Retailers sell on Amazon to increase sales, yet worry Amazon will use their data to compete

How do mid size businesses compete with Amazon

Protective of hard won data, online retailers and marketers are viewing Amazon as both important for visibility and profitability, but also see Amazon as potential competition.

A report by e-commerce solutions provider SLI Systems found that around the world, retailers, who have a mix of business size and models, including pure e-commerce and omnichannel merchants, worried that despite the potential for more sales, Amazon could also use their sales data to compete directly with them.

Indicating that they view Amazon as more of a "frenemy," the report found that 70% of the retailers surveyed reported being somewhat or very worried that Amazon will use their sales data to compete with them while the continue to rely on Amazon for visibility and profitability.

The report looked at results from a worldwide electronic survey conducted between May 4 - June 2, 2017. All respondents sell goods or services online, with 66% selling in stores and 44% on Amazon. 90% of respondents worked in a manager position or above and 54% report their company's total annual sales to be above $50m US with 24% generating more than $500m.

"This quarter, SLI took a different look at the relationship between Amazon and online retailers. We asked those who sell via Amazon why they do so, as well as the extent to which they view Amazon as a competitive threat," explained Chris Brubaker, CMO, SLI Systems. "While consumers are shopping Amazon Prime Day with glee, for merchants, the perks of leveraging the online giant come with some concern.”

The report also looked at the e-commerce forecast and found that 86% of respondents expect their revenue to increase this quarter compared to Q2 2016 while UK retailers appear the most optimistic with a third predicting e-commerce revenue growth at 21% or more.

With mobile revenue, 81% expect revenue from mobile sites and apps to increase in Q2 2017 compared to Q2 2016; with 22% expecting a boost of 21% or more. With in-store revenue/profits, 39% expect an increase, with 14% expecting a decrease; in Q1 2017, 46% of respondents expected an increase.

The study found that fewer retailers plan to acquire companies; in the US, the percent declined to 14% in Q2, from 25% in Q1 and fewer plan to add websites or brands (34% in Q2, down from 40% in Q1) or to expand the number of products or product lines they offer (78% in Q2, down from 84% in Q1).

The number of respondents planning to purchase or implement new technology this quarter dropped to 57% in the US and 48% in the UK, compared to 63% and 64% in Q1, respectively.

Additionally, the report found that customer experience (CX) remains king despite declining as the top choice, to 20% from 26% in Q1. Re-platforming climbed to the second top priority with 17% in Q2, up from 11% in Q1. Brick and mortar stores cite that 22% of respondents expect to increase their number of stores by up to 10% in 2017. Regionally, a massive 44% of retailers in Australia and 24% in both the US and UK will increase the number of storefronts.

For those 65% of retailers using Amazon, they report that adding the channel to their e-commerce strategy to increase sales; customer acquisition and visibility from a high traffic channel tied as the second greatest motivator (47% each).

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Laurie Fullerton

Laurie Fullerton is a writer based in Boston, MA with a background in business, sports, community, medical and travel writing. She has been a newspaper editor in the Boston-area, a sports writer covering yacht racing and a community reporter. She has been reporting for The Drum since October 2015.

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