting and interesting thing is only a click away. Entertaining people so they want to consume your content is an important step to building a relationship, which will get you maximum profit.
and sales, and it’s devalued and bankrupted what were
some of the most successful and well-known retailers in the world. One reason Amazon has been successful is their price strategy: They are willing to lose money on a customer for up to five years.
But how does the Amazon effect hurt or help your business?
Amazon may not break into your niche anytime soon, but that doesn’t mean one of your competitors won’t copy their model and bring it to your market. Amazon offers one-stop shopping, low prices, free shipping, and they strive to provide as much value as possible. It’s literally a bad financial decision not to do business with Amazon.
There’s always someone willing to be the low-price leader. There is always someone willing to work for less than you, hoping to make up the profit in
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