How to Use Amazon to Build Your Brand

how to build your brand on Amazon

It is a reality acknowledged by more and more marketers: a brand can no longer rely on intermediaries such as distributors, sales agents and independent retailers to convey its messages to the target audience.

A strong brand communicates directly with its end users. Their feedback is invaluable to brand owners in answering questions such as the ones below:

Does my product address the needs it’s designed to?

Why are people buying my product?

Is my product easy to use?

Are there any product defects that deter people from buying it?

What is the optimal price for my product?

Is my company able to provide a shopping experience that matches customers’ expectations?

The longer the distribution chain, the more difficult it is to find answers to these questions, meaning delays making adjustments and stay competitive.

Selling direct shortens the process and allows you to get feedback faster, but you still need to have a large enough customer base to obtain any meaningful results.

Amazon as Brand Building Platform

A strategy I personally employ and recommend to new and established brands is to use Amazon as a distribution channel.

I am not suggesting Amazon is a good fit for any business. If your product is too bulky, heavy, complicated to use, or requires installation by a third party, the online channel is probably not your best option.

Selling on Amazon is important simply because of its dominant retail presence, particularly in the United States. Consider these facts:

  • Amazon has become the go to platform for product searches, surpassing the traditional search platforms such as Google or Bing.
  • Amazon accounts for more than half of all online sales in the USA.
  • As of September 2017 close to 90 million US shoppers are Amazon Prime subscribers, spending on average $1300 USD per year.
  • Many top product search results on Google belong to Amazon product listings.
  • Amazon advertising platform delivers much better ROI than those of traditional players such as Google, Bing and Facebook.

Google Versus Amazon

Just like Google, Amazon acts as a huge search engine platform people use to research and shop for products. However, there is an important distinction between the two players when it comes to online shopping.

While Google is primarily a research and discovery platform, Amazon users are primarily shoppers who have an active need they need to fulfil.

Amazon provides these shoppers with all the tools they need to make the purchase: instant checkout without the need to visit another website, Amazon Prime benefits, product comparisons, customer reviews; all backed by Amazon’s reputation as the largest ecommerce retailer (unlike Google, perceived as a search engine).

Amazon provides brands with a huge benefit: millions of shoppers who are actively looking to buy.

For this reason, many “young” brands have used exclusively Amazon as a launch platform.

5 Reasons to Build Your Brand On Amazon

Here are some of the benefits of using Amazon to build your brand:

Building brand exposure-given the massive Amazon traffic, both new and established brands have the opportunity to gain brand exposure.

For new brands that are unknown to shoppers and struggle with initial exposure and building credibility, Amazon offers few advertising tools that are very effective in building awareness and initial sales. Even low to moderate advertising budgets can generates hundreds of sales monthly.

Once your brand is starting to sell, it will rank higher in organic searches, which leads to additional exposure and sales.

Finding optimal price for your product-one of the biggest challenges brand owners have is pricing their products for maximum profits.

In a traditional distribution model price elasticity is slow to test and measure. Intermediaries and retailers will fight against any price change, and ask for grace periods ranging from a few months to years, depending on the agreement.

The only “agreement” you need to reference when selling on Amazon is your break-even point. Amazon shoppers are used to price fluctuations, so the negative impact will be non-existent. Moreover, price adjustments can are implemented in as little as 15 minutes.

Keeping the break-even point in mind, sellers can adjust prices up and down, and watch the impact on sales. With proper tracking, brand owners will identify the optimal price that allows the best ratio of product sales to profits.

Getting honest product feedback-one of the main benefits of selling on Amazon is the honest customer feedback you will receive.

Amazon provides brands with real-life feedback; while survey sites can offer you the audience to test some of your concepts, the level of involvement is different. Survey audiences receive your product complementary, so the chances of biased feedback are high.

Amazon customers are actually paying for your product; as a result the feedback you get from them is as genuine as you can possible get. You might agree or disagree with it, but these are your brand’s perceptions in the marketplace.

This information is invaluable to brand owners, as it allows them to identify key competitive advantages, uncover new uses for their product, learn about real life experiences and applications for their products, and correct potential defects that turn customers away for purchasing it.

Another useful strategy is to monitor the feedback on competitive products, especially the negative feedback. This will prevent you from launching products with the same flaws as your competitors, which can turn into a big competitive advantage.

Growing sales (or getting initial sales)-using Amazon as a distribution channel can significantly contribute to your brand’s bottom line. There are thousands of brands that sell in the millions of dollars on Amazon, and solo entrepreneurs who make a living exclusively from sourcing and selling on the platform.

New brands cat get those much needed initial sales and revenue from Amazon, which will allow them to expand and grow.

Getting your product distributed via traditional retailers is usually very difficult for an unknown brand, with limited resources. In contrast, accessing millions of shoppers on the on the amazon platform can be done in a matter of weeks.

Improving operational performance-Amazon has built its impressive reputation on the high standards the company maintains with the employees and suppliers. As an Amazon seller you will be held accountable on a number of performance indicators, ranging from responding to customer messages within 24 hours, maintaining proper stock, shipping products within the designated time window, proper packaging and of course, compliance with the law.

While very demanding at first glance, this high level of accountability is a great chance to improve your company’s overall operational performance, which will benefit all your customers, regardless of the distribution channel.

I can argue that of all the steps needed to sell on Amazon, making sure your operational performance matches Amazon standards has to be address first.

Not All Amazon Platforms Are Created Equal

As an Amazon seller you have access to two main platforms: Amazon North America (USA, Canada, Mexico) and Amazon Europe (UK, France, Germany, Italy and Spain). All other Amazon platforms such as Amazon Japan and India are much more difficult to access as an international seller, while Amazon Australia is still in its incipience, but big plans lay ahead.

As an active seller on Amazon North America and Europe I encourage you to sell your products on as many Amazon platforms as you possibly can.

Although in terms of sales volume Amazon USA is the clear winner, selling in multiple markets will allow you to understand the various nuances of exposing your product to a local audience.

Amazon: Just One Piece of Overall Distribution Strategy

Even if your primary distribution strategy is not online, you should still consider listing your products on Amazon for the many reasons described above. That being said, do not rely exclusively on Amazon to sell your products.

In the end, Amazon is an independent distributor you have very little control of. Any change Amazon decides to implement can, at any point in time, affect your ability to sell on the platform. If Amazon is your only channel, you business will be at risk.

Moreover, as an Amazon seller, you have little to know information about who is actually buying your products. Amazon completely forbids any communication with their customers, other than related to a specific order .

As a result, your strategic goal should be to diversify your distribution channels, and invest in building a direct relationship with your customers.

Michael Baicoianu is a premium and luxury brand strategist, and the publisher of BrandUNIQ.com. Michael is based in Toronto, Canada.

Three Strategies to Expand Your Brand Online

expand online

In the past two years I have been actively involved in eCommerce, launching new brands exclusively online, or expanding established brands to take advantage of the online channel and grow sales.

I have gained enough hands-on experience managing branded online stores, as well as selling on third party retailers such as Amazon, to put together this article that explores the eCommerce channel from a strategic perspective.

Many brand owners acknowledge the need to expand online, but are unable to take action. The most common reasons are fear of channel conflict, and lack financial and human resources necessary to manage the online channel.

Selling online used to be prohibitive, especially for small businesses, but times have changed. Currently are many accessible options for expanding online, each with its advantages and disadvantages. Below are the most popular strategies, explained.

Your Own Branded Online Store

Today’s eCommerce platforms eliminate most of the barriers to selling online with easy-to-customize templates, bulk product uploads, integrated payment gateways, enhanced security and customer support.

The two eCommerce platforms I use and highly recommend are Shopify and WooCommerce. For those interested in a direct comparison and analysis of different platforms, the eCommerce Platforms blog is an excellent resource.

Advantages:

  • You have complete control of user experience, including branding, messaging, marketing activities and customer support.
  • You know who your customers are, which gives you the opportunity to develop long-term relationships and grow your brands on all channels.
  • Your margins are typically higher, as there are no intermediaries, fees and commissions to pay to third party retailers.
  • You can quickly add, remove and change products based on your strategic objectives.
  • You can build a community around your brand, with positive effects across all channels.
  • A successful eCommerce store is an important business asset.

Disadvantages:

  • While setup costs have drastically decreased, launching an eCommerce store still require a financial and human investment.
  • Building quality traffic and trust online takes considerable resources and skills.
  • You may need additional resources for shipping orders and providing customer support, in addition to marketing.

Third Party e-Retailers (excluding Amazon)

Many established retailers, such as Walmart, Sears, Best Buy, Home Depot, Staples are actively looking to expand their online assortment.

Let’s take Best Buy for example: their in-store assortment consists mainly of electronics, while their eCommerce store carries many un-related categories including furniture, baby, maternity and beauty products, sports and recreation.

Getting in-store shelf space with big retailers is often difficult. However these retailers are much more receptive to carrying your brand online, given the virtually unlimited “shelf space” available.

Advantages:

  • Your brand will benefit from the high traffic these stores already enjoy.
  • You bring credibility to your brand by associating it with an established retailer.
  • The investment in additional resources is not as high as launching and managing your own store.
  • Depending on the distribution model, the retailer can manage your order shipping and customer support.

Disadvantages:

  • Your brand will be one of many available on the online store, which makes it challenging to stand out.
  • You have limited knowledge of your buyer, as most retailers will not allow direct contact with customers.
  • Marketing tools available to influence purchase decision are usually limited, costly or both.
  • The fees paid to the retailer might put pressure on your margin.
  • The decision to keep or drop lines belongs to retailer, which increases your brand vulnerability.

Amazon

Selling on Amazon requires a multi-layered strategy and probably a dedicated article.

At the time of writing this article (April 2017) there are three ways to have your products available on the Amazon platform:

Sell TO Amazon (Amazon acting as a distributor of your products): Amazon buys your products upfront at wholesale prices, stocks them in its warehouses and sells them to customers. Amazon is in full control of retail prices, and will re-order from you based on inventory and sales algorithms, just like any other independent distributor.

In order to take advantage of this model you will have to receive an invitation and acceptance from Amazon.

The main advantage of this model is that you will receive money upfront for your products, and don’t have to wait for the sale to be made. On the negative side, Amazon does little marketing effort to push your product, at least in the case of smaller brands. You will also have no knowledge of who is actually buying your product.

Sell ON Amazon using Fulfill-by-Merchant (FBM) model: This model gives you access to the Amazon Marketplace, where you can list, market, sell and provide customer support for your products. The products are stored and shipped from your location.

This model gives you full control of the retail price for your products. Once you made a sale, you are responsible for shipping the product to the end-use customer, and cover freight costs.

Amazon will charge a Marketing and Referral fee for giving you access to the platform.

Sell ON Amazon using Fulfill-by-Amazon (FBA) model: This is the most hands-off approach to selling on Amazon using the self-managed Amazon Marketplace platform. Just like in the FBM model, you are in full control of the retail price and any price reductions.

The difference is that with FBA Amazon is responsible for warehousing your product, and order fulfillment. In other words, you ship the products you decide to sell online to the Amazon warehouse(s), and they fulfill the orders. The biggest advantage is that your order will qualify for Amazon Prime service that has at least 66 million subscribers.

All this convenience comes at a cost. Amazon charges an FBA fee based on the type of product your are selling and its retail price. This fee is naturally higher than the FBM fee, as it includes storage, order picking, packing and shipping.

I personally use all 3 models to sell on Amazon. Each model has advantages and disadvantages; here are my personal observations:

-The Sell TO Amazon model gives you the least control of your brand. While the upfront payment for stock is nice, the fact that Amazon is free to set retail prices at its discretion can drastically impact your overall pricing strategy and create channel conflict. The is also very little involvement from Amazon to push smaller, less known brands.

-The FBM model works well for businesses that have excellent fulfillment capabilities, including good shipping rates. The other benefit is that you have your customers’ contact information, which could give you an idea of who your customer is (however, trying to persuade the customer away from amazon is strictly monitored by amazon and leads to account suspension).

-The FBA model is very popular, as it requires relatively little involvement once your products are shipped to the Amazon warehouse. This model is also great for accessing international markets. As a downside the FBA can eat your margins quickly, especially if your product is retail-priced under $10 USD.

Ecommerce is a channel most brands can and should take advantage of upon careful research and planning. Brand owners must decide on what method(s) work best given their specific product, target audience and internal expertise.

If you have any concrete questions about selling your brand online, feel free to contact me directly or leave a comment below.

Photo Credit: Robbert Noordzij on Flickr

Michael Baicoianu is a premium and luxury brand strategist, and the publisher of BrandUNIQ.com. Michael is based in Toronto, Canada.