In 2016, one single company accounted for an astounding 43 percent of all online retail sales in the United States. That same company captured 53 percent of online sales growth that year, proving once again that it will not slow down anytime soon. As you probably guessed, that company is Amazon.
Truth be told, only a few ecommerce retailers can hope to compete with Amazon. When it comes to selling general merchandise online, Jeff Bezos’s brainchild is in a league of its own, save for a few competitors like Walmart, Target, etc.
But specialty retailers, those who sell third-party brands’ goods in specific verticals like home goods, furniture, or apparel, need not throw their hands up in defeat. That’s because, in reality, they’re not even competing with Amazon to begin with—they’re competing with other retailers in their unique vertical, at their unique price point. This is especially true with higher end stores. INTERMIX might lose some sales to Amazon, for instance, but their real competition is with other high-fashion sites like Revolve, Farfetch, FWRD and Amazon-owned ShopBop. That’s who they want to find competitive advantages over.
Those retailers ought to look at Amazon not as a rival then, but as a cooperative role model whose ecommerce success can be replicated on their own websites. One of the easiest, most effective ways retailers can do that is through dropshipping. Surprisingly, over 60 percent of Amazon’s total retail sales, more than $130 billion, comes from its 3rd-party marketplace, where Amazon carries zero inventory from its 2 million-plus vendors. For all the amazingly advanced logistics and proprietary fulfillment technologies Amazon uses, a clear majority of its sales actually comes from dropshipping, the “great democratizer” of ecommerce.
And here’s why this is so important and can be so easily replicated: almost anyone can launch a dropship program with the right tools, and regardless of capital on hand, anyone can establish a site with an extended aisle of SKUs for consumers to choose from. The overhead costs and risks are so minimal while the ease of expanding product mix is so significant, that implementing a dropship strategy can give any retailer an immediate edge over the rest of its competition.
The whole point here is that you have absolutely no need to uncover Amazon’s trade secrets or dive into the mind of Jeff Bezos. Rather, just take a look at how beneficial dropshipping has been for Amazon, and seamlessly replicate it with your own store. You can increase your volume with existing brands, sell new products from new brands, and test out selling products from entirely new verticals. Dropshipping is not necessarily a groundbreaking tactic that will let you dethrone Amazon, but that shouldn’t be the goal. Instead focus on using dropshipping as the most effective, least expensive method to build your brand, make new revenue, and get a leg up on the other retailers in your market.
