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Is your Retail Business Ready for the Amazon Effect

22 August 2022  |  By Lesaka

With Amazon reportedly set to launch in South Africa next year, forward-thinking retailers are starting to position themselves to defend and extend their share of the R30 billion per year retail ecommerce market. Those that are agile and innovative enough will benefit from a surge in transactions as South Africans become more comfortable with online shopping.

"With a 30% share of the UK ecommerce market and 50% in the US, Amazon is a force to be reckoned with,” says Steven Heilbron, CEO of Capital Connect. “In recent years, Amazon has shaken up markets from Australia to the Middle East with its top-notch customer service, aggressive pricing and extensive product range."

“Amazon’s local launch will not only challenge the established ecommerce players—it will also compel brick-and-mortar retailers to up their game. The well-documented ‘Amazon effect’ has forced retailers around the world to re-evaluate every aspect of their business model, from their pricing and the channels they use, through to their product range.”

Retailers can prepare themselves for the Amazon effect by re-evaluating their operations, considering whether their ecommerce platforms and logistics are up to scratch, says Heilbron. They can also look at how they can turn their physical points of presence into an advantage by creating destinations shoppers want to visit, also known as shopper-tainment.

Make your brick-and-mortar an advantage

“There is no one size fits all answer to how your retail business should innovate to stay ahead of new competitors like Amazon. However, with everyone out and about after the end of pandemic restrictions, in-store customer experiences is critical for shopper retention. You should think of ways to entice shoppers into your store to spend time and money there, instead of online or the shop next door”, says Heilbron.

“A shop with shopper-tainment and a great atmosphere can help to bring more footfall. Giving customers opportunities to get hands-on with products; hosting demonstrations, tastings, and DIY workshops; and putting a coffee shop with good Wi-Fi in place are all ways to bring more business through your door.”

In addition, says Heilbron, retailers should re-evaluate their existing digital channels, ensuring that their delivery experience via partners like Uber Eats and Mr D is smooth, as well as that their website is attractive and easy to use. “You could even consider creating a mobile app that lets customers browse specials, shop from their phones and check in at your store for loyalty points,” says Heilbron.

“If you run a brick-and-mortar business, being able to integrate the digital and physical experience with options like collect in-store or browse in-store and order online are a real advantage. Another way to get an edge is to focus on personalised customer experiences and advice—this is where online retailers often fall short.”

Heilbron says that businesses can easily access fintech growth capital to finance their competitive advantage, whether that will come from revamping the store, adding ecommerce or purchasing products in bulk at a discounted rate for promotions and specials. “Fintech lenders, like Capital Connect, offer growth capital with flexible and attractive terms so that retailers never miss out on an opportunity,” he says.

“Retailers can access short term, unsecured capital of up to R5 million in just 24 hours to ensure that they don’t lose out. They simply log into an app to Click & Borrow and the funds will appear in their bank account by the next day, or the same day.”