Does Amazon or eBay impact your business?
If you own a small business like I do, you know the dent that Amazon and eBay are putting into your sales. I have been racking my brain, trying to figure a way to keep my piece of the pie. I’m experimenting with this idea, not a new one, but may work to keep those people that use all of my work and effort putting together page after page of helpful information to assist them in buying machinery on my site as well as my brick and mortar store; only to have them take the model or part number and leave my site or store and search for the lowest price on their phone.
In my business, people aren’t buying apples or eggplants without part numbers, they are buying products that have a specific product number, model number or part number. This makes it VERY easy to compare my prices against everyone else. Now some of you may be saying, so what, the lowest price wins. My reply to you is, if Amazon always wins, then EVERY single store other than Amazon will go out of business because NOBODY can compete on price like Amazon. Jeff Bezos and his crew don’t care if they have to buy the market and lose a few billion dollars to own an industry. They have deep pockets. If it isn’t Amazon, it’s an Ebayer who has somehow managed to distribute one of our same lines that are living in a doublewide trailer selling things at 5% over cost because he has no overhead. (and no possible way of growing either) There is an old adage in business. “If you live by price, you die by price.”
Another business down the street selling similar products to mine was seeing a phenomenon that he didn’t know how to combat. A customer would come into his Lawn Equipment store and ask for a gear for his riding mower. The employee would look up the make, model, serial number of the mower. They would both pour over schematics (parts diagrams) and finally locate the broken part. After this 20 minute search, the customer would state, “Just give me the part number so I can think about it.” The employee would give out the part number only to never see the customer return. After a while, his boss kept asking why these people never purchased anything. He said, “We had the part in stock and if we didn’t we could have ordered it for him. Why didn’t he buy it?” The employee replied, “Well, they just ask for the part number and then never come back.” His boss finally realized what was happening after searching for that part number on the web, only to find that Amazon was selling this part at a cost that made him spill his coffee all over his keyboard. “When did Amazon get into the Lawn Equipment business?” he said to his staff. His staff told him that they themselves were purchasing most anything for their personal use on Amazon. Sure enough, after a little searching under many different categories, he found that the top selling products from any category he could think of was being sold on Amazon.
“Geez, how are we ever going to sell anything if everyone
is doing this?” he lamented to his staff. That was the moment that he decided to never give out part numbers again. He was more than willing to help customers, but he starts everyone discussion at the parts counter with, “I’m more than glad to find the part for you, but I expect you to purchase this from me as I do not give out part numbers.” Ever since then, the customer either leaves or gladly supports his local business.
I have an online store
99% of our business comes from our online store and only 1% comes from walk-in customers nowadays. I have seen my profit margins slip every single year as more and more companies start an online store thinking only of profit and not of providing a service. They compete on price alone and figure they will win, only to realize that Amazon is going directly to the manufacturers and agreeing to purchase millions of dollars of the product if they will give them the top 200 selling products to sell. Amazon is glad to sell at a loss with free shipping to boot! Amazon is stealing all of our lunch money so that we can only buy things in one place. Did you know that Wal-Mart is considering scaling down their retail business and going into health care due to Amazon and the other online companies starting to cut into their profits?
My Plan of Action
Ok, so here is my plan. From now on, we are not going to show part numbers on our site. We will, of course, have a list of all of the manufacturers and model numbers along with a plethora of information and parts diagrams. We will continue to have a customer service team that will answer your email questions and talk with you on the phone to help you find that part or unit to keep you going, but we will NOT provide part numbers so that you can search it again to find the cheapest price out there. The last time I checked, my employees don’t want to work for free, my landlord wants his rent check and the lights don’t stay on if I can’t pay the light bill. For those of you that know your part number, because you already used my site or one of my fellow online peer’s sites to research your part number, you won’t find the part number on our schematics. Yes, you can find the part by searching by part number, but we won’t hold out a billboard saying, “Hey, here is the part number and here is my price. Now, go shop me against everyone else in the world to get it cheaper.”
If every business would start to do this, maybe we could put a dent in Amazon and these crazy Ebayers. It’s worth a try. What do you have to lose?
My main reason for shopping at Amazon is the free shipping and Prime. I think if more people would cut shipping costs and try to have fast shipping they would take some business from Amazon.
Amazon does have that ace up their sleeve in regards to shipping. Currently they are using the post office for most of their delivery, but the post office is on the losing end of that deal and is going in the hole even further than they have been in the past. UPS lost the contract to deliver for Amazon a year or so ago and the USPS picked up that contract but they agreed to terms that they cannot continue to support.
When a company the size of Amazon competes in the marketplace, their buying power and the squeeze that they put on manufacturers to get their cost of goods down to a level that any other merchant can’t compete with due to the shear buying power of Amazon.
I do get it why people use Amazon though.
I agree. As homemakers, we tend to hunt the best bargains. And the last straw in making decisions would be the shipping costs.
The question is how to get around the shipping cost as well as keep prices at rock bottom levels.
It must be so tough to compete with big giants like Amazon. There are some things which you can only get with bigger businesses x
This is so true Rhian. We really can’t compete, but we are holding our own so far, and still here. To be able to do this has been at the expense of consolidating and letting employees go because we have to keep cutting our expenses.
Amazon for me is a seller by its Prime service, if I want something next day I will always head to Amazon first. However I also love to buy off a small business, I will always do that first if I can. Especially local ones.
As a small business, I appreciate that you try and by local or a small business first. I do the same thing. If I can’t find it locally or at a small business, then I have to go to Amazon as well. From a small business owner, thank you.
I prefer flipkart rather then Amazon, although both of them have a fast delivery but the service of flipkart is better.
I’ll have to give Flipkart a try.
Informative article here. Definitely food for thought for business owners. I will try Flipkart one day.
Thanks. Your blog is quite good. I took a look. Good job!
It’s a good plan. You can’t just give the farm away. Give awesome cuatomer service and people will buy from you.
This is true. Customer service is crucial for beating other companies, especially the big ones, but you can’t sell at 10% over cost and stay in business either.
I think this strategy is great. After all, we are not really obligated to put in the numbers. We also just started our online store and so far happy to with the results.
That is great that you have just started your online store. It’s way too easy for people to use your site to find a product, then take that part number and search for the lowest price and free shipping. If you are offering unique products that can’t be purchased elsewhere, you have an advantage.
It’s so hard to compete with such an albatross for sure. But I love supporting smaller and more local. Hope to make a dent!
I’m not sure if people who are not self employed do this, but I intentionally buy from small independent businesses when I shop.
What is difficult is when people want to return something. They think that we can be like Amazon and simply allow returns due to any whim. Typically we get stuck with the return and lose; granted if the product is defective, that is different. We do see an attitude that we should ship the same day, ship at the lowest price and ship for free and then somehow pay our staff.
Very informative article and has most certainly given me something to think about. I appreciate it must be hard as a small, independant business.
It’s harder to compete as a small business due to the buying power of these huge companies. You have to have a niche and offer something that others do not to make it these days.
Please tell me that niche as Amazon and Google are putting me out of business 🙂
For my products to appear in Google Shopping (75% of my sales come from Google Shopping) I must use the manufacturer’s UPC code. This enables shoppers to compare prices for the exact item across many stores at once. Consumers will (of course!) choose the lowest price and it’s usually from an Amazon seller.
That’s pretty low of them requiring this. I invented a new product and until I registered a UPC code, they refused to list my product as well.
It’s pretty hard to be a David with all of these Goliath’s around. We just have to figure out what kind of sling shot to use!
This is a really interesting perspective! I, like so many consumers, get suckered in by Amazon’s prime/shipping figures without thinking about the impact it has on small businesses. Great post!
Thank you Liz. Most people don’t think about this unless it affects someone they know.
Really interesting read. I didn’t know Amazon was crippling small business like this. I was completely unaware of how Amazon was putting a lot of businesses in tight spots. Good luck out there.
Thank you. It has been tough, not just for me the small guy, but for other larger companies that depended on people forming relationships with their company and hoping that this was of value.
To be honest, I do not own any online store, so I have never had any thoughts joining Amazon. However, if I need something specific to buy, Amazon is the first place to look. usually I find it and in a good price.
I agree that they offer price and quick delivery. If you want customer service or help in trying to determine what works for you, then this is where they lack in my opinion.
Sounds like you’ve come up with a smart solution! It’s crazy how both of those companies sell literally everything now.
Yes, they look for markets where there are good margins and people are looking for the lowest price.
Oh this is really informative and helpful. I have a real love hate relationship with Amazon!
Same here. When nobody else has the product and Amazon does, then I am glad.
On the other hand, if many people have the item and Amazon has it below the price of everyone else with free shipping, then I start to feel the pain.
Good luck on that big step! I prefer to support small business owners over big capitalists businesses!
Thank you Karla. All of us small business owners appreciate it.
Wow! I never realized what an impact Amazon could have on small businesses! I think more customers need to be made aware of this. I typically just open up Amazon when I want something (force of habit and free shipping), but would love to support local business too! Thanks for writing this!
It is indeed sweat to compete against Amazon because of their huge purchasing power and trust but I definitely wish you all the best. Go ON!
Thanks.
Like the commenter above me, I like to shop small businesses. Small business owners work so hard and sacrifice so much for their families. The least we can do is buy and support you all. I like your plan of action so that you still keep your customers. Hopefully that helps people to start buying from you again and not Amazon or Ebay.
Time will tell. If I had my way, I would still like to deal with my customers face to face and build a real relationship.
Ug. It is hard because Amazon is so so easy. But I love supporting small businesses, too. Tis the season to do so!
Hey, I get it. It’s Christmas and sometimes it seems that only Amazon has it and can get it to me in time for Christmas.
It’s a great business model, but it is hurting so many businesses due to the change in our society to do things from the comfort of our couch, chair, bed, car etc.