Why small businesses should stop selling through Amazon and other online platforms
One of the great promises of the internet for small businesses was that it was going to eliminate the “middle man” – intermediaries between sellers and customers. Manufacturers could sell directly to end users instead of stores; retailers could stay in touch with customers frequently.
All that is true – but what is also true is that the internet created a new kind of intermediary: platforms.
You almost certainly already use platforms – at least as a customer. There’s Amazon for goods, Doordash or Postmates for food deliveries, Uber or Lyft for rides, Upwork or TaskRabbit for small jobs. The list goes on and on.
Platforms offer many positives for small businesses. A freelancer who develops WordPress websites, for example, might have had a terrible time getting clients in their small Midwest town, can now reach clients all over the world through a platform such as Upwork, Guru, or Fiverr.
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Platforms, at their best, deliver:
- New customers: They reach people who’d never know about you
- More customers: They reach customers far away from you
- Infrastructure and support: They help you figure out how to bill customers and get your products and services to them
- Guarantees: in a few cases, they take the risk of the customer not paying, being dissatisfied, or provide insurance
But platforms are also a trap for small businesses. They typically:
- Own the customer
- Take a high percent of the sales price
- Require you to follow their rules, which can be costly
- Require you to assume all costs other than marketing
- Allow your competitors to advertise to your customers
- Compete against you
Here’s a typical scenario: a customer goes on a platform – let’s say Amazon. They’re looking for your product and put your company’s name and product in Amazon’s search bar. Do your company and product come up first in the customer’s search? No, not unless you pay an advertising fee.
Instead, there will be an ad for competitors above your result, and in some cases, a product made by Amazon and sold for less money instead. Even if the customer buys your product, Amazon takes a big chunk of the sale and ‘owns’ the customer – you may never get their name and contact info.
So here’s how to survive Amazon and other platforms, whether you use them or they’re just your biggest competitor:
Avoid them. If you can be successful without using one of these platforms to reach enough customers, don’t use them. You’ll be far more profitable without a platform. Many large, well-known brands no longer sell on Amazon.
Capture your customers’ names and contact. Do EVERYTHING – and I mean everything – you can to actually get your customers’ names and contact info so that you can market to them directly. For example, if your restaurant delivers meals through a platform such as DoorDash, include slips of paper with discounts if customers join your mailing list and order directly from you.https://6f8895d5ce852ade215ebb8e9d9f4fb1.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html
Get off those platforms as fast as you can. If you started on a platform but have built a loyal customer base, see how you can start transitioning to dealing directly with customers. If, for instance, you found new customers for your dog-walking service on Rover.com, see if you can get those customers to refer their friends to you directly.
Retain your best – and most profitable – stuff or services to sell directly rather than through platforms. If you’re a manufacturer, you may have two or three lines of products. Keep your best products off Amazon and other platforms and sell through more profitable channels or directly to customers.Get the Coronavirus Watch newsletter in your inbox.
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Market so customers can find you directly. Use social media and good old search engines to help customers find – and buy – directly from you rather than through platforms.
Find a niche. If you have a specialty, you’ll be easier to find and you’ll develop more loyal customers.
Become a destination. If you have a brick-and-mortar location, find ways to offer some kind of “entertainment” value. Hold lessons, parties, speakers – anything to draw customers in.
Have a social mission. And let customers know they’re helping that mission by buying directly from you. No one feels a sense of pride in doing business with Amazon. Give customers a reason to feel good about doing business with you and make it part of your company story.
Work together. The independent store across the street is not your big competitor, so work with them on local events and discounts and other activities to remind customers that you are a vital part of the fabric of your community.
Finally, help spread the word to “shop small, shop local.” Because it’s “buy local” or “bye-bye local.” Every one of us has to be an ambassador for buying from small and local businesses – even if you sometimes buy online.
Spread the message: Amazon and other platforms should be your last resort, not your first choice.
Let’s talk exit strategies. Thinking about leaving one of those platforms mentioned above? Rhonda Abrams is hosting a free webinar on how to do it on Tuesday at 11 a.m. EDT. Join the conversation and get advice about your situation.
The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.