GUEST OPINION Why an Amazon strategy is essential in 2019

Streaming video. Drone delivery. In your home, on the high street, potentially in our airspace. Amazon is everywhere and it wants to become a constant in the fabric of our lives. Sarah De Martin explains

The tech giant’s ecosystem has become such an integral driver of consumer behaviour that brands now neglect it at their peril. But given the ever-increasing complexity and competition within what was once just a place to buy cheap books and CDs, that’s easier said than done.

It’s more than the simple SEO tricks you all now know by heart, because no-one can honestly claim to know exactly how Amazon’s ever-evolving algorithm works - except Amazon. Mastering the platform means drilling into the nuts and bolts and sweating it for everything it’s worth. And before you can do that, you first need to understand the customers.

Half of online user journeys start on Amazon - take note of how

Amazon isn’t a traditional search engine - the latter was traditionally how most people started their product search - but now nearly half (46.7%) of US internet users start their product search journey on Amazon.

Search and choice may have been the genesis of Amazon’s success, but the ecommerce site is now one part of a much broader ecosystem. Its genius is that it keeps people within its walled garden at every point in the day, across every device - regardless of whether you’re at home, at work, or travelling between the two.

You ask Alexa what the weather’s like when you wake up; you use your Prime discount at Whole Foods on your lunch break; you listen to an Amazon playlist when you’re filing a monthly report; you wind down with Prime Video after work, and end up watching a genuinely brilliant film personally recommended to you by Amazon.

It’s all masterfully woven together to cover all aspects of the purchase journey. Almost every touchpoint offers a sales opportunity, whether that’s an impulse buy for a physical product for casual browsers, or a subscription offer on a digital service that fulfils a need at a particular point..

The big question is: with so many purchase opportunities, how can you be sure your product will be seen at the right time, in the right place and by the user when they are actively looking to make a purchase? SEO has a part to play, but natural ranking does also seem to be governed ,to some extent, by historical sales volumes. In other words, selling more seems to push you up the organic rankings.

It’s an inspired, yet arguably devious, strategy on Amazon’s part. To increase sales and thus stay near the top of the search results, especially at peak times such as Christmas and Black Friday, it’s wise to invest in paid search.Consequently, a carefully considered Amazon Advertising strategy is the key to the real-time segmentation and targeting that will help you reach customers at each stage of the journey.

Seller, vendor… or both?

Before even thinking about Amazon Advertising, it’s important to set out your business strategy. Both seller and vendor are valid business models. The key difference is a seller dictates and fulfills its own business model, whereas Amazon controls a vendor’s. A hybrid approach leverages benefits from Amazon while still maintaining control of key logistical aspects. Hybrid won’t necessarily be a comfortable fit for everyone, but it does offer greater control, notably of:

• Price control: This is a no-brainer, given that brands should look to control the price evolution of their products - especially the premium ones. On a platform like Amazon, which slashes vendor prices on all the major shopping holidays plus its own Prime Days in July, the comfort and confidence in controlling your prices in relationship with your margins is essential.

• Inventory management: Stock shortage due to automatic ordering. Stock shortage due to a flash sale. Stock shortage due to a group of 200 people being told about your brand at a conference. This stuff happens to vendors a lot. Going hybrid gives you the chance to control your own stock, all the while using Amazon’s intel to advise said stock levels. You’re wrapped into the ecosystem, but not dependent.

• Commercial negotiation: Annual commercial negotiations have become so conflicted in just about every category. As a seller, you’re entitled to a percentage. With vendor benefits, you have the opportunity to drive a hard bargain if necessary.

• Self Service & Hands off the Wheel: Amazon’s Hands off the Wheel pilot, which automates demand forecasting and negotiates vendor prices, is something a lot of brands will have a version of, in one way or another. As a seller, you’re at its whim.

Five steps to ecommerce success on Amazon relies on five key points

As we’ve seen, Amazon is unlike any other ecommerce platform and has its own set of rules. You’ve already got a handle on where you stand as a seller or vendor - now it’s time to look at how you can deliver for customers. Your success on the platform relies largely on five key pillars:

1. Selection: Ensure your catalogue has the depth and quality to cut through competitors. With Black Friday and Christmas in constant fisticuffs - Christmas has clawed back its title of ‘Busiest event in the US shopping calendar’, though - it’s paramount to offer a high quality, broad range at any given time, but especially during these manic seasonal periods.

2. Availability: Again, this links back to the consumer demand caused by Amazon’s convenience and our ‘always-on’ shopping calendar. Being out of stock on Black Friday would be the worst possible scenario on Amazon, as 85% of users simply choose another brand if the product they’re looking for is unavailable.

3. Searchability: This pertains to SEO tactics - again, not necessarily too different to Google or Bing, but with the added complication of sales driving ranking. 90% of Amazon purchase journeys start with a search, and only 30% of those searches reach the second page. Monitoring your brand position on top queries is one way to get ahead and improve.

4. Attractivity: Select the right assets based on your brand’s business objectives. For example, printing paper probably doesn’t need an interactive shopping experience, whereas a clothing brand would certainly benefit.

5. Visibility: Advertising reach beyond Amazon’s ecosystem is required for growth, even if only to rope in casual browsers who may purchase. Amazon DSP offers a very solid core proposition here - it places ads within and/or outside its walled garden against people it knows have bought certain things.

Ultimately, there is no one right way to ‘do’ Amazon. It all depends on your brand’s plus points, objectives and customers. But on such a vast platform, it’s easy to get lost.

If you work with Amazon, understand how it can aid you, and treat it as its own entity - which is absolutely how Amazon wants you to view it - then you can start to reap the rewards. Trying to plug Amazon into a broader ecommerce strategy will only make your life infinitely harder.

Author

Sarah De Martin, managing director at AI and data-driven agency Artefact UK