How Can Your Online Store Compete With Amazon? (Part 1) — by Jaffer Ali
In the wake of this year’s “Amazon Prime” event, this is not a rhetorical question. There ARE ways to compete, but they involve thinking differently than the way 99%+ of merchants think. The problems Amazon presents are real and cannot be dismissed.
Amazon does not really need to make money selling a widget. In the past three years, Amazon sold the following amounts in advertising:
2019: $12.63 billion
2020: $19.77 billion
2021: $31.16 billion
And profit margins for advertising revenues dwarf anything they can get selling widgets (see Google!) Amazon also has Amazon Web Services (AWS). 2021 AWS revenue was $62.2 billion and projected to reach $74 billion in 2022.
These revenue streams make Amazon one heck of a daunting competitor. To deny this is to deny reality. But in the immortal words of Lenin, “What is to be done?” and this is what the remaining part of this missive is all about. All of the suggestions are born from actual experience we have been practicing since 1998 for our online store: PulseTV.com.
Owning Your Own Media
This is one of our mantras. You already own some media. If you have an email list in which you send offers to buyers or subscribers, this is media. Your web traffic to your site is media. Your Instagram, YouTube Channel, Twitter reach, these are all media that you own.
But you need to ask yourself a few questions: How can I increase the reach of my media assets? How can I optimize the revenue and profit of that audience? How can I build or diversify my media assets? It is worthwhile to remember Amazon is more than an online retailer. They are a bonafide media company with audio and video channel competing with HBO and Netflix.
One way to diversify your media assets is to create e-zines or newsletter content. At PulseTV, we have 15 content newsletters that are free for subscribers. They range from Daily Recipes to content about the Bitcoin industry. We have a subscription newsstand at GopherCentral.com where people can subscribe. We have over 500,000 subscribers and that results in over 25 million monthly e-zine ad impressions to sell to 3rd parties or use for PulseTV. If selling advertising is good enough for Amazon, it should be good enough for you to explore. More on additional media you can monetize in the next installment of this series.
By the way, content should not necessarily geared to “buy my stuff” but to build audiences. We monetize the free e-zines using Live Intent, placing ads for PulseTV products and we sell advertising to those wanting to reach real audiences. When you own your own media, there is zero fraud and outside advertisers quickly learn this difference.
This is similar to The Hallmark Channel producing content for cable and building an audience to build their brand and sell more cards. Notice a Hallmark card sells for about $5 these days!
Building Your Ecommerce Database
There is no more urgent imperative than to increase the size of your email database of interested potential customers, You must internalize that data is media. The more data you accumulate, in this case emails from site visitors, the more media you own. The value of each person’s email you have in your database is substantial, although different for each retailer.
Obviously when someone purchases from you, they automatically should go into your email stream. But is there a way to identify visitors to your site that have not purchased and bounced away from your site? Of course there is. Web retargeting has been around nearly ten years, but can you identify those people’s email addresses?
The answer is yes. PulseTV has been doing this for seven years and developed the technology to do this for US traffic. We ended up spinning the technology and business to its own company 5 years ago. (TrySERA.com ) This is not an advertisement for the technology/data company. There are several firms offering this service.
The above represents the largest source of new leads for our online retail company. Google, Facebook, Twitter, etc. could give you the email addresses of those who click to your advertisement but they withhold that data. Clickers enhance THEIR database on YOUR dime. You pay for the ad but they reap the real reward of enhancing their huge database. In fact, the data gained from clicks on YOUR ads that you pay for are used for competitors without you benefitting.
Retargeting non-buyers via email and enriching YOUR database is will certainly bring more revenue to you. Amazon does this all the time, why not you? I will spare all the details, but if you are not doing this, you are leaving significant revenue potential off the table. Retargeting email works better than web retargeting and you OWN this media.
The other benefit is that you can monetize this non-buyers email stream with outside advertising that has zero marginal costs and that results in 100% profit margins. Every online retailer SHOULD also become a media company. You can use this media to build up other media assets, including newsletter audiences. Of course you will increase traffic to your website.
Stay tuned for Part Two where we explore how to work with competitors with reciprocal benefits and augmenting your website revenue with outside advertising.
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Jaffer Ali is the CEO of PulseTV and TrySERA. He has written more than 200 essays and articles covering media and online commerce. If you are interested in learning more about how to build your database, feel free to reach out to me. I will introduce you to the TrySERA team. You can reach me at: J.ali (at) PulseTV (dotcom).
