My most lucrative business endeavor is Workoutz.com, a global supplier of high-performance exercise equipment and sporting goods. It has been in operation since 2007. At some point, there were rumblings that Amazon’s disruptive technology, along with a change in consumer behavior, started to adversely affect the business ecosystem. This resulted in closures of several high-profile businesses. Would my business be the next to go under? No chance. In fact, the business got bigger because of it. I’m going to show you the 9 strategies I implemented to survive the Amazon effect.

Initially, my business only listed excess inventory or discontinued items on Amazon. There was no need to list more products on the platform because their fees were high and somewhat complicated. As time progressed, let’s just say, Amazon kind of changed several rules of operation and even the way they did business. This is when I started to rethink my overall business strategy on Amazon. It’s important to note that a prudent business owner should always have a plan for anything that can lead to extinction. So, here are the precautionary steps I took to counteract the Amazon effect:

Step 1. Listened to Amazon Shoppers

I listened to Amazon shoppers and tried to really hear what people were saying during casual conversations. For example, I had someone tell me they only buy products on Amazon if they have the prime badge, which allows buyers to get expedited shipping and other perks. As an owner, my job is to assume 7 out of 10 people think similarly. So, I made a strategic decision to make select items prime eligible and it worked. In order for sellers to get their products listed with the prime badge, they must either send their inventory to an Amazon warehouse, or meet strict standards if they want to ship customer orders themselves. My business did a combination of both.

Step 2. Repurposed Warehouse Space

I used the extra space in my warehouse to opened a local store. Previously, I operated exclusively online, but always had warehouse space for distribution and storage. At the time, the business was occupying a little over 8,000 sq ft of warehouse space. I was able to convert half of the space almost entirely into a retail store.

I’m going to tell you a secret: Amazon sellers generally can’t compete with local business pricing. For those who operate on a local level, the absence of shipping costs allows them to sell cheaper. Prices on Amazon may seem reasonable, but many are overpriced due to shipping costs, which are rolled into product costs, to ultimately give the appearance of free shipping.

Larger and heavier items can create huge windfalls for local businesses, whereby the cost to ship these items via freight carrier is substantial on Amazon. If you buy these items locally, it’s usually going to cost less. Because of this, I was able to easily beat Amazon pricing on just about everything; especially larger items like rubber gym flooring, weight plates, squat racks, and a number of other products.

Also, opening a local store was a great way to connect with the community and allow patrons to come in and physically interact with products seen online. For those who were looking a weight set, they would enter my store having seen a Craigslist ad, not realizing we had other equipment. So having a brick and mortar store allowed them to buy most of the equipment from a single source.

Step 3. Included Promotional Inserts

In any Amazon shipment, I would include a promotional insert, which was used to incentivize buying on my website. Most of the time, it was a coupon or a thank you card with an offer to save money on a future purchase. Unfortunately, this practice is no longer allowed, according to Amazon’s updated terms of service because it circumvents the Amazon sales process.

Step 4. Priced Lower Than Amazon On Company Website

On my main website, I deliberately priced lower than Amazon. If someone was searching for the lowest price of a given product, it would increase the likelihood that I beat out Amazon for the sale.

Step 5. Launched A Wholesale Operation

I launched a wholesale website, which attracted the clientele most likely to be repeat buyers: business owners and larger corporate clients such as hospitals, health clubs, colleges, etc. The wholesale website mostly sells bulk quantities at a discount, and the minimum purchase is $200… and they must spend the $200 for each future transaction, not solely the initial purchase.

Step 6. Implemented Amazon Pay

With Amazon rapidly growing in popularity, I implemented Amazon Pay on my website. The service allows existing Amazon customers to pay with their account. The advantage is that it speeds up the checkout process and there is trust since the customer already has a relationship with Amazon. The payment acceptance mark was prominently featured throughout site and also in paid ads.

The decision to include Amazon Pay was initially thought of as a potential risk because if you advertise Amazon on your company website, is that going to remind shoppers to leave and go to Amazon? Possibly, but this strategy was a win for me.

Step 7. Sponsored Local Events

I did a lot of business development at the local level. I partnered with my local city and became a go-to source for several community events. An advantage to operating locally is it makes business development easier because your customers often work in capacities that may prove to be financially beneficial long term. For example, if I learned that a customer worked for the fire department or the police department, I would see if those organizations had a formal process, like maybe a newsletter or some type of bulletin board where an announcement could be made, stating that we offer discounts to first responders. Before you knew it, I was outfitting various gyms. This was a massive source of revenue because whenever an organization needs equipment, they are going to spend thousands. There is also residual growth stemming from business referrals.

Step 8. Created Online Purchase Incentives

I created purchase incentives that shoppers were more likely to find beneficial. Not only did I price lower, but I also created other incentives such as opportunities for further discounts via instant coupons, access to an online workout generator, and free gifts with any purchase. I have given away things like gym bags, lanyards, jump ropes, resistance bands, and other gifts that people buying exercise equipment would find useful.

Step 9. Added More Products to Amazon

The final step I implemented was to add additional products to Amazon. Since my business was already a distributor of other brands, I was able to leverage those relationships and boost my product offering on Amazon, which invariably led to higher revenues.

These are the 9 proactive steps I used to survive the Amazon effect. I didn’t spend too much time worrying if my business was going to survive. I was proactive. I always had a plan to protect the business, and I was highly successful in executing that plan.

With regard to the Amazon effect, here was my thought process: In the event that my sales started to decline due to changes in consumer behavior, the strategy was to do two things: 1) start and grow a local business enough to counteract the Amazon effect and 2) rethink my online pricing, marketing, and growth strategies. When I implemented these, not only did my Amazon revenue grow, but overall revenue grew to record highs because it was essentially like operating two businesses; with one being online and the other being local.

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