There isn’t a product category that has not been impacted by the Amazon Effect. Moreover, Amazon has turned some categories, most notably apparel, on their heads. Can a product or even an industry Amazon-proof itself?
Apparel: Far from Amazon-Proof?
Analysts say certain characteristics make some industries immune to the Amazon Effect. What does that mean? It means online marketplaces leave their existing sales channels more-or-less intact.
Obviously, apparel does not fall into that category.
For example, US apparel sales grew by 3% from 2015 to 2016 to a $200 billion total. Amazon apparel grew 25% over the same period to reach $3.4 billion.
That’s one marketplace accounting for nearly 2% of apparel sales. Assuming apparel continues down this road, the sector will see more disruption. Amazon will take more. Brick-and-mortar fashion retail will continue to contract.
What Qualifies as Amazon-Proof?
Amazon marketplaces may have cornered apparel. However, as Morgan Stanley analysts say, Amazon is not “primed” for all industries. The analysts geared their research to guide investors in search of companies immune to Amazon disruption.
Their conclusions reflect the eCommerce giant’s business model. First, the analysts say, Amazon won’t do highly customized products. Secondly, it will avoid regulated industries. Finally, if a product requires a lot of back-and-forth with a customer, Amazon would rather not bother.
Other factors play a part, all pointing to something that gets lost in all this talk about Amazon. Yes, Amazon has especially impacted traditional big retail. But Amazon is also an opportunity to find more customers, sell more, and build your brand.
So, we think Amazon-proof isn’t about resisting the marketplace. It’s about taking some of what the analysts saw and embracing online marketplaces when it makes sense.
Sell a Unique Product
Morgan Stanley analysts say the more an item is tailored to the customer, the less likely it is to be at risk from Amazon. Because Amazon favors commodity products, its marketplaces won’t impact customized products as much. The more customizable you make a product, the more immune it will be to Amazon competition.
Focus on Customers, Not Transactions
If Amazon is about commodity products, it’s also about the transaction. And that doesn’t make for a deep customer relationship. One of the reasons customers still prefer brick-and-mortar is for the shopping experience. They don’t just want a transaction. The advantage goes to the online and physical brand that focuses on the customer first and the transaction later.
Embrace the Marketplace
Finally, most inventory-based businesses can no longer rely on a single channel to grow. Customers more often than not expect an integrated multi-channel experience. This is one reason multi-channel sellers should embrace Amazon and other online marketplaces. Marketplaces are just one part of the multichannel seller experience that more businesses employ to grow sales and build brand awareness.
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