8 Ecommerce Founders Share Their Amazon Strategies

March 5, 2019

On the endless shelf space of the internet, Amazon owns one of the largest displays. The retailer's grip on online shopping accounts for 50% of the market. With growing customer expectations for fast, free, convenient delivery and ballooning acquisitions costs, brands are getting squeezed from all sides.

Despite releasing control of their supply chain, many ecommerce brands are selling on the platform as a way to satisfy customers, while others are opting out of pay-to-play. On the Well Made podcast, founders and journalists have shared their strategy to take on the behemoth.

Using Amazon as a discovery platform

Innerwear brand, Richer Poorer uses Fulfilled by Amazon (FBA) as part of their omnichannel approach. Products often qualify for Prime shipping, but with higher service fees, brands are more selective over what they're selling.

“Amazon is a great place for people to discover us. If they're searching for Richer Poorer, it's like, hey, let's use that as almost that kind of gateway drug on Amazon to give them an assortment, and show them what it is that we do, and why our products are great, and then hopefully eventually over time, they'll discover our website.”

Similarly, brands like Baggu and found a formula that works for them by focusing on their hero products.

“We found that the styles like the reusable shopping bags and the really basic tote bags, where people just want to re-up the same thing over and over and over again [...] that kind of stuff does really well for us on Amazon.”

Some argue that Amazon’s disjointed site lacks focus and favors Amazon's private label brands. Even after customers wade past paid advertising, brands still need to find a way to show up in search results, especially since 65% of all clicks happen on the first page.

“One of the other issues I have with Amazon is the paradox of choice. I normally just go on Amazon knowing exactly what I want, but it's not great for discovering new products.”

“[The customer is] not browsing. They're like going there and searching for the product because they want to buy it on Amazon.”

“Amazon Basics itself is an admission that you know, I need batteries, not a brand.”

Planning your Amazon advertising strategy

Amazon has yet to truly monetize on the 54% of product search happening on the platform, and that may be cause for concern. Purchasing data will inevitably outpace query and the placement opportunities are a greenfield. As Amazon plots their next move, it’s only a matter of time until brands will have to adapt and follow suit.

“Amazon is building a profile on you based upon what you actually convert on. I think that's the advantage, and I think that's what you're going to see playing out moving forward, but Alexa’s a huge opportunity. It's a black box.”

Sustainable period and sex company, Sustain Natural is focusing their acquisition strategy on voice-activated search.

“I don't think DTC only is a reality for anybody anymore in terms of the long term. If 62%, or whatever it was, of searches are going to be voice-activated, and most of that's going to be [...] Alexa, what does that mean if you're not on Amazon?”

As brands decide where to spend their acquisition dollars, Digiday Retail Editor, Hilary Milnes argues that this an opportunity for traditional department stores to position themselves as the anti-Amazon partner.

“If they can really show brands that they are not going to sacrifice their brands' story, let them tell it on their own, really build an attractive place online [...] there's going to be a big opportunity to kind of arm themselves on both the retailer and the brand side against Amazon.”

Sacrificing data and brand experience

More brands are shunning Amazon altogether in favor of building their own tools and using platforms like Shopify to control customer experience and cost.

Cards Against Humanity became the biggest game on Amazon, but rampant counterfeits on the marketplace grew too much for CAH to ignore. They responded with their own fulfillment service, Blackbox.

“It was hurting our business that we were getting killed by these counterfeits. And the other thing is like FBA prices [...] the rates kept going up and we kept having these issues.”

Studio Neat shared that their conversion rates are much higher on Amazon, accounting for half their revenue, however, the lack of shopper data is a downside.

“We have no way to know if someone buys something on Amazon. Like if they come back to us, there's no way we can correlate data.”

Oui Shave and Grovemade says staying direct-to-consumer gives them the most leverage. According to a Glossy survey, 34% of brands are concerned about Amazon cannibalizing their direct sales.

“If you are selling through channels where you can't control your brand story and your pricing and your value proposition to customers [...] it's a much bigger risk to take.”

Physical goods are always at risk of being commoditized, and it’s an inherent threat with Amazon. Most brands can't compete against Amazon’s pricing arbitrage. Instead, they're staying true to their image and giving shoppers reason to choose them over Amazon’s 135 private labels. Community is not instantly replicable and brands are betting on allegiance.

“The reality is that customers are human beings. And what are human beings? Emotional. We like stories.”

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