Learn How Specialty Brands Leverage Amazon's Platform

NOTE: This article supports a brand-new Channel Mastery podcast, which features Elaine Kwon, co-founder of Kwontified, an e-commerce solutions agency. Join Elaine and I as we offer tips and strategies to position your passion brand for success on the Amazon platform. Download the podcast and grab your free Playbook here.

Many of you have been following (or maybe even cheering on) David Kahan, the CEO of Birkenstock, as he’s publicly accused Amazon of launching an ‘assault on decency’ while concurrently warning retailers (third-party sellers) against selling ‘even a single pair’ of Birkenstocks to Amazon.

The prize quote from Kahan? “This is a middle finger to all brands.”

"The Amazon marketplace, which operates as an 'open market,' creates an environment where we experience unacceptable business practices which we believe jeopardize our brand," Kahan says. “Policing this activity internally and in partnership with Amazon.com has proven impossible.” (Taken from his insights in an article published in Rack earlier this year.)

I'm a positive person and I like to believe that there's always a solution. Sadly, I'm questioning my positive attitude after researching Mr. Kahan’s plight and weighing what I'm learning against the backdrop of the work Verde Brand Communications does with so many passion brands. I have to admit, it sometimes feels almost impossible to feel empowered with Amazon and understand the nuances of this incredible platform.

Let's consider the fact that Birkenstock is a hot brand right now. Mr. Kahan and Birkenstock hold a lot of power with their retailers due to that fact that his brand is both profitable and a traffic driver to its retailers. But maybe that's an assumption that only rang true in the old playbook.

Today most certainly brings a different – and continually changing – playing field. It's a field that's foreign to the many brands that have evolved in the passion industries of outdoor active lifestyle. It's neither linear nor static. There are things we just cannot control and it's nothing short of nerve-wracking for those of us charged with forecasting anything or being a brand steward within our organizations. What's more, platforms and marketplaces like Amazon are continuing to gather more steam and build out more reach.

Amazon's third-party sellers (3PS) are apparently a profit center for Amazon, but they're also the bain of so many passion brands.

3PS

According to an article from Seeking Alpha, Amazon realizes huge benefits as its third-party marketplace grows. Some of these include:

1) Selection - Third-party merchants provide an incredible amount of selection and increase customer choice.

2) Competitive pricing - Prices come down to very attractive levels to most consumers due to intense competition.

3) Inventory ownership - Amazon does not own or take risk of the inventory that is being sold on Amazon.

4) Supply chain and logistic cost reductions - Third-party sellers increase the volume of packages being shipped and received thereby achieving greater economies of scale.

5) Amazon builds a huge moat around their retail business that’s extremely profitable.

It's obvious to see why Amazon deploys the 3PS model, but it doesn’t work for specialty brands.

Specialty brands don't do commodity, which is what I believe has directed and shaped the 3PS approach from Amazon. Leaders of specialty brands must understand the dangers of 3PS.

Positioning a brand consistently across all points of entry in multiple channels calls for consistent pricing and brand presentation. That requires control. My clients tell me that there's a distinct lack of control happening on the Amazon platform at a time when building end-consumer trust in each and every touchpoint is more important than ever. Pricing is a major part of this, as is brand presentation.

Kahan gained back control – publicly – with his public outcry against Amazon.

It was a move that was seen and heard globally. It implied that brands must take matters into their own hands to protect how their brands are presented on the behemoth marketplace. Is it that black and white?

AMAZON’S MISSION:

In an article published in the Washington Post, a newspaper owned by Jeff Bezos, founder of Amazon, a spokeswoman for Amazon was quoted as saying the company buys products from third-party businesses to offer customers “a wider selection of great brands,” and that those sellers can opt out at any time.

This weaves into the Amazon mission, which she offered to readers: "Amazon’s mission to be Earth’s most customer-centric company.” And, “Amazon strives to provide our customers with the largest selection, at the lowest price, and with the fastest delivery.”

Consumer-centric, according to Amazon, is about selection, lowest price and fastest delivery. I'm reading into this, perhaps, but could Amazon be making a far-reaching blanket generalization about how consumers feel about ALL brands and products? Or, is this mission about the experiences the consumer has on Amazon? And if so, are our brands ingredients to that experience, or witnesses to it?

We’re all reading insights from retail and consumer-behavior analysts who are reporting that consumers are very much preferring deals these days. Matt Powell with the NPD group, noted this in Episode 1 of Channel Mastery, said that ‘yesterday’s consumer used to find value in buying from Nordstrom’s, today’s consumers have a badge of honor buying from Nordstrom Rack.

Still, I personally find it hard to believe that ALL consumers can be bucketed as driven to have access to the best deals, the fastest access and the biggest selection of stuff.

I can see how Amazon’s mission could be well suited to ongoing purchasing of commodity items like toothpaste and toilet paper.

But passion brands?

Passion brands are special snowflakes in this regard. We do need to have control over how our special snowflakes (our brands) show up to our target end consumers across all of our points of entry. It must be consistent across all points of entry, especially as we migrate from wholesale-only to a multi-channel ecosystem.

This is our first opportunity. We've now seen Amazon's point of differentiation; its stake in the ground for its target consumers (which, apparently, is everyone).

What does consumer-centric mean to your brand?

What would you consider to be your mission in serving your absolute target customer?

There’s an old saying in marketing: the riches are in the niches. As specialty brands, we absolutely must rise far above being a commodity and constantly strive to have that emotional connection with our end consumers – directly.

Birkenstock is not a commodity. Passion brands and commodity brands cannot share a consistent, reliable experience across the Amazon marketplace.

Passion brands have been tied to specialty retail and building tribes of end consumers who share a strong love for a similar experience.

As specialty retail (and retail at large) corrects, passion brands are faced with giving into the drug that is Amazon (the short-term gain: far-reaching visibility and ‘distribution’ vs. the marathon approach, building 'lifers' who want to invest more for a brand and product that literally defines who they are).

Richard Kestenbaum, co-founder and partner with Triangle Capital LLC, and interviewee in Episode 5 of the Channel Mastery podcast, nailed it when he said: Amazon might be a big fat pipeline into consumer’s homes, but that’s not the same as creating inspiration.” (From Racked).

I get why brands may be short sighted today - there's most certainly some backfilling to do as we move through the market corrections in wholesale. However, we must realize that short term gains can seriously fade the veneer of our brands to our target end consumers during an absolutely pivotal time.

WHAT’S A BRAND TO DO?

It's important to go back to what made our passion industries great in the first place: aligning with our targeted tribes, building community and rabid loyalty around great experiences and products, and continually gunning it for the 100 extra miles to be remarkable to our target end consumers. No one does that better than passion brands!

1 - Be comfortable with, and build your culture around the consistent trial of new approaches, and the less awesome consistent failures that will go along with that cultural shift. Enable your teams to know that they don't have to get it right every time. Failure equals progress.

2 – Get as close to your end consumer as you possibly can. Crowdfund, survey, pick up the phone and call, get out to a trail head, an event, or anyplace your end consumers are and engage with them. There will be more content on this very topic at verdestrategy.co next week.

3 – Work tirelessly to create remarkable brand experiences that are consistent for your target end consumer across all brand points of entry. Then, monitor the outcome and commit to being nimble - jockey your efforts and strive to do all you can NOT to 'set and forget' anything when it comes to creating a consumer experience and being responsive to your end consumers.

4 - Always be working on creating community around your brand and empower your retailers to do the same by making your marketing assets sharable and additive to them. We're in this together!

And remember. ... It’s a marathon, not a sprint.

Elaine Kwon, on this week’s Channel Mastery podcast, emphatically tells us that choosing the right partnership with Amazon is critical. Listen in and hear her explain why.

If you got a lot of value out of this LinkedIn post, please listen to the Elaine Kwon podcast on Channel Mastery podcast, presented by Verde Strategy.co, your multichannel business accelerator. Also, know that there's a free downloadable Playbook available to you that accompanies the Elaine Kwon podcast that gives you the top five steps to take to best position your brand for visibility, engagement, and conversion on Amazon. Grab it here: www.verdestrategy.co/6.

Kristin Carpenter-Ogden is the founder of Verde Strategy, which provides guidance to businesses and brands to build and scale multi-channel businesses that are profitable, sustainable and consumer-centric. Verde Strategy offers strategic consulting, as well as free weekly resources and training, in the Channel Mastery podcast and blog. Verde Strategy is the strategic consulting arm of Verde Brand Communications, founded in 2002 by Carpenter-Ogden. If you’re interested in learning more about Verde Strategy services, or Verde Brand Communications, email: [email protected].