Competing with Amazon
A popular discussion these days is how to compete with Amazon. Mega retailers with physical stores and/or well-designed ecommerce platforms often hold the best cards when working with their suppliers. Strong merchants in their own right, including leading apparel brands, often need mass merchants like Walmart and Amazon, to boost the volume sales and distribution of their products.
In August, Amazon announced that its Marketplace Sellers, the group of merchants that vary in size from small booksellers to giant athletic wear brand Nike, which fulfill orders through Amazon, would be required to follow Amazon’s hassle-free returns policy.
Amazon says that the new policy will improve the customer experience and is designed to help its Marketplace sellers. “These new features allow sellers to reduce time and cost associated with returns while providing customers with an easy and efficient return experience,” according to Retail Dive.
Should a brand play along?
On the one hand, if you elect not to sell on Amazon but your competition does, you could be losing out on sales. In some categories, this is a costly move.
Choosing to sell on the Amazon Marketplace means that you as a merchant can’t market to those customers via email. Also, there is always the fear that Amazon might compete with you in the future.
Furthermore, customers acquired via the Amazon channel tend to have a lower average order and are less loyal to your brand.
With its loyal customers and efficient business model, what’s to keep Amazon from introducing a similar product or undercut the price and brand equity of its Marketplace sellers? Not much. If Amazon sees a big opportunity, they are likely to move and move quickly.
Amazon is a sticky ecosystem which is why building community and having unique product is important.
International athletic-apparel brand Sweaty Betty, known for their innovation and community-building through events and unique products, is driving their own brand success. Their stores and ecommerce platform are becoming sticky and they have thousands of loyal customers. Read more here about experiential marketing and Sweaty Betty.
If your marketing group is considering expanding to sales channels like Amazon Marketplace, carefully consider the pros and cons. Weigh the opportunity for increased sales with losing the ability to do email marketing and the potential to dilute your brand equity.
Need someone who can track and compare important metrics such as retention rates and annual spend from Amazon-acquired customers, versus customers acquired from catalog and other channels? Look no further than Hansel Group Marketing.
Contact us today. We work on a project and retainer basis with retail clients across the U.S.
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