Ever since Amazon rose to become the dominant player in the world of eCommerce, the conventional wisdom has been that there’s little room left for competitors.
After all, Amazon not only sells almost everything, but they own a sprawling and effective shipping infrastructure and maintain a significant army of customer service agents all around the world. They enjoy a massive material advantage over any would-be challenger.
But that doesn’t mean that a smart eCommerce startup can’t find a way to compete with them. One of the go-to strategies that such startups have leaned on in recent years is niche specialization. By focusing on a single product category, it is still possible to best the Seattle-based giant in many cases.
The trouble with niche specialization, though, is that it comes with some natural limitations. For example, niches – by definition – are quite small. That means it’s hard to build a profitable startup around one of them.
And catering to multiple niches can lead to muddled branding and marketing difficulties that are hard to overcome.
Join Our Small Business Community
Get the latest news, resources and tips to help you and your small business succeed.
So what’s an eCommerce startup to do?
They can turn to supply chain quality assurance instead of niche specialization as their main tactic to compete against Amazon, that’s what. Here’s what that means and why it can be such an effective eCommerce startup strategy.
What Is Supply Chain Quality Assurance?
Put simply, to eCommerce businesses, supply chain quality assurance is the process of making certain that the products you offer for sale always meet or exceed high-quality standards, that they’re available in warehouses when orders come in for fulfillment, and that they always go out quickly when orders come in.
It also means that they ship from manufacturer to warehouse – and from warehouse to customer – efficiently and with care commensurate with the type of product, no matter what the extenuating circumstances.
In a world where startups have to source products from places all around the world where they have little visibility, end-to-end quality assurance is not at all trivial to accomplish.
But there is a very good reason eCommerce startups should make it the centerpiece of their competitive differentiation strategy: the fact that Amazon isn’t very good at it themselves.
Amazon’s Quality Assurance Struggles
In its quest to become the dominant eCommerce platform in the world, Amazon has played fast and loose with its quality assurance processes.
At first, this became most obvious when reports of counterfeit product sales on the platform surfaced. It’s a problem that has caused the company major headaches, and that despite its efforts, appears to be getting worse.
And with Amazon’s recent warehouse human resources woes, coupled with the company’s reliance on high volumes of sea freight, supply chain trouble is afoot, potentially costing the company billions in losses.
But that’s not the only area where Amazon now struggles to keep its product quality standards up to snuff. Its expansion into white-label house-brand products has struggled as well. Things have gotten so bad that the company has drawn the ire of US lawmakers, who are weighing sanctions against it.
Why Supply Chain Quality Assurance Is a Winner for Startups
It would be easy to write off Amazon’s supply chain quality assurance problems by pointing out their ever-increasing net product sales. But raw sales data doesn’t tell the whole story. That’s because their sales figures are more a product of momentum and brand recognition than anything else.
They say nothing about whether customers are happy with what they’re buying from the eCommerce behemoth. And there’s reason to believe that consumers aren’t all that happy with Amazon.
According to the American Customer Satisfaction Index (ACSI), US consumer satisfaction with them has plummeted in recent years. That means consumers should be willing to try a competitor – even if they have to spend a little more to do it.
The Bottom Line
For eCommerce startups, this may be a golden opportunity. But the only way to take advantage of it is to make supply chain quality assurance the backbone of your differentiation strategy.
In that way, you’ll be able to deliver products that customers can rely on – something Amazon can’t currently do – and gain a foothold in an otherwise difficult industry.
The key, however, may be to strike while the iron’s hot. Amazon won’t be content to let its reputation suffer for very long, and will take steps to solve its quality assurance problem sooner rather than later.
But due to its sheer size, and factors beyond the control of the big business, it’s bound to take some time.
In that brief window, eCommerce startups should find the breathing room they need to gain a foothold in the market and get on a growth path. And there’s no telling when a similar opportunity will present itself again.