Amazon is one of the largest retailers in the world. Although they started out as an online bookstore, they now sell everything from furniture to groceries – and yes, even the kitchen sink. Their purchase of Whole Foods demonstrates their determination to break into larger markets, and it’s working.
Amazon sold over 5 billion products in 2017 to Prime customers alone. Many retail brands now sell their products on Amazon so they can access the buying power of Amazon customers. With a market that big – and steadily growing – it’s a no-brainer that your company can benefit from being a part of the Amazon ecosphere.
Amazon is such a successful marketplace because brands like yours operate there. More than half of what’s sold there actually comes from small businesses. Although it takes different skills to run a marketplace storefront than an e-commerce site, integrating diverse online sales channels is worth the extra effort to build your brand and take advantage of The Amazon Effect in everything you do.
When you understand the ways that Amazon can work for your brand, you’re primed to improve your overall e-commerce sales by harnessing the power of the marketplace. With that goal in mind, we’ve outlined 7 key ways the Amazon marketplace creates opportunity for retail companies like yours to reach more customers, protect and grow your brand, beat out the competition, and bolster your distribution strategy:
1. Ready and Willing Customers
Amazon now accounts for close to 50% of US retail e-commerce sales and nearly 4% of all US retail sales. It’s a rapidly growing market where customers are ready and willing to buy.
Over half of online shoppers start their product searches there, and more than 20% will make a purchase if they find something that suits their needs. That means Amazon’s conversion rate is a whopping 8x the average e-commerce conversion rate of 2.7%.
Amazon has also made it so easy for customers to quickly find, buy, and receive what they need, that it’s become the go-to for shoppers in the purchasing stage. Prime members enjoy fast, free shipping, and anyone can save payment information, enable 1-click (or 1-swipe) ordering, set up “Subscribe & Save” recurring orders, and rely on high-quality customer service.
“Amazon, through the things that they have done, has produced great loyalty. Why? Because it’s an absolute great experience.” – Glenn Fogel, Priceline Group CEO via MSNBC
Between the huge volume of shoppers, impressive conversion rate, and friction-free customer experience, Amazon offers an unbeatable opportunity for brands in the marketplace to meet consumers where they are – and deliver.
2. Get in the Running with Your Competitors
There are almost 600,000,000 products sold on Amazon (whoa). The upside is that customers can find just about anything that they’re searching for (and more). The bad news is that if they’re looking for the types of products you sell, and you’re not selling on Amazon, then they’re most likely to find – and buy – something else instead.
You have an amazing product and unique value to offer your customers. Maybe you have the highest-thread-count, easiest-to-wash, most comfortable and luxurious bed sheets on this side of the Mississippi. Or maybe you sell something else fantastic. But if price, convenience, and availability where your customers are aren’t high on your list of selling propositions, then everything else becomes largely irrelevant.
"To not be considering Amazon and others would be — in my view — delusional." – Art Peck, Gap Inc. CEO via Business Insider
Adding to the threat of competitors encroaching on your would-be sales are resellers, who may already be selling your brand’s products on Amazon, whether you like it or not. If your products are in demand, then they tend to find their way into the marketplace no matter what, so why not come along for the ride – and the profit, controlling your competitive positioning as a result?
In sum, your competitors offer a plethora of options on Amazon. Shoppers are likely to get what they need there, they deserve access to your awesome products, and resellers could sell your stuff even if you don’t. For any retail brand, getting a leg up on the competition is certainly important, but the first step to selling more is simple: just show up.
3. Protect Your Brand (Customer Retention)
When you think about protecting your brand, you’re likely to consider your logo and style guide that dictate how you’re represented to the world. These are the elements that help build trust and loyalty among your customers and set you apart from your competition, alongside your unique selling points (1,000 thread count sheet set, anyone?).
When you establish a presence on Amazon, you extend your brand guidelines to the marketplace to keep your brand consistent across sales channels and prevent resellers from tarnishing your reputation. You can claim your space to ensure accuracy and authenticity with product descriptions, quality images, and other branded content.
There are a few marketplace issues that may arise for retail brands that are not on Amazon. Unauthorized resellers can potentially sell counterfeit products listed as legitimate, resellers might violate MAP pricing, and other sellers could misrepresent your brand. Although becoming an Amazon seller doesn’t eliminate the possibility of these problems coming up, it does give you the power to remedy them.
To protect your brand as an Amazon seller, you can submit your trademark to the Amazon Brand Registry to “create an accurate and trusted experience for customers.” Registration allows you to better track and report suspected intellectual property rights violations and maintain a handle on your brand’s representation in the marketplace.
By becoming a registered Amazon seller, you can implement your brand guidelines in the marketplace and be better equipped to combat misrepresentation or fraud from other sellers of your products. So, when customers are purchasing your products from Amazon, they’re not just receiving the items, they’re experiencing your brand.
4. Grow Your Brand (Customer Acquisition)
Amazon’s massive customer base is full of potential brand champions who simply haven’t heard of you yet. By selling your products in the marketplace, you’re quickly getting in front of new-to-you shoppers, some of whom can ultimately be converted to brand-loyal buyers. Your presence on Amazon increases brand awareness so that more people can search for your company and find your e-commerce site.
In addition to boosting organic search traffic for your brand, you can bolster your paid ad conversion with retargeting ads that reach your Amazon customers – or those like them – via Facebook. This works by using customer data from your Amazon seller account to lead a custom or “lookalike” audience on Facebook Ads Manager to your e-commerce website. It’s an effective tactic because customers who bought from you on Amazon are more likely to buy from you again.
Growing your brand through Amazon works because you can reach potential customers in the marketplace that Amazon has acquired for you at no extra cost. And, outside Amazon, you can spend your advertising dollars more wisely on qualified leads exported from your Seller account, resulting in a higher ROAS (return on ad spend) than you can otherwise achieve.
5. Dip Your Toes into E-commerce
If you don’t have the resources to create and manage a full e-commerce site on your own or you’re new to direct distribution, Amazon offers a perfect “playground” to experiment with your online sales strategy. You can test your products with Amazon’s customer base in order to validate them for expansion to e-commerce.
Additionally, if you maintain an e-commerce site but don’t have the bandwidth for a mobile strategy, Amazon offers a ready-made mobile experience so customers can access and purchase your products on the go. The marketplace converts at a higher rate on mobile than the average e-commerce sites, which still lag behind desktop conversions, despite a steady rise in mobile site views year over year.
“Those retailers ready to step up and provide the experience expected by customers will close the gap between mobile and desktop conversion rates.” – Mobify
Amazon can function as an online retail trial run with a low barrier to entry. By utilizing its existing infrastructure, customer base, and seamless mobile user experience, brands can get a feel for the world of e-commerce before committing to maintaining their own online store.
6. Move Your Inventory Strategically
Committing to multi-channel online distribution isn’t all or nothing. You can operate primarily as an e-commerce brand and strategically select products for Amazon to maintain a presence in the marketplace. This is a good compromise for brands that want to have maximum control over their product distribution but don’t want to miss out on the huge opportunity that Amazon presents.
Amazon can be a great channel for moving your bestselling, highest-margin products, getting rid of products you’re phasing out, or experimenting with higher-ticket combinations like bundles (complementary products) or multi-packs (2 or more of the same item). Custom bundles set you apart from your competition and multi-packs increase your margins. Get choosy about your marketplace offerings, and Amazon will act as an extension of your company that solves problems rather than one that dilutes your brand.
“Compared to individual (unbundled) pricing, a mixed-bundle offer increases consumers’ evaluations of the offer and purchase intentions and lowers their estimate of the cost of the bundle. This is because consumers generally infer savings from bundled offers and/or because of the convenience…” –Adrian Furnham, The New Psychology of Money
Be selective about which of your products you sell on Amazon, and you’ll have the best of both worlds. You can stay grounded in an e-commerce site that you fully control and also keep a foot in the door of America’s favorite marketplace to maximize profits. Isn’t compromise fun?
7. Let the Experts Handle the Logistics
Amazon has created a customer-centric logistics strategy that sellers can take advantage of through FBA (Fulfillment by Amazon). They continue to automate processes in order to drive down costs and reduce delivery time for customers. If you’re selling products on Amazon, this makes your customers happy and makes your brand look good.
With FBA, you store your products at Amazon’s fulfillment centers. They then fulfill the orders, ship them to customers, and handle customer service, including returns. This allows you to expand your business beyond the limitations of your own fulfillment capabilities and your available warehouse space.
Using Amazon’s FBA program can help your business grow by taking advantage of the marketplace’s superior fulfillment networks to build upon your company’s own logistics capabilities. Amazon ships your products cheaper and faster, which gives your customers more purchasing options and, in turn, strengthens your brand.
The Short of It
In short, these 7 benefits of becoming an Amazon seller justify your retail brand’s expansion into the marketplace.
✓ Ready and Willing Customers
✓ Get in the Running with Your Competitors
✓ Protect Your Brand (Customer Retention)
✓ Grow Your Brand (Customer Acquisition)
✓ Dip Your Toes into E-commerce
✓ Move Your Inventory Strategically
✓ Let the Experts Handle the Logistics
As you can see, they have influenced a culture of multi-channel, savvy consumers who are ready to take your e-commerce company to the next level. With Amazon in your toolbox, you have an unprecedented opportunity to unlock your brand’s full potential. So, what are you waiting for?