Free the birds

Branding, Retail

Understanding the Biggest Beast: Amazon Strategies Virtual Forum 2020

It might be just us, but virtually every other knock at the door during lockdown seems to be an Amazon delivery. The e-commerce behemoth has become a major beneficiary of the global coronavirus pandemic. Lockdown has seen a huge boost in online sales generally, now 30.4% of all retail sales in April according to the ONS. And Amazon has been a major player in this, inking deals with Morrisons, Deliveroo and more besides to use its distribution network as other retailers have scrambled to go online.

It was with this in mind, and more generally the fact that Amazon claims the biggest chunk in virtually every online retail market bar China, that we attended the deep dive Amazon Strategies Virtual Forum, hosted by insight platform Digiday. Free The Birds is already accomplished at designing virtual stores for brands venturing into that jungle, but we always strive to understand that bigger strategic picture for our clients.

And what a bigger picture! The Virtual Forum was a series of presentations, workshops and talks taking place over five evenings (for us here in the UK) in April. The talks featured a variety of brands like E.L.F. Cosmetics, natural male grooming brand Oars + Alps, Australia leather goods brand Bellroy and weighted blanket pioneers Gravity Products, Amazon specialist consultancies and service providers like reCommerce, Kenshoo and Quartile, as well as a variety of marketing and management consultancy experts from Dentsu and Publicis.

There was so much covered in the deep dive, it’s impossible to capture it all here, but here are our big take-outs:

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If you don’t take your brand on Amazon someone else will (even if you’re Chanel)

Gravity blanket is, in fact, not a generic name for weighted blankets used to reduce anxiety and aid sleep. It’s a trademarked, high-quality, machine washable and extremely technical product that’s passed into common parlance due to the very many, cheap copycats that sprung up on, you guessed it, Amazon. Gravity Products’ Brand Director, Mark Wynohradnyk, talked about how going on Amazon was, for them “a defense mechanism and an offensive move to take back some of the share of the market”, a way of making sure that their product was not being diminished or mis-sold.

Whether it’s downright copying (which can be tackled by Amazon’s anti-counterfeiting services, albeit slowly) or grey market goods leaking onto the site, being present on Amazon yourself is a way of controlling the brand narrative, price and – crucially – the customer experience. Whether you’re doing the distribution directly, using Amazon itself or a 3rd party service to fulfil for you, knowing that the products are right, with the right information, the right follow up in case of problems, is worth a fortune in brand equity addition to the product sales.

Owning the Buy Box is everything

 Nope, we didn’t know what the buy box was called either. It’s the little top right-hand side ‘buy it now’ or ‘add to cart’ section. And if you’re the seller who’s got the Buy Box, your product is the one that pretty much always gets bought: over 80% of Amazon purchases made on desktops are done via the buy box and, when it’s on mobile with a much smaller screen size, it’s even higher! And if you don’t have it you can’t do subscribe and save either, you can’t be in control of your pricing much or indeed in what condition and packaging your product is reaching people.

And it’s not the brand producer who automatically owns the Buy Box, except in a very few gated categories like Luxury Beauty, collectibles, Fine Art, automobiles and the like, where Amazon guarantees that to brand owners or verified providers to ensure quality. With two kinds of sellers on Amazon – Amazon itself and everyone else as third-party sellers known as resellers – whether it’s your brand or not, you’re all in the same boat when offering the same product as resellers. The Fulfilled by Amazon one (FBA) always gets first dibs (in practice, even if not theoretically) which is why so many brands opt for FBA, and, if that’s not the case, Amazon decides when there are multiple resellers based on the price (in total, including taxes and delivery charges), inventory levels, review numbers and score, shipping speed, tracking details and far more besides. Being excellent on every front is a must.

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Performance performance performance, it’s all about the numbers (and £££s)

It’s impossible to do justice to the complexity of Amazon’s advertising eco-system here. But the short version is, if you’re not advertising, unless you’ve been on Amazon a very long time with thousands upon thousands of unanimously 4-star positive reviews and an extremely well-known product name and description, you are just not going to appear in organic search. And without it, you are nowhere. The experts agreed that two-thirds of all click throughs are ‘above’ the fold – the first 4 to 5 items that include sponsored listings – and a full 80% of purchases made on the first page.

The rest comes from elsewhere through pay-per-click advertising, where Amazon merchants bid on the right search keywords to put them in premium position, whether it’s banners on the top of search results, in boxes in the sidebar or placed amongst high-ranking products in search results. All of this costs the seller and makes Amazon money. Twice. When the ad is paid for and a proportion of the sale. And the product only starts to move up organic search results, the more it’s bought, so advertising to kick start it and maintain it is an absolute must.

What’s clear is that it’s a highly complicated process which needs performance marketing professionals, either in-house or specialist agency-side, to manage the advertising and search optimisation. And it comes with a hefty price tag: the eye-watering figure of $10k per month was largely agreed to be necessary for any brand new product launch…

Mark Podean, CEO of marketing services company Podean, put it starkly when he said brands embarking on selling on Amazon needed to be aware it’s a third third third strategy, with profits unlikely in the first six months. One-third of the investment is in creating and shipping of product, another third is the commitment in various Amazon fees and fulfilment and practical presence on the marketplace such as filling in the brand registry, with the final third going to investment in media and strategy in order to build demand and keep visible.

And that means deeply understanding the various metrics – ROAS, ACOS, PPC, CTR – and more besides. And either paying for various third party software tools to get the right metrics or paying someone else to do it for you. Because without the expert attention, the platform simply won’t work for you.

Designing for success

Back in the slightly less scary world of brand design and content, things are more creative than the ferocious fight for product visibility. Brands must pay attention to each product page and, ideally to a store front that matches its own website in consistent design, feel and messaging. But even that’s about optimisation (spot the emerging theme?).

On the brand storefront, Gravity Products’ Mark Wynohradnyk talked about how they have pretty much duplicated their own brand website on Amazon, with tabs for each product, an About Us and so on. If the main website is updated with new content every couple of weeks, so is the Amazon page. Giving them more control over the way the brand is presented, far more so than on its retail partners’ websites, ironically. Oar + Alps take a more product layout approach, but Bellroy also go for a full content offer, with lifestyle imagery, story, video and more, using all the real estate at their disposal.

The same principle applies to each and every product page. For desktop it’s nine image tiles available, mobile truncated to just seven (meaning ensuring the top seven can work alone). Think a mixture of clear product shots, lifestyle imagery and detailed information (such as back of pack or close-up depending on the product) and even product reviews or brand idea/messaging. And add to that incredibly informative bullet points that pre-empt FAQs and that are packed with SEO-friendly description. And after the bread and butter is done, you can add in what’s called A+ content, think campaign materials, video, endorsements, graphs or statistics that back up the product performance and more besides. E.L.F. for example has how-to videos for shade match for its face colour products with swatch charts galore. As with everything Amazon, it’s 10% creatively dealing with the 90% hard scary Amazon science to meet the needs of the brand and the consumer.

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Amazon is not the only game in town, BUT….

Almost ironically in this rush to online during the pandemic, Amazon has struggled to meet demand and particularly its usual almost-immediate delivery times, with profits badly hit by the demands of taking on extra staff and pandemic-proofing like PPE, new working practices and more besides.

And there are a whole host of new online small shops emerging (we’ve been loving buying from smaller local butchers, florists and more who’ve finally got the online message)  and Facebook entering the fray with its Facebook Shops facility on Facebook, Instagram and WhatsApp and Messenger in the very near future, all integrated with Shopify and Bigcommerce and other off-the-shelf online store providers. Which, being realistic, is going to be a far more creative, visual and seamless way to shop than the Amazon’s pages and pages of ad-led product.

But, despite all that, what has happened is that online shopping has become absolutely business of usual, for many people who never shopped much online before. According to research by e-commerce platform ChannelAdvisor, 42% people say they will now shop online more frequently after lockdown ends and previously internet-wary buyers will be joining them. Before the crisis, 70% of shoppers 55-years plus said they shopped online occasionally or rarely, yet nearly a third (31%) of this group now think they will shop online more frequently, with just 6% said they would likely shop in-store more frequently after lockdown ends. And Amazon is a favoured destination of older shoppers, with their love of price and review comparisons. Add that to Amazon’s move into healthcare, prescriptions, fashion, beauty and more besides – and with rumours of Amazon buying up the J.C. Penney retail estate in the US and other locations in the UK as retailers fold – its dominant sales channel position cannot be ignored.

The real question is how to do it best. Which we’re always happy to help you with. If you’re interested in taking your brand online, onto Amazon or otherwise, do get in touch with Molly Allen at molly@freethebirds.com.