Small businesses can still compete with Amazon – even on Prime Day

On this year's Amazon Prime Day, the online behemoth is joined by other big-name retailers like Macy's and eBay who are promoting deals and sales of their own. But small businesses – including those that don't sell much online – shouldn't sit on the sidelines.

While entrepreneurs may not be able to go head to head with Amazon in some areas, experts say they should differentiate themselves by offering unique products and experiences, whether their business is rare books or shoe repairs.

"Stay authentic," says Amit Sharma, who is CEO of Narvar, a tech company, and is a former executive at Walmart, Williams-Sonoma, and Apple. "You can't compete on price and promotions, but highlight your product and how you stand out."

Amazon has emphasized Prime Day's own impact on small businesses that sell on its platform. It said Prime members ordered more than 40 million items from small and medium-sized businesses last year during the promotion. And it said thousands of those businesses selling on Amazon had more than $50,000 in sales on that day. Consulting firm AlixPartners says that based on its surveys, more shoppers than last year are actually expecting to use Prime Day to shop for bargains at other retailers.

Mary Adams, who has owned and run the Annapolis Book Store in Maryland for nearly 14 years, is considering ways she might benefit from some of Amazon's limelight. 

"I'm trying to stay alive," says Ms. Adams, who has seen sales weaken at her shop that sells both antiquarian books and current bestsellers as shoppers shift online or just don't want to collect books.

Small businesses can't compete with Amazon's war chest for marketing. The company heavily takes to the TV airways to promote Prime Day and sends reminder emails to its members. But smaller companies can blast their own emails, and even do local marketing such as digital banners on the area football field.

Small businesses shouldn't just use Prime Day to get rid of summer leftovers or other products that haven't sold. They should offer small discounts on new and special merchandise and even offer sneak peeks of holiday items – so that shoppers will have a reason to come back for more.

"The best strategy is to use Prime Day to gain customers in the long-term," says Roshan Varma, a director in the retail practice at AlixPartners.

Experts also advise small business owners to examine which deals Amazon will be highlighting and then offer small discounts on their own items that complement those products.

Whether you offer repair services or free coffee, highlight the intimate experiences of your business. Experts also think owners should emphasize their niche products. "The 'everything store' can't compete with a locally curated assortment," says Ms. Varma.

This story was reported by The Associated Press.