Insights

Brands Finding New Ways to Compete as Amazon Expands its Influence

Customer buying behaviors are shifting from brand to platform loyalty, with Amazon leading the charge

and driving purchases as a one-stop destination for almost any product imaginable. The ecommerce giant’s membership program, Amazon Prime, has grown to 90 million members, with nearly a third of those members joining in the past year alone. The program costs shoppers $99 annually or $10.99 monthly, and includes perks such as free expedited shipping, video streaming and original content.

Not only are more and more consumers becoming Prime members, but those members are becoming more loyal. A securities research firm, Consumer Intelligence Research Partners (CIRP), surveyed 500 shoppers in the US and found that 95% of Prime members will “definitely” or “probably” renew their membership.

Further, Amazon’s aggressive expansion plans show no signs of slowing down. The company likely has a number of initiatives on the horizon for 2018 and beyond to maintain influence and set the bar for competitors. As Amazon’s third party seller base, and corresponding product catalogs, have expanded at record rates, so too has the risk of counterfeit goods and other unethical sales practices. Amazon will likely create and implement policies and processes to police the marketplace and protect consumers from questionable sellers. Further, it’s very plausible that Amazon’s brick & mortar acquisitions won’t stop with supermarket chain Whole Foods, and the company will seek out additional targets to supplement what they can offer consumers, aligning with Amazon’s long term plan to be a destination for everything.

However, those ambitious objectives present a significant opportunity for brands. It’s very difficult, if not impossible, for one company to serve every need for every customer. Brands are able to offer specialized services, experiences and goods that Amazon cannot.

There are a number of ways brands can differentiate. We outline a selection of those ideas below.

Create a well-structured, easy-to-navigate site experience leveraging user experience best practices.

Brands must be able to present a viable alternative to Amazon Prime through their ecommerce channel. Key initiatives might include developing a robust mobile experience for your products, integrating easy checkout options like Apple Pay, integrating a loyalty program to drive engagement and offering subscription services to allow customers to order on a schedule.

For instance, whole food protein bar brand RXBAR created a transparent ecommerce instance that blends story with conversion best practices to support explosive growth. The brand allows customers to order subscriptions of any product delivered in 30, 45, or 60 day increments to simplify and encourage reorders.

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Use Amazon to your advantage.

Depending on marketing budget allocation, and whether your brand is already selling on Amazon, buying sponsored ads in your product category on Amazon can be a highly effective way to increase your brand presence and drive sales.

For instance, The Clorox Company, whose product portfolio includes Burt’s Bees, Brita, Kingsford and Glad, has invested in digital marketing with a focus on paid search on Amazon. Clorox’s CMO, Eric Reynolds, said, “We see e-commerce as both a merchandising channel and a marketing channel. We treat Amazon the same way we treat Google, YouTube and Facebook, for example. Buying keywords in our category on Amazon — just like paid search on Google — is an efficient way to reach consumers.”

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Consider partnerships with other businesses.

There are many ways to sell outside of traditional ecommerce channels like Amazon. Look into partnerships with both conventional and unconventional brands and companies.

For apparel or beauty brands, consider partnering with subscription services, such as Rent the Runway, Stitchfix, or Birchbox, to allow for broader audience exposure. There are subscription boxes for nearly every retail category imaginable, so research what exists in your industry and start there.

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There are also opportunities to build less straightforward partnerships between brands. For instance, Kellogg’s Global VP of Ecommerce Capability, Oskar Kaszubski, is encouraging his team to consider more complex partnerships, such as Airbnb. He explained, “We could use Airbnb as a platform to sell [our cereals], given that when people are in a new city they don’t always know where to go for things like cereal, and breakfast could be expensive. …We are fighting against the idea that e-commerce equals Amazon.”

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