Brands selling through stores and websites might see Amazon’s explosive growth as their biggest threat. In fact, the online giant may offer their biggest opportunity.
Take, for instance, the Amazon-fueled success of toymakers Melissa & Doug. The 30-year-old brand, run by husband-and-wife team Melissa and Doug Bernstein, features toys that are proudly low-tech, including coloring books, a miniature play broom and mop, costumes and trains.
Melissa & Doug toys run on imagination, not electronics. But the brand has figured out how to take advantage of Amazon’s uniquely powerful mix of online storefronts and reviews to become a retail behemoth, according to Vox. “It gave us incredible accessibility and was a major facilitator of growth,” Doug Bernstein said.
Melissa & Doug is not alone. Smaller direct-to-consumer brands like Quest and Chomps have found similar success using Amazon to generate sales. Increasingly, big brands like GNC and Apple are following the upstarts’ lead and expanding their Amazon presence. Top American media buyers expect to double their spending with Amazon Advertising by 2020, according to a Cowen survey cited in Recode. With Amazon sales at an estimated 50% of the ecommerce market as of last year, Jeff Bezos’ platform is a force that brands ignore at their peril.
While some executives might fear giving control of their destinies to Amazon, it can significantly boost your business. Amazon allows enterprises to showcase popular items on their storefronts while also pointing customers to their proprietary site for larger selections. Brands also benefit from consumer reviews — not just the positive ones, but also those whose critiques help companies improve products.
Highlighting Top Products
Companies that want to increase traffic can use Amazon’s Showcase template, which allows brands to select some items to display on digital storefronts and then link customers to websites offering full product lines.
Chomps is an example of a D2C brand that has used Amazon to increase sales while maintaining its own online store. The healthy beef jerky brand launched in 2013 and with help from Amazon reported 2018 revenue of $8.8 million, earning plaudits from Inc. as one of the year’s “coolest” fast-growth products.
While young companies quickly recognized Amazon’s potential, their bigger counterparts are now lining up. Apple signed a deal with Amazon in November 2018, and is now selling products through the marketplace, evolving beyond its earlier tight grasp on distribution.
Apple’s Amazon product pages feature the company’s branding and look like Apple’s website. Customers can now buy iMacs, iPhones and other devices directly from Amazon, but the full selection of colors and configurations remains on the Apple website.
Tapping into Customer Feedback
Companies often struggle to get timely feedback on their products, information they can use to tweak offerings and improve market share. With Amazon’s massive share of reviews, brands can get customer testimonials and critiques in real time.
Melissa & Doug first signed on with Amazon in 1999. Fast forward to 2018, according to Vox, and its toys joined household names like Barbie, Hot Wheels and Harry Potter in the Amazon holiday catalog mailed to 20 million customers. “It helped us generate over 100,000 organic toy reviews early on,” Doug Bernstein said of how customer reviews helped his company’s growth. “Getting on Amazon early is probably the reason why our older toys still sell really well.”
Nutritional supplement company GNC used Amazon to reverse erosion in its customer base. With revenue in decline, the retailer began using Amazon in 2017. GNC reported that Q4 2018 ecommerce sales increased 13% over the prior year. According to the company, that increase was “driven by growth in revenue from both GNC.com and our Amazon Marketplace.”
Moving to Amazon also helped bring GNC’s products to a mainstream audience, not just the fitness buffs who were once its main retail clientele. The company is now developing products exclusively for Amazon.
ROI Speeds Past Google and Facebook
As brands devote increasing shares of their advertising budgets to Amazon, many find their return on investment is better than on Facebook or Google. In addition to Amazon’s lower cost-per-click rates, brands benefit from higher conversion rates due to Amazon features such as one-click checkout, Prime shipping and voice ordering with Alexa.
In February 2019, Amazon augmented its Brand Analytics dashboard, giving registered brands easy access to information about keyword rank and popularity and showing which products registered the highest traffic and sales. Amazon has also added a “new-to-brand” feature that allows advertisers to identify purchases made by people who had not shopped from them in the previous 12 months – information they can use to see the cost of acquiring new customers. According to Digiday, pet supplies seller BarkBox increased its Amazon ad spend after discovering that 86% of its Amazon sales since November 2018 came from new customers.
Many of the most successful online brands found early success through Amazon. Increasingly, established retailers are accepting that Amazon is a potential ally. As the past decade has proven, customers will continue to gravitate toward the convenience of ordering on Amazon. It’s up to brands big and small to either compete in vain against the ecommerce giant or take advantage of the platform to attract eyeballs and watch their sales soar.
Alasdair McLean-Foreman is CEO of Teikametrics