August 22, 2017
We all know something is happening. We’ve all read the headlines, see the LinkedIn posts and are being asked by colleagues and co-workers…. “Amazon, huh, it seems like they are taking over the world.” I don’t know if they are taking over the world, but they are doing the best they can to take over retail. What I would like to highlight is how brands in the natural sector can benefit from Amazon.
When you have a retailer that had an estimated 65 million people shell out $99 to shop on its site, you may want to leverage its reach. The truth is natural products are uniquely positioned to maximize Amazon’s power. Here’s why.
The top five categories where shoppers tend to purchase on Amazon, according to CPC Strategy's Consumer Packaged Goods Shopper Survey 2017, are:
Health supplements-13.7 percent
Pet care-11.2 percent
Baby Care-8.8 percent
Household Cleaning-5.1 percent
If you are a natural brand in one of these categories, Amazon represents a huge opportunity. Let’s touch on how to take advantage of it. The first step is an attitude shift. Repeat after me: "Amazon is not the enemy." Once you accept that, you can get to work, and here’s what I would suggest you work on. First, protect your brand’s image in these ways:
Distribution: The less intermediaries, the better. Do everything within your power to limit the use of distributors. If this is not an option, create an approval process that protects your distribution model. This is the foundation of controlling your brand, limiting gray market resellers and having the ability to protect your price point.
MAP creation and enforcement: Creating a legal and enforceable minimum advertised price policy is essential to protecting your brand’s image, your margin and the margin of your authorized retail partners. Work closely with legal counsel or a MAP expert when creating your policy to ensure that it is enforceable and is built on a foundation of copyrights and trademarks. I would also suggest you create a role within your organization dedicated to brand protection—it is important your team has an expert that handles all things Amazon and is personally responsible for keeping your brand clean online.
Listing optimization: Is your brand’s name in the title of your listing? How many images do you have? Are there keywords in the product description? How many bullet points do you have? These are just a few of the questions you should be asking yourself when optimizing your listings. These questions may seem basic, but how you answer them goes a long way in determining the quality and overall discoverability of your listing.
So, you have taken the steps to ensure your brand is represented in an accurate manner and the pricing is in line with your policies, and you are wiping your brow saying, “Wow, that was a lot of work.” What you will also begin to realize is you have sent a message. Now, that message will be interpreted differently depending on who is receiving it.
Gray market retailers: They understand that your brand is no longer easy prey. They can no longer turn and burn at the lowest price and make a quick buck off you; it is no longer worth the headache to carry your brand because they can’t easily acquire the product, and if they do they are bombarded with trademark and copyright infringement claims.
Corporate chain partners: They will begin to notice customers comparing the prices on their smartphone to the price on the shelf and the shelf winning. If the price is close and consumers could have the product immediately, they will probably just throw it in their cart.
Independent natural retailers: I believe shoppers that frequent their local indie want to support them. They feel they are voting with their dollar. A strict MAP policy allows them to do so. They will no longer have to pay a premium to shop local.
E-commerce partners: When they send out their armies of bots that crawl the interwebs for the lowest price, all they’ll find are prices that match their own. This shows that your brand is truly partnering with them and any investment they make will not be lost to that random reseller on Amazon. Create a level playing field and watch everyone truly compete.
It is important to note that a lot of work goes into each point I’ve made. It’s a choice that has to be supported at every level of your company. Most organizations solicit third parties to help, and this is step I would strongly recommend. Now your brand image is being upheld, the country’s largest marketplace is clean and your partners love you for protecting their interest. When you mix these elements, the end result will be larger margins, increased velocity and more opportunity. Retailers support brands that support them.
Remember, in the race to the bottom, there are no winners. If you continue to let Amazon or gray market sellers dictate the terms for which your brand is sold, your brand will no longer be your own.
Rob Principe has been in the natural products industry for almost 10 years. After spending the bulk of that time with MegaFood helping create and optimize its e-commerce channel, he has moved into the retail side as the VP of strategic partnerships at WishingUWell, where he helps premium brands maximize their reach on the Amazon platform.
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