How Brands Can Thrive in an Era of Amazon

For years, one of the most common goals for retailers was to provide a “best in class” experience for consumers. Now, that goal is falling apart. The dream of being best in class assumes that consumers still think in industry-specific expectations. They don’t.

Consumers expect a Netflix-like library of options as they browse new car features online. They expect the convenience of a Dollar Shave Club-like subscription when shopping for dog food. And they expect a Spotify-like nuance to style and taste when shopping for a diamond engagement ring.

Seemingly overnight, industry-specific, best-in-class standards have dissolved. Perhaps no single organization has done more to make consumer expectations portable across categories than Amazon.com. To thrive and win in the age of Amazon, retailers need to master three core areas.

Embrace Zero-Based Budgeting

Digitally native vertical brands (DNVB), a term coined by Bonobos founder Andy Dunn, represent a mix of disruptive, direct-to-consumer brands like Warby Parker, Casper, and Indochino. These DNVBs are unencumbered by the legacy systems and culture inherent in established retail businesses. It may be tempting to tear everything down and start from scratch, but that’s not a realistic option. Instead, there are ways to emulate the agility of direct-to-consumer brands born in a digital world.

One of the most critical characteristics is a zero-based budgeting philosophy. Zero-based budgeting is a direct response to the insanity of pre-allocated marketing budgets determined in advance by the finance department.

Zero-based budgeting forces agency partners and clients to rethink and defend every dollar invested in the brand. It's also a cure for inertia inherent in large enterprises — i.e., "but we've always done it this way.” Predetermined, spend-it-or-lose-it budgets treat marketing and communications as a cost center. That process actually removes accountability from the equation, and hey, we're just doing the best we can with what the finance team gave us.

Obsess Over Great Customer Care

Another attribute of DNVBs is their near-maniacal obsession over customer care. The most effective brands have realized that delivering great care isn’t a burden, but rather a competitive weapon. In fact, it's a form of marketing in and of itself. Look at the reviews for any direct-to-consumer brands, and you’ll see genuinely helpful support and liberal return policies. In fact, Amazon’s entire model is built on a foundation of reviews and resolution of problems in plain view for all prospective buyers to see.

If You Can’t Beat ’Em, Join ’Em

Finally, for many successful brands, the marketing strategy and the business strategy are one in the same. In that way, the entire business model is based on a brand’s ability to unify and enrich its first-party data, delivering targeted digital advertising to its most high-value segments and prospective customers who look or act like those high-value customers. Established brands can leverage Amazon’s advertising platform to reach people as they browse and buy. What was a confusing patchwork of Amazon Media Group (AMG), Amazon Marketing Services (AMS), and Amazon Advertising Platform (AAP) has now been consolidated into simply Amazon Advertising as of September 2018. This makes it easier for brands to leverage the variety of advertising options available, including video, display and sponsored products.

Retailers should expect more advertising capabilities in the coming months. As Amazon Advertising admits, “As much as we’ve grown, it’s still very early days for us.”

John Stauffer is the managing director of strategic planning and channel strategy at DEG, a trusted digital marketing agency partner for national and global brands.