by: Jaffer Ali
“Hit ’em where they ain’t” –Wee Willie Keeler on the secret of success at the plate
There is no bigger question asked of any retailer, whether online or offline, than “how do you compete with Amazon?” Seems like a logical question. Amazon sells over 12 million products that it owns and over 350 million items featured on its site from 3rd part sellers.
They have over 120 million Prime members and its market capitalization as of 9/18 was $1.48 Trillion. It is quite daunting to think of scaling a redwood looking up from its base. But if one is going to be successful, you really need to think though the competitive landscape. This post is a personal story of how our company, PulseTV confronted the question.
We define ourselves as “push marketers”. This means we do not wait passively for a customer to search for a product. That passive marketing approach looks to satisfy demand but does not create demand. Creating demand is what we are all about. We hail from the infomercial industry where direct response commercials intervene into your content viewing at all hours of the day, whether watching Seinfeld or Gomer Pyle at 2:00 AM. When you see a spot on television for a copper pan, you were not necessarily thinking of that copper pan.
For PulseTV, our number one push initiative is email. We deploy offers via email to consumer or subscriber email boxes. We also use web push and more recently text push methodologies to get our product offers in front of consumers. Banners are not terribly effective as they have become more like wallpaper that is ignored.
We figured we just could not compete with Amazon or its more than 2.5 million third party sellers vying for a sale when people searched for what they wanted. If you are looking for a flashlight and search “flashlights” on Amazon, there are over 10,000 results that show up. As a marketer, it becomes difficult to stick out from the 10,000 listings with each marketer beating a path to zero profits trying to be the cheapest.
So we rather surprise our consumers and delight them with fresh offers daily. Also, instead of having thousands of items (SKUs), we limit our website to less than 500 items at any one time. We only offer one item a day via email. When people click, they see cross sells and other items on our site. The net effect of limiting the SKUs is to garner one of the highest sales/SKU in the business. Limiting choice is not always a negative. By increasing sales/sku you can purchase at much better discounts as vendors covet being one of the 500 or so items chosen.
Amazon seeks to be everything to everybody. Many have tried to emulate this strategy, few have succeeded. Results have been abysmal for Amazon’s competition. PulseTV chose a different path. We chose to concentrate on a neglected demographic; boomers. Internally we call this the Wee Willie Keeler strategy. Our culture worships youth and does not revere the elderly. We cater to those forgotten in popular culture. A side benefit is that this demographic actually has the most disposable income in these trying economic times.
Concurrent with this demographic, PulseTV caters to those people who rather speak with a customer service representative rather than going the digital route. We invest in customer service featuring live, in-house reps. Jeff Bezos is on record as saying that every customer service phone call is a failure of their system. We view each call as an opportunity to connect with our audience.
Another advantage of marketing to this demographic is loyalty. Younger consumers are generally not loyal to brands. They shop online seeking the lowest cost as if it was a sport. 31% of PulseTV buyers have purchased an average of 15X. We charge S&H and while we sell items at a discount off suggested retail prices, we are not the cheapest when you add S&H. This often adds 16% to the cost of an order.
When we offer less than 500 items a year, we spend a lot more time *selling* products. This includes creating demonstration videos using our real, in-house personnel. We do not use models or trained people. We use authentic PulseTV employees and do more than “yell and sell” as we prefer to “show and tell”. Amazon cannot feature videos of 350 million+ items.
Video is a key driver of what we do in creating demand. If we sell an air fryer, we cook food and eat it on camera.
All of the above do not work in isolation from each other. The combination makes this more than the proverbial sum of its parts. BTW, we do offer some items on Amazon, but the platform accounts for less than 1% of our sales and is one way we liquidate overstocked items.
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Jaffer Ali is a serial entrepreneur and co-founder of PulseTV.com.
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