The Impact of Amazon Logistics for New Competitors

At this point, a lot of people assume a looming threat of Amazon completely “taking over” the e-commerce space, thanks to Amazon Logistics continously evolving. With a market capitalization approaching $500 billion, the company’s value is higher than the total market value of the eight largest traditional retailers combined. Because they are such a giant and hold a considerable share of the online market (approx. 44% in the US), you no longer should have a mindset of competition with Amazon. Rather, you must understand how to co-exist.

One of the most significant advantages they hold over just about everyone else at the moment is a keen ability to adapt. It can be discouraging for other players in the game and even brick and mortar stores when they see the different maneuvers Amazon Logistics might be making. Often, it seems as if they are just years ahead of their competition. Namely, in the areas of efficiency and shipping. A new study from L2 found that about a quarter of shoppers would abandon a cart online if same-day shipping wasn’t available, indicating that customers increasingly expect short delivery times.

Amazon is first and foremost a distribution company. They rose to prominence largely through their ability to make shipping faster and more cost-effective with Amazon Logistics. Amazon’s shipping times are incredible and keep getting faster. Closing the gap between clicking the order button and the item arriving on your doorstep, they continue to heighten the online shopping experience and are replacing physical retailers for a wider array of products. In the last two years, Amazon’s average ship time has been reduced by nearly 1.5 days. This reduction has been driven mostly by their free 2-day shipping offer for Prime subscribers. This year, Amazon reached more than 90 million Prime subscribers. With Amazon Air drone deliveries likely in the next decade, we could soon see deliveries just hours after ordering. 

That means that incredible shipping speed is not only encouraged but required for all other e-commerce businesses to focus on this if they hope to co-exist. Your ability to get your product into the hands of your consumer at a low-cost and in time has never been so important. And Amazon Logistics isn’t slowing down ANY time soon. So…what can you do about this?

Here’s What You Can Do

1. Influence the Customer’s Perception of Speed

Now what do I mean by this? Rather than to make claims of speedy delivery, be responsive and provide valuable customer support when a purchase is made. Utilize transactional emails and be responsive should you receive a message from somebody who has purchased an item. This can be just as fulfilling in their minds and will allow you to compete with Amazon even if you personally can’t get shipments to doorsteps in under 48 hours.

2. Create Personalized/Free Product When a Customer Receives Their Order

Everybody loves free or unique gifts that are paired with the item they intend on purchasing. You can use this tactic to make them think less about the speed of their delivery and create a higher level of satisfaction upon the reception of the shipment.

3. Sell Products They Don’t Sell

People go to Amazon to find certain items, but 70% of Amazon consumers browse for the same items on other sites as well. By offering a unique product that can’t be duplicated easily, or one that is sold exclusively through your store, it forces consumers to think beyond traditional shopping priorities like price or shipping and consider your overall buying experience. This may seem like a no-brainer, but it has become increasingly important over the past few years where the big players have really taken a stranglehold on customer acquisition.

4. Use Customer Data

A former Amazon employee once said that Amazon “has the ability to track both what people are buying as well as what they search for and can’t find.” Now think about where your site is at. Are you even tracking analytics or relevant information about your customers? Many are quite behind in this regard and it absolutely widens the gap. Think about this just from a productivity standpoint. You could be expending energy into areas that aren’t contributing to your bottom line or you might be not focused enough on what is actually doing well. When others are tracking customer information and you aren’t, you will end up losing out in the long run.

5. Consider Offering Free or Discounted Shipping for a Minimum Threshold

Find a price point that is suitable for your online store to offer shipping at a reduced rate or even free. Maybe by having a subscription based model or something of that nature, it will be even easier to promote cheaper shipping options for your shoppers. People subconsciously will feel better about choosing your site if they are under the impression they are receiving a discount.

In Conclusion

You don’t have to be this multi-billion dollar conglomerate to be successful (Frankly, you shouldn’t want to be). Just focus on what you can control and how to navigate the current marketplace. By finding your own niche, establishing a presence that is unique, and offering value to the consumer, you should be sure to find yourself in an ideal situation. Amazon Logistics has an insurmountable head start and lead over everyone else. Create your own respective lane and try to figure out what to do on a smaller scale that can truly make a difference. Tesla/SpaceX CEO, Elon Musk, described starting a company as such

“staring into the face of death. If that sounds appealing, go ahead.”

This quote may sound discouraging for some. The message is deeper than what he said on the surface. If you have significant doubts to begin with, you likely shouldn’t even try. The ones who WILL make it wouldn’t give a damn about his opinion at all because they have enough faith in themselves and their own idea.