While we wait for Amazon’s Q4 results to come out to see how high they climbed in 2019, I want to share eight expert views on who is winning on Amazon right now.
As a merchant on Amazon, you can have two different roles. One is as a vendor working with Amazon in a retail partnership. This is when products are sold to Amazon to be commercialized on the platform and does all the marketing for you. Or, as a third-party seller on the marketplace that uses Amazon as a platform for marketing the product. There is also a hybrid model to be a seller but benefit from Amazon’s fulfillment solution.
We expected experts to respond to our Amazon Marketing Report research to say there is a slight advantage to being a vendor over a seller (or the opposite). But, responses were a lot more varied and with some interesting angles.
Nils Zündorf from factor-a gave us this surprising, but also completely justified angle on the question: Amazon is obsessed with the customer experience and always makes sure the price is right, so the end-user is the winner.
Definitely the end-users because Amazon gave them not only transparency in price, but also lower prices and they raised the bar in terms of services with free shipping and kind of an unlimited guarantee on a product.
– Nils Zündorf
More in line with what we had expected to hear, but with an interesting perspective of how the winner of yesterday is not the winner of tomorrow, was the response we got from Megan Harbold of Kenshoo:
It used to be the power of the brand name. Then it used to be throwing money at it to keep at the top of search. I think there’s, again, this shift happening where neither is good enough on its own. It is about a dedicated focus to the consumer experience.
– Megan Harbold
Adam Palczewski from Philips insisted on learning to adopt Amazon’s customer experience focus:
In order to win on Amazon, you have to embrace their culture of customer obsession: start with the customer & work backward. It’s always day one, no PowerPoints just 6-page docs and PRFAQs, 2 pizza-size teams, embrace innovation, work-hard-play-harder-make-history.
– Adam Palczewski
But there is competition everywhere, and Nich Weinheimer from Kenshoo uncovered a new dimension we really hadn’t expected to see:
Today traditional brand-holding companies are ramping up their investments on Amazon (and Walmart) as a strategic defense of their market share against innovative upstarts with rapid scale. The democratization of the digital shelf opens the door to China-direct brands where traditional grocery stood guard for more than 100 years. On Amazon’s marketplace, nearly half of the top sellers are China-direct manufacturers, and their growth is staggering.
– Nich Weinheimer
Are brand-holding companies preparing for this new world of digital commerce? Absolutely, as Benjamin Spiegel from P&G could testify:
Amazon, brick-and-clicks and last-milers have emerged as the leaders in today’s digital commerce environment. This has drastically disrupted the rules of retail and opened up the field for a whole new set of competitors. No longer do you own the shelf based on your scale, instead you win based on their unique algorithms. Buzzwords like Glance Views, Search Rankings and Buy-Box % are the new metrics that decide who wins on the digital shelf.
– Benjamin Spiegel, an SMX West speaker
Trish Carey of TC Max Marketing provided a simpler answer that is more based on the dynamic growth statistics of the moment:
“Sellers are doing really well. Third-party sellers are outselling Amazon right now.”
– Trish Carey
Indeed, sales from third-party sellers in the Amazon marketplace represented higher sales figures than Amazon e-commerce by 15-20% and are growing at a higher rate. There are also movements from one form of sales to the other: vendors becoming sellers, losing certain data access and service levels and gaining others, making people wonder whether perhaps there could be some kind of homogenization of the two merchant models on the horizon to level the playing field.
From Tanner Schroeder of Hanapin Marketing comes a different view, but also totally justifiable:
Prime is winning. If you can get your product to be Amazon Prime, you’re going to be in a good spot. The competitive advantage is becoming less important as the number of Prime products increases, though.
– Tanner Schroeder
Prime, an out-of-the-ordinary loyalty program you actually pay to be a member of and which actually provides the member with real benefits, is changing the rules of the e-commerce game as it affects user behavior on one hand and becomes a product characteristic that was not previously a criteria at the moment of buying.
And, thanks to Amazon leading the way in e-commerce and having the power to influence user behavior, the final quote from Evan Facinger totally makes sense:
Amazon is winning. Because Amazon is forcing everybody to do it the way that they want.
– Evan Facinger
So, we have third-party sellers winning over vendors, bold marketers winning over traditionalists, algorithm-driven metrics over traditional knowledge, service and price winning over brands, and end-users simply winning, especially via Prime, which they, of course, pay Amazon for.
In 2020 there will likely be many new winners on Amazon. But the competitive space is becoming fiercer, and understanding how the ecosystem works and where to bet becomes essential.
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Source: IAB