My daughter is having a training day at Amazon Web Services today which will be quite intense because understanding their sales platform is the key to being successful. Currently we have more questions than answers and maybe some will be answered today and others will have to wait and see.
Up till now Amazon South Africa has been non existent and that is about to change. The plan for Amazon going forward will be to run at a loss disrupting their competitors and to slowly start to dominate.
The 3 stage plan as we have been told is they will kick off with Black Friday with an open budget for marketing purposes. They will feature specials that are so good they will lose on those sales which are known as loss leaders which is an attempt to lure prospective customers on to their site. This aggressive marketing strategy will work because everyone loves a deal and with an open cheque book for marketing everyone will know about this.
Black Friday will be followed by Christmas sales which by then the plan is to have South Africa as part of the Global Amazon community which opens up world ecommerce. This is the part I have been waiting for because the products we have lines up are geared more towards the States and Europe due to the favorable exchange rates.
This leads me onto not knowing what happens to the branded products under license and are sold in other regions around the world. How can the same product have 3 or 4 different prices because it is sold in a certain country. South Africa would be the cheapest shopping region if tat is the case and it would affect others who are selling the same product in their regions. This no doubt will be sorted out and I am sure the other brand holders with the same item will not be best pleased.
Removing The Competition
I am particularly interested in the trampoline replacement mat market because there is no one who can compete at our pricing and this would be unbranded. Temu seems to be our biggest competitor, but I have plans for this which I will only start in March/April next year and not until we are 100% ready. There seems to be some local companies selling replacement mats based in SA, but those are also imported and my plan will remove that competition as well. They cannot compete and their days are numbered.
The way I see this is that if you are importing then you are reliant on the exchange rates and are not saving costs via manufacturing yourself. If I had to aggressively market my products I could undercut everyone by 50% and still make a small profit so there is so much wiggle room to target competitors. One competitor today shows a 22% discount which we know is not really true because I know the real costs so they are making a decent return and it will be fun to make them sweat and take them much lower.