As a recent CNN story concluded: It's Amazon's world. We just live in it. Amazon now commands almost half of the entire U.S. e-commerce market, and one in two product searches start in its ecosystem. The Seattle-based company is also making significant strides as an online advertising platform – among a gazillion other ventures – and is well on its way from an ‘everything marketplace’ to an ‘everything company’.
Where does this brave new world leave brands?
Considering Amazon’s massive consumer audience, an increasing number are opting to play in Amazon’s world. And while for many, this is a smart move, it’s also a Faustian bargain. Running with the big dogs is all very well – until they change the rules. Like when Facebook changed its algorithm so that the brand pages and fan communities that marketers cultivated over years of hard ad investments... suddenly became irrelevant.
Time to address the elephant in the room, or better yet, the (e-commerce) giant. How dependent are brands really on Amazon and how can they avoid losing their soul in the bargain?
BAILING ON AMAZON
Some brands are already calling it quits. When German footwear company Birkenstock walked away from Amazon last year, the news made waves. Birkenstock CEO David Kahan slammed Amazon in a five-page email calling out its distribution practices and inability to crack down on counterfeit products.
Yet a year later, the Birkenstock case is already forgotten and Amazon continues to grow its advertising platform, posting massive growth and locking brands in further into the Amazon ecosphere.
But what the Birkenstock case highlighted was two-fold:
- strong brands can flourish without Amazon, and
- assessing the pros and cons of getting into bed with Amazon has never been more important for brands than today.
CONTROLLING YOUR CUSTOMER DATA
Weighing the pros and cons in today’s digital economy must entail how much of a brand’s customer intelligence now streams into the Amazon system. Because when brands sell direct-to-consumer, they own and control all data on intent, behavior, and purchases.
In Amazon’s world, all that data lives behind a wall – and the same goes for digital contenders like Walmart and Target. To no surprise, these platforms are becoming increasingly effective at leveraging this valuable data into targeted marketing and building out their own, rich consumer profiles.
With that said, focusing on developing a direct relationship with your customer is key, no matter where they choose to buy from your brand. It’s not a matter of company size either – many smaller brands have doubled down on creating an empathetic brand and have established a direct channel to the consumer by building up a database.
How? Successful brands build genuine communities on social and through their owned apps – take the rapid rise of Peleton Bikes as a prime example – while driving traffic to their websites for conversion and further engagement. Plus, they also use every chance and every touchpoint to learn more about their audience and their daily routines.
DOUBLING DOWN ON OWNED MEDIA
When it comes to learning about your consumer, owned media is where it’s at for two reasons: First, your websites, apps, and social properties offer the chance to engage consumers and collect rich data for your universal profiles that unlock more personalized marketing. Especially in this post-GDPR world where contact lists are dwindling and marketing opt-ins need to be renegotiated (also read our guide to reviving email lists after GDPR).
And second, your owned properties are way more fun and offer far more storytelling power than a standardized Amazon product page. On that note, keep in mind that while Amazon corners half of the e-commerce market, the main drivers are more transactional than emotional in nature: Customers mostly choose Amazon because of free shipping (70%), price (65%), and two-day or next-day shipping (60%) according to Epsilon.
This leaves a major window for brands to dazzle consumers with engaging stories on their owned platforms. And then use the opportunity to ask for actionable data points in honest, transparent language – perhaps while throwing in a few freebies because data is currency these days and consumers, they know it.
As a motivator, keep in mind that Amazon now creates more than 35 percent of its total revenues with personalized shopping recommendations. These powerful recommendations are created by feeding Amazon’s rich consumer intelligence into its proprietary AI engine.
But guess what? This kind of tech that lets Amazon know exactly which item you want to purchase next is no longer the sole domain of giants. AI-engines like Selligent Cortex can unlock similar results for any brand – if you own the right data.
THE CHOICE IS YOURS
Whether you take a bold leap with, or without Amazon is for every brand to decide on its own - but you’ll need to be intentional and analyze whether an exit (like Birkenstock) or a dual strategy makes more sense.
If you opt for the latter, consider also Amazon’s Advertising Platform. You would be in good company: Amazon ad revenues are currently growing 63.5% year-on-year and expected to reach $2.89 billion in 2018 (eMarketer). Now that half of all product discovery searches start on Amazon, it makes sense to be there.
Consider also whether your brand should sell directly on the Amazon marketplace. If so, it’s in your best interest to view it as another part of your digital storefront. This means adopting a hands-on philosophy about curating your product selection just as you would on your brand’s website. In the book The Amazon Marketplace Dilemma, e-commerce experts James Thomson and Joseph Hansen advise brands to assume control over five key areas when it comes to working on their platform:
- Product Availability
- Catalog Selection
Keeping your Amazon presence on-brand will pay dividends, plus you will receive some degree of data on what customers are buying. Use it to feed your owned consumer profiles, and consider doubling down on your owned media to run your own show.
Because whether or not you choose to play in Amazon’s world, the future belongs to brands who can build meaningful relationships with their consumers based on trust and relevance. It’s up to you to own that future.