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Today’s e-commerce landscape is vast and complex. While there are now more avenues for small to midsize businesses (SMBs) and vendors to promote and sell their products, there are also greater challenges to overcome. Consumers are savvy shoppers, and have been primed by services such as Amazon to expect seamless experiences, increasingly quicker delivery times, and hassle-free returns. How then can small businesses compete against retail behemoths?

According to statistics revealed at the recent Shopify Plus Commerce+ event held in New York City on October 3, 2019, 39 percent of consumers use social media to get inspiration for purchases. In the US, 45 percent of consumers start their product searches on Amazon, and 66 percent of the millennial generation will search for a product online while they are in a store to find the best deals online.

1. Third-Party Sellers on Amazon Have Surpassed Amazon in Sales

Amazon dominates the e-commerce space. According to RetailTouchPoints, Amazon sells 12 million products. But if you include the Amazon Marketplace, in which third-party vendors can sell used and new products, then that number balloons to 353 million products for sale on the platform.

In navigating the online retail ecosystem, retailers need to figure out whether to partner with a platform provider such as Amazon or generate their own online storefronts. What seems to work for a lot of sellers is using a mix of both; they establish a brand on their own websites or social media while making their products available for sale on Amazon. This enables businesses to control their own brand narrative without missing out on potential sales from Amazon.

Despite Amazon’s continued success, third-party sellers are outselling Amazon on Amazon’s own platform. Amazon CEO Jeff Bezos explained in a letter to shareholders that third-party sales on Amazon grew from $0.1 billion in 1999 to $160 billion in 2018. Bezos also disclosed that third-party sellers accounted for 58 percent of total physical gross merchandise sales on Amazon last year (see the Statista chart above), which puts Amazon in an interesting situation. Amazon is seeing surging competition coming from many of the brands for which it provides e-commerce solutions.

2. Hopify Levels the E-Commerce Playing Field

Shopify is a cloud-based e-commerce solution that provides a platform for online retailers to build and manage standalone digital stores. Shopify helps brands of all sizes through the process of creating their seller website, setting up payment options, and even handling shipping and more.

“Shopify is excellent at working with smaller businesses. Shopify actually helps brands set up a marketplace and their website as well as carries their order fulfillment,” said Oweise Khazi, Director of Research at Gartner Research. Khazi’s area of expertise is Amazon retail strategy.

Shopify levels the playing field by giving retailers and brands full access to metrics and buyer analytics, which they can then use to improve and refine their online sales strategy.

3. Niche Players Can Thrive in E-Commerce

Brands and vendors whose products offer a unique value proposition tend to get more attention from consumers. For example, sustainable shoe brand AllBirds focuses on building shoes from renewable sources. Its wool shoes are designed to be elegant, practical, and comfortable; they sell for approximately $100 per pair. AllBirds surged in popularity because it offers sneakers made out of comfortable Merino wool and sustainable soles made out of sugar cane, as well as various recycled materials. The company made sustainability its brand and grew to a billion-dollar business in four years.

Granted, while AllBirds’ unorthodox adoption of non-standard shoe materials and production methods increased its products’ production costs and pricing, the payoff was that environmentally-aware consumers soon embraced the brand. AllBirds proves that customers will pay more for ethically sourced and sustainable products.

4. Direct-to-Consumer (DTC) Brands Are on the Rise

Consider adopting a Direct-to-Consumer (DTC) approach to sales and marketing as this strategy often succeeds with customers. DTC brands are companies that offer quality products and sell directly to consumers, usually from e-commerce websites or via social media channels. Some of the more popular DTC brands include mattress maker Casper, eyeglass manufacturer Warby Parker, Allbirds shoes, and Wayfair furniture.

DTC brands effectively cut out the middleman; they do not rely on bricks-and-mortar retail stores, and they find new ways to find and engage consumers. While you may not always see their products at a mall or in big box stores, you will see them prominently featured on your Instagram or Facebook feeds. Successful DTC brands excel at finding their customers and tailoring user experiences on the services and devices customers use the most. This is why they thrive on social media channels and on mobile devices.

DTC brands create new and engaging customer experiences. Many do this by making it easy to buy the product (for example, buying directly from an Instagram feed). They also strongly focus on the product’s presentation (for example, Casper’s beds come vacuum-shrunk in surprisingly small boxes). Finally, they also work hard to cultivate deep customer interactions. Key strategies here include using creative marketing and sharing data between their various customer touch points, such as their social media marketing tools and customer relationship management (CRM) platform, for example.

5. Customer Engagement Is Priceless

Consumers expect to be engaged and delighted by brands and sellers. Smaller brands and niche vendors have the opportunity to cultivate a lasting relationship with their clients in order to build loyalty and ensure continued patronage and sales.

New enterprise brands are building customer loyalty by providing opportunities for discovery. While on stage at the Shopify Plus Commerce+ conference, Ross Bailey, founder and CEO at Appear Here, and Hussein Suleiman, founder and CEO at Daily Paper, discussed how experiential is not a “pop up.” It’s about evoking emotion and creating a unique opportunity for discovering authentic brands. “Brands that get it right understand it’s not always about selling product but about providing unique and meaningful experiences,” Padelford said.

The more successful brands build passionate user communities by providing online and real-world events to engage their customers. Some sellers use customer input and feedback to improve their products and services to better suit customers’ needs. Taking these five trends into consideration can help emerging brands and SMBs build their e-commerce strategies.

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