It is a reality acknowledged by more and more marketers: a brand can no longer rely on intermediaries such as distributors, sales agents and independent retailers to convey its messages to the target audience.
A strong brand communicates directly with its end users. Their feedback is invaluable to brand owners in answering questions such as the ones below:
Does my product address the needs it’s designed to?
Why are people buying my product?
Is my product easy to use?
Are there any product defects that deter people from buying it?
What is the optimal price for my product?
Is my company able to provide a shopping experience that matches customers’ expectations?
The longer the distribution chain, the more difficult it is to find answers to these questions, meaning delays making adjustments and stay competitive.
Selling direct shortens the process and allows you to get feedback faster, but you still need to have a large enough customer base to obtain any meaningful results.
Amazon as Brand Building Platform
A strategy I personally employ and recommend to new and established brands is to use Amazon as a distribution channel.
I am not suggesting Amazon is a good fit for any business. If your product is too bulky, heavy, complicated to use, or requires installation by a third party, the online channel is probably not your best option.
Selling on Amazon is important simply because of its dominant retail presence, particularly in the United States. Consider these facts:
- Amazon has become the go to platform for product searches, surpassing the traditional search platforms such as Google or Bing.
- Amazon accounts for more than half of all online sales in the USA.
- As of September 2017 close to 90 million US shoppers are Amazon Prime subscribers, spending on average $1300 USD per year.
- Many top product search results on Google belong to Amazon product listings.
- Amazon advertising platform delivers much better ROI than those of traditional players such as Google, Bing and Facebook.
Google Versus Amazon
Just like Google, Amazon acts as a huge search engine platform people use to research and shop for products. However, there is an important distinction between the two players when it comes to online shopping.
While Google is primarily a research and discovery platform, Amazon users are primarily shoppers who have an active need they need to fulfil.
Amazon provides these shoppers with all the tools they need to make the purchase: instant checkout without the need to visit another website, Amazon Prime benefits, product comparisons, customer reviews; all backed by Amazon’s reputation as the largest ecommerce retailer (unlike Google, perceived as a search engine).
Amazon provides brands with a huge benefit: millions of shoppers who are actively looking to buy.
For this reason, many “young” brands have used exclusively Amazon as a launch platform.
5 Reasons to Build Your Brand On Amazon
Here are some of the benefits of using Amazon to build your brand:
Building brand exposure-given the massive Amazon traffic, both new and established brands have the opportunity to gain brand exposure.
For new brands that are unknown to shoppers and struggle with initial exposure and building credibility, Amazon offers few advertising tools that are very effective in building awareness and initial sales. Even low to moderate advertising budgets can generates hundreds of sales monthly.
Once your brand is starting to sell, it will rank higher in organic searches, which leads to additional exposure and sales.
Finding optimal price for your product-one of the biggest challenges brand owners have is pricing their products for maximum profits.
In a traditional distribution model price elasticity is slow to test and measure. Intermediaries and retailers will fight against any price change, and ask for grace periods ranging from a few months to years, depending on the agreement.
The only “agreement” you need to reference when selling on Amazon is your break-even point. Amazon shoppers are used to price fluctuations, so the negative impact will be non-existent. Moreover, price adjustments can are implemented in as little as 15 minutes.
Keeping the break-even point in mind, sellers can adjust prices up and down, and watch the impact on sales. With proper tracking, brand owners will identify the optimal price that allows the best ratio of product sales to profits.
Getting honest product feedback-one of the main benefits of selling on Amazon is the honest customer feedback you will receive.
Amazon provides brands with real-life feedback; while survey sites can offer you the audience to test some of your concepts, the level of involvement is different. Survey audiences receive your product complementary, so the chances of biased feedback are high.
Amazon customers are actually paying for your product; as a result the feedback you get from them is as genuine as you can possible get. You might agree or disagree with it, but these are your brand’s perceptions in the marketplace.
This information is invaluable to brand owners, as it allows them to identify key competitive advantages, uncover new uses for their product, learn about real life experiences and applications for their products, and correct potential defects that turn customers away for purchasing it.
Another useful strategy is to monitor the feedback on competitive products, especially the negative feedback. This will prevent you from launching products with the same flaws as your competitors, which can turn into a big competitive advantage.
Growing sales (or getting initial sales)-using Amazon as a distribution channel can significantly contribute to your brand’s bottom line. There are thousands of brands that sell in the millions of dollars on Amazon, and solo entrepreneurs who make a living exclusively from sourcing and selling on the platform.
New brands cat get those much needed initial sales and revenue from Amazon, which will allow them to expand and grow.
Getting your product distributed via traditional retailers is usually very difficult for an unknown brand, with limited resources. In contrast, accessing millions of shoppers on the on the amazon platform can be done in a matter of weeks.
Improving operational performance-Amazon has built its impressive reputation on the high standards the company maintains with the employees and suppliers. As an Amazon seller you will be held accountable on a number of performance indicators, ranging from responding to customer messages within 24 hours, maintaining proper stock, shipping products within the designated time window, proper packaging and of course, compliance with the law.
While very demanding at first glance, this high level of accountability is a great chance to improve your company’s overall operational performance, which will benefit all your customers, regardless of the distribution channel.
I can argue that of all the steps needed to sell on Amazon, making sure your operational performance matches Amazon standards has to be address first.
Not All Amazon Platforms Are Created Equal
As an Amazon seller you have access to two main platforms: Amazon North America (USA, Canada, Mexico) and Amazon Europe (UK, France, Germany, Italy and Spain). All other Amazon platforms such as Amazon Japan and India are much more difficult to access as an international seller, while Amazon Australia is still in its incipience, but big plans lay ahead.
As an active seller on Amazon North America and Europe I encourage you to sell your products on as many Amazon platforms as you possibly can.
Although in terms of sales volume Amazon USA is the clear winner, selling in multiple markets will allow you to understand the various nuances of exposing your product to a local audience.
Amazon: Just One Piece of Overall Distribution Strategy
Even if your primary distribution strategy is not online, you should still consider listing your products on Amazon for the many reasons described above. That being said, do not rely exclusively on Amazon to sell your products.
In the end, Amazon is an independent distributor you have very little control of. Any change Amazon decides to implement can, at any point in time, affect your ability to sell on the platform. If Amazon is your only channel, you business will be at risk.
Moreover, as an Amazon seller, you have little to know information about who is actually buying your products. Amazon completely forbids any communication with their customers, other than related to a specific order .
As a result, your strategic goal should be to diversify your distribution channels, and invest in building a direct relationship with your customers.