Competing against Amazon as startup
If you know your enemy and you know yourself, you need not fear the result of a hundred battles — Sun Tzu
Lowest price, fastest delivery timings and the largest collection.
That has been Amazon’s mantra since Day 1 and that’s how they’ve always competed in every industry they enter.
So how do you win?
Choose One only: Faster, Cheaper, Larger Selection or X
Yes, you can compete on strategy. If you choose the right one.
Facts about the Giant
Amazon is no doubt a behemoth in business today
Whenever they enter a new industry, incumbents suffer
- A Dozen Disruptions: Amazon’s Pursuit of Massive Market Share
- UnitedHealth, Other Healthcare Stocks Plunge as Amazon Enter the Space
The usual startup advice tends towards something like:
Which one of these doesn’t apply to Amazon employees as well?
The only thing left to beat them on, is Strategy.
The term “better” has always been a vague business term.
What does it really mean to have a “better product”?
“Better” is an axis
When we discuss better products, we talk about how we were trying to solve a task and this product did the job better. (From the Jobs to be done theory.)
Think Uber and Lyft.
The job was to get from point A to B and they did it “better” than taxi cabs.In this case, “better” means cheaper (sometimes faster) than cabs.
They aren’t the cheapest option (walking) or the fastest option (private limos).
But they serve that gap in between.
Strategy against Amazon
There is ALWAYS a tradeoff
In order to beat them, you have to beat them in strategy.
Here are some examples focus on their e-commerce and web services divisions…
Gaps in the Market
Look for products/ services that need to be delivered within minutes and urgent enough for someone to pay a (comparatively)large amount for.
Some examples: Food (Uber Eats)
Simple enough services where developers can get started without the hassle of configurations.
Some examples: Digital Ocean, Netlify
Look for products/ services that are not urgent.
Some examples: Non-disposable commodities (Steel Sheets), Wish
For side projects that are simple enough for you to work on without extra requirements.
Some examples: Netlify, Linode, Blue Host
Not in every category. Some customers depend on retailer’s expertise to source products and vet manufacturers.
Some examples: Beauty, Sephora
- Nobody beats them here.
As a startup, don’t focus on trying to be great at everything. Focus on axises that you think you can compete in or look for other ways to be “better”.
- Less Choice Complexity: Subscription Boxes
- Better Quality: Netflix (in terms of content, my opinion)
Fair Warning ⚠️
It has to be said that just because you managed to find a gap in the market, it doesn’t always mean there’s a market in that gap.
Gap in the Market
Heralded by literature like Blue Ocean strategy, business executives and young startups have since been repeating the mantra of executing in markets where there is little to no competition.
Market in the Gap
Many entrepreneurs (myself included) have come to realise that the reverse also deserves to be evaluated.
Just because you are unique, doesn’t make you useful.
If you were designing a BEAUTIFUL new weather app, it doesn’t actually help with the actual Job that weather apps are meant to do. (Help me decide if I need to bring an umbrella)
Balancing strategy is hard.
On one hand, it seems that competing on one dimension (e.g. speed or delivery time) could be a huge differentiator against an incumbent like Amazon but does that differentiation really matter to your consumers?