Can retailers and online merchants afford to sell on Amazon? Can they afford not to? Online sellers confront that paradox every day. What changes lie ahead for the ecommerce juggernaut and how will these trends impact marketplace sellers?
We checked in with Larry Pluimer, CEO of Indigitous, a Seattle-based agency that specializes in providing select brands and their investors with the resources necessary to maximize sales and marketing opportunities with Amazon.com.
The Indigitous founder has deep ecommerce experience from the first days of Target.com in the 1990s to more recent senior management roles at Amazon.com. His company provides Amazon vendor account management and optimization services and channel management consulting to mid-tier brands who sell directly to Amazon.
Here are some of Pluimer’s observations that anyone working with Amazon should be paying attention to in 2016:
1) The success of Amazon Prime will make FBA essential. First, Amazon Prime has reached critical mass. Between the Prime Day promo last summer, the growth in Prime Video, and the rapid expansion of Prime Now, there are more Prime members than ever. For sellers, we think this means that FBA is essential. Amazon shoppers expect offers to be Prime eligible and will pass on non-Prime offers or filter them out altogether.
2) The continued rise of generics will make differentiation crucial. A second observation is what we call the Alibaba effect. Anyone can now source generic products, and there has been a noticeable proliferation in Marketplace offers as a result. This is especially true for hard goods in categories such as sporting goods, kitchen and home.
Included in this new wave of sellers are overseas factories that are selling directly to Amazon customers at below-market prices on non-branded merchandise. We’ve also noticed an uptick in counterfeit branded merchandise.
The key issue for sellers here will be mastering Amazon’s systems to ensure their listings stand out and distinguish themselves in an increasingly crowded and competitive Marketplace. The value proposition must be clear and resonate with the customer.
3) As brands clamp down, merchants will find themselves under pressure. A prediction for 2016 is that some sellers who compete for Buy Box against other sellers for the same branded merchandise may find themselves at odds with their brand partners. Brands are increasingly becoming aware of the massive influence that Amazon has over customers across multiple sales channels.
For this reason, brands are realizing that promoting (and preserving) brand equity on Amazon can be equally as important as growing sales. For this reason, vendors are increasingly looking to curb Marketplace distribution and reign in sellers who don’t add value to their brand.
4) The rise of mobile shopping will be felt by all merchants. The last observation should be an obvious one, but for anyone who didn’t get the memo, consumers are using mobile devices to shop online. Amazon’s mobile statistics on their 2015 holiday season added an exclamation point to that trend.
For the most part, Amazon assumes responsibility for the mobile optimization of their site and apps, but anyone selling on Amazon needs to be cognizant of the mobile format and leverage their content accordingly.
Keep an eye out for more articles in EcommerceBytes Online Selling Trends series.