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Why D2C brands can't rely on Amazon over the long term

October 21, 2021


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Comparatively speaking, it’s easy to sell through Amazon. With 82% of American households subscribed to Amazon Prime, there’s already a massive audience you can tap into. By leveraging Fulfilled-By-Amazon, you also don’t need to build your own partnerships with shippers. And, by working hard to build reviews and reputation, you can even sell your product right alongside your competitors by appearing on their Amazon product pages.

However, while a lot of new brands will flock to Amazon as their first choice for selling D2C, it doesn’t take long before the cracks begin to show. The marketplace may be an easy place to start selling, but we highly recommend building your own D2C store as soon as possible. Here’s why.

You need to own your customer

On Amazon, you never have full ownership of your customer. Instead, all the data, purchase history, and information associated with your buyers is entirely owned by Amazon. You can’t develop a brand story, build a unique customer experience, or draw people into your world. You have zero control.

This is becoming an even bigger problem, now that Google, Apple, and Facebook are making life more difficult for digital marketers. Today, the name of the game is zero-party data. You need your own customer database, one that isn’t controlled by third-parties or reliant on their technology. And if you’re selling on Amazon, that’s going to be close to impossible to collect.

You need to own your margin.

Outside of the per-item fee, Amazon charges what they call “referral fees” for granting you access to their massive audience. These can range anywhere from 6%–45% of your sale price, with most sellers paying around 15% to sell their products. 

That’s certainly not trivial.

By paying such a high price to move product, you’re limited in how you manage cash flow in your business. That 15% could be used to drive marketing campaigns, explore new products, contribute to discounts during sales seasons, or help you expand your on-the-ground retail locations. Sending it all to Amazon means that yes, you may sell more in the short-term, but you’re sacrificing control of your profit margins and ultimately, the future of your business.

You need to own your policy.

Selling on Amazon means following their rules. Break them, and you’re off the platform. If you’ve taken the time to build a robust D2C store on Shopify, that’s not a huge problem. However, if you rely on Amazon sales for the majority of your revenue, being removed is going to be a major setback.

Additionally, you may want to offer slightly different policies—returns, exchanges, warranty, etc—than what’s deemed acceptable by Amazon. For example, offering gift cards when a customer requests a return is a great way to retain the initial sale while keeping them in your funnel. This isn’t possible on Amazon, and means you’ll be less competitive in the long run.

You need to own your product pages.

Amazon actually does a pretty amazing job at pushing people to ‘add to cart’ when they’re on a product page. Unfortunately, those people don’t always add your products to their cart, even when it’s your product page they’ve landed on. Instead, Amazon includes listings for similar products on your pages that can take sales away from you and hand them over to your competitors. Not great.

Additionally, Amazon will allegedly creates their own versions of best-selling products and start listing them alongside your own. These Amazon-branded products typically sell for much cheaper than those sold by other merchants, as Amazon has a lot of margin to play with and can afford to undercut you. Hard to compete when they own the marketplace, search algorithms, and fee schedule.

Here’s what you can do.

Moving away from Amazon should be part of every D2C brand’s roadmap. At some point, you need to encourage customers to shop directly from your store instead of through the marketplace. Of course, that’s a lot easier said than done. However, here’s how you can start the process:

1. / Get serious about branding.

To set yourself apart from the crowd, you need a brand that’s entirely unique and recognizable. There has to be a very compelling reason to shop from your eCommerce store instead of Amazon—help convince customers by building a brand they want to be a part of. Use storytelling, great imagery, and a purpose your supporters can rally around. What does it mean to be one of your customers? What world are they a part of? How can you make the experience different, rewarding, and authentic?

2. / Build your own zero-party database.

It’s impossible to improve important metrics like customer lifetime value if Amazon holds all your customer data. Break their stranglehold, by collecting your own data and building your own customer database. A great place to start is by using “quizzes” on your D2C store that will both help customers find products and collect information on the kinds of products they prefer. You’ll also want to focus on building a large email list so you can continue to market to customers without the help of third-party marketing platforms or Amazon’s audience.

3. / Find new audiences with referral programs and gift codes.

Including information about referral programs or gift codes in your product packaging is a great way to start moving existing Amazon customers into your own funnel. Referral programs are especially effective because they help you reach new customers who may be hearing about you for the first time. On the other hand, gift codes that only work on your D2C store can help push your Amazon buyers to leave the platform and buy directly from you instead.

4. / Offer store-exclusive products.

While Amazon might be a good place to continue selling your flagship products, a good strategy for getting those customers to leave the marketplace is to offer other products through your site. Combine this with exclusive discounts, referral programs, or influencer opportunities to help persuade customers to shop from your eComm site first, instead of heading to Amazon.

5. / Work with similar brands to build a D2C network.

You’re not the only one trying to escape the deceptive safety of Amazon. By working with other D2C brands on marketing initiatives and collaborations, you can help each other boost your reach and sell directly through eCommerce stores. Ideally, look for brands that are in line with your vision and who have a compatible brand. The partnership should feel natural and should speak to customers’ needs.

6. / Talk to eCommerce professionals who can help.

Finally, if you’d like to find a way to successfully blaze your own D2C trail, consider bringing in an agency who can help you do it right. Here at Parkfield, we’ve successfully helped all kinds of companies ditch Amazon and big-box retailers for good, earn more from their direct-to-consumer channels, and own their customer every step of the way. Learn how we can help you do the same, by booking a free strategy call with our team.

Photo by Sean Robbins on Unsplash

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