The Amazon Dilemma: Compete, Retreat, or Join the E-Tail Giant

While adapting to the ever-changing environment that is the current COVID crisis, brands have few options but to search far and wide to replace lost revenue streams. Large and small brands alike are forced to rethink their market positioning, particularly online, with many facing what we call “the Amazon Dilemma,” where brands must choose to compete, retreat, or join the e-tail giant.

Of course, not everyone is on board. It is in the not-so-distant past that Amazon disrupted once thought impenetrable industries. In response to Amazon’s purchase of Whole Foods, grocers around the nation started making big moves to keep up. Grocery chain Albertsons started online grocery delivery for orders just 2 months later. Target announced it would acquire delivery service Shipt, which can deliver groceries the same day. Walmart announced Delivery Unlimited, a grocery delivery subscription service in addition to its curbside pickup service.

But that was a different time and a different scenario. So, what about the current crisis supports the idea that maybe we should see Amazon more as friend than foe? The answer: consumers are turning more and more to online shopping during this pandemic, making a case for at least a temporary cease fire.

One brand that made this distinction was battery giant Energizer. They saw opportunity where others saw threat. By embracing the online retail giant’s established online dominance, they became one of Amazon’s top-selling electronic brands in the US. Energizer made a calculated decision, as will any other brands searching for new revenue streams online. Before taking the plunge, we have compiled a series of questions that can help you decide if Amazon is a good fit for your business:

• Does our business model make sense? E.g. Are there any exclusivity or minimum advertising price (MAP) agreements that need to be taken into consideration? Are there features of Amazon that will make it easier or more difficult for our business to reach our customers?
• Will our brand’s value be compromised or reinforced?
• Do the margins make sense? Will the added layer of fees make or break the business?
• Does our company have the existing infrastructure, time, and attention necessary to fully leverage all of Amazon’s features? [check out how we help our clients become Amazon brand leaders

If you have made it this far and answered all the above to a satisfactory conclusion, the next question is probably how do I get started? Setting up an Amazon Seller Account can be a daunting task; business info, tax documents, shipping schedules, sale sheets, keyword optimization strategies, A+ content (Amazon’s version of enhanced content), the list goes on and on. To help you get started, we laid out some quick steps to get the ball rolling.

• Decide on account level. Individual or Professional Seller Account:
  • Individual account $0.99 fee per sale
  • Professional account with a flat fee of $39.99/month
• Request Amazon Approval to sell in your brand’s category
  • While not all categories need approval, making sure your product can be sold on Amazon is a must
• Register your Brand
  • This allows you to control your brand’s products and lock out resellers from writing their own description of your products
  • Unlocks other capabilities, like A+ content
• Have an idea of the predetermined categories your brand will want the products to be showcased in
  • This is important for product rankings and can be hard to change in the future (e.g. Instant Coffee vs. Roasted Coffee Beans are two separate categories)
• Have business documents, license, tax IDs, sale sheets ready
  • Universal Product Code (UPC) and other item attribute information
  • Keyword research

While setting up an Amazon account may seem like a one-and-done scenario, the difference between success and stagnation on Amazon comes down to one thing: sales velocity. Brands who find the most success take advantage of all the tools and features Amazon offers on an ongoing basis. From the suite of Amazon advertising options and customer feedback tools, to keyword rotating and conversion rate optimization features, there is a vast number of tools and capabilities to help you expand your brand onto the world’s most trusted online marketplace.

The current crisis has affected most retailers at some level. The “Amazon Dilemma” seems more like an opportunity for brands that fit with the model to take the plunge. Brands who have lost channels of distribution have an opportunity expand their reach through the E-tail giants’ established presence.

If you would like more information about how we can help bring your brand to life in the Amazon marketplace, or to optimize and manage existing listings, give us a ring.