The first step in online retail success: Accept there are some things that Amazon does that your company could never possibly compete with. Scope of product offering and price are big ones to concede to Jeff Bezos' retail killer.
For fashion start-up Rent the Runway and motorcycle gear retailer Revzilla, the business moats that help to keep Amazon out are constructed using a level of customer service, and creating a consumer community, that would not be possible for Jeff Bezos' low-cost model.
"At the time we started in 2008, we started thinking about how communities worked in retail," said Anthony Bucci, founder and former CEO of Revzilla, speaking at the CNBC Disruptor 50 Road Show in Philadelphia on Oct. 24. He didn't look to Amazon, but to a site called Bodybuilding.com. "We looked at customer service and curated content and community — that was the moat," Bucci said. "Everything else was sold elsewhere. Speed, price and selection were commoditized. Amazon had already won that."
"There was no great [motorcycle] retailer other than moms and pops and flighty online shops, so we started a business to solve our own pain point," Bucci, a motorcycle enthusiast since his teens, said. "We realized all the questions we were asking were questions not being adequately addressed in the market. ... How do we help [the consumers] through the purchase life cycle? Understanding becoming a resource was the origin."
Maureen Sullivan, Rent the Runway's chief operating officer, said consumers are buying more clothes than ever before but of lower quality, lower price and lower use. "In 1990 the average woman bought 40 articles of clothing, and today it is 68 items, but the spend level hasn't gone up," Sullivan said. "Eighty percent of a closet is worn less than three times a year. Amazon is getting you to buy a lot of stuff. We don't want you to buy stuff. ... It does not make sense to own all this stuff."