The Opportunities and Challenges Facing Brands in an Amazon Ecosystem
Successfully selling on Amazon.com requires a dramatically different skill set than what today’s brands use across their own e-commerce websites. Many of these brands, which have been historically reluctant to sell on marketplaces, are reworking their e-commerce strategies to include Amazon at the center for the significant brand-building and revenue-generating opportunity it represents. This year, the leader in online retail solidified its position as the go-to destination for consumers at every stage in their purchase journeys — from initial product search through to conversion — with nearly nine out of 10 shoppers visiting the platform during their product purchase cycle.
The rapid ascent of Amazon unlocked a wide variety of new opportunities and challenges for traditional brands. To understand how brands can succeed in an Amazon-led future, we must first understand how they're thinking about and leveraging the platform today.
Feedvisor recently polled business leaders from more than 500 major U.S. brands on their relationships with Amazon to understand motivations and apprehensions about selling on the platform, the most effective strategies for driving sales, use of advertising tools, competitive concerns, and perspectives on other major trends like private labels and voice ordering.
The survey found that more than half of brands (54 percent) are already selling on Amazon today, and nearly three-quarters (72 percent) will be selling on the platform within the next five years. This data indicates that Amazon represents a tremendous opportunity for incremental growth, revenue diversification, and increased levels of brand awareness and engagement.
Data shows that the brands currently selling on Amazon have already deeply integrated the platform into their greater e-commerce strategies. Forty-four percent of brands revealed that over half of their total e-commerce sales come from Amazon, and nearly three-quarters of brands on Amazon (67 percent) cited that over a quarter of their Amazon traffic is net new. Ultimately, brands are leveraging Amazon to expand their reach and drive net new business.
Likewise, as brands seek to build and expand their customer base, they're turning to Amazon to leverage the unmatched volume, reach and diversity of its audience. For 97 percent of brands currently selling on Amazon, as well as 84 percent of brands that are currently not, the most beneficial component of selling on the platform is acquiring new customers.
With this potential in mind, brands are increasingly taking advantage of new Amazon tools designed to help them reach both existing and potential customers through the platform. Brands on the platform are eager to drive impressions and expand their presence, product visibility and recognition. Experimenting with brand-specific opportunities across Amazon (like A+ Content, Enhanced Brand Content, or Amazon Stores) coupled with different ad types and strategic targeting features are critical elements in defining a holistic Amazon strategy.
After attaining 95 percent year-over-year growth in the fourth quarter, Amazon’s online advertising is on pace to generate $20 billion by 2020. Feedvisor’s analysis found that the majority of brands selling on Amazon (57 percent) already pay for Amazon Advertising, and of those an astounding 97 percent see value in those efforts. Advertising and active brand management, however, are just two variables among many that impact rankings, conversion and brand impression on Amazon. Other factors such as inventory, pricing and reputation also need to be considered.
To help them navigate the complexity that results from a dynamic marketplace, competitive pressures, an influx of complex data streams, and a lack of control over brand representation, brands need artificial intelligence-powered technology, data-driven intelligence, and hands-on Amazon expertise. As their businesses scale, brands need to establish and optimize their Amazon presence in order to ensure discoverability, remain competitive, and deliver on their brand stories and value propositions. By taking these actions, brands can effectively engage shoppers who may be browsing, researching or comparing products and convert them to valued customers.
Dani Nadel is president and chief operating officer at Feedvisor, an “AI-first” optimization and intelligence platform for large sellers and brands on Amazon.
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