With a series of bold decisions and an unorthodox business model, Amazon has gone from a small book company to an absolute juggernaut. While the original mindset among competing corporations was to simply beat them at their own game, this method has proven unsuccessful. Imitation does not work against an entity willing to lose money to eliminate the competition.
In 2015, Amazon entered into the ocean and air cargo businesses, purchasing container space on ships and leasing Boeing planes, taking over their supply chain and expanding their footprint in the global economy. Today, Amazon is equipped with the best technology and analytics available. So, how do businesses compete with a company like Amazon? Differentiation and data are the key.
Do Business with the Commodities that Amazon Does Not Ship
When browsing Amazon’s website, it seems as if they sell everything. But there are several items that Amazon does not sell or ship. Agricultural equipment, aircrafts, automotives, and industrial equipment are bulky items that Amazon does not work with. Ocean transportation companies can place more attention on specific areas where they have gained an advantage strategically, and have captured that particular niche in the market. Entering these less saturated segments will help corporations establish a firm position in the market and competitive advantage.
Use Data to Segment Your Customers Based on Behavior
Companies must learn to let go of outdated business solutions that may have succeeded in the past. Instead, they need to leverage their unique business model to analyze their business and customer data. This will determine which customers and products will produce the largest revenue. Effective data analysis and implementation is the way of the future.
Understand How Sensitive Your Customers are to Price
Companies working in the logistics industry must utilize their data to calculate how important price is to their customers and streamline processes to understand how best to adjust rates. By providing competitive rates and understanding what is important to your customers in addition to pricing, i.e. experience, customer service, personalization, the ocean transportation industry can stay competitive.
Covid-19 is Disrupting Amazon’s Supply Chain
But even a giant e-commerce company like Amazon is being affected by the pandemic.. As the novel coronavirus spreads on a global scale, the increasing demand for Amazon’s services has placed enormous strain on its supply chain. Many Amazon employees are unable to work due to the infection and many Amazon sellers source products from manufacturers, who are currently producing at below average rates. In the current climate, Amazon’s sheer scale may be the very thing that impedes it, creating opportunities for smaller organizations to step in and fulfill needs in the supply chain.
While RTM Lines does not compete with Amazon directly, we have seen how differentiation and data can help a business compete in the ocean transportation market. RTM’s business model of creating “innovative solutions for complex shipments” fills a need in the market. It gives us a competitive advantage especially when transporting cargo that cannot be transported in containers due to weight or measurements. Shipping and Logistics specialists adapting a similar approach can create opportunities for their companies to succeed even against a juggernaut like Amazon.