Growth / Planning & Strategy

How to grow your small business in the age of Amazon

Philip Piletic

Updated: Dec 19, 2023 · 8 min read

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small business owner growth

For generations, small businesses have been at the heart of most developed economies. That's still very much the case today. In the U.S., that translates to an astounding 30.2 million small businesses—making up a whopping 99.9% of all businesses operating in the country.

Despite their numerical superiority, however, small businesses have always been at odds with larger competitors. For a long time, there was a certain balance maintained between the two, owing to the fact that every business was competing on the same playing field.

Then Amazon came along, and everything changed.

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Today, Amazon has driven almost all but the most dogged large retail chains out of business. They've done so as the retail landscape has inexorably shifted toward ecommerce, and now claim nearly 50% of all ecommerce sales nationwide. For small businesses that are now forced to compete with the juggernaut that is Amazon, the future looks like an uphill climb with long odds against success.

There are, however, tactics that small businesses can use to exploit many of their natural advantages to keep growing, even in the age of Amazon. Here's what they are:

Focus on value-added services

One of the primary ways that small businesses can drive growth is to offer things that Amazon doesn't. In this case, it isn't products, but value-added services that small businesses should be targeting. According to David Schultz, COO of Carcover, there are a variety of ways to do this.

He says that "adding perks like lifetime warranties on purchased products and no-hassle price protection policies are an excellent way to give consumers a reason to turn to you instead of Amazon. If you lean into an image that tells the consumer that it's their satisfaction and not their money that you're interested in, it can go quite a long way."

The bottom line is that small businesses can focus on selling products that come along with item-specific complementary bonuses and services that differentiate them from Amazon. The reason there's plenty of room for this in the market is that Amazon tends to take a one-size-fits-all approach to selling, and isn't going to personalize perks on a per-item basis. Since small businesses are more agile, they can do this to great advantage.

Pick a niche and dominate it

Another facet of the Amazon approach that small businesses can exploit to drive growth is their all-things-to-all-people drive to carry every item imaginable. Although Amazon does an admirable job of this, it often favors broad coverage of product types rather than in-depth selections. Small businesses can turn that to their advantage by selecting a hyper-specific niche and working to become the go-to destination for it.

A perfect example of this may be found at wallpaper ecommerce specialist WallsNeedLove. Instead of carrying a vast array of home décor or wall hangings, it instead chose to focus on traditional and peel-and-stick wallpaper alone. By doing so, it has been able to build an impressive catalog of options that consumers won't find at Amazon. That kind of laser-focus on a niche is an excellent way to drive growth and beat Amazon at its own game.

In fact, this is a tactic that can work for small businesses of all kinds. For example, an insurance business could target a small but valuable subsector of its market, such as providing auto insurance options for businesses that let employees use personal vehicles on the job. While that represents a very specific scenario, it's one that can drive massive revenue and there's likely less competition for customers in that situation.

Create luxury experiences

If you ask any Amazon customer about their experience with the giant retailer, they're apt to use words like "fast" and "inexpensive" and "convenient" to describe it. If you dig a little deeper, though, you'll find something else. What Amazon customer, for example, hasn't come home to find a package haphazardly left at their doorstep? Or opened an Amazon box that was either comically too large or small for the items it contained? At the end of the day, for all of Amazon's selling prowess, there's plenty about the customer experience that it can't control.

Small businesses can take advantage of that by working to create the kind of luxury customer experiences that Amazon couldn't hope to provide. Things like having a dedicated salesperson seeing to the customer's every need—providing them with comfort, assistance, and expert advice. It's something that an ecommerce business would struggle to offer, but that small businesses can provide with relative ease.

This kind of tactic works especially well for small businesses that are already selling luxury goods. Nehal Zaveri, CEO of Diamond Wish, says that upmarket buyers will go to great lengths to get an experience that matches the prestige of their purchase. She adds "When a customer comes in looking to make an expensive purchase, they expect the retailer to give them the attention and care such a purchase commands. They know they could buy similar items from places like Amazon, but then they won't be able to touch the item, feel its weight, and be given first-class treatment." The takeaway is that the personal touch can take a small business to places where Amazon won't be able to follow.

Use data like Amazon

One of the things that made Amazon such a formidable presence in the market was its ability to collect and use all kinds of data about its customers. After a few years, the scale of its data operations grew so vast that it spawned an entirely new business unit—now known as Amazon Web Services. While small businesses won't have the same level of access to customer data that Amazon does, they too can use data to supercharge their performance.

They can begin by harnessing the data that's already in their CRM systems and using it to create automated marketing campaigns that trigger personalized messages when certain conditions are met. Using such systems, it's possible to entice existing customers and new leads to make purchases, or at least to re-engage with the business.

Beyond that, small businesses can use data to create personalized advertising campaigns. That can help to increase the effectiveness of their marketing spend, driving increased ROIs. Also, all of the available data suggests that personalized ads are what people want, with as many as 71% of consumers claiming they'd rather see ads related to their habits and preferences. Better still, such ads have almost doubled the click-through rate.

Think local, act local

Last but not least, small businesses can ensure solid growth by recognizing that they don't always have to compete with Amazon at all. At least not directly. They can instead opt to target their local market with products and services that cater to their specific needs and desires. Although this might seem like a capitulation to Amazon; a recognition that a small business could never best such an ecommerce powerhouse, it's not. It's just good business.

The evidence of that is all around us. In every corner of the country, a careful examination of main streets, thoroughfares, and even the bumpers of vehicles reveal that there's a growing movement of people who want to support local businesses. The "Buy Local" signs and stickers that have started popping up everywhere offer ample proof that it's real, and growing.

In fact, according to the 2019 Cox Consumer Pulse on Small Businesses report, almost three-quarters of consumers take steps to shop at local businesses to help support their community. That means small businesses that pivot toward their local market won't be closing the door to very many sales. On the contrary, they'll be accessing a ready-made contingent of consumers who are already intent on patronizing local businesses.

Adapt, compete, thrive

Any way you look at it, there are plenty of ways that small businesses can keep growing, even in the age of Amazon. To begin with, they're an integral part of the economic landscape, and as such occupy a position where they're not so easily displaced—even by such a menacing competitor. From offering niche products and luxurious experiences that Amazon can't match, to connecting to local consumers via data-driven marketing campaigns, the opportunities to thrive are many.

Best of all, they're the kinds of opportunities that Amazon can't (and wouldn't try to) interfere with. To do so would require them to reorganize their business to embrace a massive physical footprint of the kind they've just spent a decade dismantling amongst their biggest rivals. For that reason, despite the carnage that Amazon has visited on large retail chains, there's a good chance that small businesses will have little trouble coexisting with them for the foreseeable future—if only because Amazon can't be everywhere all at once.

The bottom line is that the outlook for small businesses in the age of Amazon is far better than many imagined it would be. All they have to do is cater to their strengths and occupy the spaces where Amazon isn't to find ongoing success, come what may.

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