Amazon has become the world’s largest online marketplace for two simple reasons: they provide value and convenience to online shoppers and make it simple for sellers to sell their products. Amazon’s massive customer base has brands large and small rushing to list their products, hoping to capitalize on the 2+ billion monthly visits Amazon earns across its sites.
By providing digital storefronts and fulfillment, Amazon appears to be a cash-printing machine for consumer brands. But with its lack of customer data, brand dilution and, in some cases, potential entry as a competitor, selling on Amazon is a trickier proposition than it may seem at first blush, especially for growing brands.
There’s no doubting that Amazon presents a substantial opportunity for brands looking to grow online revenues. But its risks are just as significant as its perceived reward.
We’ll talk about the potential hazards and how to tip the scales of risk and reward in your favor with a comprehensive Amazon marketing strategy.
The Risks of Amazon
The pros (for brands) are simple: convenience and increased revenue. Sellers are almost guaranteed to boost their overall sales by offering their products on Amazon. With Amazon processing payments and handling fulfillment, it seems like easy money. Not so fast.
The cons are a bit more complex.
1 – Lack of Data
Amazon is a great way to increase sales, not acquire customers. Amazon doesn’t pass back customer data to sellers. For most brands, this data is crucial to personalizing their customers’ experiences across multiple touchpoints to build a long-term relationship and increase customer lifetime value (LTV).
Shaping the customer journey is one of the key reasons brands create their own websites. Ecommerce sites are not just windows to sell directly to consumers, but rather engines of sophisticated marketing strategies based on customer information and behavioral data.
Earning a purchase on your own site isn’t the end of your relationship with that customer. An Amazon purchaser may come back for more, but it’s entirely out of your hands.
2 – Negative Brand Perception
Simply being listed on Amazon can substantially cheapen a brand’s image. Amazon’s shoppers expect product availability and low prices. It’s where people go to buy diapers in bulk or get a deal on protein powder – not exactly an environment of exclusivity or luxury.
Established brands risk negatively affecting how consumers perceive their brand, while newer brands without brand equity run the risk of pigeonholing themselves as a value brand, as it’s highly possible that Amazon will be the first place many customers discover the brand.
3 – Direct Competition
Amazon has aggressively grown its private label business, replicating products that perform well and undercutting prices to capitalize on margins. Sellers have reason to fear this direct competition – Amazon can (and does) advertise its own products and place them higher in “organic” search results.
It creates an interesting dilemma for brands looking to sell via Amazon – sell too much, and you could awaken a sleeping giant looking to club you out of business.
Optimize Your Amazon Marketing Strategy
There is still a way for brands to sell on Amazon without losing valuable customers, cheapening their brand or exposing themselves to the risk of being ripped off. Here are the key elements to a successful Amazon marketing strategy.
1 – Product Strategy
The biggest mistake a brand can make is to put all its products on Amazon. When you offer your best products on Amazon, savvy internet shoppers have no reason to visit your website. You lose all that critical customer data to the Amazon black hole.
List only lower-priced, out-of-season, high-inventory items on Amazon to capitalize on the revenue opportunity it provides. Reserve your best-selling and highest-value products for your website, where you own the data and control the experience.
The buyers of your best products are typically your most valuable customers – their average order value (AOV) is higher and they are more likely to purchase from you again. These are the customers with whom you need to create long-term relationships, increasing AOV and purchase frequency (and therefore LTV) with marketing.
Additionally, Amazon is less likely to knock off one of your products if they don’t know how well it would sell on their platform.
2 – Storefront Optimization
Your Amazon storefront is your chance to tell your brand story and communicate your value props. Turning your storefront into a branded experience will establish a deeper connection with potential customers, increasing the likelihood of conversion. This is especially important for newer brands, where Amazon is more likely to be a user’s first exposure to their brand.
Repurpose content from your website for consistency. Use eye-catching imagery and messaging in your brand voice, featuring your brand’s unique story and value props to capitalize on the high purchase intent of Amazon users.
3 – Organic Search
Position your products for the best organic ranking in Amazon searches by taking advantage of SEO. Determine which search terms are most relevant and have the highest conversion rate. Align product titles, descriptions and key feature points with those search terms.
4 – Paid Search
Search advertising on Amazon is similar to Google’s PPC options. Targeted product or storefront ads are a great way to increase brand awareness and drive revenue. Start with a simple Beta/Alpha campaign structure. Determine top-performing keywords from an initial discovery set (Beta campaigns). Move these to exact-match keywords (Alpha campaigns) and scale spend.
5 – Display Advertising
Amazon offers robust display ad options on its Amazon Advertising Platform (AAP). Unlike other display ad networks, Amazon’s DSP targets based on customer purchase data, rather than interests. These ads can drive back to your Amazon product page or your own website, and appear across Amazon sites and major publishers across the web.
These attractive features have made Amazon’s DSP one of the largest and fastest-growing. The catch? It currently requires a minimum monthly spend of $35k.
Amazon can be a great revenue generator for your business, but only if you understand the risks and how to navigate them. Take the proper steps to keep high-LTV customers coming to owned sites while protecting against damage to brand perception and being ripped off. Pair this with the Amazon marketing strategy we’ve outlined here and you’ll be on your way to a winning strategy on the e-commerce behemoth.
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