For manufacturers, Amazon can be both a blessing and a curse. A report from Statista states that “Amazon is the leading e-retailer in the United States with close to 232 billion U.S. dollars in 2018 sales.” Any business would love a piece of that enormous revenue pie. Reports from various sources say that more than half of these sales are generated from marketplace sellers (even amidst changes to the fee structure). This is a huge opportunity for manufacturers, but it comes at a cost.
One of the major costs is customer connection and loyalty. While Amazon has created a platform where customers are much more ready to buy than those doing a simple Google search, they’ve also created a platform where their own branding eclipses that of the manufacturer. For instance, customers often say “I bought it on Amazon” and may not even know who the manufacturer is.
Furthermore, Amazon does nearly all the communicating with customers and sellers are actually prohibited to market to their Amazon customers. This makes sense in practical terms–wouldn’t it be annoying to be added to an email list for every product you’ve ever purchased on Amazon? But, from the manufacturer’s perspective, this is devastating.
Amazon describes the relationship a seller is allowed on their “Seller Central” portal: “Amazon will provide all the order and shipping emails to customers; you must not send order or shipment confirmation emails. This is to avoid conflicting messaging or confusion for the customer. Remember that selling on Amazon requires less communication by you to customers, since much of the process communication is handled by Amazon.”
Amazon’s marketplace has given rise to a slew of new businesses created solely to sell on Amazon. The model, called FBA (fulfilled by Amazon), allows an individual to purchase goods online from overseas, add branding and marketing and ship it directly to Amazon’s distribution centers. For these sellers, Amazon taking the reins on communication is a key component to their success. But for established manufacturers, it’s a key to brand confusion.
The seller’s guidelines go on to state: “You must not market or advertise to Amazon customers, nor divert them in any way from the Amazon sales process. You should follow this even during permitted communications, such as when responding to buyer inquiries about your products or their orders.” This arrangement benefits Amazon, but makes it difficult for brands to form any real relationship with their customer base.
So as an established manufacturer, what are you to do? Sure, you have to sell on Amazon to some extent. And you can also check out Amazon’s competitors by selling on similar platforms created by Walmart and Target. Target’s platform, called Target+, promises shoppers a more curated environment. RetailDive writes, “While it’s hard, if not impossible, to beat Amazon on volume, a more carefully curated assortment of on-trend brands (a classic page from Target’s merchandising playbook) may give it an edge with online consumers.” Time will tell if this platform is more favorable to manufacturers, but they’ll still miss out on the direct connection to customers.
The other option is to sell directly to the consumer. This way, you can control your interactions with your customers, learn about them and communicate directly with them. You’ll probably adopt a strategy that runs both of these scenarios at the same time. But the better you get at D2C sales, the less you’ll need Amazon.
Learn more about selling D2C in our blog series from last year.
If you’re a manufacturer, we want to hear from you! Do you sell on Amazon? How do you balance your customer service with Amazon’s terms and conditions? Tell us in the comments below, or write to us here.
Written by Kim Kelly Consulting