If the client asks "Why not Amazon?", what would you say?


(Jake Soroka) #1

I am having a healthy disagreement a VP at the moment, regarding two new clients and wanted to get external opinions. We are working with 2 clients, both e-commerce, one is a $500-800 after-market car accessory (there are no competitors) and the other is a $50-100 health and wellness product with a CBD angle.

My approach is to run some small test campaigns to understand audience response at the top of the funnel and measure their conversion onsite, refining the gaps we identify along the way. Typically that’s best done on FB/IG, though it may involve Google or even Pinterest/Snap at this stage.

VP wants us to include Amazon as a secondary storefront (neither brand currently has an Amazon presence), as well as Commission Junction, as a way to throw “everything against the wall and see what sticks”. Or, in other words, to see what acquisition and conversion channels result in the highest ROAS.

I disagree for a lot of reasons, but I’m concerned I might be being overly judgmental before letting the data tell its story.

My thoughts:

  1. I am looking at this like we’re developing true DTC brands (Away, DSC, Native etc) and the best way to control the user experience is to manage it from start to finish. None of those DTC market on Amazon. But if Amazon does indeed increase conversion significantly, does that make up for the 15%+ commission they’ll take? For now, I am ignoring the potential for counterfeiting on Amazon, or at least taking that as a given.
  2. Even if an Amazon storefront is part of our ultimate plan for them, I believe that should come later, once we’ve refined all the creative/messaging/targeting variables.

But I’m having a hard time quantifying those concerns, and so I wanted some second opinions as to whether there’s any real harm in building an Amazon storefront for them at this stage. My take on CJ is a little different, I think the only time to use Affiliates is when they can reach people that you otherwise couldn’t or they have trust you can leverage indirectly (this is another topic, but I think Influencers are the new Affiliates, and they are a good example of this).

Any opinions are welcomed - am I making decisions without the benefit of data? Should we try everything and see what sticks? Or is Amazon a pit of vipers that we should only enter into once we’ve refined everything else? If the client asks “Why not Amazon”, what would you say?


(Troy W) #2

UX researcher here. Main warning I’d give is that Amazon de-brands brands. It turns a $300 Casper mattress into a $119 “foam pad.” There’s a lot you can say about this, but the short version is that overseas manufacturers are increasingly using Amazon as an R & D service, and this has picked up speed in the past year or so. Anything that gets traction gets copied for a LOT less. I see it as a Taleb-style sucker bet: the better you do, the more you are punished.

From a UXR perspective: Amazon may increase some sales, but not to people that make DTC work. In my experience, DTC succeeds or fails based on its ability to identify and attract “supercustomers,” who are in essence people who want to spend $300 for a $119 foam pad. Amazon is not where supercustomers hang out. Supers are willing to believe the brand story, in other words, and this is very context-dependent. Currently working with a retailer who is a perfect case study for this, mostly in terms of getting it amazingly right. Drop me a note if you’d like to discuss off the record.


(Thomas Chung) #3

I think if you’re developing a true DTC brand then focusing on the channel is a mistake.

“Everything against the wall and see what sticks” isn’t the worst strategy I’ve ever heard of, but it’s like a marketing plan without a vision. I think it’s appropriate to apply the scientific method – that is, have a hypothesis about what will happen. Troy nails it below.

Gl! let us know how the decision turns out!


(Sumeet Kanwar) #4

Jake,

Another way of framing the question (if you have the ability to reframe) is simply ‘which channel strategies allow/enable near/long term maximization of revenue/profit?’ Doing that takes out the presupposition that DTC is the right answer. It also allows you to consider the kinds of things the business would have to do to extend its S-curve (including expanding or contracting distribution over time).

I think you could argue that the thesis that ‘creative/messaging/targeting should be solved first and independent of channel’ had a lot more validity a couple of decades back. Channel strategy can now over-ride some of those ‘classical/old-school marketing’ considerations. (I have been a brand marketer, so I will underline that there’s value in the old-school principles too).

Hope this gives you food for thought . . . when data is available, you should use it . . . but it is important to remember that data tells you what happened . . . it sounds like you are dealing with ‘what actions will create the best outcomes?’ Helping your clients create a mental model that lays out the possibilities may be more important.

Sumeet


(Matt Quinn) #5

I once read a piece that said, if you’re starting ecommerce today, and you haven’t got an incredible brand (be honest).

Sell on Amazon

BUT

Keep a brand site where you engage with your community, build email lists etc.

That’s what I would do.