Amazon this week became the whipping boy of anti-competitive retail practices at the US House Subcommittee Antitrust hearing. Brands are frustrated with Amazon using their sales data against them, the proliferation of counterfeits, and the ‘walled garden’ that make it hard for brands to understand customer behavior across an increasingly fragmented buying journey.
But despite the many challenges that brands face in selling on the Amazon marketplace or to Amazon as a vendor, it is still the place where the majority of ecommerce transactions occur. Analysis from eMarketer shows that Amazon commands 38% of ecommerce sales. A study by Civicscience in June 2019 found that almost half of US internet users typically start their search on Amazon when shopping for a product online.
Here is a non-exhaustive list of marketing features that Amazon has built which can create enormous upside for brands that invest in selling there. Some are free, and some are paid. All of them require investment in some form.
Customer reviews: free and paid
Amazon holds a unique ability to build a large number of quality, verified reviews from real customers because of the volume of transactions that occur there. Amazon is often the first place that shoppers will search when researching a product, whether that’s shopping online or in-store – a frustrating experience known by retailers as showrooming. Amazon has two paid programs to help brands grow the number of products reviews: Vine Reviews, and the Early Reviewer Program.
The catch: Sure, there are challenges like fake-review loopholes that bad-actor sellers seem to get away with. But like it or lump it, shoppers love reading reviews on Amazon, and a healthy number of positive reviews quickly increases conversion rate.
Ability to test new markets: paid
Jewelry brand Charles & Colvard CTHR uses Amazon to validate demand for certain styles of product in new markets they are considering launching in. For example, they’ve found that a shopper in Spain prefers a more under-stated style, compared with a typical German shopper. They then use this data to develop their more extensive DTC assortment in each market.
The catch: Expanding to new markets on Amazon does require investment. Brands generally need to establish an in-market supply chain.
Live video: free
Amazon launched a QVC QVCA -like live video program a couple of years back, and it appears to receives very decent traffic. Customers can view product demos and shopping guides from the Amazon.com/live page, or from a product page while a live video is being broadcast.
This can be a great discovery tool for brands – launching new products and doing product demonstrations are both good use-cases.
The catch: Like other forms of content development, brands need to be savvy and engaging in their live videos. Immediate return-on-investment is often lower than other programs.
The Amazon.com/deals landing page is one of the highest-trafficked pages on Amazon. Shoppers love deals, and Amazon has a few different types that brands can access. Lightning deals (time-limited), coupons, and buy-one-get-one promotions are all very easy to setup and can accelerate sales nicely.
The catch: some deal types are more visible than others, and not all brands are eager to discount their prices.
A+ content and stores: free
Five years ago, the image-rich product page content we see on Amazon came with a hefty price tag: $1,000+ per product page, and it was only available to vendors who sold directly to Amazon. Today, any registered brand can create this content.
Hosting this magnitude of content must come at an enormous cost to Amazon. Other marketplaces like Walmart.com WMT actually outsource content hosting to third-party providers and require the brand to pay for it. My conclusion here is that Amazon has justified the bandwidth cost in much higher conversions and time-on-site from shoppers. Amazon says that “Adding A+ to your product detail pages can result in higher conversion rates, increased traffic, and increased sales.”
Stores are a landing page where a brand can merchandise their product assortment and tell the brand’s story. These pages also provide access to a unique data set on Amazon, which is reporting on the most effective off-site traffic channels.
The catch: developing really engaging A+ and store content is hard, and Amazon’s process to upload it can be frustrating.
Amazon posts: free
A relatively new marketing tool, this is currently a freebie for brands. Brands can share Instagram-like posts that are shown on product pages and elsewhere on-site. Coconut water brand Vita Coco received hundreds of thousands of free impressions on their products within the first couple of months of using Posts. (Read more in my earlier post for Forbes: Brands Are Using This Little-Known Amazon Marketing Tool To Drive Free Traffic.)
The catch: Amazon has added more reporting features to the Posts analytics dashboard in recent weeks, but it’s still missing the most critical measurement: conversions and actual sales driven through Posts.
Amazon advertising: paid
Amazon has been working on its advertising platform for X years. I recall Amazon’s ad platform being described as ‘primitive’ and ‘basic’ just five years ago. Amazon has come a long way since then, and brands are increasingly recognizing the full-funnel marketing potential of Amazon. The most common use case is the direct-response, pay-per-click advertising campaigns available to all sellers. These campaigns can provide nearly instant sales and results. For brand marketing purposes, Amazon has creative ad units on- and off-site, as well as through its own media channels – Prime Video, Kindle, and Amazon Music AMZN . Amazon’s advertising revenue is expected to reach $40BN by 2023.
The catch: Running great Amazon advertising campaigns requires an expert now. And as more advertisers jump in, costs are going up compared with more nascent platforms like Instacart.
Decent analytics: free
Many brands will argue that Amazon shares enough data with its suppliers. But compared with newer online marketplaces, the depth and quality of Amazon’s data reporting for sellers and vendors is quite rich. Brands get access to metrics like basket analysis, new-to-brand sales, customer demographics, and more.
The catch: Amazon is never going to provide customer-level data that will allow you to piece together the full customer journey across platforms. But let’s be real: neither is any other other marketplace.
Brands across all categories are looking to develop their channels and meet shoppers where they are actively researching and buying. Many brands want to explore emerging marketplaces like Walmart and Instacart. It can be indeed worthwhile to be an early adopter as those platforms are growing very quickly. But Amazon’s current and likely future market domination deserve a brand’s attention. With Amazon’s 38% share of ecommerce sales, maximizing every one of these marketing features should be a priority before looking elsewhere for growth.