Online Retailers can’t compete with Amazon. I guarantee it.

Tom Dougherty, CEO – Stealing Share

6 March 2014

Amazon is focused on market share, not profits, and there’s a difference

Staples is just the latest example of the retail industry trying to deal with a changed target audience. But the deck is stacked against every publicly traded retailer who ventures into the online foray. Amazon will always win. The rest of the online retailers lose.

The reason for this is that Amazon has never cared about profits when expanding its business. Wall Street investors think that Amazon is successful based solely on its ability to increase its market share. Profit never enters the equation with analysts and investors when it comes to Amazon. After all, the Amazon brand has NEVER turned a profit. That’s right… Never.

“Online retailers need to work on their preference beyond simple price and availability or they will come face to face with the Amazon monster.”

 

Online retailersStaples, Macy’s, RadioShack, Bank of America, you name it… their shareholders insist they turn a profit. When they don’t, capital flees and the stock loses value. If any of the above mentioned brands showed sales losses (with the crazy exception of Best Buy, which you can read here) they close locations and cut expenses.

Not Amazon. They simply spend more money on warehouses, logistics and personal drones, and try to get more and more of us to check with Amazon before we buy anything – and, in some cases, even after we have made the purchase. Amazon is to retail what Googling is to web searches. It is the Kleenex brand of online merchants and Amazon is growing more and more each and every day.

Online retailers need to work on their preference beyond simple price and availability or they will come face to face with the Amazon monster. I’m talking about the insatiable monster that is dominating online sales. You can’t win if winning means out-pricing or out-delivering Amazon. Why? Because Amazon doesn’t care what the cost of competing is.

It is as if you are competing against a hidden enemy. You streamline your processes, cut your costs, improve your logistics and then emerge in full battle dress. Then suddenly the enemy appears. You have the dollars on your side and the judges suddenly rule that you lose. What if you protest? The judges answer, “ Amazon has more inches.”

What does that mean? It’s simple really. Amazon is playing a different game then you are and what counts in its game means nothing in yours. It has re-written the rules and, if you are playing online, you had better adhere to those rules.

Here’s the rub. Your judges want dollars and, against a foe that does not value them, well, you are simply going to lose.

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