You’ve built your business on Amazon, you’re making money, and things are going great. So why should you put time, effort, and money into building a brand apart from Amazon?
Really, the high-level view of this conversation is “do you just want to sell products and make money, or do you want to build a business?” There’s nothing inherently wrong with either answer, but if your goal is to really more to build something more substantial, you need to consider the benefits of having that strong brand in place. If you’re just chasing tactics and gaming algorithms exclusively for the sake of selling, you can easily overlook building trust and relationships with your customers.
Beyond just trust and relationships, there are practical considerations. Using only Amazon, you don’t necessarily “know” your customer. And you don’t have a database or email list of your own. Both of these make marketing to your customer challenging when algorithms stop delivering them directly to you.
Compete on value, not price
We all know the difference between price – the literal cost of something, considered by itself – and value, which is what your customer believes your product is worth.
The number one reason you want to build a brand apart from Amazon, or in addition to selling on Amazon, is that you can work with and against customer perceptions of your product’s worth, and not just a price tag. Competing on price tag alone can be a race to the bottom. The tactics and strategies that worked to push your product to the foreground keep changing and can be very volatile, which means you can lose revenue rapidly. When you build a brand based on value, however, it takes more than shifting algorithms to break your customers’ trust.
The Halo Effect
The halo effect describes a bias customers have toward a product based on positive feelings toward another product, and of course, Apple is the famous example. Essentially, if you had a great experience with your MacBook, the halo effect describes your tendency to then feel positively toward an iPad, an iPhone, an Apple Watch, etc. They’re all under the same halo. This can be leveraged very effectively once people have an affinity toward a brand or company.
But the habits of Amazon shoppers and the structure of the site make it difficult to recreate this effect effectively. Shoppers on Amazon behave differently. They’re looking at pricing, reviews, images. Think about your own behavior on Amazon. You might see a product, then look at the brand name, then leave Amazon, Google the product, check out their website, check out the company, and then if you like the brand and what they’re about, return to Amazon to buy it. This assumes all things are equal. A customer might not return because they want a better price. They might like the delivery or experience from another site better. Another retailer might have a rewards system in place the customer wants to take advantage of. If you have a brand apart from Amazon in place, you can recapture some of these sales.
Control of targeting/retargeting
When someone buys a product on Amazon, there are structures in place to encourage them to continue to buy on Amazon. If you’re the retailer, it’s really hard to retarget them.
Which brings us to our third point: If you can get them off of Amazon and into your own database (such as InfusionSoft, or a subscriber list) you can market to them because they subscribe to your newsletter, etc. And you don’t have to buy it from Amazon, Facebook, etc. But with Amazon, the platform is in control of your list. They have info and can market that way. We pay for advertising and for audience insight.
Higher profit margins
This just comes down to the model your business follows. Outside of Amazon, you might do wholesale, and you might market directly to the consumer. When you sell on Amazon, you have less control over your profit margins. As a result, they tend to be lower. Additionally, you don’t have the flexibility to change your model. You have the potential to make more money if you take the time to build a brand apart from Amazon. This is because you are able to market to your audiences directly.
Our proposition is simple. You absolutely can build a business on Amazon without branding behind it. But if you want a more flexible, adaptable, sustainable business, you can’t do it without building the branding behind it. If you want to explore branding, we would be thrilled to set up a complementary call!