E-commerce in the Amazon Era

“Your margin is my opportunity.” – Jeff Bezos, Founder and CEO Amazon.com

In StackSocial’s opinion, E-commerce is a fantastic sandbox to play in over the next 10 years. According to Fab.com, CEO Jason Goldberg “global E-commerce sales in 2012 topped a trillion dollars in annual sales ($1.2 trillion)…E-commerce is the only trillion-dollar industry growing in double digits. In 2013, global sales are estimated to grow by 18%, and by 2016, 15%…over the next five years E-commerce should grow by another $1.2 trillion, doubling in overall market size.”

With this explosive growth comes BIG opportunities, lots of competition and lots of failure. If you are a product creator or entrepreneur, it is a wonderful time to be in the E-commerce business. As a product creator (digital or physical) the number of distribution opportunities are endless; eBay, Etsy, Amazon, and StackSocial for physical product. For digital product; StackSocial, Udemy, Creative Market, and Amazon. Distribution is becoming more of a commodity. The major risk for any creator or entrepreneur is the market risk. Will anyone want your product or E-commerce solution?

Here are a few insights for those creators and entrepreneurs out there entertaining the idea of playing in the E-commerce space:

Niche hard and then niche again

What can you be the best at in the world? In the oversaturated world of E-commerce and social media it’s hard to get awareness. In order to position your brand in the mind of a consumer, you need to FOCUS and NICHE. A clear focused message and niche will more effectively connect with the mind of the consumer. A clear niche and focused messaging around that niche is like a sharp axe into the consumer’s mind. If you are broad and unclear about what you do, consumers will never “get it.”

Let’s come up with a product example to illustrate. Everyone in our little Apple ecosystem is crazy about the iPhone 5 release. Therefore let’s use iPhone 5 cases as our product. I’m a manufacturer/creator of iPhone 5 cases. I have my own mini E-commerce site as well as affiliates to get distribution. First I niche the product once, iPhone 5 cases. Then I’d need to niche again. So how about iPhone 5 cases printed using professional 3D printers? (see Shapeways) Ok better but still not niched enough. Metal iPhone 5 cases printed using 3D printers focused on the high end female jewelry consumer. Perfect! These beautiful cases are a status symbol for the super high end female Apple consumer.

Sell Stuff Amazon CAN’T

Amazon sells everything and has a cost structure with razor thin profit margins. This means 9 times out of 10 they can beat your prices. BUT if you create your own products they can’t beat you on price. In fact NO ONE can beat you on pricing because you control the distribution. Granted creating your own products is HARD. But this model works in E-commerce, just see Threadless, Bonobos, or Warby Parker.

Create Value Beyond Price

How did Zappos survive in the Amazon era? It created value with its culture, customer service, and niched. If all you do is focus on price you are in trouble because in the end, Amazon’s scale will find a way to beat your prices. But if you are providing value by developing tons of great content, giving away free products, and laser focusing on your specific niche, the price war becomes less of an issue. People loved Zappos for different reasons than they loved Amazon.

For your iPhone 5 case, business maybe you create tons of fashion related content around the space. You are constantly blogging and facebooking/tweeting about the most fashionable high end female centric iPhone 5 cases. You become the expert in the field. Consumers come to your site just to learn about the space. Since the product is created using 3D printing, maybe you teach people how to develop their own cases. Maybe you even sell these digital how-to products as an additional revenue stream. How about creating a community around iPhone case fashionistas? Women are able to comment, share, save, and buy their favorite high end iPhone 5 cases; iPhone 5 cases that match your outfit etc.

In the end E-commerce is growing like crazy and while Amazon is still dominating, there are a myriad of opportunities. Niche hard. Focus on the customer. Innovate and create value where Amazon cannot/will not and you should definitely increase your odds of success.

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