Is Amazon really worth it? – Avoiding the ‘Race to the Bottom’ On the Worlds Largest Ecommerce Engine

Understanding Amazon

We have been working with Amazon for a number of years now and have seen some really great results for our clients. In terms of being able to boost sales and increase your overall revenue the simple answer to the question of whether being on Amazon is worth it is YES! If you are selling a product online and you want to increase your revenue then having that item on Amazon is an absolute necessity. However, before you jump in with both feet it is important to understand what Amazon can do for you or more importantly what Amazon can’t.

In simple terms at Binary & Co, we tend to look at Amazon as a sales channel not a marketing channel. Now, obviously these two things are very similar and there is a definite crossover between them. However, it is important to make a distinction between them. The other important distinction to make between Amazon and your own ecommerce store is that on your store you ‘own’ the customer and on Amazon, Amazon owns the customer.

It is these two subtle but very important differences that can make a huge difference to how you approach Amazon. Ultimately what it comes down to is that on Amazon you have very limited opportunity to build up any brand equity with your customers. Amazon is kind of a pseudo commodity lead marketplace that will enable you to make sales but won’t necessarily allow you to build a relationship with your customer.

To build that relationship, you need to reach your customer off Amazon. It doesn’t mean you have to sell to them off of Amazon but you do need to reach them outside of that particular platform in order to really connect with them.

What Can You Do on Amazon?

But first lets’ start with what you can do on Amazon. Recently Amazon has been putting a considerable amount of effort into the platforms Ad technology. They have introduced a more sophisticated PPC platform, as well as opening up Sponsored display and remarketing ads to users on the seller central platform. Previously display advertising was only available to vendor customers. In addition to this, they allow brands to make their own stores, as well A+ pages. Also, recently they have opened up their Vine program to users on the Seller platform. This again was something only available for larger vendor clients.

So, there is no doubt about it, in terms of levers to pull to drive traffic to your products on Amazon there are many. However, the question comes as to what happens if they don’t buy your product or more importantly if they do. Let’s deal with the first one. What happens when they don’t buy your product? If they have visited your site and failed to buy, you can put them into a remarketing audience and drive them back to your site. You can even segment them depending on where they dropped out of the process. So, if they dropped right before the checkout you can remarket to them based on that behaviour. Although you can do this on Amazon you are still driving them back to Amazon and you have less control over the process.

What Can’t You Do On Amazon

More importantly is what happens when they buy. When someone buys something directly from you it is an opportunity to nurture them as a future customer. You can do all sorts of things – send them a follow up discount code, sign them up to a newsletter, put them in a remarketing list to get future promotions. Also, what you can do is use the information on who is buying to find more people likely to purchase. By creating lookalikes of your customers you can find other potential customers and target them. None of this is possible on Amazon. After a sale is made on Amazon, Amazon still owns the customer.

So, really what happens or doesn’t happen is that your customer has less opportunity to really connect with your brand. This can be a real problem for premium brands. When you are looking to sell a superior quality product on Amazon it can be hard. One product can look very much like the other and telling the story of why yours might be superior is infinitely harder. This is characteristic of commodity based marketplaces which Amazon can feel like it is. However, products are not commodities and this can create a general ‘race to the bottom’ with sellers trying to outdo each other on price alone.

An Holistic Approach

So, what can you do about it? Well ultimately it comes down to not putting all your advertising dollars into a channel that won’t benefit your brand equity. We would ultimately recommend that ecommerce vendors put their products on Amazon and spend money on Amazon’s advertising platforms. But don’t let that be all you do! Take time to reach out to your customers on other platforms such as Facebook, instagram, pinterest or your own properties. Take the opportunity to tell your brand story. It’s by people connecting with your brand not your products that you’ll nurture long term repeat customers. This is something that is limited on Amazon and you need to make sure you maintain elsewhere. Giving up advertising dollars spent on brand building in favour of driving sales through Amazon is really an act in short termism. You will get the sale but in the long term you won’t get the customer. After all, the customer is king, not the sale.

At Binary & Co we are all about the customer. Our purpose is to effect change through understanding customer needs, wants & loves. To find out more about how we do this on Amazon and other platforms contact us here.

We hope you found that interesting and informative. We build full funnel digital advertising campaigns that leverage all the data you have in your marketing stack. If you want to find out how we do this or if you just want to chat get in touch with us here.

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