StrategyEcommerceWhy eBay and Amazon Will Redefine Local Commerce

Why eBay and Amazon Will Redefine Local Commerce

The two e-commerce giants are changing the game for local commerce, and here are three things you can do about it.

Social customer experience is driven by increasingly demanding customers, and this has significant implications for what it means to be a local business. “Buy Local” tugs at heartstrings to be sure, but reality suggests that consumers are driven by efficiency, value, and convenience.

Local businesses have long benefitted from social media marketing: it’s been more than 10 years since Yelp was founded, and coming up on 10 years since my first book on social media marketing was published. Between ratings, reviews, localized Facebook pages, and blogs, local businesses have realized a strong presence online through accessible, straightforward marketing techniques built on the social Web. That in turn has allowed local business to compete for “share of search” when consumers in their markets go looking. Of course, this is in addition to the things that local business do every day in their physical market places: sponsorship of “fun runs,” local music happenings, and similar. All great stuff.

But increasingly, commerce and purchase are becoming automated, and businesses that don’t keep up — small or large — will simply get pushed aside as they fail to thrive in an online, technology-driven market. A couple of examples show what’s at stake. Whole Foods Market includes a variation on a blog that presents ideas for food, complete with a robust customer discussion around many of the featured items: the recipe, the ingredients, important tips on preparation…are all available and clearly presented along with tips from customers. A quick trip to Whole Foods finds all of the ingredients in-stock, with the result being that Whole Foods does a great job in meeting the expectations of its customers.

Now compare this with an experience that I had last week: I needed to buy a few things for an upcoming racing event with our son, so I hit all the natural points: Amazon, eBay, my long-standing preferred dealer (in San Antonio; I live in Austin), and a new Austin-based motorsports shop that seemed to have everything needed. Customers, and I’m no exception, are increasingly demanding, and that’s good because it drives innovation. Consumers know that whatever it is they are looking for, someone, somewhere has it and can get it to them in two days. That’s just the new reality.

So, my preferred dealer did not have the item I needed, understandable given that it’s a specialty item (a rain suit) and I needed it quickly. His suggestion: online. Point of note: it’s always appreciated when someone helps you, even when it means they won’t get that specific sale. Of our racing dollars, out of every 10 about nine go to this particular dealer for exactly this reason. Amazon, eBay, and a larger online racing site all had the item: as did a local (Austin) store that was listed near the top of the search.

I thought “what a perfect opportunity to buy local.” I put the item in my cart, and looked at shipping options. Ground delivery in Austin seemed perfect (since we were both in the same city and I had a few days.) But just to be sure, I called the store. Oops. As it turns out, this item is actually not available in Austin, and the best estimate on arrival (had to ship from California) was “next Wednesday,” which was too late. I ordered the rain suit online instead, with guaranteed delivery in two days at no extra charge.

So here’s the takeaway: If the purchase itself has a strong experiential component (like shopping at Whole Foods), then local is the way to go, especially if your local seller provides home delivery for the non-experiential transactions. Back in the ‘50s the Japanese created “Just in Time” processes (JIT) to increase manufacturing efficiency and reduce inventory carrying costs. More and more homes now operate on this same principle: Amazon has scheduling, for example, for recurring purchases like pet food and is actively developing drone delivery; it also contracted with the USPS for Sunday delivery.

Where does this leave local? In my last column I wrote about a swimming pool motor that I purchased: I found it on Amazon, and the vendor fulfilled it. The experience was superior in every way (timeliness, price, longer warranty, and heavier-duty motor) to what was offered locally, where the business objective seems to be “sell inferior products for a slightly lower price, because our customers are going to sell the house in a few years anyway.” Just as UPS outsources its logistics expertise, Amazon and eBay now outsource commerce and delivery, something local businesses can benefit from since it means being able to sell anything to anyone and deliver it promptly. Given the extreme expectations of customers, local merchants would be well-served by aligning themselves with major commerce and logistics platform providers.

Here are three things for local merchants to consider:

  1. Inventory. Create an excellent fulfillment experience: unless you are a craftsperson or a purveyor of bespoke goods, avail yourself of a larger inventory system and drop-ship everything. It may seem like overkill right now, but when the drones happen (and they will) you’ll be in perfect spot. Recall Dell, in the early ‘80s, when even customers in Austin had to “buy online.” It seemed crazy: “I can see your office…why can’t I just come over and buy something?” But the Dell insight for online + just in time was pivotal for both the industry and consumers: it’s the same thing now with inventory and logistics.
  2. Delivery. Meet your customer’s needs. Negotiate drop-ship rates with UPS and FedEx, and don’t forget USPS. All offer next day, two day, and three- to five-day economy options. Amazon Prime has effectively made two-day shipping the standard.
  3. Customer Experience. Above all, deliver an experience that gets talked the right way, for the right reasons. Invest in search, and invest in the online performance of your business. Consumers are one-click buyers and it’s spreading beyond digital content (books, music and media, tickets…stuff that can be downloaded) to real items — food, clothing, hardware, and more. Set yourself now for future success.

Get you head around the delivery experience, around the shopping experience, and around the specific aspects that, together with shopping and delivery, define total customer experience. Because that’s what customers care about (and much more so than your TV spot), and that’s what customers talk about (again, much more so than you TV spot.) Do the three things above, and build customer experiences that affirm loyalty at each transaction, that deliver long-tail business-building ratings, reviews, and social postings, and that position your local store for the future we all know is coming.

Image via Shutterstock.


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