First of all, there are brands that don't want to expand to other channels and will only sell through their website (and perhaps their own retail stores). They are comfortable with their business size and growth, and that's completely fine. But for everyone else – brands who always look for additional ways how to diversify their business risks, increase the company valuation and reach a brand new customer segment – expanding to Amazon (and other channels) is a must.
Also, if you believe that expanding to other channels destroys the DTC philosophy, then this won't be for you, and that's also fine. For everyone else, who look at DTC as a fantastic channel (but not exclusive one), read on to learn more about all amazing benefits that you can get if you start selling your brand's products on Amazon.
Ps. Most of these benefits also apply to other channels, but in this case, we will focus on Amazon. We will also take a look at valid concerns and other important aspects that you must take into account before making the decision about expansion on Amazon.
Reach new customers
More US digital shoppers start their searches on Amazon instead of Google or any other platform. In fact, Amazon overtook Google as the main place where consumers start their product searches already back in 2018. We have also found this to be true while doing Amazon keyword research for our clients. In many cases, we use Google keyword search volume data to strengthen the initial Amazon keyword research, and it's clear that Amazon is indeed the leading platform for consumer product good research. And it's not surprising, because Amazon is an amazing product research hub – shoppers can read hundreds of reviews, view images, read Q&As and in many cases get cheaper and faster shipping options (especially the Prime customers with their free 1-2 day delivery).
In addition, and mostly thanks to the power of Amazon Prime and Amazon's obsession over customer experience (which sometimes causes problems to us, sellers, but more on that later), there are shoppers who shop online EXCLUSIVELY on Amazon.
Combine the most popular platform for product search in the world with the fact that some people shop exclusively on Amazon, and you get the undeniable truth – once you get your brand on Amazon, you will unlock a whole new audience.
In addition, 70% of the search queries on Amazon are for generic goods. That means consumers are typing in "running shoes" or "athletic shirt" instead of searching specifically for "Nike" or other brand. However, all other search queries are for specific brands, and it makes sense, because customers use Amazon to check out the product before buying it. Why? It's simple. In most cases they just want to check the price and shipping speed, perhaps they can find a better deal. In addition, the average consumer likes to check additional images and read additional reviews about the product before making the decision.
So, whenever you are running paid ads and boosting your brand awareness through various marketing channels, it's guaranteed that many customers will actually search your brand name on Amazon.
So what happens if your products are not on Amazon when customers search for your brand name? Many of them might return to your website and still make the purchase there, but others will stay on Amazon because they will see similar products in search results. Products that not only solve the same problem, but also have thousands of reviews, lower price and faster shipping. And that's the best case... Because brands who are spending decent budget on external marketing channels like Facebook or TikTok ads but are not yet on Amazon, will find many knock off brands on Amazon that are bidding on their brand keywords, getting cheap sales and making a living thanks to your brand's search volume on Amazon. That was also one of the main reasons why Ezra Firestone took BOOM! by Cindy Joseph to Amazon, to finally get rid of these parasite brands and take over all traffic control and reach all these new customers on Amazon.
Protect your brand image and customer experience
In addition to above mentioned case with parasite brands, there will be other sellers who are actually selling your products for higher price, operating as unauthorized middle man. Or even worse, companies selling their own products shamelessly branded as your products.
Taking into account all these retail arbitrage hustlers, unauthorized sellers acquiring inventory and counterfeits, there's high chance that your products will end up on Amazon, even if you don't take them there.
And this is really painful for modern DTC brands, who want to offer the best customer experience and keep their brand to high standards. Because you can control your brand's image and customer experience on Amazon ONLY if you take your brand there and protect it.
Fortunately, Amazon has been actively working on improving brand experience on Amazon, creating new tools designed to help brands protect their image and have better control of customer experience. Most noteworthy programs include Brand Registry, Project Zero and Transparency Program.
Increase sales and lower customer acquisition costs
As mentioned above, there are customers who will shop only on Amazon. In addition, people love and trust Amazon. So by simply being on Amazon and capturing your brand's demand, you will already get incremental sales, even if you don't run any Amazon PPC campaigns. However, we do suggest to start with brand keyword campaigns to get rid of all these parasite brands and get to the top positions for your brand related keywords much faster. These brand campaigns are also relatively cheap and quite often reach 10–20+ ROAS. With increasing acquisition costs outside Amazon, it's clear that Amazon is a great channel that will help to unlock new scale.
In addition, if your brand's awareness is strong, you can easily get to the top positions also in generic product search results (without spending tons of money on ads), in which case you would get access to a completely new audience who have never heard about you before, which would generate even more significant sales boost. But don't worry if your brand does not have strong brand awareness yet, you can still get your product high in search results for various search keywords and find new customers while spending less money on acquisition in comparison to classic advertisement strategies like Facebook ads.
Diversify risks and increase the company's value
Apart from expanding your brand's reach, protecting brand image and customer experience and increasing sales, another benefit is risk diversification. This is actually true for every new channel that you unlock, not just Amazon. Expanding to other sales channels and also unlocking new marketing channels will allow you to better deal with unexpected changes. Your business will become more resilient to any sudden changes or crisis.
You also don't have to jump on Amazon and upload all your product catalog. You can start with a smaller selection of products. See how the marketplace works, get your brand in all these brand programs and start working on establishing a strong brand territory on Amazon. All of this will also increase company's value if you are planning to sell it later on. PE Investors and business aggregators will be more interested in your business if they will see that it has great potential on Amazon with some real data backing it up. They also prefer more diversified companies that don't rely on single acquisition channel, especially in times of uncertainty.
Main challenges and valid concerns about selling on Amazon
All expansion strategies have some drawbacks, and there are few important things to consider in case of selling on Amazon. But there are great solutions for each one of them, so let's dive in.
Will launching on Amazon cannibalise my brand's sales?
Yes, to some extent. But remember that you unlock brand new audience that shop exclusively on Amazon. So the combined sales are always bound to increase. We usually see a 15-30% increase in total sales. But it really depends on products and the existing sales channels mix. We have had few cases where the products got in front of this large audience that was previously unaccessible and the brand easily doubled their total sales.
You lose some sales on your own online store but its easily outweighed by orders from people who exclusively shop on Amazon and from getting in top positions on various keywords and reaching people who hadn't heard about you before. In addition, if there are these knock off parasite brands already active on Amazon, feeding on your brand demand, you are already losing these sales on your own online store. We have seen many cases where these knock off brands were generating 10s of thousands of revenue each month and the more you let them grow, the more difficult it will be to fight them off once you decide to launch on Amazon. Talking about solutions, once you get on Amazon, be sure to utilize all these amazing tools for brands like Brand Registry and Project Zero.
If you need some more examples of cannibalisation and the net positive effect, here's a great podcast where Ezra Firestone shared their reasons for launching on Amazon and mentioned that BOOM! by Cindy Joseph now generates 15% of their revenue on Amazon:
What happens with customer data?
This one might actually be the worst drawback for many DTC brands out there, who have really powerful email marketing strategy in place. Amazon owns the customer data. You don't have access to customer's email address or phone number. And it's strictly forbidden to encourage Amazon customers to shop on your website. You can't mention it in the product descrpption. You can't mention it on the product packaging or packaging inserts etc.
However, there are many great methods that allow you to boost the synergy across both sales channels. While you can't encourage your customers to shop on your site, you can include packaging insert that showcases your product catalog (without any links to the product catalog on your homepage). You can also include a short version of your brand story and an option to learn more about your brand (you can include a link to full brand story, but make sure that there isn't any option to buy your products on this landing page). In general, your main goal shoul.d be to raise interest in the Amazon customer to go and learn more about your brand, without encouraging them to shop on your website. Once you get that visit to your homepage, the customer is "yours" and any media buyer will know what to do next.
In summary, make sure you don't encourage Amazon customers to buy products on your website. That will only get you in trouble. Instead, create appealing brand presentation so customers naturally want to learn more about your brand (thus getting into your marketing funnel).
Is Amazon's obsession over customer experience hurting seller experience on Amazon?
Short answer, yes! Although Amazon provides amazing tools and opportunities, when it comes to disputes between sellers and customers, Amazon will lean towards protecting the customers. on all platforms, there are also fraudsters who try to take advantage of this and sometimes they succeed. And perhaps they succeed on Amazon more often than on other platforms.
My only solution to this? Be patient. Play fair. And remember that you can't win all battles – in some cases Amazon will side with customer even if they should be on your side. But it's definitely not worth to lose your mind over these cases which happen very rarely and actually don't make any loss at all in the grand scheme of things.
So what's next?
The benefits of selling on Amazon far outweigh any downsides and challenges you may face. None of our clients have regretted expanding on Amazon. And there are many public case studies and podcasts where DTC brand owners share their success stories of launching on Amazon.
If you want someone to take a look at your brand's Amazon case and potential, we will happily do it FOR FREE. Just get in touch with us and we will do a quick and honest overview of your brand's potential. Click here to fill in the form.
Don't trust these classic Amazon agencies who say that everyone should sell on Amazon. It's not for everyone! Some brands are not yet ready to expand to other marketplaces and should instead focus on improving their product-market fit and building stronger brand awareness, and that's completely fine!