Have you ever struggled to compete with Amazon? In this episode, Paul shares several ideas to help you compete more profitably, even against Amazon
Show Notes:
Is Amazon really that tough of a competitor? Our research shows that customers want more than cheap prices.
“Although Amazon can beat your price, can they beat you at the other ten items?”
If you’re trying to beat Amazon, take a tip from Jeff Bezos; be customer obsessed, not competitor obsessed.
“For every ounce of energy you focus on Amazon, focus ten times that amount on the customer and their needs.”
Don’t fall prey to the “Amazon Effect.” When Amazon enters a new market, competitors freak out. Competitors adopt a wait-and-see approach instead of being proactive.
“When you’re selling against Amazon, remember these tips…”
“Who’s making a bigger deal out of Amazon, you or the customer? Here are a few data points to consider…”
For additional tips on selling against Amazon, pick up our latest edition of Value-Added Selling. There is an entire chapter dedicated to competing against Amazon (which is kind of funny since the book is available on Amazon).
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How do I sell against Amazon?
(Transcribed from podcast)
Today’s question came from a recent webinar. I was doing a webinar with a trade association, and one of the salespeople asked a question about Amazon. Specifically, they wanted to know “How can I sell against Amazon?”
I know this is a constant pressure that many salespeople are facing, especially those in the wholesale distribution world. But, also, this is creating some pressure for some other manufacturers, [and] brand owners as they are also dealing with competitors like Amazon. We’re going to dive into how to compete against Amazon. We’re going to talk a little bit about Amazon.
I thought I’d kick off today by sharing a quick story. I want you to think of this company. This company started off by being able to sell directly to consumers. They figured out a way they could sell directly to consumers without actually having a retail location. Initially, this company started off by selling into one category, but they eventually expanded into other categories. Finally, after they continued to grow and make more money, they eventually built a series of regional distribution centers. And finally, after they built up the business even more, they opened up a first retail location. Obviously, the company you’re thinking of is Amazon, but actually, it’s Sears.
The reason I start with that story is that Amazon is like this immovable force out there right now, a disrupter that people are freaking out about. I get it. At some levels, this is unprecedented. At a basic level, Amazon has come in and disrupted certain industries. Whether it is distribution, whether you’re selling as a manufacturer, they’ve disrupted it. There’s been disruption throughout our history if you look at it. I want you to think about that, take some of this advice today, and realize that what we are seeing right now we have seen before. I’m going to paint a little picture for you, draw a little context so you can understand that at a deeper level.
Let’s get into how we compete against Amazon. The first thing we need to do is compare yourself to Amazon. Your company right now, whoever you’re selling for, I want you to write down these twelve items. This is a list of twelve things that customers want from your solution. We took this data of over 600 customers that we surveyed. It was part of our Best Sales Practices study. We created a list in rank order of the top twelve things that customers want.
- Quality product
- Customer service
- Knowledgeable salespeople
- Product availability
- Company to stand behind their products
- Ease of doing business
- Follow-up on promises
- Trustworthy
- Durable solutions
- Accessibility to the right people (customer service and salespeople)
- Acquisition price
- Technical support
These are the top twelve things that customers told us they want when making a purchasing decision. These items are in rank order. Let’s look at this list of twelve things and do a side-by-side comparison with Amazon. If you go down this list and compared each element, ask yourself, “Who is better in this area, me or Amazon?” As you go through the list, you will understand that you actually beat Amazon in most of these categories. Think about it.
When it comes to quality of product … that could be roughly the same. When it’s customer service, you can certainly beat Amazon in that regard. The knowledge of the salesperson—you beat Amazon every single time. I don’t even think they have salespeople. Having product available … Amazon does make that pretty easy. They do have product available, but ask yourself, “Is Amazon any different than me?” If you have a location in a local area where you can warehouse inventory—you don’t need to warehouse everything that Amazon sells—but if you warehouse the categories that you’re competitive in, I would say that you’re able to compete at some level. Standing behind what you sell … You can beat Amazon at that every single time. Have you ever tried to return something to Amazon? It’s a pain in the neck. You go through this list and compare yourself. What you’re going to find is that you can beat Amazon in most of these categories.
However, there is one area where Amazon is going to beat you every single time, and that’s acquisition price. In fact, on this webinar, that’s what this salesperson mentioned. They can sell product at below cost; they can put pricing up there; they can do a number of things. Yeah, they can. But you’ve got to remember … that’s the eleventh most important thing to customers. Based on our research, price was the eleventh most important thing.
If I were to tell you that you have a new competitor out there who you can beat at most of the things on this list, but they’re the best at the eleventh most important thing to your customers, would you lose any sleep over them? Probably not. But as soon as you insert the name Amazon, it takes on a whole new meaning because of everything that is associated with Amazon.
With that being said, let’s talk about The Amazon Effect. When I say The Amazon Effect, this is what happens when Amazon enters a new industry (when they disrupt a new industry). Although you might not be directly competing with Amazon, you are going to be competing with the expectations that they do set. In fact, in a recent sit-down with Ryan Jenkins I had on a previous podcast, we talked about millennial buying behavior. He threw out a percentage—I want to say it was like over 70 percent of millennial buyers believe that the B-to-C experience should be similar to the B-to-B experience, or, they agree that the B-to-C experience influences the B-to-B experience. Amazon is shaping some expectations that we’re going to have to deal with.
Let’s look at what happens with The Amazon Effect. When Amazon enters a new industry … We’ll look at an example. Just a couple of years ago when they purchased Whole Foods, as soon as Amazon bought Whole Foods, companies like Kroger and Walmart started to immediately drop their prices. The reason they did this was in response to what Whole Foods said they were going to do. They were taking a look at 100+ items and they were going to lower the price. Immediately, the competition starts lowering their prices. Immediately, their profit starts to suffer.
Another thing, Whole Foods started talking about additional services that they were going to provide. Sure enough, Kroger and Walmart started offering additional services as well. They developed a wait-and-see approach. It’s so reactive. These companies (Walmart, Kroger, etc.) waited to see what Amazon was going to do, and then they copied it. That is taking a competitor-obsessed approach, where they wait and see what the competition is doing, and then they respond. I think these companies like the Krogers and Walmarts knew deep down that they should have been doing these things all along. Yet, they wait for someone like Amazon to come along and lead the way so that they can follow. That’s one of the biggest mistakes you can make when Amazon is entering into your category, is to wait and see what they do and try to copy it.
Let’s look at why Amazon is so successful. Jeff Bezos talks about why they’re so successful. He has one quote that is famous. He says it all the time. “The reason we’re successful is because we are customer obsessed, not competitor obsessed.” Think about that. I’m sure you’ve heard the story of Amazon. Since their early meetings, they would always keep an empty chair in the room that represented the customer. They would always look to that chair and think about how their decisions would impact the customer.
Amazon focuses on more of what the customer’s needs are, and they’re less concerned about the competition. That is the root-cause of their success. That’s the reason they’re able to develop things like their Prime membership, their algorithms, the online experience. They developed all of these things because they focused, with laser-like intensity, on the customer’s needs, not against the competition. That principle is very similar to what we say in Value-Added Selling. Value-Added Selling is about selling to the customer’s needs, not against the competition. As a tip, if you’re competing against Amazon … do what they do. For every ounce of energy you focus on Amazon, focus ten-times the amount on your potential and also on what you could do to satisfy the customer’s needs. If you’re going to try to compete against Amazon, you’ve got to make sure you’re focusing on the customer.
With that being said, here are a couple of tips and things to consider when you’re competing against Amazon.
Differentiate yourself. I mentioned the twelve things that your customers want … Expand on that list and do a side-by-side comparison with Amazon. What you will notice is that you offer some unique differences. There are certain things that you can do—whether as a salesperson, as a distributor, as a manufacturer—there are things you can do that Amazon just can’t do. They’re not set up to do that. A lot of it has to do with the personal value that you bring. It’s important that you demonstrate that personal value. You, as the value-added salesperson, bring a full 25 percent of the value. Our customers tell us that you are a big part of why they buy. Your knowledgeable expertise is a critical component to the value-added experience.
So, think about this when you are selling against Amazon and the customer says, “I can get this cheaper online.” You want to mention a few things, “I understand you can get it cheaper online, but if it doesn’t work out, don’t you want someone to throw it at?” [laughs] Acknowledge the personal service that you bring to the table. Or, acknowledge your expertise. You could say, “I get it. You can go online and buy this. But if something happens, you’re going to need someone to help support or provide some insight and ideas on how to implement this. Aren’t you going to want the thirty years of experience I have in this industry?” You’re highlighting your personal value.
The other is to set the expectation. A lot of times, salespeople in our training seminars will mention, “I do all the upfront legwork. I put together a proposal. I help the customer design the specifications. We help value-engineer our solution. And, then, our customer will actually take our products we quoted them, and go online and purchase them from Amazon.” They say, “We do all the upfront legwork, and Amazon gets the credit.” I get it. That can happen. But if it happens more than once, that’s shame on you. You have to set the expectation with your customers and let them know that you’re not in the free-consulting business. The reason you do all this upfront legwork, the reason you partner with them to help them make the best choices, is because you are there creating value with the expectation that you’re going to get the business along the way.
A lot of salespeople might have trouble having that conversation, but it’s critical to have it. Because, if you create value upfront and you don’t get to share on the value when they purchase, it’s not an equitable exchange. I would recommend setting that expectation, and also, set that expectation at higher levels within the organization. If you’re just meeting with a procurement person sitting behind a desk and they decide to take your product, your solution, and then price shop you online with Amazon, talk to some of the higher-level decision makers. Explain to them, “We create a lot of value. We help you guys make the right decision. The reason we do that is with the expectation that you’re going to purchase from us.” It’s critical that we have that conversation because we need to set that expectation for a fair and equitable exchange.
In Value-Added Selling, we talk a lot about equity and that it has to be fair for both the customer and for you as the salesperson. Just because you put that customer first, it doesn’t mean you put yourself last. There has to be that equitable exchange.
Another thing. Use this as an opportunity to develop some new services. Amazon’s coming in. If they’re disrupting your customer base or your mark, whatever it is, use this as an opportunity to find new services that you know are going to be important to your customer. You can do the things that Amazon can’t do. Think about what those are and incorporate those as part of your value-added extras.
And, finally, if you haven’t done so already, create a platform to sell online. It’s interesting with Amazon. As of lately, they’re doing more things to become traditional. Case in point, with the purchase of Whole Foods and also having a retail footprint. A lot of the other traditional retailers are starting to become more techy. When you think about Amazon’s advantage, the window that they have is closing, because, the online experience is becoming better and better through multiple channels. As they’re losing that window of opportunity, it creates an opportunity for you where you can now get involved. You can now sell online. If you haven’t started, get out there and get started. It wasn’t too long ago when people were sitting around boardrooms and saying, “I think this whole internet thing is going to take off. Maybe we should build a company website.” The same is true for having an online purchasing experience. That is the future, so we need to make sure that we’re getting involved, we’re taking the steps now to become more competitive.
Something to think about … Who is making a bigger deal out of Amazon? Is it customers, or is it salespeople? Here’s why I say this. In our most recent edition of Value-Added Selling, we did a buyer’s survey. This group included multiple types of decision makers. Everyone from procurement people to influencers, technical people, high-level decision makers like business owners and VPs, C-level executives. We asked them a series of questions to understand how they make decisions. Let’s think about some of the data. I’m going to go through a few data points. This should help us realize that maybe we’re making too big of a deal about Amazon.
For example, one question we asked, “What best describes how you will research a potential supply partner or service provider?” The number-one response was, meet face to face with the salesperson. Right now, Amazon can’t do that.
We asked this question, “When choosing between multiple suppliers, why do you choose one supplier over another?” The top three responses were better service, hard cost savings, the relationship with the salesperson. Think about those. You can easily beat Amazon in two out of three of those. Hard cost savings … you also have a chance, especially if you can help save on the total cost.
The other data point … We asked, “How can salespeople create greater value for you and your organization?” The number-one response was provide more after-market value-added services and provide more meaningful insight early on in the buying process. This is something that Amazon just can’t do.
We also asked, “Why would you choose one supplier’s solution over another?” Out of eleven different options, online ordering ranked eleventh. This group indicated that there were ten things more important than ordering online.
Think about it again. Who’s making a bigger deal out of Amazon? You’ve got to make sure that you’re selling to your strengths. Make sure that you’re being competitive out there, but don’t lose too much sleep. Rather than focusing on Amazon, focus your efforts on helping your customers.
Make it a big day!
