33% of merchants don’t sell on Amazon—and don’t plan to.
That’s according to a Digital Commerce 360 survey of 118 retailers and brands in May 2020. What’s more, 14% of respondents said they’ll revisit their reliance on Amazon this year.
Many brands avoid selling on Amazon because of the platform’s drawbacks. Sellers don’t have access to customer data. They can’t remarket to shoppers who purchase their products and can’t control the customer experience. These are only a few problems retailers name.
Not owning the customer experience was one reason direct-to-consumer brand Native Deodorant didn’t sell on Amazon at first. “We didn’t want it to be a commodity-like experience, as it typically is on Amazon,” Native founder and CEO Moiz Ali says. The company had a personalized unboxing experience that would have been lost on Amazon.
But as Native was growing, selling on Amazon made more sense because the brand was missing out on sales. Customers searched Native in Amazon’s search bar more than a million times a month.
Before Native began selling on Amazon’s marketplace, shoppers searching for Native products would see ads for the brand’s competitors, such as Tom’s of Maine, which would buy ads against the Native keyword. And they’d also see marketplace sellers selling Native’s deodorant for far more than its manufacturer’s suggested retail price. That meant that consumers seeking to buy Native products from the largest online retailer in North America were having a subpar experience, Ali said.
“You can launch your brand without being on Amazon,” he said. “But the larger you get, the more it makes sense to sell on Amazon.”
It took haircare brand Moroccanoil more than 10 years in business before launching on Amazon in March 2019. The merchant began selling on the marketplace initially to protect its brand. While Moroccanoil wasn’t officially on Amazon, there were several unauthorized sellers selling Moroccanoil products on the marketplace. The product pages had incorrect product names, images and descriptions. Those sellers often sold counterfeit Moroccanoil products too.
“This is the experience our customer was getting. They don’t understand that it’s not our brand,” Emma Sayles, Amazon account manager at Moroccanoil said at a Digiday conference in January. “It really harmed our brand identity and we wanted to have control over what the consumer was seeing from Moroccanoil.”
Now, all Moroccanoil product pages have quality branded images, videos, accurate descriptions and many have the Amazon Choice badge. When they began selling on the marketplace, Moroccanoil’s seller rating was 3.3, which it inherited from its unauthorized sellers. Now it’s 4.5.
It was an uphill battle for Moroccanoil since it inherited all the bad reviews its unauthorized sellers received—many claiming counterfeit products. What’s worse, those are often the first reviews a customer will see on a product page because they have been on the product page the longest and customers have clicked the “helpful” button on those reviews. For example, on its Moroccanoil Treatment page—which has more than 10,000 reviews—the second, third and fifth comments from customers are 1-star ratings from 2017, 2018 and 2014, respectively.
To improve its reputation on Amazon, Moroccanoil put a “diversion statement” on its Amazon brand page that says: “We officially launched on Amazon on March 1, 2019. Any products available before that date were unauthorized listings…”
But for some brands, Amazon isn’t the right fit. For example, web-only shoe brand Allbirds only sells through its website online and it doesn’t foresee selling on Amazon or other marketplaces. “We believe the strong direct connection we have with our customer is our biggest competitive advantage, so no plans to change that anytime soon,” co-founder Tim Brown says.
A direct-to-consumer apparel brand that asked to be unnamed sells men’s dress shirts and pants. It began selling on Amazon because the message in the industry they heard was, “if you’re not on Amazon, then you don’t exist.” However, marketplace hasn’t been successful for the brand yet.
The merchant sells a limited number of products on Amazon. However, one men’s dress shirt could have up to 50 SKUs with the different sizes and color options the apparel brand offers. The main issue they’re facing on Amazon is that this brand’s shirts are priced higher than many other brands. Therefore, customers see several lower-priced options on Amazon’s search for “men’s dress shirt,” without understanding why this brand’s items are priced higher. (The brand focuses on high-quality cotton and sweat-resistant shirts, which cost more to manufacture.)
For example, a search for “men’s dress shirt” yields an Amazon Essentials shirt for $20 as the first result. This brand’s product is nearly quadruple the price, and it’s not clear by the title or description on the search results page what makes these shirts different.
Additionally, most consumers when they purchase on the brand’s website purchase a bundle deal, like “two for $200,” the brand says. They aren’t able to offer a deal like that on Amazon.
Large brands left Amazon as well. In November 2019, Nike cut ties with Amazon. The athletic brand stopped selling it’s sneakers and apparel directly on Amazon’s website, ending a pilot program that began in 2017.
Nike reportedly struggled to crack down on unauthorized sellers without much help from Amazon. Official Nike products had fewer reviews than other third-party listings, leading to worse positioning in search on the site. Sandal manufacturer Birkenstock and mobile phone accessory brand PopSockets had previously ditched Amazon because of similar hassles. The question is whether other brands follow Nike’s lead. Few other brands possess the kind of muscle Nike has, so it may be harder for them to leave.
This is an excerpt from Digital Commerce 360’s 2020 Online Marketplaces Report. The full 59-page report can be downloaded now as a PDF for $399. Digital Commerce 360 Gold and Platinum members receive a complimentary copy of this report as a part of their membership.Favorite