Selling only on Amazon doesnâ€™t make you a digital company. Hereâ€™s why

There has been a phenomenal rise in the number of companies that started selling on Amazon throughout the lockdown. Most refer to themselves as ‘a digital company’, but Mihir Joshi, Co-founder, 1702 Digital, begs to differ.

In the rush to bring profitability sooner, many new brands make the decision to display their products on virtual marketplaces such as Amazon. But there are a number of pitfalls you’ll have to face because of this decision, especially when it comes to building your name among your audience. Now you might wonder, “But the world is looking to shop on Amazon, so where else would I go?” That’s fair, but there are a number of factors you might not have considered while making the decision to add your brand to the never-ending portfolio on the online marketplace.

Selling On Amazon - Pros and Cons

Pro: Everyone Is On Amazon

The virtual marketplace has rapidly wedged itself in the consumers’ psyche, becoming synonymous with the concept of online shopping, despite fierce competition. According to website analytics & competitive traffic intelligence platform SImilarweb, it ranks first in the E-Commerce and Shopping category in India. Amazon boasts of 288.70 million monthly visitors, who explore a minimum of 7 pages on average.

Con: Consumers’ Look Purely For Product, Not For Brand

You might argue that if a consumer wants a pair of Nike sneakers, that’s what they’ll type on the platform. To that I say, if your product is about the same as Versace, Apple and Nike, then this article clearly isn’t for you. It’s those brands that aren’t as established in an oversaturated market that have to look out. Consumers shopping on Amazon mainly look for a product on the platform, never the brand. Additionally, a majority of them consider price to be a major factor while making their purchase decision. In fact, if you ask most of the people around you for the brand of product they purchased from the platform, 8 out of 10 times they’ll draw a blank. Your brand has the best value on its own platform, not someone else’s. As a matter of fact, even Nike withdrew its product range from Amazon in 2019, now averaging 10 million users on their own website.

Pro: If You’re Open To A Buyout Or Looking For Investments, The Short-Term Growth Can Work In Your Favour

The undeniable fact is that selling on Amazon gets you high exposure to a varied audience. In fact, Amazon now has over 10 million Prime users in India, and this number is only growing. Apart from being the ideal platform to conduct testing for your product, you can also use this platform to augment your brand value in the eyes of investors. According to UK consulting firm Hahnbeck, there are a number of companies in recent years that raised money to obtain niche Amazon businesses. These buyers aim to build those brands’ sales and profits by backing them with greater financial and technical resources. So, if you are open to the possibility of a buyout for your brand, the relatively short-term growth you get from the platform can prove to be of advantage, displaying your strength among the competition. This display of prowess also helps when your brand is looking for Series A and Series B investments.

Con: The Internal Threat Is Way Worse Than Any Outside Competitor

For all the exposure that the platform provides, there’s a lot you, as a brand, don’t get to access. The most important among that is your customers’ data. Because technically, it’s not your customer, it’s Amazon’s. So, not only do you not have access to your customer base, you’re also handing all data about your star product to this online marketplace, on a silver platter. Amazon has roughly 400 private-label brands for 243,000 products and is constantly on the prowl to see where they can grow further. The better a product sells on the platform, the closer Amazon gets towards recreating and launching a similar product from their label. The company has shown a penchant for launching products that barely avoid patent infringement and cost significantly less than its competitors. For a marketplace where cost of the product is an important factor for most customers, this is a sly move. We experienced it too, when AmazonBasics slowly started replacing Duracell in our basic necessities like batteries, extension cords and cables that cost 30% less than our usual choices.

So, How Could You Transform Into An Independent Digital Company?

As Phillip Kotler said, “If you’re not a brand, you’re a commodity.” On Amazon, you are the equivalent of a seller at a weekly village bazaar; unless someone recognises you, no one will notice if you’re not there. You need to carve out your identity, and reinforce it among your audience at regular intervals. Some of the ways you can go about this are as follows:

Strengthen Your Brand’s Visual Identity:

In a sea of similar products, you need to do everything you can to set yourself apart. And one the best ways to accomplish this is through your visual identity. Although the total value of your product isn’t determined by its presentation, this is the first (and sometimes only) chance you have to win over a customer. From innovative boxes to custom packaging complete with personalised thank you notes, every little thing helps create and nurture your brand’s identity. In fact, aesthetic elements are a major contributor in establishing brand recognition and growing brand awareness.

Use Emails To Your Advantage

Amazon won’t part with customer data by any stretch, so you need to get creative in connecting with your audience. While you may have to be a bit sneaky in collecting the email list, it gives you a direct link to your customers, who you can guide to your own website. Emails also have the advantage of getting your customer away from the noise of all other competitors so they can concentrate solely on your brand.

Be Present Outside Of Amazon

This is the most important part. You can’t expect to be treated as an independent digital first company if you don’t have an independent platform of your own. The eventual goal of every digital enterprise should be to become a direct-to-consumer (DTC) venture. With a little elbow grease and good advertising, if you have a good product, people will come and find you. Just remember that they should come find you in your house, not Amazon’s.

Reward Customers For Buying From Your Website

Most consumers only care about something if they see potential benefits for themselves in the bargain. Amazon is a carefully curated marketplace, and your customers need to be incentivised to let go of the convenience they get there and come to you instead. Giveaways, discount offers, extended warranties, samples – anything and everything is on the table. Once you hook the consumer in with these additional benefits, you can start customising their feed, sending personalised messaging and more to make sure they stay on your site.

In conclusion, Amazon is a quick way to reach your potential customers and see how your product performs among others in its category. If your goal is to boost your cash flow through speedy sales, being on this platform will do the trick. But for long-term growth and profitability, you need to do much, much more. Amplifying your brand equity and creating a loyal following is the only way to become a regular part of your consumers’ life, so that you can be called a Digital Company in your own right.