The Age of the Merchant: How Independent Online Retailers Increasingly Steal Market Share from Amazon
It’s no surprise that the volume of goods sold online is growing at a fast clip. After all, the world’s population is getting bigger, richer, and more connected. What may surprise some, however, is that those goods are increasingly purchased from independent internet merchants and not from the vast inventory stockpiles of Amazon and Walmart. Global access to e-commerce infrastructure for sellers, along with easier access to wholesale goods, has initiated a major secular shift: an army of independent merchants now own large portions of the e-commerce market that might otherwise belong to the biggest online retailers.
And, this new merchant population stretches way beyond SMBs based in Denver, Columbus, or Los Angeles. E-commerce software, destination marketplaces, and fulfillment & customer support services have enabled a global set of entrepreneurs to take full control of their businesses and have leveled the playing field for aspiring business owners worldwide.
Merchants anywhere can establish storefronts on Main Street of the world with just a few clicks of effort. Many capture buyers in the developed world through targeted advertising of consumer discretionary, affinity products that resonate with their buyers’ interests. Highly effective social advertising tools better aid merchants in directing traffic straight to their own proprietary sites, making the product listing capabilities of destination marketplaces secondary in driving value. Each merchant’s competitive advantage lies in the uniqueness and relevance of products they offer, their ability to target the right buyers for those products, and they way they can maximize the value of each customer and maintain customer relationships.
How can this army of independent merchants collectively acquire and convert customers more successfully than the biggest shopping malls of the web? Primarily, because independent merchants have intimate and specific knowledge of their customers’ interests, and now have the the tools at their disposal to work for themselves. As a result, the e-commerce landscape has been flattened and democratized.
The new independent merchant class has the power to own a large majority of commercial buying opportunity for discretionary retail goods on the internet. Would you be more successful at maximizing sales of a new product by posting paper flyers around towns where buyers are likely to live, or by dispatching community agents to meet in person with each interested buyer, understand exactly what they need, and offer them just the right thing? Independent merchants fill the role of community agents and are heavily incentivized to win over customers since their livelihoods and ultimate business success depend on it.
The most successful independent merchants sell extremely relevant goods to specific target markets of which they have deep local knowledge — this is their biggest competitive advantage. The merchant’s job is to lure buyers into their sites, show them why the specific goods they present will enhance the buyers’ lives in clear and meaningful ways, and help them transact on the spot.
Mastering this human sales process is as much an art as it is a science. It’s the digital equivalent to welcoming buyers into physical retail stores and having close, personal conversations about their needs. Merchants need a way to authentically and directly connect with buyers on a very specific level, which is not well-supported by selling through destination marketplaces that pride themselves on ubiquitous availability of products displayed on homogeneously designed pages. Destination marketplaces’ primary purpose is in selling staple goods such as paper towels and dish soap sorted by sophisticated search algorithms to buyers with high intent.
Large destination marketplaces like Amazon and Walmart make it easy for merchants to list their products within endless catalogues, but are not great at letting merchants stand out through personalized experiences. These mega-retailers may have the broadest availability of product, but they do not have the human touch.
The large and growing population of independent merchants will continue to gain e-commerce market share that might otherwise belong to the likes of Amazon and Walmart. These merchants combine their deep local knowledge and drive to succeed with a newly-connected and sophisticated commerce ecosystem, enabling their independence and powering their success. The tide of e-commerce has shifted to support all merchants in breaking free and in taking control of their own businesses. The age of the merchant has just begun.