I don’t need to tell anyone reading this how much the retail landscape has changed in the last few years and as I write this article, I am also taking in the news that Shoe Zone is warning of 100 store closures and that Groupon will stop selling physical products by the end of 2020.
The causes of this are complex, including the need for a refreshed approach to business rates and the need for a digital tax to allow a more level playing field. Until that happens though, brands need to adopt a more agile retail strategy, including understanding how better to work with Amazon. For too long, many brands have largely ignored it or been dismissive of it as part of a considered sales and marketing strategy.
In the summer of 2019, we launched a dedicated team of Amazon specialists working with our proprietary tech stack to help brands shape and manage their UK and international presence. We have had good success across a wide diversity of sectors, from healthcare to beauty and FMCG in building out both defensive and aggressive sales strategies.
As online penetration rates across most retail categories continue to rise, Amazon is in prime position to take advantage of the struggles of the high street retailer – for lots of reasons, some fair and some unfair.
Why do brands need to think differently about Amazon? For starters, the traditional competitor mix can be very different. Well-known companies are competing against a much wider range of largely unknown brands that enjoy better reviews and have a more thorough understanding of how the Amazon algorithm works. Amazon offers a low barrier to entry for smaller challenger brands who are building their business on Amazon and ‘stealing’ revenue away from better known legacy brands.
Competition from all comers
Many companies are also often competing against resellers of their own products which has a big impact on their own pricing strategies and resulting revenue. Not having a grip on this doesn’t just cause lost revenue on Amazon but also wider problems across other retail customers who are monitoring pricing availability.
Amazon's own label is also expanding into different categories and the company has access to a huge amount of data that it is using to fuel this product development. Instead of moaning about this, brands must build a counteracting strategy.
This requires building out an integrated Amazon strategy which is data-led and drives improved product visibility through organic and paid media strategies and better pricing and stock management using AI and automated tools.
We are also seeing the rising importance of Amazon as a branding platform for companies not selling on the platform. The Amazon prime membership is mostly metropolitan and earn above average income. We have recently seen financial services companies that want to experiment outside of the duopoly of Google and Facebook running brand awareness campaigns to reach these affluent audiences.
Amazon is a search-led online platform and knowing what customers are searching for and when they are searching for it, is key to building successful optimisation and marketing strategies. We are now helping clients consistently hold first page organic rankings through smarter techniques and keyword insight and as a result they are consistently in the top five most sold products on Amazon.
Amazon will only get stronger. Relying on brand strength in other channels isn’t enough to succeed.
Jim Hawker, owner at Threepipe.