Jigantus.com

I recently saw a slide of Amazon.com’s performance as presented by Mary Meeker from Morgan Stanley at a recent Web 2.0 conference.  It shows how strong they have become at the expense of competitors like EBay. You can see by the chart below that they have grown at a much faster pace then the e-commerce retail industry sales by far. In fact, even as growth declines, Amazon.com continues to show increases.

Amazon Metrics

Amazon originally started out as a discount book seller, selling a HUGE selection of books at great prices and service. I recall ordering a book from them when they first started. This first order turned out to be a  miss shipment. When I called customer service, they were prompt, courteous and replaced the book and allowed me to keep the first book for the “trouble”.

With sharp prices and this type of service, customers will continue to come back. In my other e-commerce business, they are fierce competitors. We could beat their prices, but because of high ad costs, we don’t normally list prices lower.

Amazon doesn’t make much margin, but they get repeat business because people trust the brand. Amazon makes this up with large volumes.

If they have a weakness, it is their large product line. Their customer service representatives lack expertise in many of the products they sell. This is where I can see niche companies with competitive prices and product specific knowledge gain traction. Companies that try to spread themselves too thin experience mistakes when recommending product selections resulting in a higher percentage of returns and unhappy customers.

My other e-commerce business has had success in this regard.  Offering competitive prices with knowledgeable service, we have managed to become top sellers in our space in a short period of time. Even though Amazon might list better prices, we enjoy reasonable sales because we are specialized.

E-commerce is a tough game with fierce competition. To stay alive you have to offer competitive prices, great service and have the knowledge to back it up. Beating Amazon head on would be a tough game, but carving out a niche specialty might be the foot in the door.