By Raj Sapru, NetRush Director of Strategy
E-commerce, and particularly Amazon, is fueling conversations about the future of retail. That future is being shaped in part by a larger digital transformation that has been underway for some time, affecting how products, information, and money flow through evolving supply chains to meet consumer expectations. It’s clear that older business models are cracking under this change and a significant number of companies are struggling to adapt, or worse, are blind to the forces of change. Manufacturers and brand owners need to have a clear strategy or else the unstoppable forces of change will expose inaction through declining margins, inability to compete, and failing customer experience — it’s as clear as that — and the indicators are available for all of the public to see on marketplaces like Amazon. How brands appear on Amazon serves as an excellent X-ray into brand policies, strategies, and measure of competitive success.
Here’s what’s at stake: The natural products sector has differentiation on its side, for now, but if it’s not nurtured, that potential advantage will fade away to new and more digitally savvy competition, which is, in fact, happening now. For companies who are only beginning to adapt, strategy development will look like comprehensive change management, affecting people, processes, culture, and resources; however, for those unwilling to make it a priority, future strategies will inevitably fall into crisis management.
Here are three things that natural products companies should consider when supporting a brand strategy with Amazon:
…many things, not the least of which is an education platform. Amazon is on the customer path to purchase, whether the journey finishes on Amazon, at a brick-and-mortar retailer, or elsewhere online. Digital means that it’s practically irresponsible not to comparison shop and seek reviews even from the aisles of specialty grocery, supplement shops, and practitioner offices. Customers go to Amazon to learn about products. Brand owners need to define the educational messaging, control the experience, and meet customers where they are and what they are there for. The natural products sector has good stories to tell, but if you do not take control of your message, someone else will do it without your involvement.
You’re looking at the wrong competitors
Digital means that your Amazon competitors are not the same as your traditional competitors — they are the ones who have optimized for the platform and invested in success, regardless of whether you’ve heard of them or not. Digitally native brands — ones that were born on Amazon, grew up quickly, and are now thriving — are adept at maximizing all aspects of the platform, and you’ll be competing with a lot more of them too. Your new competitors are savvy about imagery, content, digital marketing tools,
Death by P&L
If you have a salesperson “handling Amazon,” you’ve missed the boat on a strategy. Amazon is not simply a retail channel, it’s the pacesetter for the entire market: All channels are linked by information, and with auto pricing tools, rapid comparison, and Amazon’s desire for low prices, all channels are affected by your Amazon decisions. Digital means that your price on Amazon is your new market price. Brand owners that place Amazon in an organizational silo, and claim to be doing well, may be failing to understand the system-wide effects. This could show up on the books as misattributed sales, poor marketing ROI by failing to utilize Amazon marketing tools, or ever-increasing financial demands from key retailers whom you have put at a competitive disadvantage.
Developing an effective Amazon strategy is a choice. It affects all aspects of the brand and requires leadership and making hard decisions that get even harder with prolonged inaction. Organizing for success requires finding the right partners — in every channel — and having fluency in content, digital marketing, customer journey, supply chain, and understanding the interaction across all channels. Amazon can support your brand strategy — allowing you to reach a growing and important consumer base, educating about your products, and differentiating on the unique value of your products — if you make the effort to see the big picture.