There’s an unlikely contender for the eCommerce crown – the king of the physical retail space: Walmart.
It seems counterintuitive, but key to Walmart’s success in the eCommerce arena is its sheer physical presence on the ground. Walmart has placed a big emphasis on the opening of its brand-new Supercenters over the last couple of years and that focus has given the brand a huge network of stores it can now leverage for ‘click & collect’ (or buy online, pickup in-store, BOPIS).
However, Amazon still has a firm stranglehold on the eCommerce market, accounting for roughly 50% of all eCommerce sales in the U.S. and growing, as it looks to close in and officially surpass Walmart as the world’s leading retailer.
Whatever the outcome, it’s becoming clear that the digital space is the arena where these giants will battle for ultimate dominance. As that battleground heats up, what does it mean for smaller companies? Other online brands are already finding it increasingly difficult to compete and Walmart’s online expansion only serves to place smaller players under increasing pressure. If that wasn’t enough, retailers are also having to adapt quickly to the complex and competitive post-pandemic landscape.
It’s not all doom and gloom though. The consumer-driven changes brought about by the pandemic means more consumers online than ever before. This creates a huge opportunity for small and mid-sized ecommerce firms who are prepared to disrupt the disruptors.
Poking the Giants
Have no doubt, we live in the age of the disruptor. What Amazon has done to the high street, Google and Facebook have done to advertising, Netflix to film and TV distribution, Uber to minicabs – and so on.
While Amazon and Walmart are Giants, they aren’t flawless. Walmart’s biggest weakness is a lack of ecommerce experience and expertise. Amazon lacks a physical presence – and its website experience, in the view of many, falls short compared to the elegantly designed and customisable storefronts that are available on the Shopify Plus platform.
The shift from offline to online commerce is accelerating and new direct-to-consumer brands are looking to position themselves to take advantage. Stores created through Shopify Plus increased by 62 per cent during the height of the pandemic, and that surge in adoption highlights the speed and ease with which new brands are able to get online. Shopify Plus has made starting an online business highly accessible; it’s now pretty easy to create a beautiful, user-friendly website, sell to a global audience and forge a direct connection with customers.
Amazon, and even Walmart, are not as focussed on personality-driven UX, and Amazon, in particular, lacks loyalty amongst younger customers who trend towards brands that offer more personalised experiences and make them feel part of a ‘tribe’. The Giants also have another underlying weakness – primarily, but not exclusively, they are retail platforms that sell other brands. That’s a flaw because consumers are changing their online buying habits – as much as 81% of them – want to buy products from brands directly.
This trend presents a huge opportunity for the smaller ecommerce players.
Direct-to-Consumer brands can have unfiltered insight into customer behavior, direct control over their relationships, and highly competitive price points. You won’t find many people who claim to have an emotional connection to Amazon – but DTC brands are building global cult followings. Success stories include brands such as Dollar Shave Club, Gym Shark and the beauty brand, Glossier.
You can buy razors from Walmart or Amazon, but Dollar Shave Club became a $1bn dollar valued firm, in part, because of its control over the brand and its ability to create personalized relationships with customers – something that multi-brand retailers can struggle to do.
Retail Operations – the Key to Disruption
There’s a reason people remain so loyal to Amazon. From order to delivery, they have it nailed. They’ve invested billions in a highly efficient ecosystem that supports speed and hyper convenience.
This is the area smaller brands struggle the most with. They lack agile retail operations to thrive in today’s ecommerce environment and successfully manage inventory, same-next day delivery, shipping, returns and logistics across multiple channels and locations, while at the same time offering real-time customer-facing support.
Few retailers seek to address the operational complexities that lie beyond the buy button – even though post-purchase experiences have been proven to have the biggest impact on customer satisfaction, loyalty and reviews; all crucial to modern retailers’ bottom line. It seems like it should be a simple fix, but 25 percent of shoppers still experienced items being listed out of stock after purchase in the last year – with a similar number citing it as their biggest point of frustration when shopping online. Firm’s that can’t nail the post-buy button experience will never be able to compete with the likes of Amazon and Walmart.
Brand’s now need to rocket strap digital transformation at all ends of the buying experience, and key to that is intelligent retail technology that removes any potential bottlenecks in their operations.
Lalan Shrikam, founder of loungewear brand Malabar Bay recently told us that brands must always remember they are competing with Amazon. He said “Customers want ease of purchase – but they also want their products as quickly as possible. They can count on that with Amazon, so as a retailer, you must be able to offer similar convenience, personalization and speedy fulfillment.”
Standing out in an increasingly contested market – and levelling the playing field with Amazon and Walmart – starts with an honest audit of the complete customer experience, identifying improvements, and then fixing them before they grow to become a major pain point. Any online shopper is judging your service against Amazon and brands that have the ability to offer a similar experience to the ecommerce giant and provide all the incentive needed to win and retain customers.
Earlier, I mentioned that Walmart’s leverage rests in its huge network of stores it can now leverage for BOPIS, a market set to account for an estimated 13.9% of total retail spend within the next four years.
Consumer-pleasing initiatives like BOPIS are also a competitive weapon for small and middle-market retailers; one that is currently under-utilized. If your brand is able to take advantage, it will provide competitive differentiation, and lessen the appeal of buying online with Walmart – especially if you’re making a single purchase.
Becoming the Next $1bn Brand
Competing effectively with the ecommerce giants is possible, but success rests on a brand’s ability to connect with customers by offering outstanding online experiences and personalised service, alongside fast and seamless post-buy button touchpoints like shipping, returns and incredible response times.
If brands are able to deliver on the above, they can nullify the advantages the biggest players have, and provide a persuasive argument to shop with them instead.
In conclusion: go direct, understand that ownership of the total customer experience is vital – even more important than the product itself, and accelerate your operations, ideally with the right Retail Operating System (ROS) behind you. Brands that do this can disrupt the disruptors, and, perhaps, become the next $1bn dollar success story…
