5 Ways Your Small Businesses Can Topple Amazon This Holiday Season While the holiday season is an exciting time for entrepreneurs, the one major obstacle small-business owners will face is competing with the almighty Amazon.

By Matt Winn

Opinions expressed by Entrepreneur contributors are their own.

With the holidays right around the corner, online retailers -- large and small -- are preparing for what's expected to be the biggest selling season in ecommerce history.

While exciting for entrepreneurs, the one major obstacle small-business owners will face is competing with the almighty Amazon. From their high-brand awareness to low prices, your small online shop will have to be extra savvy to compete – especially with a limited budget.

So what can you do to topple the ecommerce giant this holiday season?

Related: 5 Ecommerce Mistakes to Avoid: A Newbie's Guide

Here are five practical ways to reclaim your piece of the pie.

1. Use your small size to make a big impact. First and foremost, you need to accept that Amazon is an extremely powerful player. Instead of puffing up to seem like a large company, your small business should embrace its size and "show off its smallness" to build an advantage over the Amazon machine.

The good news is more consumers, particularly the key millennial demographic, are looking to support a cause, including promoting small and local businesses. To capitalize on this trend, broadcast your story and startup culture as much as possible. For example, explain the history and mission of your business on your "About Us" page to make an instant connection. Even more, your small business vibe should become a core brand component, so be sure to include any relevant icons (Better Business Bureau, Chamber of Commerce and others) on your website.

Also, one of the most impactful perks of being small is the ability to personalize the customer experience. This can be done through simple tactics like sending personalized "thank you" emails, or even including handwritten notes in order packaging to add that special touch. The key here is to make customers feel good about buying from your site, something that Amazon simply can't do.

2. Leverage existing customers early and often. Marketing Metrics claims that your business has a 60-70 percent chance of selling to an existing customer, with only a 5 to 20 percent chance of selling to a new prospect. Pair that with the fact that it costs six to seven times more to acquire a customer than to retain one, and it becomes clear that encouraging current customers to make repeat purchases is paramount to the success of your small business this holiday season.

Related: The Top 5 Errors Made by Money-Losing Ecommerce Sites

To get started, send email-marketing messages as soon as possible, namely to reintroduce your business to existing customers. Simply appearing in customers' inbox will remind them of their previous purchase and place your shop back into their consideration set. As the holidays draw closer, your email frequency should also increase, extending personalized discounts and product recommendations to increase sales conversions.

Another useful tactic is to utilize loyalty programs to encourage shoppers to return to your website to redeem points or cash. Email can also be used here, sending a reminder message for customers to make purchases using existing rewards, or even offering special deals to loyalty-program members. Regardless of approach, you'll need to maximize the value of your existing customer base to take a bite out of Amazon's market share.

3. Try to compete on price, but protect your profit margins. Beyond brand awareness, many online shoppers make holiday purchases on Amazon because of cost savings. Because Amazon is such a huge player, they can easily afford to offer some of the lowest prices on the web while accepting razor-thin profit margins. Smaller businesses, on the other hand, don't have that luxury, meaning that every dollar and order counts.

Naturally, your small business will be pressured to cut prices to remain competitive with larger players. But when doing so, you must be highly strategic by looking at profit margins on a per-product basis. If one line of products has a large profit margin, it makes more sense to reduce prices there as opposed to a product line with tiny margins.

As the holidays draw near, time exists for you to work with suppliers to see if there are any cost savings or discounts. Once those conversations are held, then explore expanding your presence by listing products on various marketplaces -- including Amazon, Google Product Search and Nextag.

Related: The 7 Critical Elements Your Ecommerce Site Needs to Be Considered Trustworthy

4. Focus on increasing average order value. Since your online store won't enjoy the same volume of customers as Amazon, do all you can to increase average order value. This technique includes finding ways to increase the amount of money each customer spends and the number of items purchased with each transaction. Fortunately, doing so is easier than you might think.

To get started, take a page out of Amazon's book by offering free shipping -- but only at a certain amount. For example, by only offering free shipping with a $50 or $100 purchase, you're encouraging customers to spend more to receive the discount. Another idea is to offer a gift card with a certain purchase amount, such as a $10 gift card with $100 purchase. And finally, try increasing the number of items customers add to their shopping cart by offering product accessories, showcasing related products or bundling items to spur impulse buys.

5. Stay positive and keep your chin up. Half of the battle is keeping your head held high in the face of the Amazon giant. Although the cards may seem stacked against you, with a little hard work and dedication, you can compete, and even beat Amazon this holiday season.

Remember this: You know your products and customers better than anyone else, so use that to your distinct advantage. Amazon is all about quantity, whereas you can provide a high-quality and unique customer experience. Simply arm yourself with product knowledge and exceptional service, and you'll earn customers far beyond the holidays to compete with Amazon all year long.

Related: The Holidays Are Coming: 4 Ways Startups Can Meet Shoppers on Mobile

Wavy Line
Matt Winn

Senior Marketing Communications Manager

Matt Winn is Volusion's Marketing Communications Manager, where he helps oversee the organization's branding and communications efforts. Matt has created hundreds of articles, videos and seminars on all things ecommerce, ranging from online marketing to web design and customer experience.

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