In the past decade, we’ve seen an exponential rise in the use of e-commerce (online selling) from all types of brands, both large and small. In 2019, online sales made up 14.1% of global retail purchases; and that number is projected to continue rising significantly in the wake of the emerging stay-at-home economy. Given this trend, many businesses who are yet to venture into online sales are asking themselves the same question: should we be selling on Amazon?
The short answer is yes—but with a few considerations and caveats. While Amazon is widely acknowledged as the best of the best in third party e-commerce platforms due to its behemoth customer base, streamlined sales process and robust customer service, it is crucial for selling partners to take steps to establish recognition outside the platform in order to preserve brand autonomy and prevent getting lost in the shuffle.
So, why are 1.7 million small and medium sized businesses currently choosing to partner with Amazon? Depending on the business need, Amazon can function as a one-stop-shop for all e-commerce needs ranging from product promotions to fulfillment. Most importantly, Amazon's brand is synonymous with consumer trust and satisfaction, giving users a sense of security and comfort when shopping or exploring products they have not interacted with before.
Through its customer-centric focus on value and convenience, Amazon elevated the standard consumer expectation across the retail and technology industry. In particular, Amazon's shipping and delivery practices have had a considerable impact on the market by offering free shipping and decreasing delivery times. By leveraging the consumers' desire for fast and free delivery, Amazon was able to drive long term customer loyalty through the Amazon Prime Membership program, enrolling 112 million users in the U.S. as of 2019.
Amazon's commitment to the consumer's experience is the reason why 80% of Americans trust Amazon as an online retailer, and you should too. It is also the reason why today, Amazon makes up 75% of all marketplace sales in the U.S. currently holding seven times the market share of their closest competitors.
Twenty years ago, Amazon opened up its platform to third-party sellers or partners, providing a greater variety of inventory to customers and a great opportunity for smaller brands to increase their sales. However, Amazon holds these sellers to strict guidelines in order to maintain its own brand standards across the platform, often at the expense of any brand differentiation for the selling partner.
Although sellers can build out and customize some aspects of a product page, much of the customized branding is placed on the bottom fold, and Amazon does not allow outbound links to the business's website on its platform. As a result, customers are less likely to experience the brand beyond photos and price points. About 90% of Amazon shoppers make up their mind in a short period and click straight to "add cart" or "buy now." Although this sounds like a dream come true to conversion-driven marketers, it is a considerable loss to the brand experience primarily as more consumers prefer to purchase from authentic brands driven by purpose and value.
Establishing brand loyalty and a brand presence is also crucial because third party partners directly compete with Amazon and its private label products on the platform. Competing private label products are offered alongside compatible products at a lower rate when customers are ready to buy. Prompting the customer to purchase the private label product over the third party's.
So, how can businesses leverage Amazon's reputation of trust and high customer volume without losing brand autonomy?
Aileen Zerrudo, a spokeswoman for Glad an Amazon partner, when asked about competing with Amazon directly she explained, "[Glad] trusts that consumers who love Glad trash bags will continue to choose our brand." By having an established brand presence beyond Amazon, Glad can enter the Amazon marketplace confidently and trust that customer loyalty will come out on top.
For newer companies selling on Amazon that do not have a 57-year-old brand history, they must communicate their brand and brand purpose across multiple digital channels outside the platform, building a customer base that is already aware and seeking out their products before they head to Amazon to make a purchase. By aligning digital customer experience with brand purpose, businesses can connect with their customers beyond the "Buy Now" button and build customer loyalty.
COVID-19 has dramatically altered consumers’ sense of security as well as their spending habits, and large companies like Amazon are benefiting the most from these shifts. This is why, if you’re already a selling partner or are considering becoming one, it is important to leverage the power of Amazon while also taking steps to strengthen your brand autonomy. At the end of the day, Amazon is a valuable tool for revenue growth, but it is up to you to build and sustain your customer base and make lasting emotional connections with your tribe.