Amazon’s first-quarter sales hit $108 billion this year and generated record profits, which means one thing: its business is ripe for disruption.
A record number of consumers visited the so-called Everything Store during the COVID-19 pandemic. Huge selection, low prices and quick delivery have made Amazon one of the largest corporations in the world. But Amazon is a lot less popular with the companies that must give 20 percent of revenues to sell on its marketplace.
Amazon is more than an online shopping mall. In addition to hosting brands, the Internet giant also collects data. Too frequently, when a brand is successful, Amazon will launch its own, similar product at a lower price.
Small companies are left with a dilemma. Keep selling on Amazon, but watch profits whither as competition mounts, or go it alone and lose the customers Amazon delivers.
While members of Congress and the Biden administration consider whether Amazon is violating antitrust laws, a Houston-based start-up is offering brands a helping hand. Cart.com helps companies create an effective alternative sales channel to Amazon.
“E-commerce is a lot harder than just having a website, right? You have to be optimizing the entire end-to-end customer journey,” said CEO Omair Tariq. “We always knew that the world needed the best parts of Amazon and the best parts of Shopify and did not need the parts that were unfriendly for these brands.”
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Cart.com offers a fully integrated suite of software, services and infrastructure to run the backend, marketing and fulfillment operations for companies with little or no e-commerce expertise. Companies can choose from a menu of services to meet their needs.
Tariq was an early hire at Blinds.com and became its chief operating officer before Home Depot bought it in 2014. He then worked his way up at his new employer, boosting the home improvement store’s online sales to $20 billion a year.
Tariq co-founded Cart.com in September with Jim Jacobsen, former CEO of RTIC Outdoors. Last month they closed a $25 million Series A round of financing, led by venture capital firms Mercury Fund and Arsenal Growth. That’s in addition to an initial $20 million Seed funding by Bearing Ventures.
Cart.com has since then acquired five companies and is hiring. In January, the company bought Beaumont-based AmeriCommerce, which provides online store services to nearly 3,000 customers, Tariq said. He expects to announce several more acquisitions soon.
What sets Cart.com apart is how it ensures the different back-end systems work together, and most importantly, Cart.com does not get between a brand and its customers the way Amazon and other platforms do.
“We can do your marketing and your website and your logistics and your customer service,” Tariq said. “We’re enabling access to their end consumers directly.”
Most of Cart.com’s customers are small merchants who hire the company to operate online stores. But Tariq wants to help direct-to-consumer brands, such as ProjectorScreen.com, grow their operations. As the name implies, the company does one thing.
“Our online store revenue now blows away the revenue we get from Amazon, and we have control over the messaging, control over our customer interactions and control over the entire experience,” Brian Gluck, owner of ProjectorScreen.com, said.
Most people would look at Amazon, a global corporation with a $1.75 trillion market cap, and assume it is invincible. But remember, Amazon was once the little guy taking on the big retailers using a new thing called the internet.
Innovative companies, however, can only make fat margins for so long. Outsized profits are evidence of an opportunity for a smaller start-up to undercut a big company by finding efficiencies and offering a better or less expensive service.
No brand or retailer in its right mind wants to depend on Amazon for all sales. Amazon founder Jeff Bezos expects too big a cut, controls access to customers and will knock off your product in a heartbeat.
Neither does Tariq suggest a brand can abandon Amazon. But for long-term success, every company needs a good, direct relationship with customers if it wants to thrive.
“Look, retail is about having an omnichannel presence, and both brick and mortar and online,” he told me. “It is very important for these brands to have a direct relationship with these customers.”
As for myself, the more I have learned about Amazon’s business practices over the years, the more I’ve used the site as a showroom to find products. Then I go to the brand’s website to make my purchase, even if it means waiting a little longer for the delivery. I’m just not interested in making Bezos any richer.
Tomlinson writes commentary about business, economics and policy.