Amazon Private Labels: Winning the game on the competition’s field
How do you play the game when the competition has home-field advantage? Is the Amazon game rigged in favor of the new player in town? More specifically, how does a business reconcile the fact that its best vehicle for sales is also possibly its biggest competitor? We’re finding out thanks to Amazon’s growing plethora of private-label brands.
Amazon has recently disrupted a variety of industries by creating almost 80 private-label brands in the last few years. The disruption is happening because the company’s brands compete against established brands that also sell on Amazon, and they also give Amazon an advantage via insights into a specific industry’s sales and demographic information. Amazon has long been a power player in retail; this new power concerns national brands of all sizes.
What power is Amazon gleaning from the industries in which they now compete? It’s not insignificant! The retailing giant entered the private-label game armed with knowledge that their competitors might not easily find: information like best sellers and worst-performing products in a given category or pricing information generated by the Amazon algorithm. To its credit, Amazon doesn’t hide this fact, although it does spin it differently. An Amazon spokesperson told Recode, “We take the same approach with private label as we do with anything here at Amazon. We start with the customer and work backwards, aiming to bring them products we think they will love.”
When it offers a private-label brand, Amazon has full control over product sourcing and selection, margins, brand equity and where the brand is sold. In Amazon’s view, this is great for the customer; these brands will now make the customer’s selection process easier.
Amazon knows that it has the trust of its customers and can capitalize on this trust to break into industries armed to succeed. Cadent Consulting Group believes that these private labels could earn as much as $64 billion over ten years’ time. Amazon knows what customers want/need, and when they will purchase again. When a private label shows up ahead of a well-known brand in search results, customers may purchase it instead a larger brand due to convenience, lower price point, etc.
Amazon marketplace is a “pay-to-play” game, and now traditional brands are “paying” the competition for the right to compete against them. It’s suddenly a skewed game, and the house always wins, right? Not always. There are strategies that traditional brands can take on the Amazon marketplace now they are competing against Amazon brands. It’s an uphill battle, but you can take some steps to tilt the odds in your favor.
Build stories about your brand for your audience. More than ever, the online customer wants to know everything they can about a brand, from where they came from to where they are going. They want to know that your intentions are positive, that they are contributing to the greater good by going with your brand.
Remember that content is KING. Back up your story with content that shows why it matters. Generate comparative content to show the why of your customers’ choice. Your features are great, but be sure to tell your customers how each one will benefit them physically, emotionally and rationally. Which brings us to:
Use your customers’ emotions to influence their purchasing behavior. Make them feel good about choosing your brand. “Yes, buying our dog food is good because it’s good for your dog, but our packaging is great for the environment as well!” Appeal to their sense of the greater good whenever possible. This is the surest way to build trust and loyalty, especially among millennials. This is where an established brand should have a huge advantage over an Amazon private label. Your brand should already have a certain level of trust with the audience. You can enhance that trust with:
- Transparency in sourcing and manufacturing
- Honesty about the “NO’s” in your product to communicate a more positive message
- Ease of accessing information; if your product has ingredients that provide health benefits, make the “why” easy to find
Shout with a singular voice. No matter where you sell, make sure that your voice is consistent across all marketplaces. You don’t want to hammer on your low price in one place and then focus on quality in another. This will only confuse people. You want a unified message so that when your product appears in Amazon search results, theres’s no doubt what your customer is clicking on. And when creating this voice, make sure it applies not only to the overall brand but to each product’s description, including bullets, copy and image tags and cutlines. Also, be aware of these messages in responses to customers’ questions and reviews.
Use the “enemy” against itself. Leverage Amazon’s Marketing Services (like pay-per-click) to make your brand stand out. This means you can pay to have ads in the top spots for your branded keywords and non-branded keywords. If you invest in AMS, you will rank higher than the “promoted” private-label brands of Amazon.
Don’t forget your own tools. Use your own website’s data to your advantage. Narrowing down your current customer’s demographics on your website will better prepare you for identifying new customers, tailoring new promotions and re-inventing how you drive traffic to the site. This data can be put to use on Amazon in the same way Amazon uses it for its own private labels.
Remember that you’re not alone
Competing against Amazon at the game when it also owns the game board will not be an easy task. This simply means that a brand will have to expand its own game and dedicate more time and resources to all platforms and marketplaces, not just Amazon. It’s more important than ever to lead with a “customer-first” mentality, instead of focusing only on revenue. Once again, it comes back to the customer experience. Tell your audience what they need to know and make it easy as possible for them to find that information. Make your story their story.
To do this effectively, consider partnering with someone like Woodruff who is experienced in brand evolution and consistent storytelling. A good marketing partner can do the heavy lifting!