Amazon's Achilles Heel
Amazon's e-commerce dominance can largely be attributed to its 3rd Party seller ecosystem, with third parties accounting for more than half of Amazon's revenue. However, beneath the surface, there's a chink in Amazon's armor that presents an opportunity for a savvy competitor to take the throne. It all boils down to a straightforward fact: Amazon's track record in serving its selling partners is nothing short of dreadful.
To illustrate this point, just ask any seller about the Herculean task of managing their product catalog on Amazon. They'll likely paint a picture of navigating a labyrinthine maze of Excel spreadsheets, deciphering an ever-shifting set of Amazon's rules, and wrestling with a customer support system that could double as comedy material.
And if that wasn't enough, Amazon's departmentalization adds a layer of absurdity to the mix. Picture this: the Catalog Team pointing fingers at Brand Registry, and Brand Registry returning the favor, like a game of corporate hot potato where you’re the only potato during Thanksgiving at a vegan commune.
I've been keeping a close eye on the tangled web of complaints from fellow Amazon sellers, and it's like a soap opera with more plot twists than a mystery novel. Here's a sneak peek at the greatest hits of issues that are as common as Amazon Prime delivery:
- Review Removal Rumble: Amazon's attempt to enforce its own terms of service often resembles a game of whack-a-mole. Bad-acting sellers have turned this into a sport, setting up review farms offshore to torpedo their competitors' listings. It's like a digital Wild West showdown, and the referees are nowhere in sight.
- Return and Resell Shuffle: Picture this: you get charged for returns, and then Amazon resells those returned products on your listing. It's like buying a brand-new car, only to discover it's been taken for a joyride. Cue the bad reviews and confused customers.
- Service Fees to Fix Amazon: You'd think you were paying for a premium service, but more often than not, you're forking over cash to overcome Amazon's own inability to police the mischievous sellers in their midst. It's like hiring a security guard for your bank that's constantly getting robbed because they leave the cash just lying around.
- Sleuthing in the Amazon Jungle: To keep Amazon accountable, sellers need an arsenal of apps to audit Amazon's practices. It's like becoming a detective to solve a mystery novel with too many plot twists. From inventory auditing to tax auditing, it's a jungle out there.
- Support System Stand-Up: Amazon's support system is like the punchline of an insider joke for most sellers. Getting to a competent conversation feels like hacking into a secure vault. And even when you reach the top, you're often met with template responses from departments that have no phones - no, I’m not kidding… you can’t talk to the people making company-debilitating decisions..
- Shadow-Banned Blues: Sellers are left in the dark about whether their listings have been shadow-banned or organically suppressed. It's like performing on a stage with the spotlight turned off, and you have no idea if the audience can see you.
- Amazon's Undercover Ops: Amazon launches competitive products under its own brand names, sometimes at a loss. It's like competing in a race where the referee is secretly on one of the teams. Fair play? Not exactly.
Now, let's talk numbers. A successful manufacturer can kiss goodbye to a hefty 50% to 70% of their Amazon revenue in Amazon-related expenses. So, that $20 product? Be prepared to hand Amazon a crisp $10-$14 bill in commissions, advertising, storage, shipping, and fees. And that's before you factor in the cost of making the product, getting it into Amazon's warehouse, and the inevitable products that mysteriously vanish in the Amazon warehouse shuffle. It's a real-life budgetary thriller. 💸💼
Now, this isn't just an Amazon-sized problem; it's an Amazon-sized opportunity that's bigger than Jeff Bezos' shopping cart. Imagine a platform that simplifies the lives of sellers, where clarity reigns supreme, and support isn't a punchline. That's the path to dethroning the giant, and it's a path worth exploring. 😉
Let's talk about Walmart, shall we?
Walmart definitely has potential. They boast an impressive distribution infrastructure. However, when you put it on the scales, Amazon tips the balance at a whopping six times larger. That's a mountain to climb.
Walmart faces a classic chicken-and-egg problem. They need sellers to attract eyeballs, but attracting sellers without a substantial audience is like trying to start a party with an empty dance floor.
To add a twist to the tale, Walmart's infrastructure is built on the not-so-successful jet.com system. While Amazon's seller infrastructure may have its failings, it's light-years ahead of what Walmart currently has to offer. It's like comparing a Tesla to a Yugo (am I the only person who remembers that car brand?).
The reality is, there's no David stepping up to challenge this Goliath.
The startup scene lacks the financial firepower needed to scale and go head-to-head with Amazon. Amazon's vast distribution infrastructure, coupled with its colossal shopping traffic, has essentially cemented its position as a titan that small innovators can't unseat.
Amazon’s Competition Will Be Social
When we break down shopping behavior, it boils down to two main categories: the "seekers" and the "browsers."
Amazon has a vice grip on the "seekers." Think about your own habits – when you know exactly what you want, you instinctively turn to Amazon, type it in the search bar, and voilà, you're on your way.
But when it comes to the "browsers," Amazon needs a little help from its friends – or rather, social networks. They lure in these curious shoppers through a mix of organic influencer marketing and enticing incentives via the Amazon Affiliate Program.
Now, imagine this: a big-league social network steps into the ring. Why? Because they've got the "browsers" in their pocket. If executed masterfully, a new marketplace built within the social realm could redefine how consumers shop.
Some have taken a swing at it, but the results are akin to trying to dance through a minefield blindfolded. Facebook has had its marketplace for a while, and TikTok recently tossed its hat into the ring. But here's the kicker: neither Facebook nor TikTok seem to have the right DNA to nail the seller experience.
If you've ever delved into their ad platforms, you'll get it. They're like a labyrinth designed by a mischievous maze-maker – overly complicated, poorly structured, and as prone to user errors as a bull in a china shop. Plus, let's not forget that at their core, these platforms are all about ads, with a sprinkle of content strategy on top.
X’s Unique Vantage Point
Twitter has always been a platform that puts content front and center, with its ad strategy following suit. It's a bit like the yin to the yang of where Facebook and TikTok find themselves today.
Now, with new ownership at the helm, X has gone all-in on this philosophy. They're not just talking the talk; they're walking the walk. They're investing in creators, letting their algorithms roam free in the wild (thanks to open-sourcing), and taking community policing seriously with their community notes.
Further, X has been very public about becoming the ‘everything app’ - they have a bigger strategy to capture mindshare and (what I hope to be) the right value system. They continue to gain trust with their user base while maintaining a healthy respect for those who choose to make a living on their platform.
An X marketplace seems like an obvious step to becoming ‘everything’
The X Marketplace - How to beat Amazon
In the battle to give Amazon a real run for its money, X can't afford to tiptoe into the marketplace arena – they need to dive in headfirst with a clear game plan. It's like launching a rocket with passengers on board; there's no second chances.
Here are three guiding principles that could set X on the path to marketplace success:
Build Trust by Being Trustworthy:
I know, duh... Trust is the currency of the digital age. X needs to continue to make strides to be a platform that sellers and buyers can trust implicitly. Transparency, fair practices, and a commitment to both sides of the marketplace equation should be non-negotiable.
Insanely Great Shopping Experience:
Amazon is good, but not great. They’ve left a user experience opening for something much better. X should strive to offer an unparalleled shopping experience but has to still remain familiar. That means user-friendly interfaces driven by AI but inspired by existing great commerce sites, lightning-fast load times, and a seamless shopping journey from search to checkout. Make it so delightful that users keep coming back for more.
The Universe's Best Tools for Sellers:
Empowering sellers is the key to marketplace success. Start by creating seller tools that work seamlessly with any marketplace, such as inventory management, product information management, logistics integrations, digital asset management, a Shopify competitor, and perhaps even a simplified MRP (Manufacturing Resource Planning) system. Make these tools not just top-notch but also incredibly affordable (or free) and easy to onboard.
Imagine...
X throws open its digital doors to manufacturers and product companies, dishing out a suite of seller tools that are so irresistible, that even P&G is tempted. What happens next? A stampede of sellers rushes to X's platform faster than you can say ‘Alexa’
Then, X leverages its relationships in transportation and robotics to build an autonomous logistics network and robotic warehouse.
Some entrepreneurs dream of going to Mars - Me? I just long for eCommerce which isn’t a triple-decker sauerkraut and toadstool sandwich.
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