Learnings from our Live Webinar
To stay ahead in the fast-paced world of e-commerce, you need to understand exactly where major players like Amazon fit within your sales channel strategy.
Diving deep into exactly what Amazon could offer you, you need to weigh the pros and cons purely within the unique context of your business and your goals.
But, to begin that process, what questions should you be asking?
Our recent webinar saw us gather a handpicked panel of Amazon and e-commerce experts for their own insider take on the question, “where does Amazon sit as part of your e-commerce strategy”.
Here, we’ve gathered some of their top takeaways to help you build the right strategy to power e-comm growth for your brand.
Looking for expert Amazon guidance? Speak to our specialist team
What benefits does Amazon offer our brand?
There are lots of individual reasons why your brand could benefit from a presence on Amazon and, with the right strategy in place, you can mix and match to suit.
- Growing sales, profits and/or market share
- Trading direct, whether B2C or B2B
- Gaining better control over your brand – useful if your products are also sold by retailers
- International expansion
- For newer brands, it’s a brilliant place to build trust
- Gaining market insights – testing and/or exploring what does and doesn’t work on the channel and/or in different territories or categories
But what’s the downside?
We often hear businesses talk about what they perceive to be the negatives of Amazon – including concerns that it could:
- Devalue their brand
- Cannibalise sales from their other sales channels
- Reduce prices
- Reduce profits
As Amazon experts, we have definitely seen some of these happen – but only where businesses don’t have an effective, well-planned strategy in place.
In our experience, for those brands who should be on Amazon, these concerns can be overcome simply by tackling Amazon in the right way.
The Amazon Opportunity
We’ve talked about the potential uses of Amazon to a business, but we’ve not yet touched on Amazon’s biggest USP – the sheer size of the scale and volume on offer to brands.
Context is key! So let’s look at some Amazon facts:
- Amazon is the world’s largest retail outlet by revenue, with circa £400bn retail revenue in their last reported accounts.
- Amazon operates in 17 countries now, with new markets opening every year, bringing huge international scale to their brands.
- Amazon have 300m active customers, 200m of whom are Prime subscribers – a huge cohort of loyal, trusting, regular spenders.
- Let’s compare Amazon to two key UK retailers, Argos and Very. Their combined turnover represents less than 2% of what Amazon offers, and their active customer base is less than 3.5% of Amazon’s.
But the really crucial stats come when you look at consumer behaviour.
An incredible 56% of consumers begin their product searches on Amazon – not on a search engine.
That’s 56% of consumers, all with a high purchase intent, seeking out products on the Amazon marketplace – a vast pool of latent demand that’s there to be tapped.
The other 44%?
They’re searching on Google. And as a result of their search, the biggest percentage of them head to Amazon.
Our data shows that the click-share from those searches is absolutely dominated by Amazon in almost every category – with the exception of kid’s footwear and homewares.
To Amazon, or not to Amazon?
But should your business be on Amazon at all?
It could be that Amazon doesn’t have a role to play for your brand.
There’s no rule saying you have to make Amazon part of your e-commerce strategy, and you can certainly take a strategic decision not to get involved if that’s what suits your business best.
Our advice is to let your strategy set your direction.
At Venture Forge, we guide our clients through a “WHY – IF – HOW” mindset:
- Why might you want to do Amazon? And why might you not?
- If you do, what are your options? Can you – and should you?
- Then – how should you do Amazon?
By funnelling it down in this way, you can quickly see what natural role Amazon might play for you, and create the skeleton of a strategy along the way.
Why would we want Amazon competing with our website?
In our webinar, E-Commerce expert Nic Jones shared the story of a brand client.
Testing the SERP results for an own-brand product, the client typed the product name into Google search – only to find the first listings for their branded keyword were for a completely different, but similar, product listed on Amazon.
With Amazon’s huge market share and presence, this is by no means a one-off occurrence.
The fact is that Amazon is already competing with your website, whether you’re on Amazon marketplace or not.
So let’s spin the question on its head.
Most businesses invest heavily in SEO, looking to boost their ownership of the SERP for keywords at all levels of the funnel and drive traffic in.
But ignoring Amazon doesn’t just mean that a competing listing could take top spot on the SERP, despite your best SEO efforts.
Those 56% of high intent consumers using Amazon, not Google, as their product search engine? You’re making it impossible for them to find you.
But we’re already on multiple channels
Here, we’ll hand over to the experience of James Ewens, Head of E-Commerce at FurnitureBox.
FurnitureBox operates a multi-marketplace strategy, of which Amazon is just one element.
In our webinar, James explained that this strategy is driven by the aim of getting their products in front of as many eyes as possible, with Amazon representing “a powerful part of the customer’s journey to finding us”.
If you get the sale, you get the sale.James Ewens, FurnitureBox
“Amazon is only our fourth biggest channel,” explained James.
“But even if someone finds us on Amazon, and then comes to buy through another channel – without Amazon making up the initial part of that journey, would they have found us at all?”
For James, it’s not about Amazon stealing their sales from another channel – it’s about whose sales FurnitureBox can steal by using Amazon.
But I don’t want to upset my big Retailers…
If you’re a brand selling through big Retailers, having your own presence on Amazon might seem like a no-no – after all, you don’t want to upset companies you have a strong working relationship with.
And, if they already sell on Amazon, competing with them on price is only going to create a race to the bottom.
In our webinar, Nic Jones shared an excellent option for businesses in this position – and that’s to create an anonymous presence on Amazon.
This offers a range of benefits, including:
- Hides who you are from retailers you work with
- Allows price competition
- You can still enhance listings with A+ content
- You can sell any you product want
- A useful testing tool for new brand launches
Want to explore this type of strategy in more detail? Get in touch with our expert team
What type of businesses might not suit Amazon?
While it’s true that Amazon doesn’t work for all brands, our experience shows that there are really only two types of business that aren’t suited to Amazon.
1. Big brands at threat of cannibalisation
For very large, global, well-established brands like Adidas or Nike, who have built strong paths to their owned and retail channels, the threat of cannibalisation (where Amazon takes sales from their other channels, cutting margins due to the price stack) means that it can be tough to fit Amazon effectively into their e-commerce strategy.
However, our experience shows that the right strategy can work around cannibalisation for most other businesses, including mid-market and challenger brands.
2. Retailers selling other brand’s products on Amazon
Following recent announcements from Amazon and mass culls of Vendor accounts, unfortunately we’re struggling to identify a positive long-term role for Retailers who sell other brand’s products on Amazon.
Though at a glance these accounts seem to fit Amazon’s low-cost model, the only real lever at their disposal is that of price.
Competition between Retailers naturally drives a race to the bottom, and that offers very little value to anyone involved, pressurising margins at every stage from the manufacturer to Amazon themselves.
Over the last 2 years, Amazon have clearly demonstrated that they want to work directly with brands, proactively closing reseller accounts en masse.
This leaves Retailers with a big question to ask over whether Amazon has a role to play in their e-commerce strategy over the longer term.
We want to expand into the EU – how can Amazon help with that?
Amazon Europe is Amazon’s second biggest market, with €51bn sales in 2021, so it presents a significant opportunity for brands looking to scale internationally – and one which is only getting bigger.
Now with 9 markets and growing, Amazon presents a brilliant opportunity for businesses to test out international expansion without needing any specialist in-market knowledge and expertise – a simple and effective way to dip your toe and see which products work best before you commit to something more costly and permanent.
FurnitureBox is a fantastic example of a business who have used Amazon to test the waters in international markets – in fact, for their brand, it opened up a real opportunity to take a big step ahead of their competition, and even open up the huge US market.
As a business dealing with large, bulky, non-parcelable items that can’t use FBA or Prime, FurnitureBox has already gained a competitive edge because others in their sector don’t want to use Amazon.
By applying the same disruptive thinking to their use of Amazon to expand internationally, FurnitureBox first trialled a selection of their products in Germany via Amazon marketplace, using the results to pinpoint how their brand was received and which products would work well before creating a longer-term strategy.
They didn’t stop there – and the bravery of their approach has uncovered a massive potential opportunity for them.
“The US market has been the golden egg for us, and testing was invaluable,” James Ewens told us.
“Modern and specific designs like ours don’t always work well there, so we’d never have guessed our products would resonate. But we let the data do the talking and the market responded incredibly well – opening an opportunity potentially 10x the size of the UK.”
The US market has been the golden egg for us, and testing (via Amazon) was invaluable.James Ewens, FurnitureBox
So come to Amazon with an open mind…
If you’re considering fitting Amazon into your wider e-commerce strategy, our best advice is to come with an open mind.
Avoid preconceptions or the experiences of others, arm yourself with market and economic data and take the time to thoroughly understand Amazon, looking at your potential place within it, the role of your existing channels and your competition – both off and on Amazon.
The truth is that Amazon almost always presents a good opportunity, with the ability to drive sales and brand growth for any business.