It seems odd to draw attention to the fact that for a long time now, Amazon has been overlooked in favour of the likes of Facebook and Google as a key media investment channel. However, that is changing fast as Amazon ecommerce continues to dominate and disrupt so many categories and brands are under increasing pressure to find ways to drive incremental growth.
One of the reasons for the lack of strategic investment in Amazon has been the internal allocation of budgets. Historically, budget for Amazon has often sat with the sales or commercial team as Amazon was treated as just another retailer.
Recently we have seen ecommerce teams clawing that money back and taking greater control in developing a dedicated Amazon strategy to sit alongside other ecommerce efforts. We believe this is the correct approach as Amazon’s influence grows and continues to steal market share away from legacy retailers. Whether its Shoe Zone warning of the closure of 100 store closures or Debenhams closing its toy departments, Amazon continues to nibble away at the establishment.
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 Amazon sales strategies.
Why do brands need to think differently about Amazon? For starters, the traditional competitor mix can often 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 at the expense of legacy brands by optimising against well-known brand search terms.
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.
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 1st 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 is no longer enough to succeed.
Jim Hawker is the owner of marketing agency Threepipe.