Brand marketers know they need to combat the force of Amazon, but they lack the strategy, the marketing dollars and the digital resources to do so. A new report from decisioning platform firm Bluecore illustrates retail marketers’ struggles with the etail giant, highlights their failure to act—and underscores the best way to overcome this challenge: Use Amazon as a distribution channel.
According to the study, A New Path for Retail: Co-Existing with the Force of Amazon, 44 percent of retailers still do not know how to respond to the power of Amazon, while others are grappling with free shipping, email communications and better access to customer data to mimic what Amazon does best: Provide highly personalized and convenient experiences for customers. While better data and experiences are important, Bluecore’s experts say it’s time to stop fighting the inevitable and embrace the opportunity to sell products through Amazon.
“Brands are at a crossroads. The choice is: compete against a company that spends more than $10 billion annually in R&D, or leverage that incredibly powerful distribution channel,” said Jared Blank, senior vice president of data analysis and insights at Bluecore, in a news release.
“Brands cannot ignore this partnership any longer,” Blank added. “With an increasing number of Amazon Prime customers and more consumers beginning their product searches on Amazon, it’s simply ridiculous to think you’re going to succeed alone. The world’s largest brands are using Amazon as a distribution channel, and their revenue and earnings reports are seeing a sizeable uptick. It’s not about failing to go it alone, it’s about learning to co-exist with this eCommerce behemoth—and embracing the right strategies for your own digital properties to continue to build brand awareness and loyalty.”
To date, only 30 percent of the retailers surveyed for this report currently sell their products through Amazon. However, for 9 percent of those retailers, 50 percent of their sales come from this channel.
“Amazon exceeds at listening to its customers. Coming anywhere close to Amazon’s success in this area will require retailers to capture data on customer behaviors and preferences and analyze that data to fuel more intelligent decision-making and more personalized experiences,” said Blank. “The intent is fantastic, but many brands are severely limited in their abilities to obtain and digest this level of data. Even with an exceptional data and customer experience team, the risks are just too high. It’s time to accept Amazon as friend, not foe.”
Other data uncovered within this report includes:
- 29 percent of retailers haven’t changed data collection and analysis processes as a result of Amazon’s influence
- 60 percent of retailers consider Amazon at least somewhat of a competitor
- 63 percent of retailers believe free shipping for loyalty program members is one of Amazon’s most impactful consumer-facing technology initiatives
- Only 10 percent of retailers have significantly increased investment in technology to better compete with Amazon
To publish this report, Bluecore partnered with NAPCO Research to survey more than 250 retail executives in May 2017.