Amazon has the product data and customers to successfully launch new products."
In 2018, I presented at San Diego Interactive Day about how brands should best approach Amazon.
In 2019, I presented at a marketing event on the same topic, but with updated tactics. I added some new stats. Some new stories. However, one slide did not change. The last slide. The key takeaways.
In the digital ocean in which we all play, change is about the only thing you can count on. Tides are ebbing. Winds are shifting. Everything drifts.
So when I see trends that remain steady, I jump back in to see what’s happening. But this time, you’re coming with me. You ready? Hold your breath.
Here are the five Amazon trends every brand should be paying attention to:
Brands Are Shifting Toward Selling Third-Party
There are two ways to sell a product on Amazon:
- First-party selling — Amazon purchases inventory from the brand and sells it.
- Third-party selling — The brand or reseller sells its own inventory on Amazon.
Traditionally, larger brands have exclusively sold first-party. However, due to margin constraints, lack of price control and slow new-product launch cycles, to name a few reasons, brands are very receptive to moving volume through third-party (3P) selling.
Still, charting the 3P waters can be challenging for many brands. A move to 3P selling may cause a stir with the first-party business manager, additional team members with new skills may be needed and brands are often not set up operationally to get the most out of the channel. (Luckily, there are agencies that can help with that.)
Amazon Advertising Is Growing Fast
In case you missed the news, Amazon is now the third-largest advertising platform behind Facebook and Google, according to Marketplace Pulse. However, Amazon’s rate of growth is far outpacing the two leaders.
We hear it every day from brands, “We’re moving a lot of our budget away from Google over to Amazon.” This will continue.
We always tell brands, “People go to Google to browse and Facebook to see what their friends are doing. They go to Amazon to buy.” As a result, we’re seeing Google and Facebook ad agencies now selling Amazon ads as a service.
Amazon’s Private Labels Are Taking Off
Amazon has been aggressively creating products for quite a while now. You’ve seen Amazon Basics. Amazon Essentials. Now they are creating whole brands. Brands you would never suspect they are behind.
After selling millions of units of other brands’ products for years, Amazon has the product data and customers to successfully launch new products — under its own brands with higher margins.
Plus, as reported by Wall Street Journal, Amazon is giving its own brands preferential placement in search results and on product pages to create more exposure. Over time, it is expected Amazon’s private-label brands will become its best sellers.
Amazon Wants to Be the ‘Everything Store’
You can order a car dropped off at your house to test drive through Amazon. You can book a handyman. You can buy groceries. You can even buy a modular home. There are few limits to what Amazon already sells and as it pushes into more categories (pharmaceuticals, insurance, banking, etc.), Amazon will continue to become more ubiquitous in our lives.
If Amazon is not already playing in your category, it is likely just a matter of time.
It’s Still Day One
Jeff Bezos starts out many meetings with one finger in the air signifying the company is still just beginning. Amazon’s leadership team’s commitment to thinking long term and never resting on their laurels is matched by very few. With that in mind, we can expect Amazon to continue to twist and turn its way through many industries (profitably and not) on its quest to become “Earth’s most customer-centric company.”
Yes, the digital ocean continues to churn. But, if you know how to swim, the water’s fine.
