Amazon

Why You Can't Ignore Amazon

(How to Manage Your Brand On Amazon and Grow Your Business)

First I must apologise for something that I am about to do to you. I am going to perform a quick psychological experiment on you that you will not be able to resist. It’ll almost be like I’m a trained hypnotist and you’ve been called out in the crowd to take part in my show. To be fair, I want to give you full disclosure before I start and a chance to opt out if you don’t want to participate. The test will only take about ten seconds but if you don’t want to be a part please stop reading now. Ok?

Still here?  Alright here we go...

When you start the experiment I want you close your eyes for 10 seconds while you perform a simple task for me. Sound reasonable? It’s not complicated I promise. While your eyes are closed I want you try not to think about a white bear. You can start the test now. Close your eyes and I’ll wait here. Just remember - 10 seconds and try not to think of a white bear.

Back already?  How did you do?

Even though the task is not complicated it can be almost impossible to resist thinking of that white bear can’t it? No matter what you do in this experiment you will struggle to not think of anything else. This experiment was first described by Professor Daniel Wegner in his iconic book, White Bears and Other Unwanted Thoughts. The book is about how your brain struggles to not think about something once the idea has been planted. It’s just like the sub-heading of this article. When I say you can ignore Amazon for your business my bet is that you are now having a hard time ignoring the idea.


What does Amazon really mean to your business?

Amazon has come to represent speed and convenience to it’s customers.  From humble beginnings as an online bookstore to the stated goal of being somewhere you can buy everything Amazon is the place many online shoppers now go first when searching for products to buy.  Many customers bypass Google altogether and go straight to Amazon when searching for something.

In October 2017 it was estimated that 64% of American households have an Amazon Prime account.  That’s a lot of households!

In fact, in April 2018 there were an estimated 100 Million Prime members in the United States alone.   

Amazon Prime members value convenience and fast shipping over price. They pay a monthly membership fee just so they can get free 2-day shipping on their orders.  If you like numbers another statistic might impress you even more.  In 2018 it was estimated that there are over 9 million millionaires with Amazon Prime accounts in the United States.  

So have you guessed by now why Amazon is so important?  It’s because they have an enormous amount of traffic of active shoppers on their platform.  And they are searching on a platform that is doing everything it can to keep them on this platform.  So if your products are not showing up in search results for keywords important to your product on Amazon your product is far less likely to be considered by many consumers.

Your brain might be feeling a little sore about now so let’s slow down and define some of the confusing Amazon jargon you need to know to sound at least a little more knowledgeable about Amazon.

Amazon is just too complicated right?

What does all this jargon mean?  We have already talked about what Amazon Prime is.   But there are many other terms and acronyms you might have heard about such as FBA and FBM.  It can feel overwhelming when first trying to get a handle on Amazon's ecosystem so we'll start with just the bare essentials.

FBA stands for "fulfilled by Amazon" and is the process where Amazon handles the warehousing and order fulfilment for you.  Instead of having to create and maintain the infrastructure to house, pick and pack your inventory you have Amazon do it for you.  Most of the time this is cheaper than doing order fulfilment yourself as long as your stock turns over at a reasonable pace.  This is one of the huge benefits of FBA since it allows businesses with little infrastructure to scale rapidly.

If you sell on Amazon but still manage  the shipping of orders yourself then this would be termed FBM.  FBM stands for "fulfilled by merchant" and simply refers to when you or your preparation company stores, picks, packs and ships each and every order.

Another acronym you might hear bandied about is 3P sellers. This stands for 3rd party sellers which simply means any seller who is not Amazon or the owner of the brand. These might be wholesale customers for your products or even an individual who received your product as a gift and wants to sell it online. That’s probably enough jargon for now and we’ll cover some others directly when we come across them. The important thing to remember is that Amazon has its own language that you need to learn.

What About Shopify, Etsy and Magento?

In case you are still thinking that you would rather pass on the whole Amazon thing and sooner set up your own Shopify, Etsy or Magento store instead consider this.   If your product is relevant at all it is likely that it will become available for sale on Amazon from someone.  Realise that Amazon is a sales platform AND a marketplace.  Once you started to view Amazon as a distinct sales channel in it's own right the difference between the other platforms becomes clearer.

As we heard already, someone might have received your product as a Christmas gift and like the idea of have some cash instead.  So to sell it they might list your product on Amazon.  Consider how much care a person with only a single unit might put into their product listing. Product listings on Amazon are different to eBay in a very important way.  Only one product listing can exist for any single universal product code (UPC).   That means if you decide to sell your own product in the future you might be stuck with the photos, title and product description created by a teenager selling your product from home. Because you didn’t create this listing changing it becomes more of a headache.

The headache might get even worse than that if professional product resellers start offering your product below your recommended retail price and competing on price.  Any brand equity you might have built into your brand could be damaged by deep discounting and competition between resellers on the Amazon platform. You’re probably realising now that if your brand and products are relevant for shoppers on Amazon, which has the stated goal of being the “everything store” then you need to manage your brand presence on Amazon.

When you proactively manage the presence of your products and brand on Amazon there are several benefits.  You can potentially grow and scale your production and logistics without a large expenditure of capital. You can register your brand on Amazon and restrict other 3P sellers from selling your products without an authorisation from you.  If you like to be in control of your brand message and image online then you need to start engaging with Amazon. In case you have decided you want to get explore the Amazon ecosystem a little further let’s consider the different options you have for selling your products on Amazon.  Essentially you have three options

Amazon, Resellers or Your Own Storefront

The first is that you can give your product to Amazon and let them sell it for you.  This is truly hands off but the downside for you is that Amazon is a very big business and doesn’t mind selling things for a loss in order to gain market share.  The platform you would use if Amazon is selling your products is called vendor central.

The second option is to sell through authorised wholesale resellers. You might not be too concerned about any potential price erosion for your product and allow multiple sellers of your products.  Alternatively you might arrange for an exclusive seller agreement with one third party seller.  This can work well if the seller is prepared to promote your products on Amazon themselves.  

The third and best option is to set up your own store on Amazon and sell you products yourself. This is the preferred option for most brands since this builds equity in your business while at the same time protecting and managing your brand. But perhaps you don’t have the time, scale or bandwidth to handle another sales channel like Amazon?  What options do you have then?

Product and Brand Management

If you simply don’t have the scope for hiring a full time employee to manage your Amazon store a "fee for service" model might be the simplest solution for you.  You can hire a qualified and experienced Amazon professional who manages all the day to day concerns with your Amazon storefront.

This can include responding to customer service questions through the platform, managing inventory, advertising campaigns and reorders, responding to feedback and managing reviews, maintaining an eye out for listing hijackers and product counterfeits and optimising your product listings.   At the very least it would be beneficial to have an experienced professional setup your listings.  Keywords are very important for having your listings ranked on page one of the Amazon search results.  Being a very dynamic ecommerce platform an Amazon account requires ongoing maintenance and supervision.  The closest to a set and forget option for Amazon is to outsource your brand and sales channel management to a professional.

Next Steps

If you are serious about growing your business and protecting the brand you have invested so much into building you can't ignore Amazon.  Even if you hand over your products to Amazon you need a plan.

If you feel you are ready to talk to a professional consultant about your business strategy on the Amazon sales channel click on the button below and complete a quick 2-3 minute survey to take the next step.