Winning on Amazon
ecommerce marketplaces are a unique opportunity and require a dedicated brand strategy
Historians often point to a single innovation that enabled the rulers of the Roman Empire to completely disrupt their age: roads. The ability to project armies and influence over huge distances allowed such expansion that we are left with visible Roman influence across Europe to this day. A truly incredible exploitation of competitive advantage. The global internet revolution has had a similar effect, enabling systematic disintermediation and disruption of nearly every path to the consumer worldwide.
Winners in this space have proven to be two things: quick adapters and marketplaces. Amazon and Alibaba shrewdly understand this and quickly adapt to opportunities. They also leverage multiple sellers at scale to present customers with massive assortment, and “endless shelf”, so that their product selection is as quickly adaptable as their platforms. But marketplaces aren’t the only ones winning: nimble brands and now digitally-native brands, including Casper and Anker, are leveraging the opportunities marketplace ecommerce presents, winning against the traditional and producing outsize returns.
Winners in this space have proven to be two things: quick adapters and marketplaces
Since joining Amazon as an employee in 1999, I’ve interfaced with many of the brands that are winning on the platform, and they share several key characteristics.
First, they understand that the marketplace platform represents a unique opportunity and should be optimized separately from other platforms. The strongest operators on the channel understand that the store is a reflection of the total market for your product. Even product intended for Club channels or perhaps liquidation channels will usually end there, creating disruption throughout the chain. But disruption can be managed and even optimized for faster growth. Further, products and brands on Amazon inherit the consumer behaviour and seasonality of their shopper. Even non-seasonal products such as dog food often see seasonal lifts because people are on the site buying gifts with their wallet open and still need replenishables.
In the US, Amazon accounts for an astonishing 44% of all ecommerce sales and 70% of all ecommerce growth. It’s now not just the place to buy product, but also the go-to site to learn what others think about a product, including what it should cost and how it performs. In a few years, we’ve gone from worrying about the “showrooming” phenomenon, to a situation where the distribution channel demands that we get Amazon right so brands aren’t harmed in-aisle by poor reviews.
Ecommerce marketplaces represent an entirely new terrain for brands; they differ from traditional paths to market in that they are truly operational platforms. Brands with the strongest operational foundation often outperform those with bigger brand visibility and budget. But it goes beyond that:
- Search-traffic patterns don’t match those of Google or social platforms at all.
- Shelf space cannot be controlled. Distribution channels become intertwined.
- Inventory placement must service fast delivery to a market-wide audience from a single purchase point.
- Impact of customer feedback is greatly magnified.
- Order cycles are far more rapid.
- The entire customer journey is compressed, and brand value perception is tied far more closely to transaction.
Succeeding in ecommerce is not just a matter of designating an ecommerce sales team and expecting existing brand, advertising and supply chain teams to service them. Success requires every facet of a brand’s organization, from warehouse, to packaging, to customer service, to understand how marketplaces operate and how they work together.
In the US, Amazon accounts for an astonishing 44% of all ecommerce sales and 70% of all ecommerce growth
That’s why winning on Amazon – and on all ecommerce marketplaces – requires a dedicated, holistic and specific approach, focused first on team and foundation. This is in contrast to a traditional agency approach but it can’t be said more clearly: success on Amazon often finishes with demand generation and creative iteration as opposed to starting with those areas of execution.
We predict that 2018 and beyond will be the start of the roll-out of the first true ecommerce Marketplace Agency of Record, capable of implementing a dedicated approach focused on strategy, operations and execution and with a team that understands how to partner with existing teams and marketing programmes. At Marketplace Ignition, we have built a programme that partners with some of the largest and most successful growth engine brands in the channel to steal, share and drive brand both on and off Amazon.
01 May 2018
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