Why brands need to use Amazon to acquire customers

Discussion
Apr 25, 2018
Phil Masiello
Phil Masiello

As the generations raised on the internet continue to enter into adulthood, the way we do business and market products needs to shift with them. For many of these consumers, not to mention their elders, online shopping has become nearly synonymous with Amazon.com. That doesn’t in any way discount the need for a strong brand of your own, but the reality is, you may need to change what you think you know about how the consumer shops online.

We tracked visitor behavior for over 100 consumer product websites over a two-year period. We uncovered some surprising things about how today’s consumer uses websites, social media and Amazon together to make a purchase decision.

In a typical scenario, a consumer sees an appealing new brand or product and considers it for purchase. The first thing they do is find the brand’s website. They are seeking validation of quality and legitimacy.

The next step for the consumer is a search of product reviews on Google and Facebook. If all of this checks out to their liking, they head to Amazon.

Amazon plays a prominent role in product research for most consumers. Reviews offer insight into a product from an unbiased source — other buyers. An overwhelming 92 percent of the time, the consumer makes their initial purchase on Amazon.

The main reason behind this decision is trust. Customers trust Amazon to store their card information safely and are given confidence by the Amazon A-to-Z guarantee.

And if the customer searched for your product and didn’t find it on Amazon? They will almost always move on without making a purchase. That’s how strong Amazon loyalty has become.

Some retailers believe that listing their items on Amazon will draw sales from their e-commerce site. The more important principle is, most people won’t purchase from a website if they don’t know or trust it. This is the number one psychological barrier to conversion.

If your item isn’t readily available by being listed and optimized on Amazon, there is a vast wealth of customers who may never buy from you. And if they do, it will cost more money to get them to convert than it will on Amazon. If you treat your Amazon listings with as much care and concern as you do your website and stores, you will benefit significantly in both revenue and brand exposure.

DISCUSSION QUESTIONS: Are brands in denial about the importance of listing their products effectively on Amazon? How should brands balance the resources they expend optimizing and marketing their own e-commerce site with their efforts to sell on Amazon’s marketplace?

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Braintrust
"Yes, Amazon can be good for brands -- but you still have to go in with eyes wide open."
"Consumer brands can also create a direct-to-consumer presence to compete with normal channels to market. All this will be the new dynamic marketplace."
"The trick is to show up on Amazon but offer more value to the shopper on your own website — however, this is easier said than done."

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24 Comments on "Why brands need to use Amazon to acquire customers"


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Mark Ryski
BrainTrust

Brands are fast realizing the value of Amazon as a critical consumer platform. Amazon is no longer merely an online retailer — it’s a critical source of information and legitimacy. That said, brands need to be careful and thoughtful about how they communicate their value proposition and which products they choose to promote on Amazon in order to not cannibalize their own direct business or completely disrupt their traditional channels. But given Amazon’s gravitas and momentum, I don’t think it’s a question of whether or not brands will be on Amazon, it’s only a question of when.

Jon Polin
BrainTrust

From the perspective of a brand, I break my Amazon strategy into short term and not-so-short term. Short term, like it or not, I must invest in how my brand is positioned and presented on Amazon for all the reasons articulated in this article. Not-so-short term, i.e. right now, I am also thinking about loosening my reliance on Amazon because I know they will turn on me at some point and use searches for my brand/product to convert shoppers to their own Amazon-branded products. In the near future, batteries will be far from the only product category in which Amazon-branded products are the category’s best seller.

Shep Hyken
BrainTrust

Even if Amazon competes with the retailer, the retailer should take a look at how to work alongside — or even with — Amazon. That’s why brands choose to be a part of Amazon’s marketplace. Once the retailer gets an initial order through Amazon, there’s an opportunity to nurture that customer with quality of product and quality of service. Retailers must take advantage of this. Amazon gives them a bigger platform — or at least another channel for the customer to buy on.

Nikki Baird
BrainTrust
Well, let’s start with a discussion of the definition of “brand.” If you’re a multi-brand retailer, then all Amazon is is competition. If you are truly a brand, a manufacturer that also maybe has some retail distribution, then definitely, Amazon is an excellent place for discovery. But you have to keep in mind what type of brand promises you can actually convey on Amazon vs. other places. Something like Gilt or AhaLife might be a better place for discovery if you are planning on being a high-end luxury brand, because shoppers there trust those sites even if they don’t know the brands they’re buying — but they are buying with an expectation of getting access to luxury goods. Amazon is a different type of discovery channel, with shoppers who have different expectations about brand promises — not really looking for luxury per se. If your target is more down-market from luxury, then Amazon can be a great place, but you have to manage it well. The brands I’ve heard from who have successfully navigated Amazon… Read more »
Ken Lonyai
BrainTrust

Nikki – well said. It’s an obvious platform to launch and create general brand awareness, but Amazon is a profit-driven business (or for the non-believers, a growth driven business) that serves itself. As you explain, too much dependency upon the siren song of 100 million Prime households is a shipwreck waiting in a brand’s future. Only a dual strategy makes any sense.

Charles Dimov
Guest

Mr. Masiello is right. Retailers need to leverage the Amazon marketplace to grow their own customer base. The cliché is right, “out of sight, out of mind.” And in this case, consumers’ sights are often on Amazon.

Retailers, where possible, use Amazon for the marketplace and visibility, then draw them in with your in-store services, style, in-store returns and eventually when they prefer your brand, in-store pickup and other such offerings. Think of Amazon as an extension of your marketing.

Conversely, think about what systems you are operating that are based on the AWS system. We found that over 65 percent of Order Management Systems were on the AWS platform. In this case retailers should take a stand, realizing that this is purely funding the competitor.

Use Amazon to your retail advantage. Be cognizant of where you are merely supporting your competition — and DON’T!

Sunny Kumar
BrainTrust

From my experience it’s not that brands are in denial of the importance of Amazon, but many still believe they should and can compete in their own right — this is not necessarily the right approach.

The customer journey described in the article feels pretty realistic, and brands need to be more open to this fact. Follow the old maxim; fish where the fish are swimming and you’re more likely to make a catch!

Max Goldberg
Guest

Brands need to treat Amazon with as much care and concern as they do other primary retailers. And why not? Amazon dominates e-commerce and has become the starting point for many consumers’ e-shopping experiences. If this is where consumers are going, brands need to factor Amazon into their marketing and distribution plans.

Nir Manor
BrainTrust

The importance of Amazon cannot be exaggerated for brands’ exposure, trust building and sales. However, most brands and obviously retailers look at Amazon as the enemy and are reluctant to cooperate. This makes sense looking at Amazon’s share of e-commerce and relative footprint in different verticals. To get a perspective of a different market we should look at Alibaba’s e-commerce presence in China, mainly via the Tmall platform. In many cases, brands’ sales in China via Tmall account for 80 percent or 90 percent of their sales. Sales directly through their brands’ dot-com sites are very low. This obviously poses a risk for brands and is not an optimal situation long term.

Back to the U.S. market — brands should use Amazon to get awareness and trust from consumers, but they will be better off long term if they diversify their sales channels and drive significant revenues through their brand’s website and mobile app.

Doug Garnett
BrainTrust

I absolutely agree on the shopper behavior shown here — especially the idea that people “check it out” on Amazon but buy elsewhere (especially in the store).

That said, brands aren’t “acquiring” customers using Amazon — rather Amazon need be part of the communication strategy.

The truth is, any customer who purchases on Amazon remains Amazon’s customer. The manufacturer does not get their information and is unable to follow up with the purchaser to help encourage additional sales or introduce other products in their line.

That’s a very serious deficiency of Amazon as a sales channel. So yes, communicate via Amazon. But let’s be careful about Amazon’s stranglehold on information.

Seth Nagle
BrainTrust

When it comes to Amazon you need a dynamic playbook and an agile strategy. If you sit out and watch from the sidelines (like Toys “R” Us) you could be packing your bags and heading home early. Retailers like Best Buy seem to be taking a great approach to Amazon and building partnerships with them to enhance their offering.

The trick is to show up on Amazon but offer more value to the shopper on your own website — however, this is easier said than done.

Andrew Blatherwick
BrainTrust
It is true that Amazon has become a standard for the Internet shopping generation and the research clearly shows how important it is. However, brands must be careful that they do not feed the competitor most likely to drive them out of business. Retailers moving to omnichannel operations looking at Amazon as a possible outlet must consider how this is going to impact their overall brand and their competitive situation. Their responsibility is to build their own business and develop their own brand to become the destination of choice for whatever area of business they are focused on. To encourage people to use Amazon as the destination of choice for all things would be feeding their main competitor. Amazon certainly opens a huge opportunity for startup and mid-size businesses to grow and gain market share through the huge audience and customer base that use Amazon today. Consumer brands can also create a direct-to-consumer presence to compete with normal channels to market. All this will be the new dynamic marketplace that retail and manufacturers have to… Read more »
Dave Wendland
BrainTrust

Amazon is another channel of distribution that requires retail management and engagement like any other retailer. It is also often the first search engine for consumers. So, absence limits sales.

That said, brands should not put all of their eggs in this basket — brick-and-mortar remains relevant to millions, a brand’s own website is a legitimate channel if managed properly and other e-commerce initiatives generally make sense. Each of these spokes on the brand marketing wheel must contain consistent brand information and message continuity. Believe me, it’s more than a full-time job!

Cynthia Holcomb
BrainTrust

The world has changed and Amazon is THE giant retail store. A shopping machine and platform for all of everything. Branded e-commerce sites speak the brand message. Amazon sells product!

As in the past, certain brands do not want to associate their product with the masses.

Ralph Jacobson
BrainTrust

The first rule of marketing (and advertising for that matter) is to create awareness for your brand. Get your brand out there, everywhere. Why wouldn’t a huge retail online marketplace be one of your routes to market? You customers/consumers already shop there. Why wouldn’t you be there? Simple stuff, actually. Don’t over-complicate life!

Sterling Hawkins
BrainTrust

Brands don’t need to be on Amazon; however, it is smart to be there. With the volume of people searching and purchasing, many brands simply cannot afford to be absent from the marketplace. It should be viewed as a starting point — not the end game. There’s opportunity for brands to build a broader relationship with the shopper over time starting with the trust and support that Amazon lends and potentially ending with a loyal customer across more proprietary channels.

Peter Luff
BrainTrust

This is a perhaps a valid argument for developing brands, but I don’t see it as a major issue for established brands. For new brands, it will make absolute sense as it’s a quick and easy way to get established. Trick is then to have this sales channel integrated with your direct strategy for the longer term, as the dependence on Amazon’s credibility may become less important for your business strategy.

Ken Morris
BrainTrust
Ken Morris
Principal, Boston Retail Advisors
1 year 4 months ago

Amazon is not right for all retailers. For established retailers with good brand awareness, there is very limited upside to selling their products on Amazon. Why give a piece of your margin to Amazon if you don’t have to? Also, as a consumer, I trust a retailer’s branded site more than Amazon for product authenticity.

However, for retail start-ups or brands with limited consumer awareness, listing your products on Amazon can dramatically increase your exposure and drive incremental sales. It is also more cost effective to promote products on Amazon than to embark on your own advertising campaign.

Jeff Miller
Guest

Many brands are for sure in denial about importance of Amazon for discovery, shopping and now marketing. Not only do most brands need to be on Amazon they increasingly have to advertise on Amazon to stand out. There are of course huge trade offs and every brand and product category is different.

The biggest threats of being on Amazon is not owning the customer experience, the brand story, the customer data, being price swapped in real time by competitors and the potential for Amazon to private label — just ask any battery company or basic apparel brands. On the flip side, by not being on Amazon, you lose a huge discovery channel and revenue generator. Weighing the pros and cons is a challenge and something that should be addressed often.

Min-Jee Hwang
Guest

Brands must work hard to keep their Amazon listings up to date and appealing. With Amazon accounting for the lion’s share of online retail sales, brands can’t afford to miss out on that opportunity. But at the same time, it’s important to exercise caution. Amazon has the ability to shut off seller accounts for a number of reasons, so having the majority of your sales coming from Amazon gets into tricky territory. The solution is to work hard to make a dent on Amazon with excellent prices, descriptions, and Buy Box performance, but still devote significant time and effort to building up your direct to consumer and other reseller channels.

Patricia Vekich Waldron
Staff

Amazon isn’t an online retailer, it’s a brand and a platform. Companies can certainly partner successfully with Amazon as long as they know this going into the relationship.

Mike Osorio
BrainTrust

The decision to list on Amazon (or Gilt, Yoox/Net-a-Porter, TMall, JD.com, etc.) is the same reason brands decide (or decided) to retail their products in Macy’s or locate a store in a particular mall: Be where the customer will find you. The difference, of course, is the ability of Amazon to copy/cannibalize the product and the speed by which they can do it. However, that should not stop a brand from listing on Amazon, and managing that listing with the same diligence with which they manage their own site or anywhere they may need to list the product. If Amazon is where your target consumer spends time, you need to be there. Just manage it appropriately as part of your suite of customer touch points.

Kai Clarke
BrainTrust

Brands, and many companies are still in denial on not only listing their products effectively on Amazon, but also on reflecting the same information on their own website. Optimized, keywords, maximized for SEO should be reflected in any brand listing whether on Amazon or a corporate website. Most importantly, the company should recognize how robust Amazon’s listing capabilities are and should maximize each data field, listing space, and picture/video listing space. Knowing this will help many organizations utilize Amazon’s prowess and incorporate this information into their own listings.

Kevin Simonson
Guest

Our agency prioritizes Amazon as a focus channel alongside search and social. We view it as extremely important for modern, growing e-commerce brands. Amazon has become a primary point of origin for customers’ product-based searching on the web. And there’s so much data that is proprietary to Amazon. But if you are running your campaigns there, then at least you get insight into the searches people are making for your products and your ads.

The key is integrating that Amazon data with your other digital marketing efforts. We did a deep dive on cross-channel strategies that explains this approach in more detail.

wpDiscuz
Braintrust
"Yes, Amazon can be good for brands -- but you still have to go in with eyes wide open."
"Consumer brands can also create a direct-to-consumer presence to compete with normal channels to market. All this will be the new dynamic marketplace."
"The trick is to show up on Amazon but offer more value to the shopper on your own website — however, this is easier said than done."

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