How To Win The 95 Percent Of Retail Amazon Doesn’t Own

Amazon has captured half of U.S. e-commerce revenue, according to eMarketer. Not coincidentally, Jeff Bezos became the richest living human the same week.

So what’s left to do with online sales? Almost everything. Jeff Bezos knows this, which is why he pushes Amazon into so many new markets. There is, however, a limit to virtual trust. Bhaskar Chakravorti, Dean, Global Business and Founding Executive Director, at The Fletcher School of Tufts University, wrote at the World Economic Forum in January:

As the boundaries of the digital world expand, and more people become familiar with internet technologies and systems, their distrust will grow. As a result, companies seeking to enjoy consumer trust will need to invest in becoming more trustworthy more widely around the globe. Those that do will likely see a competitive advantage, winning more loyalty from customers.

Brands will be trusted when they are part of the consumer’s community, and that will include their local physical community. Having people on the ground and participating in local events, fund-raising, and improvement projects will help to convert skepticism into trust, but it is the salesperson who will close and support most of the transactions that typify offline commerce.

The challenge is how to get enough salespeople into the local market. Hiring full-time reps is prohibitively expensive, so flexible sales networks will be built instead.

Selling is an extraordinarily hard part of economic life that as many as one-in-five workers do to generate the revenue that pays the rest of us. Gaining access to consumers, getting them to trust and open up to share what they want or need, and moving them along to making a purchase takes time, money, patience, and enthusiasm that the hardest working engineer could hardly bear. And selling is changing.

Amazon.com’s First Home Page

Amazon’s growth, from early e-commerce pioneer with $511,000 in revenue after 17 months to $177.8 billion in 2017, has always turned on its success in bringing new products to market through digital channels. Product managers, now frequently assisted by machine learning tools, have had to find ways to communicate and sell remotely. Amazon is so big it can’t put all its marketers in one city.

But in recent years, Amazon has purchased physical retailer Whole Foods and opened bookstores, grocery pick-up, and automated grocery stores to establish a physical relationship with consumers. One of the rumors heard at the Direct Selling Association meeting last month: Amazon has been asking direct selling companies how they build their networks. 

Retail is under the gun from e-commerce, and Amazon is certain to claim more share from physical stores. As commerce becomes more intimate and socially driven — which, as we’ve seen in the past two years, is a fraught road for brands, politicians, and celebrities — a human face representing brands and local businesses will become a trusted interface. They need tools and training to be successful, but people are the key to extending the growth of online markets into physical neighborhoods.

The myriad small businesses growing in the gig economy now are the bricks out of which retail market share will be rebuilt. Loosely connected, mobile-enabled salespeople can take sales relationships almost anywhere. Sales will migrate to gig models as full-time and part-time compensation and benefits converge.

Online sales now total approximately 10 percent of all U.S. consumer revenue. If, over the next decade, Amazon doubles or even triples its revenues, well over 80 percent of the market will be up for grabs each day. 

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Author: Mitch Ratcliffe

Mitch Ratcliffe is a veteran entrepreneur, journalist and business model hacker. He operates this site, which is a collection of the blogs he's published over the years, as well as an archive of his professional publishing record. As always, this is a work in progress. Such is life.