Deciding whether or not to list a D2C product on Amazon can be a cause of contention between co-Founders. There are many factors to consider aside from the obvious margin vs. distribution discussions.
The Amazon business needs little introduction. Since its inception as an online bookstore in 1994, it has become the dominant online marketplace taking nearly 50% of all U.S. ecommerce sales in 2018.
Whilst redefining shopper seasonality with online events such as ‘Prime Day’, it has expanded into hardware, entertainment, grocery, offline retail, AI and Cloud Services.
All this success has led to an uneven power balance in the Western eCommerce market and deciding whether to list a brand’s products on Amazon can polarise a business.
Aside from the practical issues such as margin destruction and the effect of competitive pricing on offline retail relationships, there are strategic concerns around whether listing on Amazon can destabilise a brand’s future growth.
The development of Amazon’s own brand products, using sales performance data from third party companies calls into question it’s impartiality as a retail platform.
There are also valid concerns around fostering consumer habits to purchase a brand’s products through a third-party platform it can’t control.
So, what are the reasons that a D2C company should disregard these concerns and list its products for sale on Amazon?
At over 300M users globally, Amazon has got more traffic than any high street shop or retail web destination except for Alibaba. It could be argued that if a brand has a D2C strategy but isn’t engaging properly with the biggest marketplace in the Western world, they are yet to get started.
Amazon provides a scaled multiregional gateway for brands and sellers to engage directly with customers, without the need for fulfilment infrastructure. With its print on demand service, Amazon can even support the launch of new or niche publishing businesses without the need to invest in stock upfront.
Brands can list on Amazon with just one product in stock. If the product page is technically optimised, this means that new products can be launched and tested for consumer demand without having to convince a supermarket buyer or invest in a significant volume of stock.
4. Platform Loyalty
More than half of internet users in UK, Germany and Italy have a Prime account. In the US this is 7 in 10. By aligning with existing habits, D2C brands can promote a habit-forming subscription service through an existing infrastructure.
If D2C brands make the decision to list on Amazon, it is important that they own their brand presence on the platform in order to maintain a direct line of communication with the customer. This means not selling through Amazon or a third-party reseller.
Tangibly, it also means that they can access the data needed to optimise their platform presence to drive even more sales. This will empower the brand to optimise the content on their product detail page, in addition to pricing, reviews and imagery all of which affect sales in real time.