New ways of collaborating to differentiate value and remain relevant
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In the nature, there is a fascinating phenomenon called symbiosis. Symbiosis occurs when organisms “live together with benefits”. For example, ants protect aphids from predators and aphids supply the ants with honeydew. Today’s retail ecosystem is getting increasingly complex. Competing with Amazon requires infrastructure and resources that many independent retailers simply do not have. To remain relevant they are collaborating with organizations that did not typically work together. As customers increasingly expect even higher levels of service, many retailers are collaborating with new partners as an essential strategy to differentiate and thrive.
Why this is important: A couple decades ago, retail was literally a standalone business. Few retailers today have the resources to compete head to head with Amazon. In order to remain relevant, retailers are collaborating with new partners.
It is getting much harder to “do what they are not already doing”
When Walmart was the only 800 lb. gorilla crushing retailers on Main Street, people asked Sam Walton how retailers could survive. His classic response was: “Focus on something the customer wants, and then deliver it”. He also added: “Do something Walmart is not doing”.
Today, it is getting very difficult to find something that Amazon or Walmart does not deliver. Most retailers simply do not have the resources to compete with Amazon on breadth of products, price or speed of free delivery. Increasingly creative retailers are developing partnerships to deliver value and stay relevant in an Amazonian marketplace.
Symbiotic relationships – how “unlike partners” can create value
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EVERYONE competes with Amazon, including and especially Walmart. A headline that many have missed is an excellent example of a symbiotic of relationship of what seems like unlikely partners. Walmart is expanding a rollout of online auto retailer CarSaver in its stores. What does online car buying have to do with Walmart’s hypermarket stores? Walmart gets an opportunity to expand relationships and add value for customers in store, and CarSaver gets qualified leads by specific a Walmart location.
Normally, large national grocery chains like Kroger focus on major brands and deals with companies like Coke or P&G. Kroger has announced expanded plans to partner with local brands and suppliers. While this might increase complexity, it will differentiate Kroger from Amazon with unique offerings, and draws local customer traffic in search of unique preferred brands. Differentiated products on Kroger shelves creates opportunities for small local brands to gain market access without getting lost in the 5 million products on Amazon’s marketplace.
Strange bedfellows, or a new era of symbiotic partnering strategy?
An even more interesting case of unlikely partners is emerging with Aldi piloting shops within Kohl’s stores. On the surface food and fashion do not seem to be the perfect match. There are also potential issues of how to resolve corporate culture and operational issues. But, kudos for testing something different and letting customers vote with their wallets on value.
There are no clear-cut “rules for symbiotic partnering”. Clearly, there must be some win-win value for each party, whether there is a financial exchange or not. Even informal partner relationships must ultimately address Sam Walton’s customer centric premise of both creating customer value and then delivering it.
Unlikely partners can be compatibles that create value and relevance not possible by the giant retailers scaling operations for the masses.
How to compete with Amazon through strategic collaboration
One might argue that “partnerships” have always been a part of retailing. For example, retailers have heavily relied on distributors as partners for storing inventory, expanding assortments and delivery. In today’s omnichannel world with a faster last mile, distributors are the retailers BFFs (Best Friends in Fulfillment) and an essential partner for retailer survival.
However, there are other strategic opportunities beyond the traditional supply chain. In order achieve relevance and execute something Amazon is not doing requires thinking outside of the box. Creative retailers are finding ways to add value via symbiotic relationships with new partners who on the surface make sound like strange bedfellows. Here are some examples:
- Local Services and Networking Almost every category of retail has some potential related services needed to install, maintain or fix the product. Local retailers can add value and differentiate by cultivating relationships with local service providers. Even if there is no formal business relationship, the local store wins by vetting local service pros it can recommend to install and repair products in customer’s homes and businesses. Local service providers win by getting qualified leads in the local market with less advertising.
- Unique and Personalized Yes, Amazon is great at tracking personal information and past shopping habits to recommend other products. However, every regional retailer has the potential to know and do more things IF they keep track of the details on best customers. Creative local retailers are collaborating with compatible partners to personalize products with colors, names etc. The key is researching and finding the right compatible partners who can differentiate in ways that are unique and perceived as valuable by customers.
- Offering options, and pampering the best customers
Most local retailers cannot afford to compete with Amazon on speed or price for every product they sell. The key is offering options that fit the categories and the quality of the customer relationship. Options start with offering convenient click and collect in store, which exceeds customer expectations. Even better if that includes personalization options like those mentioned previously.
Delivery options might even include developing creative relationships with pizza delivery people – they know the market and best routes. In urban areas, bikes often beat trucks.
One local retailer is taking it further by utilizing Uber drivers to deliver packages to their very best customers. Uber delivers in minutes in an urban area with costs not much higher than two day shipping. To create a “wow experience” for best customers in store, the retailer books an Uber to take the customer home with their packages – what a way to upsell more in store when the customer doesn’t have to schlepp all the purchases to the bus stop.
Old is new again, and collaboration is more important than ever!
One can easily argue that collaborating in retail is not new. Perhaps, but that does not make these collaboration strategies any less important. To be successful in delivering something the giants are not doing will require even creative collaboration with partners in new ways.
The key is to be strategic in finding ways to differentiate value and relevance, even if it means finding some “strange bedfellows” that can work together in new ways.