The Amazon conundrum
Karolina Vieseron 16 January, 2014 at 12:01
Just as digital technology has changed shopper behavior and expectations, so has Amazon turned eCommerce upside-down. Its customer-first model, which relentlessly and algorithmically seeks to find the best deal, is fascinating, and—let’s be honest—stumps both manufacturers and retailers. Amazon’s willingness to cut into profit margins for the benefit of volume makes for a challenging business model to compete with. Amazon allows third parties to sell major brands in competition with manufacturers as part of the channel’s philosophy that a wide-open marketplace is good for its customers. As the site continues to grow aggressively in categories beyond books and CDs, the threat and opportunity has become real for CPG manufacturers and brick-and-mortar retailers. With strategic initiatives such as Amazon Fresh and Pantry, Jeff Bezos’s business is paving the way to deliver more types of products, faster and cheaper, to more doorsteps.
In a letter to Amazon customers marking the launch of the Kindle, Bezos wrote:
“There are two types of companies: those that work awesome to charge customers more, and those that work awesome to charge customers less. Both approaches can work. We are firmly in the second camp.”
For the brands that choose to sell on Amazon, the retailer’s cautious relationships with even the largest manufacturers make it a daunting proposition. Amazon is famously guarded with any data on the results of brands’ marketing efforts within the platform, making it challenging to understand how to activate and optimize the channel and understand its strengths relative to other distribution options.
But do shoppers have lower expectations for brand experiences when they shop on Amazon? Probably not. While Amazon is considered a “deal site” with some level of opacity around who the seller of each product is, the experience of sorting through product results and content from brands and third-party sellers is sometimes jarring.
So, how do you avoid losing loyalists and shoppers to Amazon and potentially risk them having a subpar experience with your brand? Considering the mega-retailer an integral part of your Continuous Commerce™ strategy and being extremely deliberate in your planning and activation of the channel will help set you down the right path.
First, embrace the prospect of doing business on Amazon without fear. You know your brand best—its benefits, solutions, and offerings. You have an eye to the product-development road map and an opportunity to leverage product and marketing assets from other channels to support your presence on the site.
Second, consider what Amazon brings to the table in terms of shopper experience and benefits: shopper events with great discounts, joint CRM opportunities, unique merchandising options, mobile experience, showroom tools that can convert a hesitant browser into a buyer. In other words, identify what Amazon brings that other channels can’t, then take advantage. Invest time in learning the pros and cons of the unique merchandising options available within your category. Understand how you can target laser-focused messaging at consumers likely to buy.
From a Continuous Commerce™ perspective, there are a few core strategies to consider as you plan and build your eCommerce business on Amazon:
- Incorporate Amazon into your ecosystem and determine its role. Approach the online retailer as you would when planning for any other channel: Evaluate your competitors’ strategies and your customers’ needs, and define your goals and objectives accordingly.
- Commit to getting the basics right. Ensure that your product is represented in the best way with accurate content and imagery that’s optimized for Amazon’s search engine, and that your inventory and distribution is set up to handle the channel’s demands.
Optimizing your business:
- Understand your Amazon shopper. Why does she shop there? What’s important to her? How can you take advantage of Amazon’s tools to meet her needs?
- Understand and challenge the options for driving qualified traffic into your Amazon store—on and off Amazon. How can you fill your funnel with shoppers who are primed for the Amazon experience?
- Understand and challenge the data Amazon provides and build your own set of KPIs to measure against, combining data from Amazon and your own sales information into an easy-to-act-on dashboard. Ensure you thoroughly and objectively analyze the data you’re gathering.
- Measure and adjust your tactics for driving traffic and conversion on the platform, and fine-tune your marketing spend based on what’s working and what’s not. Compare and contrast with your competition’s initiatives on the site.
- Optimize what you offer, and how you offer it, based on your goals and objectives. Now that you have some data, which of your products are doing well? How can you optimize products and packaging for the channel?
- Enlist Amazon shoppers to help sell your products. Ratings and reviews are essential to help you swim on the surface of the vast sea of items available on the platform. Take advantage of tools such as joint CRM programs and Amazon Vine to identify shoppers likely to share a favorable review of your product, and incentivize them to do so.
Understand that if you decide to hold off on selling on Amazon until your category has evolved on the platform, someone else probably will do so anyway—potentially with some detriment to your brand equity and the experience you’ve envisioned for your brand users and shoppers. Perhaps that’s okay: A sale is a sale! While you decide, your competitors may be honing their strategies for the channel.
But whether you’re an active participant or not, the channel will likely be a part of your Continuous Commerce™ecosystem. The bottom line? When it comes to Amazon, it’s better to lead than follow.