This is a question we get asked by brands very often. In Australia, Amazon isn’t quite the force they are in the US. Despite that, most brands are still curious about the impact Amazon can have on their business and whether they should be present on the site. To a lesser extent, we get the same question about eBay.
To answer that question, it’s important to take a step back and consider your strategy in a more holistic way. At Amplifyr, we believe very strongly that your online store needs to be your first and most important sales channel. All other channels need to complement your online store, including physical retail stores.
That might seem like a step too far for some brands and it’s certainly not a change that can be made overnight. But it’s important to move that direction. For many sectors, we’re past the tipping point where online retail has become larger than physical retail or is on a trajectory to do so. COVID has accelerated this change.
Wholesale retail with third party retailers can be very inconsistent. Large multi-brands retailers around the world are struggling to deliver growth as customers move online. Depending on their performance, order sizes can vary significantly each year, which isn’t a reliable way to build a consistent scalable business. Revenue from a brand’s online store in comparison, is more consistent.
The tools required to move in this direction and succeed are much more accessible today. Unlike some years ago, brands can create a beautiful online store using a platform like Shopify with very little or no technical knowledge. We’ve seen young emerging brands do this with a lot of success, while established brands are consumed by legacy issues.
Managing customer relationships and personalised communication have become a lot easier using tools like Klaviyo, Drip and many others. Acquiring new customers on advertising on platforms like Facebook and Google can be inexpensive and highly targeted to a relevant audience. Costs of production have reduced significantly, as smartphones become capable of producing high quality campaign images.
Owning customer data & relationships is another important aspect of succeeding in retail. Understanding customer behaviour is really important in building a strong business in today’s digital era. Having customers buy from your online store gives brands really important insights into customer preferences which helps build loyalty.
So how do marketplaces like Amazon and Ebay fit into this picture? Depending on the nature of your brand, marketplaces can play a supporting role. They can help brands new customers and improve awareness.
That doesn’t always apply. Amazon isn’t the most visually inspiring environment. So if you’re a fashion brand for example trying to differentiate your product, it’s not an ideal environment. In that case you better off looking into more curated or premium marketplaces e.g.: THE ICONIC in Australia.
If you’re competing in a sector that’s commoditised and decisions are made on the basis of price, then Amazon is right for you. For most others, we suggest holding off and investing in your own channel.