HOW TO SURVIVE AMAZON’S ARRIVAL
Amazon is on its way to South Africa, and consumers are excited, but how are the other large online retailers and independent retailers feeling about it?
How much of a threat does this pose, and what are the opportunities?
To help unpack the puzzle, we spoke to a leading business solutions executive in the United Kingdom about the dynamic challenges and opportunities within the Office Products industry with the impactful entry of Amazon in Britain.
Read more about the key advice that Integra Business Solutions CEO Aidan McDonough gives to independent retailers in South Africa at this time.
Online retail giant Amazon has announced its intention to launch in South Africa in 2024. Although no date has been set, the launch of its service comes at a time when South Africa has seen a sharp rise in online shopping. Amazon’s launch into the South African market is expected to have an enormous impact on the retail landscape — so traditional businesses should pay as much attention as their online peers.
A recent statistic that highlights this is a survey from North America which found that 50% of all product searches start on Amazon versus 31% on Google. This highlights how Amazon has managed to position itself not only as an online store, but also as a search engine designed to help shoppers rapidly find the best products and deals, giving them a significant advantage over their competitors.
For independent businesses like yours, facing the challenge offered by this global behemoth might seem daunting. However, Aidan McDonough, CEO of Integra Solutions in the UK has faced this challenge successfully. He is keen to point out that a networked community of independent retailers working together flexibly can offer significant advantages in terms of customer relationships and consumer preference for shopping locally and supporting their local community.
Aidan understands Amazon model well. He’s chairman of BPGI, which is a buying group for independent office and business products dealers and resellers and has extensive experience with dealer groups throughout Europe. Aidan unpacks the key milestones: “Let me just paint a picture of how Amazon operates in the U.K. Traditionally it came in as a book reseller and then it expanded and expanded and expanded. Today it has around 20 massive distribution centres - the biggest one is something like a million square feet. And they are incredibly state-of-the-art.
“If I put an order in now, I could probably get it within the next 3 to 4 hours. There are vast quantities of lines, not just office products, thousands and thousands of them. You name it, they do it.”
So, faced by the scale and automation of a global corporation like this, how do independent retailers survive?
The answer is to exploit the key skills that any successful independent retailer has, but with the added advantage of the purchasing power and support that a buying group like Office National provides.
“It is about leveraging the collective buying power to get competitive pricing. The challenge is to find that balance, isn't it? You don't want to be the cheapest, it can’t all be about price.”
“I do not think you can underestimate the value of local communities and trying to encourage people to shop locally and support local economies because the reality is: these are the guys that employ local staff and local services?” says Aidan.
Aidan went on to outline some key aspects to consider:
● Get a really robust and evolving e-commerce platform
● Make sure you have access to pricing and consumer data
● Implement a strong communications strategy
● And above all, focus on what your strengths are.
Aidan’s view is supported by a recent UK study commissioned by Faire, with research conducted by Opinium1 which says: “In terms of market share, large online marketplaces like Amazon and Asos still dominate the industry, and 64% of consumers used at least one of them in the last year. However, many British consumers are also staying local, with 40% purchasing items from an in-store independent retailer in the last year and a third (31%) shopping with independent retailers online.” The research showed the main reasons were supporting local brands and businesses, providing a sense of community, and having a positive impact upon it.
So, it’s far from doom and gloom, and Amazon’s entry actually represents a real opportunity, which is proven by Aidan’s experience in the years since Amazon’s entry into the UK. The really good news is that Office National offers all of the support and expertise that Aidan specifically points out. In fact, Office National’s pay-off line “Think. Shop. Support Local” really says it all.
Joining Office National and transitioning your business to an Office National Outlet is easier than you might think. Let’s continue the conversation.
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