Major retailers have shed more than $100 billion in market value in the past 10 years, according to Yahoo Finance. During this same period, Amazon has been bullish, adding more than $300 billion in market value.
And even though 55% of all consumers begin their online shopping search on Amazon, many big brand retailers don’t have a strong presence on the site. As Amazon continues to dominate the e-Commerce space, brands need to begin selling on Amazon to maintain relevance, grow their market share and get back into the green. Especially when 90% of consumers check Amazon even if they find a product they want on a retailer’s site.
We’ve reached an inflection point where all major brands should have a strong presence on the site, and the following are just a few reasons why brands need to embrace the market giant.
Advertisement
Growth Opportunity And Maintaining Relevance
Advances such as mobile e-Commerce, subscription-based pricing models and next day shipping have made it easier than ever to make purchases and receive goods nearly instantaneously. Many consumers now view brick-and-mortar stores as a hassle. Why fight traffic and crowds to make a purchase when shopping is as simple as swiping on an smartphone? In fact, it’s predicted that one-third of malls will close their doors in the coming years due to changes in consumer behavior and losing the convenience battle with e-Commerce web sites. Who is the main benefactor of this pronounced shift in consumer behavior? You guessed it — Amazon…and those that sell on Amazon.
Amazon’s current market value is bigger than nearly all brick-and-mortar brands combined. Additionally, the site has seen a 1,934% increase in market value over the past ten years. With 300 million active users and more than 100,000 sellers that generate upwards of $100,000 in revenue apiece, the e-Commerce titan is still growing.
Though more than half of consumers begin their online shopping search on Amazon, many big brands don’t have a strong presence in product search results. Research has shown that 75% of consumers never go past page one of search results. This means that major brands miss out on revenue and potential customers because they are not ranking on the first page of these searches.
Additionally, some brands believe that selling on their own web site will give them better results. Unfortunately, the numbers tell a different story. Established brands with name recognition can excel on Amazon and rejuvenate their sales with a refined product listing strategy. The future of e-Commerce is rapidly changing and brands that adapt to new marketplaces will thrive and survive the retail apocalypse.
Competitive Advantage
Amazon continues to dominate the e-Commerce space, seizing 36.9% of the 2016 online holiday market share as compared to runner-up Best Buy with only 3.9%. The sooner retailers embrace selling their products on Amazon instead of trying to compete, the easier it will be to ride a wave of sales on Amazon’s coattails. Every day, the barrier to entry increases just a little bit more, meaning that as more brands establish themselves on Amazon, it becomes tougher to succeed as a company that’s new to the platform.
There are two different types of successful sellers driving high returns on Amazon. The first group is made up of savvy third-party sellers that are privy to competitive pricing, reviews, product descriptions and search engine optimization best practices for Amazon’s ever-changing algorithms.
The second successful seller group consists of brands that are early adopters of the site and are succeeding due their already established success and reputation on Amazon. If larger brands recognize the opportunity, they can utilize their brand power in combination with a well-executed strategy, geared specifically for Amazon, and drastically improve their competitive advantage over other sellers and brands.
Assessing Risk With Predictable Revenue Software
While it’s imperative that brands begin accepting Amazon as an untapped opportunity, there is still plenty of strategy that goes into making the leap to the e-Commerce marketplace.
One of the reasons brands tend to avoid listing their products on Amazon is the lack of knowledge about both Amazon’s nuances and the logistics and fees associated with listing and shipping products. Luxury brands specifically worry about Amazon’s reputation as a low budget retailer and the prevalence of counterfeit products on the site. While this may have been more prevalent in its infancy, they’ve now established their reputation as a trusted retail outlet that caters to many different types of consumers — not just bargain hunters.
As for counterfeits, Amazon is taking aggressive steps to help brands battle counterfeiters through its new set of digital tools called Brand Central, to help merchants prevent other sellers from copying and selling their products, according to Fortune. Brands can also combat this by establishing their own legitimate presence on Amazon so that consumers can be certain of a product’s authenticity. Overall the potential revenue opportunity from selling on Amazon greatly outweighs the challenges.
That being said, there is definitely a learning curve for both familiar and unfamiliar brands to properly navigate the challenges and opportunities the marketplace presents to generate optimal profits. Luckily, software and services companies can help bridge the knowledge gap for many retailers looking to make a splash on the site. By partnering with knowledgeable tech platforms, brands can break through the clutter to identify and predict profitable markets, assess product category trends and optimize features such as pricing and product reviews to increase page rank and views.
Amazon is the next logical and unavoidable step in the evolution of e-Commerce, and with all the tools available to brands, the reward outweighs the risk.
Casey Gauss is the cofounder and CEO of Viral Launch, a software and services platform helping brands to source, launch and dominate on the Amazon marketplace.
