Bright Perspective Episode 3: How to compete with Amazon and win market share
In episode 3 of Bright Perspective, Deposco’s Director of Marketing, Carina Wingel, interviews Michael Johnson, Director of Business Consulting at Deposco, about how to compete with Amazon and win market share.
Everyone thinks Amazon is untouchable. Despite their earnings of $303 billion in a single year seem untouchable, clear evidence proves that other players are fine-tuning their inventory and order fulfillment processes to compete smarter and gain market share.
Amazon grew annual sales from 2019 to 2020, but their market share actually decreased — reversing a trend of domination they’ve held for over a decade. Meanwhile, 509 other retailers on the Top 1000 grew +25% in that same year.
It’s not to say that Amazon is losing their “effect”. But the data above does prove that, with the right inventory execution tools, companies of any size or budget can deliver perfect omnichannel experiences that can win.
In this episode of Bright Perspective, Deposco’s Director of Business Consulting Michael Johnson reveals the strategies you need to compete profitably with Amazon and win market share. Hint: it starts with transparency and trust, from both a customer experience perspective and internally.
In this episode, we are joined by Michael Johnson, Director of Business Consulting at Deposco. Michael has over a decade of extensive experience in the supply chain industry and understanding best practices and implementation strategies for businesses. Welcome, Michael! Tell us a bit about yourself and why we’re here today.
Hi – thanks for having me. This topic comes up quite a lot. My job is to help companies that are trying to grow their fulfillment operations “keep up” with flawless omnichannel experiences. The key is getting their Available-to-Sell and Available-to-Promise inventory data in sync.
Yes, Michael. Everyone thinks Amazon is untouchable. But I understand some data just surfaced that could prove otherwise…
That’s right. No one is surprised that Amazon made $303 billion in one year (2020). However, I just received DC Commerce 360’s Top 1000 Report for 2021, and it’s very interesting… in a year where e-commerce sales blew up for pretty much EVERY online retailer, Amazon actually LOST market share among the Top 1000!
509 of the Top 1000 Retailers grew more than 25%, while Amazon’s share actually dropped from 2019 to 2020:
Wait, so you’re saying that Amazon… a company that received FAA certification to carry out its plan for autonomous drones to fill orders “within 13 minutes from click to delivery”? … They CAN be beaten??? How???
Yes. If companies want to grab a slice of that growth, one of the most crucial KPIs is Available-to-Sell / Available-to-Promise. The first step is to get inventory accuracy in order; enable your employees for speed and scale.
Right. My question for you… inventory accuracy is not a NEW challenge; so why the urgency now?
Some key trends have escalated the need for transparency and trust, both from a customer experience perspective and an internal or financial lens. I’ll start with how this plays out on the CX side first because that drives everything:
- CX: Omnichannel shoppers expect what you say to come true. Their patience is thinning when it doesn’t. Data shows that omnichannel consumers have a 30% higher lifetime/long-term value than those who shop using only one channel. So it pays to keep them happy.
- Omnichannel shoppers buy more often, spend more money, and return to your brand more consistently than their non-omnichannel counterparts. In fact, 55% of consumers are willing to spend more for a guaranteed good experience.
- There’s a real desire for supply chain transparency as part of the experience. Most consumers understand we’re all facing supply shortages — BUT the profit picture is better if you can give them a play-by-play status of their orders (one they can TRUST is accurate).
- Integrations are a great way to do this. Shopify, for example, can be integrated from the WMS or order management system to automatically sync and deliver instant, up-to-the-minute inventory data, letting customers know you are on it. Integrations also afford the opportunity to offer complementary products or substitutes, etc. at the right time, thereby maintaining the sale while the sale is hot.
We also see consumers wanting more transparency throughout the lifecycle of a product, especially younger shoppers. Sustainability and sourcing are increasingly important with this market, as we see increasing interest in things like fair trade, etc. These consumers want to know where their product came from and where it is through the entire process.
And from a financial standpoint? What trends have pressed the need for transparency and trust internally?
The sheer increase in order volumes, coupled with high costs, is where this pays off.
Just look at labor costs, which have increased 10-15% in the past 5 years. Being able to automate tasks in the warehouse, evaluate staff performance and empower associates with better data (readily accessible in the cloud) empowers your team to process more orders while fixing operational blind spots as a cost reduction play.
Together, this one-two punch drives rapid profitability and market share by:
- Improving efficiency, costs, and operational throughput
- Lowering on-hand inventory, while reducing risk from backorders and overselling
- Having accurate analytics around staff performance
- Empowering staff with customer insights to make better, faster decisions on the floor
- Easily identifying opportunities to optimize replenishment cycles
- Growing sales; if you can meet expectations from CX standpoint, you drive organic value and profitability for the business
So what kind of results are we talking about?
According to IndustryWeek, organizations that implement a warehouse management system report 4% higher perfect-order performance on average, vs. those without these systems. Most of our customers are able to increase fulfillment efficiency by ~150%; hit +99.95% order accuracy; and get fulfillment time down under 24 hours on average after introducing WMS technology into their inventory and warehouse management process. In addition, our customers often see a 20-40% increase in daily order throughput, a 53% increase in productivity gains for warehouse associates, and a 77% decrease in manual data entry.
All of this means that enabling your team to be more efficient allows the business to grow without having to bring in more and more bodies to accommodate that growth.
- 99.9% or higher inventory & order accuracy
- 20%-40%+ increase in daily order throughput
- 77% decrease in manual data entry/administrative updates to system
- 53% increase in productivity gains per warehouse employee
What strategies are top-tier omnichannel businesses using to get to these results?
Well, Carina, first I think it’s important to note that you don’t have to rely 100% on Amazon to sell your goods, but also, Amazon isn’t 100% the enemy. There can be a balance.
That’s a strategy widely used by best-in-class businesses. Right now, 51% of firms use at least 8 selling channels. We spoke about the higher lifetime value of omnichannel shoppers earlier, so making sure that up-to-date available inventory is represented appropriately across those selling channels is crucial to growth because it:
- Positions you to avoid overselling
- Keeps your customer experience high
- Elevates your seller rating on marketplaces like Amazon, so consumers can continue to find your products
An order management-built WMS system puts you in a great position to do this.
For someone who wants to evaluate WMS solutions, what advice do you have?
If you are comparing WMS technology partners, one thing I’d strongly recommend is asking about the architecture of the system.
Traditional WMS solutions typically are not designed to provide the level of flexibility you’ll need when the time comes to scale order management to support new growth initiatives. Usually what we see with most systems is that they integrate WMS and OMS on a scheduled basis; they are not truly one system.
The most scalable and easiest to onboard platform is one where all of the inventory management functions reside on a single platform, from the warehouse up into the ordering systems in real-time.
Having an integrated WMS and OMS solution that resides on one codebase and one database allows businesses, like our customers here at Deposco, to have real-time enterprise visibility and trust as inventory moves from the warehouse operations, into their order management system, and ultimately represented in their selling channels, is a true game-changer.
That makes perfect sense. So, where should someone start if they are listening to this show and want to learn more?
The first step is really finding a best-in-class software partner that has a proven track record for setting up the efficiencies we spoke about based on the unique challenges and business processes within your operation. Once these solutions are implemented, we’ve seen most of our customers onboarding new employees in 15 minutes or less and seeing increased output overnight.
When you look at how quick and easy it is to see value from these solutions — especially considering all of today’s labor challenges and costs — it’s mind-boggling that so many organizations still manage their warehouse operations on paper.