How To Beat Amazon

Amazon's new Price Check app has small business retailers up in arms. Is it possible to compete with the online giant?
Freelance Writer and editor, Self-employed
December 13, 2011

Lets get one thing straight—I don’t hate Amazon.com. I just hate what the company is doing to small businesses right now. And I’m not alone. As you may have heard, the online retailer recently launched Price Check, a smartphone app that allows shoppers to walk into small businesses, scan items and instantly price compare them to those offered on Amazon. The goal: for shoppers to walk out of brick-and-mortar retailers empty-handed and buy desired items online.

As if this wasn’t enough to get your goat, from Dec. 9 through Dec. 10 Amazon incentivized customers to check prices by offering 5 percent off orders (up to $5 per customer). Last week stories flooded the internet—in publications from Businessweek to TechNewsWorld and on blogs such as allBusiness and Z6Mag—on the unfairness of the practice.

Even legislators are speaking out against Price Check: Senator Olympia Snowe from Maine released a statement on Thursday saying, "Amazon's promotion—paying consumers to visit small businesses and leave empty-handed—is an attack on Main Street businesses that employ workers in our communities. Small businesses are fighting everyday to compete with giant retailers, such as Amazon, and incentivizing consumers to spy on local shops is a bridge too far.”

Amazon officials responded to the barrage of bad press in yesterday’s Wall Street Journal, where a spokesperson said the app is really meant for "major retail chain stores." Hmm.

As a small business owner, is it even possible to compete with the Amazons of the world?

Yes it is, according to Shel Horowitz, author of Guerrilla Marketing Goes Green: Winning Strategies to Improve Your Profits and Your Planet—but there’s one caveat: You can’t compete on price. And that’s OK.

“Small retailers can offer a lot of things Amazon can’t, such as the ability for customers to physically touch a product, for them to learn about products face-to-face from experts and to feel a sense of community when they shop locally,” he says.

Here are a few tactics to help you one-up the online behemoths.

Get creative with marketing

Small business owners are famous for their product expertise—so flaunt what you know.

“I have a client who owns a pet store and shares a parking lot with Wal-Mart," says Horowitz. "He posts signs in his windows saying he can’t compete with Wal-Mart’s prices on fish tanks, but also can’t be responsible for fish that die in Wal-Mart tanks. The tactic worked, and he recruited more customers because of his knowledge of fish tanks."

But what if Amazon offers the same fish tank as you at a lower price?

Horowitz recommends changing your inventory to play to the high-end customer.

“If the bottom of your market is price shopping, expand the top of your market,” he says, suggesting that if you own a soap store opt for locally handmade soaps that come in at a higher price point.

Find out what irks your customers

As a small business owner, you have much more access to customers than online retailers do. You interact with them in person on a regular basis and may even strike up personal friendships with frequent customers.

Horowitz recommends using this access to your advantage by conducting informal surveys about what pushes their buttons. Ask them what they don’t like about retailers (online or otherwise) and try to offer a solution in your business.

“The great thing about small businesses is that when there is a problem, they can move much more quickly at solving it than big businesses can,” he says.

Give back

Small businesses can donate to local causes—be it the homeless shelter on the corner or the under-14 t-ball team. This type of community involvement is endearing to neighborhood consumers, says Amanda Wetherill Holmes, owner of Blue Horse Boutique in Wayne, Penn.

“As a promotion for Small Business Saturday, I gave a portion of my profits to the local SCPA. Who did Amazon give back to on Cyber Monday?” she says. “It really keeps you at the top of your customers' minds when you are an active part of their community.”

Collaborate with nearby businesses

While Amazon’s quarterly advertising budget may be three times your yearly revenue, there’s no reason to be discouraged. Horowitz encourages small business owners to join local merchant associations and advertise together.

He says, “Find a few businesses that compliment your product or service and go in on an ad together—your collective buying power will give you more of an impact than if you did it on your own.”

Push for an online sales tax

If you really want online retailers to pay their share, Horowitz suggests contacting your local legislator to pass a sales tax that would affect online merchants. FYI: This is a hot topic as of late—on Thursday, Amazon came out in support of an Internet sales taxother retailers are more hesitant.

Horowitz says, “Sales taxes need to be fair to online and offline merchants. I think there should be a national tax where every purchase is taxed the same. Regardless of your point of view, though, small business owners should write letters to their local politicians to level the playing field.”

How do you compete with online retailers, and what do you think about an online sales tax?