With the news last week from Earnst Research that Amazon had once again cornered the e-commerce market over the holiday period, one would think this can only be good news if you are a brand who sells on there.
But should you sell to Amazon or on Amazon, or forgo the retail behemoth altogether as some brands choose to do?
Amazon represents a fabulous opportunity to reach and sell to millions of consumers around the world. A store and experience well understood by customers that can complement your existing bricks and mortar or direct channels. Indeed, Amazon was the second-fastest growing advertising company last year, second only to Snapchat. However, with this opportunity comes risk. Faceless mercenary sellers that may not hang around for long, operate to a different set of rules and have very different motivations. Many are simply out to make a quick buck and have no interest in brand building or longevity and simply go where the money is.
What you gain in a new retail channel may cause other unforeseen challenges if not correctly managed.
A bit of basic marketing analytics can help us with this decision if we use the '4P's' to help make a decision, namely: price, product, promotion, and place.
- Price - How much control do you have over pricing? What impact will this have on your margins or your average selling price across all other channels after Amazon have taken their cut? Are there uncontrollable fluctuations in pricing that need to be monitored?
- Product - Do you want to list your entire range on the site or just a selection. How will you launch new products or sell through end-of-life inventory? Does your brand suffer from counterfeiting and how will you manage fake products getting into this channel?
- Promotion - Who is writing copy and providing images for the listing on the front end along with tagging and setting up PPC keywords on the backend? Will the branding efforts be consistent with other channels and not devalue marketing spend elsewhere.
- Place - Which sellers are representing your brand and how many of them are known to you? Are they in it to turn a quick buck or do they want to grow with you? Do you just have a single listing, or are you creating unnecessary uncertainty and doubt in the mind of the consumer by having multiple listings for the same product?
This is a good place to start when trying to judge if Amazon is right for your brand. If these elements are ignored, you may find brand equity on Amazon and potentially other channels taking a hit, and finding yourself with an 'Amazon problem' that is tricky to solve
However, with careful management, an Amazon channel can complement and even enhance what the brand does in every other channel.