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YOUR BRAND VS. AMAZON - WHO WILL WIN?
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YOUR BRAND VS. AMAZON - WHO WILL WIN?

AMAZON WILL - BUT SO CAN YOU

“Your margin is my opportunity” Jeff Bezos is alleged to have said. This meme has been interpreted many ways. My view is that Bezos meant that if there is a meaningful margin in your brand then he’s going to have some of it.

So how should brands then view Amazon? Amazon is a powerful brand – certainly more powerful than yours. Shoppers have huge confidence that stuff will turn up in good shape and quickly. In many cases this brand benefit is enough to clinch a brand purchase decision. Amazon do not care about your brand, They care about your margin. They remind me a bit of my mate Ian who moved to America. Every time we had a meal I had to remind him about waitresses: “Mate, they aren’t hitting on you – they just want a good tip.” It took him a long time to learn. . . .

 


Amazon have also targeted certain categories. Many of the Pull Agency’s clients are in the health and beauty business – a business that Amazon have deliberately targeted. where in both the US and UK, they have reached an eye-watering 25% market share.

At a recent British Beauty Council event expert speakers took the audience through some of the challenges and opportunities for brands on Amazon. The first thing that was pointed out was that for all but the most luxurious brands, any stigma associated with being seen on the channel has gone.

AMAZON WON THE COVID WAR

As we know – Amazon was a big lockdown winner. Any reticence buyers had about the marketplace disappeared during this period of draconian measures. 50% of US households now have an Amazon Prime account.

So while there are still brands who exist in such a rarefied atmosphere they don’t want to be seen on Amazon, there aren’t many now that can afford not to be.

So what are the main challenges with putting your brand in this channel?

DON’T LOSE CONTROL

Aptly named Amazon beauty brand marketplace experts Market Defense recommends having a ‘brand protection strategy’ which tells you something about the possible pitfalls itself.

“A significant number of brands have been captured on Amazon by third parties.”

What does this mean? Well it means you’ve lost control and may need to do some significant work to get control of your brand back. It means that you are selling to someone who is re-selling your brand on Amazon. Amazon typically take around 15% as a margin along with various other fees and charges.

So a third party needs to be getting a pretty good margin to be able to buy from you and sell at a profit to them on Amazon. This is not an unsurmountable problem – after all you should be in control of your wholesale pricing. . . but overcoming a well-entrenched seller of your brand will depend on the degree to which they are the established supplier of your brand on Amazon. If you are in this situation – you need a strategy. It might be something you need to do over a managed period – especially if your revenues are dependent on the third party who has captured your brand franchise on Amazon.

IT’S A CHANNEL - IT NEEDS MANAGEMENT

The other key challenge can be resource. It is probably best to view Amazon as a specific channel that needs management like all channels. If you are a significant seller on Amazon this may be a full time job. If your Amazon sales are really substantial it might mean a team. Amazon are constantly quietly introducing new tools and programmes. Someone needs to keep up with this and make sure your brand is playing the game.

Another dimension is merchandising. When I worked at P&G we cared hugely about how a brand looked on shelf, including how it looked vs. its competitors. For many brands this has got much more complicated. The questions now are: How will my brand look on shelf? How will my brand look on my website?  How will my brand look on Instagram? How will my brand look in the hands of an influencer on TikTok? And how will my brand look on Amazon? Your brand needs to look good in all these places. So an identity created with all these things in mind is essential – along with easy to use brand guidelines so that your team and agencies you work with can easily execute your brand identity properly.

Lastly, as stated by one speaker: And this had quite a chilling ring to it: “Remember – Amazon is a ‘Regulator’. And one who shoots before talking”. They will take unilateral and unexplained action that might drastically penalise your brand without asking questions. You need to know what to do when this happens.

So the key to selling your brand on with Amazon is to do what you should be doing in all your brand channels: Promote, safeguard and defend your brand like it is your darling child. Amazon is not your friend, they are the dominant party and will take whatever action to protect their brand and their reputation. You need to look after your own.

Posted 14 May 2024 by Chris Bullick

 

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