Time for the weekly recap of Amazon news! It's always good to keep up with events related to the fast-moving world of the Amazon ecosystem. I select the most important news updates to share with subscribers each week, which you can sign up to receive right here.
Brands Versus Amazon
There were a couple of great articles this past week that dove into the idea of brands not being as relevant as they used to be in our current Amazon age.
Marketplace Pulse’s article cites two reasons why brands are less relevant than in the past when a brand was a marker of quality.
First, “Thanks to improvements in technology and quality control processes searching for quality goods is a lesser concern for most customers,” says Joe Kaziukenas from Marketplace Pulse. “Second, the internet means search costs are decreasing. The discovery process is now helped by other customers making the same journey.” This has led to the surge in Amazon-only brands, who don’t invest in any kind of branding or marketing outside of Amazon. Instead, they use Amazon’s data and optimize their supply chain to create competitively priced products that consumers want.
An article in RetailWire titled, “Amazon is (quietly) upending private branding. Will others follow?” talks about how retailers once used their own private labels (store brands) as a mechanism to protect their margins and differentiate themselves from Amazon. Now that Amazon is firmly in the private label game themselves, what does this mean for brands and retailers? The author of that article suggests that by promoting private labels on its site, Amazon is pushing a brand-agnostic agenda amongst its shoppers, causing them to be more loyal to the platform than to brands.
What does this mean for brands? With so much commoditization happening across categories on Amazon, it’s important for brands to understand and exploit their differentiating factors. While there will always be a market entrant who’s prepared to gain ground based on a lower price, brands must uncover and communicate their unique value to customers.
Finally, on the topic of branding, The Atlantic covered how product packaging has changed over time, in this interview with the editor of Packaging Digest. In short, online shopping has changed the packaging industry. Instead of consumer sales being influenced by the packaging people see in the store, products sold online are frequently shown without their packaging. As a Manager at Amazon said to the interviewee, “many of the fundamental design features for packaging in traditional retail are far less relevant online”.
Landmark EU court case protects luxury brands from unauthorized sellers on Amazon
In the European Court of Justice, cosmetics firm Coty won the right not to have its name associated with Amazon. The European Court of Justice decided that "A supplier of luxury goods can prohibit its authorized distributors from selling those goods on a third-party internet platform such as Amazon". This is a landmark case because Amazon, and the third-party distributors who sell brands on the marketplace, have not been legally held responsible for ensuring that they have permission from the brand to distribute products on their platform. Brands’ calls to have Amazon police unauthorized third-party sellers have fallen on deaf ears. With this new ruling, Amazon will need to facilitate brands’ demands to bar unauthorized sellers from listing their products - at least in the EU, and at least in the luxury goods category.
Amazon is the kingpin of paid and organic search for Consumer Electronics
A new study finds that Amazon dominates pretty much every aspect of paid search for terms related to consumer electronics. Search intelligence provider Adthena found that Amazon’s share of consumer electronics ad spend on desktop sits at 15.35%, winning 49.65% of the category’s click share. Organic share is the highest amongst other retailers too, with 16.87% share of clicks among generic search terms.
What does this mean for brands? Well if you’re a consumer electronics brand that’s not yet on Amazon, or not investing in the channel effectively, you’re losing out. Amazon clearly sees this as a strategic category to win and is putting serious budget into advertising and SEO for the category.
Finally, check out our blog post this week outlining critical strategies for managing inventory on Amazon. Stock-outs are the single biggest killer of sales momentum on Amazon and should be avoided at all costs. In this article, Bobsled Project Manager Lauren Sutehall details the strategies we use with our clients to optimize inventory availability.
This is all the news I have to share with you this week. Stay tuned for my next update!