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How Brands Can Thrive Alongside Amazon’s Private Labels [Webinar Recap]
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With over 55% of product searches starting on Amazon, brands can no longer ignore the e-commerce platform as a unique, independent sales channel. As an increasing number of brands learn to adapt their business strategies to include Amazon, they will also need to account for Amazon’s growing portfolio of 125+ private labels.
In our latest Amazon experts webinar, Feedvisor’s Director of Enterprise Sales Justin Halle was joined by former Amazonian Andrea Riposati to discuss strategic ways that your brand can maintain its brand value while remaining profitable and competitive in the midst of Amazon’s private label initiative.
Amazon’s first line of private label products — AmazonBasics — was created in 2009, with a handful of products like batteries and audio cables. Initially, Amazon was inserting itself in categories where they were the market leader and had seen success for many years, such as consumer electronics. However, the line now boasts more than 1,500 items, with products ranging from camera equipment and headphones to bedding and travel accessories. Amazon was intent from the beginning upon protecting their relationships with brands and did not want to put any of them at stake.
Private Labels Are a Long-Term Play for Amazon
Today, Amazon has allocated significant resources to back their private label venture, and see the opportunity as a long-term play. Given that many of their private label brands don’t have the word Amazon in their name, they have been more flexible to experiment with new items and categories.
Where historically Amazon only implemented private labels in “safe” categories where they held on to a majority of market share, they are now selling private label items in a mix of categories across the board, some of which they have not been traditionally successfully in. These categories are complex and there are risks involved for Amazon as the stakeholder, but they are expanding their private label business and are willing to test the waters to add a new revenue driver in the coming years to their overall offering.
According to Amazon expert Andrea Riposati, Amazon’s private labels are one of the key aspects of their business, with most of their private label items growing 200% year over year and even the slower lines growing 90% over that same timeframe. Amazon’s experiment in the private label sector shows a lot of similarities to their rise in the grocery industry. In 2006, the company established Amazon Fresh in Seattle, with an extremely limited portfolio of products.
Over the years, the company increased the number of cities that it offered the program, but it was never wildly successful compared to some of their other programs, such as Prime. However, after eleven years, they acquired Whole Foods and doubled down on their investment to the grocery business. Their approach with private labels is similar — this is just the beginning for them.
Preventing Brand Erosion: What Can You Do as a Brand on Amazon?
Amazon’s constantly growing list of private label brands has the capacity to impact both first and second tier brands that are operating on the marketplace. In the webinar, Andrea gave the example of leading notebook brand, Moleskin. Amazon has launched an AmazonBasics notebook that competes head to head with one of Moleskin’s top sellers and the item has quickly gained market share in the high-end notebook space.
Amazon, with intimate knowledge of their algorithm, has been aggressively advertising and pushing their branded notebook against the leading SKU from Moleskin. On the Moleskin item’s Sponsored Products ad, the AmazonBasics item is the first item in the lineup. Despite not having the best reviews, Amazon is constantly investing in their brand through ad promotion.
In order to stay profitable and competitive alongside Amazon’s private label products, our Amazon experts drove home a key takeaway from the webinar presentation: own your brand and own your category. Take any necessary steps to ensure that your brand is number one in your applicable product categories. To drive traffic and conversion to your products, here are a few actionable recommendations you can take:
1. Perform an analysis of your KPIs down to the SKU level. Be sure to look with a brand and category lens as well, but prioritize looking at your portfolio on a SKU-specific basis. If your catalog is too large to do so, focus on your top sellers. This analysis can include ad optimization to make sure that you are leveraging all angles to increase conversion.
2. Monitor your advertising strategy by campaign. You can run targeted and specific advertising campaigns to drive net new customers and sales on your brand to ensure that you maintain the leadership position in your category.
3. Keep a specialized focus on Amazon’s private label items, tracking their ad placements and organic ranking so you can constantly benchmark your performance against theirs on an ongoing basis.
4. Review your sales and traffic report on a regular basis. With insights into your ordered product sales, units ordered, total order items, average sales and units per order items, average selling price, and sessions, you will be more in tune to your sales trends and any spikes or dips in traffic.
How to Differentiate Your Brand
Simply stated, leverage and own your vertical expertise. You know your product better than Amazon can. Their private label team does not have the vertical expertise in your category. They measure success across all categories and not on a category-specific basis. Don’t only drive traffic through advertising, but inform customers when they are on your page and looking to make a purchase via strong, optimized product listings. Highlight your products via SEO-rich content and images and emphasize certain product features and benefits.
Additionally, constantly push forward with product innovation. Make your products superior to others in your categories and optimize your advertising bids and keywords to utilize them as a competitive advantage. By being innovative and trying new things in your product space, you can help protect your brand against deterioration, while simultaneously driving brand awareness, customer engagement, and profits.