Is it possible for both established retail brands and e-commerce newcomers to beat Amazon.com at its own game?

The rise of Amazon to the position of undisputed king of e-commerce in the U.S. has undermined — and even threatened to topple — traditional brands. Most lack the marketing savvy and physical infrastructure that Amazon has spent decades building. And the situation is even more dire for smaller merchandisers, or those without instant name-brand recognition.

Amazon is challenging two distinct categories of sellers today: large omnichannel players that began life as brick-and-mortar retailers, and fledgling direct-to-consumer entities focusing exclusively on e-commerce sales.

Unlike established brands, the latter group of merchandisers must figure out how to get on the radar screen of shoppers, who are inundated today with purchasing options.

“That’s first and foremost among the business concerns our customers have,” says Eric Best, co-founder and chief executive officer of SoundCommerce, provider of a data platform for consumer brands and retailers. “How do you acquire the next incremental customer, or re-engage the existing shopper to convert a new purchase?” he asks. The usual answer is, of course, the internet, but resources are limited, and sellers are being hit with rising advertising costs on essential channels such as Facebook and Instagram.

Grabbing the customer’s attention is only the first step in securing a foothold in the hotly competitive world of e-commerce. “It’s one thing to pay to acquire shoppers,” says Best. “It’s another to operate with confidence that you’ll have sufficient supply to serve demand.”

Then there’s the problem of getting product to impatient and demanding customers. With many supply chains suffering from severe congestion at seaports and in warehouses, e-tailers are having to resort in some cases to air freight, racking up “extraordinary incremental costs,” says Best.

With costs piling up, e-tailers have less wiggle room for promotional discounting in peak selling seasons. “It’s a double-edged sword,” says Best. “If you can get access to product, that’s good. But if the cost of attainment is so high that it limits your ability to generate demand in typical ways, you basically create a new set of problems.”

The most popular consumer brands don’t necessarily lack the resources to compete for shoppers’ business, yet have their own challenges to overcome, chief among them the need to keep large volumes of product flowing through the supply chain. That’s especially the case today, when COVID-19 and its variants threaten to shut down factories, constrict the labor supply and create bottlenecks in transportation. Even if a merchant is able to shift sourcing of manufactured goods to make up for the loss of a vendor, labor shortages at ports and over the road can stymie their ability to get items onto buyers’ hands.

“Time is money when it comes to inventory turns,” Best says. “Whether a product is stuck on a ship or never manufactured at all, you still have the same supply availability problems.”

Then, of course, there’s the looming hazard of Amazon, which can apply its massive resources to solve just about any supply chain crisis — even if that means creating its own fleet of delivery trucks or chartering aircraft and ships to get around logistical roadblocks. But Amazon’s prowess is more than just a matter of possessing better physical infrastructure. Over the years, the giant e-tailer has focused intently on marketing and perfecting the customer experience. That’s a major reason why 50 cents of every e-commerce dollar spent in North America today flows through Amazon, Best notes.

The company has spent huge amounts of money on honing its ability to understand shopper behavior across all customer touchpoints, including Amazon Prime, its streaming video service, the Whole Foods retail chain, and its own Amazon Go stores. “What Amazon is able to do is effectively benchmark how each of those engagements drives customer loyalty and future engagement,” says Best. What’s more, Amazon’s focus on “downstream impact,” or DSI, means it can forecast the amount and source of future demand, right down to the SKU level.

With Amazon having amassed what seems like an insurmountable lead over the competition, is there any hope for retailers and e-tailers wishing to sidestep the behemoth’s channel and supporting infrastructure, and build direct ties to consumers? Best thinks modern technology, with its ability to uncover massive volumes of information about customers, can help. “The good news is that it’s becoming cheaper and easier for independent brands to achieve data accessibility, because everything is moving to the cloud,” he says. “You can stand up a storefront, and be running a modern e-commerce website, in a matter of hours.”

The physical aspect of the problem is also solvable, even for those e-tailers who decline the tempting Fulfillment by Amazon service, tapping that company’s sprawling network of warehouses and order-fulfillment capability. “There’s a growing ecosystem of third-party logistics providers that make it easier for independent brands and retailers to outsource the physical infrastructure of their e-commerce operation,” says Best. “They can stand up regional distribution centers and leverage that ecosystem to look and act more like Amazon today.”

None of this means that success against the ever-expanding Amazon empire is guaranteed, either for old-line brands or e-commerce startups. “But it’s easier than ever to adopt technology as a brand or retailer to be competitive,” Best says. “That’s important in terms of independent brands surviving and thriving in an Amazon-dominated market.”