How to get your retail business ready for the Amazon effect

With Amazon readying itself to launch in South Africa in February 2023, forward-thinking local retailers and e-tailers are gearing up their businesses to leverage the country’s R30 billion per year e-commerce market.

Globally, Amazon dominates online sales and has driven enormous disruption in the market. It’s called ‘the Amazon effect’: the consistent disruption of the retail market, both online and in brick-and-mortar stores.

But for South African retailers to grab a slice of this booming market, they will need to re-evaluate their existing business models, and ensure that all platforms and operations are up to scratch, says Dov Girnun, founder and CEO of alternative lender Merchant Capital.

“Covid-19 was a huge boost for e-commerce in South Africa, and if local retailers can get it right, they will be well-positioned to see a surge in transactions as big players like Amazon enter the market,” said Girnun.

But can local retailers compete? Perhaps they don’t need to, says Girnun.

“Often it makes sense for businesses to work with, rather than against, Amazon. This can take the form of selling their wares through their own Amazon-facilitated stores, as almost half of small business sales usually come from this revenue stream. This increases profits and their businesses will see a boost in both online and social media engagement,” said Girnun.

However, local online businesses can be competitive in their own right by offering customers personable, reliable service and friendly engagement, said Girnun.

Prioritise customer service

Treat every single customer as a top priority. When you provide a rich customer experience, this will generate positive feedback and generate return business. Gestures like free samples, next-day delivery, vouchers, value-adds and personal thank you notes will up the ante and elevate your customer experience.

Prepare for unexpected scenarios

“Unexpected expenses can wreak havoc on small online stores. Make sure you have a safety net, and maintain a healthy financial position so that you can access working capital from reputable lenders should you need it,” said Girnun.

Get customers to ‘shop local’

Many consumers care about where the products they buy come from. “Harness this trend and emphasise the locality of your business. Get out into the local community, sponsor local events, and educate people on how your product or service betters the community they live in,” said Girnun.

Customise and personalise

“Show your customers that you care about each order,” says Girnun. “Personalise all correspondence with their name, and only market items they are specifically interested in. Show them their time and needs matter.”

Improve your supply chain

Ensure that you optimise your entire supply chain to be as efficient and effective as possible. Use tech like bar coding and tracking software to ensure stock levels are accurate and orders can be shipped immediately. Make data-driven decisions, which will inevitably improve customer service.

“Amazon is going to force the small online business sector to up its game. This isn’t a bad thing, as customers are ripe for online shopping and the e-commerce environment holds big potential for our local retailers. While upgrading facilities to get ready for this shift might be a pricy endeavour, quick access to working capital will get the ball rolling so changes can be implemented well before Amazon’s arrival,” said Girnun.

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