Luckily for me, my time as a big CPG brand manager was “back in the good old days.” Back then, big brands really only worried about other really big brands (and sometimes private label). The small guys weren’t much of a threat because they didn’t have good access to the shelf, to merchandising, or to the types of media we were able to buy at heavily-discounted volume rates. In those simpler times, the industry was primarily defined by perpetual clashes between titans: Dawn vs. Palmolive, Campbell’s vs. Progresso, and Gillette vs. Schick… Goliath vs. Goliath. Without a small miracle, there was no reliable way for upstarts to enter the arena.
Those “good old days” are gone – and they’re not coming back. The competitive landscape is exponentially more complex. The very smallest brands (all the way down to 6 and 7-figure revenue “microbrands”) are now on the field and they are armed with powerful weapons – the same weapons that the “big guys” have access to. The very best of these brands are able to employ these tools more effectively than the giants because of their speed, agility, and low overhead costs.
Nowhere is this more true than on Amazon.com, the eCommerce behemoth that now controls 49% of US eCommerce. Amazon is “ground zero” in today’s fight between big and small. In large part, this is because Amazon is very focused on empowering small domestic players and offshore direct-to-consumer exporters – this offers their customers alternatives that meet increasingly picky and segmented tastes.
Let’s have a quick look at this new landscape together. If you’re a big brand, we hope to help you to understand where you might be vulnerable. If you’re on the other end of the spectrum, you might discover some options & strategies you’re not yet using. Separately, if you’re working at another retailer (or on their business as a supplier), this will help you to understand “the competition.”
1: IT ALL STARTS WITH DISTRIBUTION:
In most of retail, brands hoping to get on the shelf can invest years on the path to a coveted “big box” buyer meeting. On Amazon’s marketplace, though, nearly anyone can get onto the virtual shelf with $39, a little knowledge, and a couple of weeks. Meaningful distribution is just as easy for your friend’s home based organic peppermint lip balm brand as it is for Chapstick. This ease of access creates a highly competitive seller situation and choice for the shopper.
For businesses without their own logistics infrastructure, Amazon’s FBA program (Fulfillment by Amazon) is another game changer. Launched WAY back in 2006 (ancient times), this service allows nearly anyone to take advantage of Amazon’s warehousing, fulfillment, and customer service. Rather than carting boxes to the post office or UPS and then following up with shoppers on delivery, small businesses can ship their product directly to Amazon and let them do the rest all while earning the important Prime designation.
2: DRIVING AWARENESS & “DISCOVERABILITY”:
If you’re reading this article, it’s likely not news to you that Amazon is all about search. You might be surprised, however, at how “democratic” Amazon’s algorithm, known as A9, really is. Computer brains, not human ones, pick the winners and losers based on gobs of data. Experts agree that momentum and sales history are the key drivers that will help you win at search – sales beget more sales. No matter who you are, if you can drive that momentum at SKU level you’ll likely move those items up the rankings for your strategic & relevant keywords (perhaps all the way to Page 1). This is why a brand like Death Wish Coffee (#1 Best Seller in ground coffee as of this writing) can outrank Starbucks despite a massive difference in company size and resources.
The tools needed to gain that initial momentum are also very egalitarian. The biggest one that Amazon offers is Sponsored Products which allows any seller to bid for high visibility in search results. Headline Search Ads (banner-style) offer similar benefit but are also believed to be a strong “top of funnel” awareness driver due to increased branding and communication options. Given how active these tools are today in the US, it can be hard to find good cost on your keyword buys – deep SEO expertise specific to Amazon search (not Google’s or Walmart’s) is required to earn a good ROI.
Beyond these “cost per click” (CPC) tools, Amazon is increasing their focus on “cost per 1000” (CPM) advertising tools in an effort to compete with Facebook, Google, and others for ad dollars. As on Facebook, sophisticated targeting is available including contextual, demographic, and behavioral options that leverage Amazon’s understanding of the shopper including actual purchase info. Unlike CPC tools that are generally available to all, however, some of these CPM options are still not available as “self service” options without the help of approved partners.
3: DELIVERING INFORMATION, EQUITY, AND EXPERIENCE:
Whether you’re a big brand or a small one, having a registered trademark (®) opens up a few doors on Amazon. You can join the Brand Registry program which offers several valuable brand protection services. In addition, being part of the registry “unlocks” enhanced tools for driving your brand experience online.
- Enhanced Brand Content (EBC): This feature is available to brands of all sizes and allows for more impact than basic bullets and product images (you can see this listing as an example). Importantly, EBC lives right above Ratings and Reviews which means you get another chance to sell to shoppers who have decided that your item is interesting enough to research. Brands have creative control (within limits) and can present deep product information, seasonally-relevant content, or go deeper on their stories.
- Amazon Stores: Also unlocked by Brand Registry, stores sell the portfolio and provide a great destination for off-site campaigns. They are typically indexed well by Google (often showing up in top results for a brand). Like EBC, store building tools and widgets are diverse and allow brands to deliver their equities and messaging well. Finally, with the recent addition of “source tags,” brands can easily see how their offsite efforts (including social and influencer) drive actual sales. Yes, brands really can have real-time and reliable ROI measures for their marketing campaigns!
4: CLOSING THE DEAL WITH THE RIGHT PRICING AND INCENTIVES:
In its effort to be a price leader, Amazon makes it very easy to offer deals. I’d bore you if I went into all of the options so will save that for a future article in case you really want all the gory details. At a high level, though, self service tools allow easy setup of coupons, discount codes, BOGOs, Subscribe and Save, and (of course) Amazon’s own Lightning Deals.
One really important point to consider is that many of these tools including coupons are visible not only on your item page but are also visibly flagged in search results. This means that in addition to driving your conversion rate (% of visits resulting in a sale), they also drive “sessions” (traffic) by differentiating your item where it counts.
One advantage of selling in the marketplace is direct control over price – when a brand sells through the marketplace instead of to an Amazon vendor manager (buyer), they can adjust price as often and however they’d like to quickly respond to competitive activity. Taking this further, it’s possible to automate pricing in various ways to adjust velocity or maximize profitability.
5: ENCOURAGING REPEAT & ADVOCACY:
Product ratings and reviews, perhaps the most powerful advocacy tool in marketing today, drive conversion but also play a major role in how a brand ranks in search results. For this reason they are highly coveted. While review manipulation (paid reviews, fake reviews, etc.) are definitely a “serious no no,” Amazon does offer some tools to help brands of all sizes achieve initial success.
One of these is the Early Reviewer Program in which Amazon encourages a brand’s first buyers to leave authentic, unbiased reviews. Another is the Buyer – Seller Messaging service available to marketplace sellers. Within limits, brands can drive review activity by automating customer messaging through this service. Many upstart brands, especially those focused on Amazon.com selling, also include inserts in their packaging featuring value-added information, review reminders, and incentives that get the shopper to come back.
SO… WHAT ABOUT OTHER RETAILERS?
Today, Amazon leads the pack in sales and also in the tools they make available to sellers of all sizes. Other retailers will follow and the broader eCommerce landscape will start to look more like what we see in this article. Both Walmart and Jet, for example, have significant marketplace offerings and experience – they are continuing to evolve and improve their platforms all the time. While retailers will remain distinct, features will begin to converge as they do in most industries.