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BizReport : Ecommerce : September 14, 2021

How merchants can win against ecomm giants

Consumer spending is once more on the rise, and much of it is going to digital merchants. But how can smaller businesses compete with the likes of big-box stores like Walmart and digital giants like Amazon? We asked a digital expert for advice.

by Kristina Knight

Kristina: Since the beginning of summer, we've seen an increase in nearly everything, from shopping to travel. Do you expect this trend to continue?

Rick Wilson, CEO, Miva: No one can predict the future, but based on everything we've seen over the past 18 months, all signals point to a very strong back half of the year for ecommerce sellers, leading to another record holiday. Six trillion in pandemic stimulus plus two trillion in increased personal savings over 2020 means there is cash in the economy, which will be spent by consumers who are by-and-large hungry for experiences, retail and otherwise. We don't yet know how the Delta crisis will impact businesses, but I am confident that ecommerce sellers are ready to support the public in whatever way they need to shop. Our industry will continue to grow towards being America's primary form of shopping.

Kristina: Amazon's Q2 earnings report, with an overall increase of 16%, were quite strong - are they positioning themselves to remain at the top of the e-commerce heap?

Rick: Amazon is currently integral to ecommerce - it's a force of nature. But this shouldn't be discouraging for smaller sellers. The main takeaway from Amazon's earnings report is that 2020's overall ecommerce performance was not an aberration, but a new baseline for the entire industry. Amazon's 2021 success is saying loud and clear that consumers have embraced ecommerce for the long run. Amazon will hold its place at the head of the table as long as it serves those customers well, but in the process, it will constantly create opportunities for all other sellers by expanding the industry.

Kristina: Do you see the report as a harbinger of an incoming bull market for online shopping?

Rick: The report makes it plain that more shoppers have directly experienced the benefits of ecommerce and have integrated it into their daily lives. They're not giving it up. If Amazon's earnings had sharply dropped in time with the reopening of physical retail, we would think the opposite. But even after vaccines made it far safer for consumers to shop in person this spring, those shoppers are still turning to Amazon and independent ecommerce.

When we look at other devastating moments for our culture and economy, recovery always follows, even if it is painful and slow. It generally isn't though. The big picture story is always one of growth. With Covid, this economic cycle has moved quickly for ecommerce and will continue to do so.

Kristina: Though Amazon remains popular with shoppers, there has been backlash against how they pay employees and even the CEO's spending and recent lower-orbit flight. What kind of bearing will these issues have on the company moving forward?

Rick: Workers' rights and pay are among the key progressive movements of the day. In the U.S. labor market, unemployment numbers are suggesting a major shift in what workers want - and I think there is a similar shift in who consumers feel good about buying from. With about 1.3 million employees, Amazon's labor issues around fair pay and working conditions become part of the company's identity with the public. If Amazon does not address these issues in a meaningful way, it will lose some of the goodwill they have earned by providing critical services during the pandemic.

The Bezos space flight is not much more than a brief Twitter curiosity for most shoppers, but it is revealing that an ecommerce CEO has become a bit of a pop culture figure.

The larger issue is that a handful of very powerful tech leaders - like Bezos - are in a position to directly impact the lives of millions of employees and tens of thousands of businesses. Will they wield this power for good? The jury is still out.

Overall, with business digitization at record levels and more than half of our commercial economy utilizing remote work, ecommerce companies are suddenly in the driver's seat for figuring out how to employ people effectively and fairly. Every day I see digital businesses investing heart and resources into building better work cultures. Amazon must rise to the occasion and lead here as well.

Our industry has been coordinating physical and digital infrastructure for a generation, intending to improve workers' lives through technology. In a sense, we are the brain trust for doing this best. Ecommerce is perfectly positioned to define the workforce culture of the future.

Kristina: What can smaller brands do to compete against the Amazon giant?

Rick: Ultimately, the best way to compete with Amazon is not to compete with it at all - most modern ecommerce businesses need to find ways to leverage Amazon for at least some of their business. The key is building a margin plan which strikes the balance between Amazon's fees vs the traffic it provides while offering incentives to shop the same goods on independent sites.

Along these lines, smaller sellers should focus on getting pricing and margins dialed in to prepare for the remainder of the year. We are seeing many retailers adjust their prices up for 2021, in part to account for new supply chain realities, and also to reflect the massive new demand that customers are bringing to the online space.

Tags: ecommerce, ecommerce marketplace tips, ecommerce tips, ecommerce trends, Miva, small ecommerce, SMB commerce, state of ecommerce

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