With the imminent arrival of Amazon to Australia as an onshore player, many businesses large and small are responding with a mixture of panic and indecision. But Amazon’s entry may represent an opportunity rather than a threat. And there are strategies to counter and defeat stronger and better-resourced competitors in your marketplace.
If you haven’t yet considered the impact of Amazon entering the market on your business, you may well be left behind.
Opportunities and Threats
The expression ‘a rising tide lifts all boats’ may well apply to many businesses with the entry of Amazon. For some, the US commerce company setting up shop in Australia may represent an opportunity to win new business, to gain a new channel to market, or simply to lift the profile of their product area.
On the other hand, their entry may well represent a threat to the market share and/or profits of some businesses. Amazon is huge – but with size comes not only strength but also many weaknesses. Yes, Amazon may well represent a threat but that requires that you move and adapt your business and its competitive offerings.
Your role as a business leader is to identify and exploit the opportunities and weaknesses that Amazon’s entry into the Australian marketplace provides to your business and its offerings.
To assist you in crafting your winning competitive strategy, let’s look at three perspectives:
- Positioning.
- Being small.
- Strategies for defeating stronger competitors.
Positioning To Win
As a starting point, you must ensure that you have a clear competitive posture in your chosen market and that you recognise and understand the opportunities and threats that Amazon represents. Ask yourself: How am I presently competing to win and how may I need to adapt? This becomes a question of positioning.
Positioning is a topic I explore in my guide, ‘Strategy Play – Crafting Undefeatable Business Strategies’. The below includes extracts from this guide.
So, what is positioning?
Positioning is determining where you are the strongest and therefore signals the most advantageous position for you in the market you have chosen. Bear in mind that this strength must connect with customer need and therefore customer value. Positioning should also be considered dynamic and not static.
You can determine where to position yourself, at either the business or product level, by developing a strategic analysis of your chosen market progressively. This can be done through examining the marketplace, the competitive landscape, and then your strengths and positioning.
This includes:
- Marketplace: The boundaries of the market in which your business competes, the characteristics of that market, and factors that may impact it in the future.
- Competitive Landscape: The identification of your competitors within relevant markets, the customer segments they target, market share, and the basis upon which they compete.
- Positioning: The strengths, weaknesses, opportunities and threats (SWOT) facing your business, an identification of your resources and capabilities, and what the business is best at, ultimately leading to a consideration of how to compete.
The questions that need to be answered are:
- What is the market that you have chosen to compete in and its characteristics?
- Who else is competing in this marketplace and what is their competitive posture?
- What are the strengths of your business?
- Where should you best position yourself?
- What will be your competitive posture to underpin success?
Consider as you move into this area that strategy is about how you chose to compete and you compete around customer value by delivering more of it than anyone else. That is, customer value as defined through the eyes of the customer, not yours.
And, as you ask and answer these questions, factor in the entry of Amazon and how that may change the competitive game that has been played to date.
Here are six questions that will assist you to lock down this area:
- Where do your strengths lie?
- Where do your strengths lie given the way the market competes?
- Which of your strengths are materially stronger than your competitors?
- Which of your strengths align best with customer need and value?
- Have you chosen the right marketplace for your business’s strengths to grow and be utilised to their fullest potential?
- How are the agents that impact the market going to influence customer need and value and your strength relative to competitors? And what new opportunities may it open?’
And a final thought for your consideration: Positioning should also lead you to consider the question of how the market presently defines itself and how it competes. What is today commonly called the Blue Ocean strategy (and was originally described as Value Innovation) in very simple language asks: Can you change the way value is perceived in the market so that the strengths of your competitors are reduced and yours are materially increased? Often this results in a redefining of the market and therefore takes you out of direct competition with existing competitors.
Be clear on your competitive posture, that is, how you can compete to win.
Being Small Is Big
The second key consideration is how your size, against Amazon’s, is going to work to your advantage.
It is likely that there will be few businesses in Australia that will be able to match the market power of Amazon in the areas it chooses to compete. But that’s okay because you don’t need to match their size to compete effectively, you need to in fact lift your ‘smallness’ to the forefront and see that as a key strategic advantage.
The internet, digitalisation, cloud computing and SaaS (software as a service) are great equalisers in the world of business. You can be a business that employs only one person and still build a presence in global markets by being online. You can also develop an automated marketing back-end to your website that will allow you to compete against the likes of Amazon. And, of course, if you are social media savvy (or buy that savvy) you can develop global brands, and the fan following that goes with it, which Amazon cannot match. The point being that many of the cutting-edge marketing strategies and tools that Amazon brings to its platform are available to even the smallest of businesses. So while you might not have the breadth of product, you can have the depth and the marketing smarts.
Keep in mind what business Amazon is in: it is principally a marketplace. Its mission statement says: ‘We seek to be Earth’s most customer-centric company for four primary customer sets: consumers, sellers, enterprises, and content creators.’ It used to be solely an internet-based business but now it is stepping out to build physical premises that customers can visit. It will be interesting to see, as it moves more towards being a traditional retailer, whether in falters and loses some of its competitive strength.
So be small and lift the strengths of smallness to the surface in developing your business’s competitive posture.
Smallness is good because:
- Smallness induces manageability and commitment.
- An individual can stand out and make a contribution in a ‘small business’.
- A manager can be hands-on and gain a real understanding of a ‘small business’.
- A ‘small business’ can build a family environment.
- Creativity flourishes where an individual counts for something.
- Increased face-to-face contact exists between leadership, employees, customers, suppliers and stakeholders in a small business.
- A smaller business is less complex.
- Smallness leads to clarity, simplicity and stability.
Add all of that together and you have a business that is better equipped to compete. (An extract from one of my earlier guides, ‘Business Growth 1: Foundations for Growth’.)
And smallness does not mean that your business size is tiny, it really means that you have designed it to retain the benefits of smallness as it has grown larger.
All of the benefits of smallness go to building great businesses. If you missed it, read one of my previous articles, which looks at building great businesses, ‘The Circus Has Closed’.
The extract below (featured both in the article and my book, ‘Strategy Play – Crafting Undefeatable Business Strategies’) is particularly pertinent.
‘For me, a great business is one that endures and does so by continuing to deliver greater customer value every day through a focus on purpose and its connection with customer need.
How will you know when you are on the trail to building a great business?
Look for the following signs in your business:
- It is delivering greater customer value every day.
- You are finding continuing opportunities for growth and innovation.
- The owners and leaders are thriving in and being fulfilled by their business.
- Employees are passionate about their work.
- Customers just love it.
- It is growing and compounding capital value.
- It is throwing off free cash flow.
- It is highly profitable.
And everyone looks to you for the standard and the next level of customer value. Note also that cash flow and profit are at the bottom of the list and are the outcome of everything else before them.’
Not being as big as Amazon can be a distinct advantage.
Get Your Strategy Right
The third and final task is to step back and consider your competitive strategy when fronting Amazon face to face in the marketplace. Specifically, how do you fight and win against a much stronger opponent?
Here are eight strategic thoughts to consider:
1 – Don’t go head on.
If the nature of your business is that Amazon will be a direct competitor, then do not try to go head to head. There is nothing to be gained by this strategy, rather, allow them to advance and attack their plans, attack them in areas where they are unprepared and advance in areas where they do not expect. Wear them down and exploit their weaknesses.
2 – First mover advantage.
If you believe that you hold first mover advantage because you are already established in your market, then think again. This advantage only applies if you can hold that market position and, faced with the resources of a determined and stronger competitor, you may not be able to. Some of my earlier articles, ‘They Will Never Catch Me’ and ‘First Mover Advantage – Not A Game Changer’, may provide some insight.
3 – Fight them on your ground.
Focus on the narrow markets, what you may call ‘niches’, but better thought of as small spaces that big competitors find it difficult to manoeuvre in. These can be markets that are too small or specialised for a broad big player to be effective in.
4 – Be adaptable.
Shift and move fast to always outpace your competitor’s value offering. You’re smaller, it’s easy to adapt.
5 – Build alliances.
Build an eco-system around you that allows you to match your competitor’s technical capability. SaaS is an example. And, in addition to this, build alliances with other businesses to deliver greater value to yours and their customers. For example, couriers and warehousing suppliers that Amazon don’t use.
6 – Create raving fans.
Build deep relationships with your customers. Make them raving fans of your products, service and your brand, so they won’t buy from anyone else.
7 – Be awesome.
Build a team in your business who are simply awesome. They are creative and committed and will always find a way to lift the customer value you offer.
8 – Be what they are not.
Exploit their weaknesses at all levels of their business. Size creates arrogance, bureaucracy, politics, distance from the customer, legacy systems, slowness to respond, and so the list goes on. Look for these weaknesses and build your strengths in these areas.
Always think strategically before you act.
The impact that Amazon entering the Australian market has on your business is in your hands. They can only defeat you if you allow them to through your lack of preparation and response. Their entry may well represent an opportunity for you to seize a greater market share and grow your business. Be strategic and work your response to win.
Active Knowledge Questions:
What are the opportunities and threats to your business with Amazon’s entry to Australia?
How will you exploit these to your advantage?
Act Now:
How undefeatable is your business strategy? Consider Strategy Play – Crafting Undefeatable Business Strategies.
Need to lift the leadership performance in your business? Learn how in C88 – Leadership Performance Guide and Journal.
Want to become part of the Entrepreneurs+ community? Sign up for my eNewsletter, and join the conversation by sending me a question via Ask Richard.
All the best in the success of your business,
Richard Shrapnel
