Amazon is Going to Slaughter Your Brand

[Waspy]

Amazon is already taking the pie.

The crumbs of this pie will feed an entrepreneur for a lifetime.

 

[biophase]

Thanks for replying.

Please correct me if I am wrong, but are you are implying that pretty much all small sellers, like ordinary folks who want to dip their toes into ecommerce will be swallowed by Amazon?

Small sellers won't get swallowed by Amazon because by definition, they are small sellers. Amazon is not entering a market that has low sales numbers.

It is the large and medium sellers that have a simple non-brand loyal product that should be worried about Amazon basics. If you are selling garbage cans or kitchen cutting boards, you could get crushed by them.

Products that require some semblance of R&D are probably not going to be taken over by Amazon basics. They aren't coming out with sunglasses that will rival Oakley's or Rayban, but they might squeeze out the smaller sellers selling ordinary ones.

 

[MJ DeMarco]

I don't expect Amazon to be writing books anytime soon.

 

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[Walter Hay]

This exactly, I agree. All the "me too", arbitragers on Amazon will over time just get squeezed out, or best case - still make money - but face an never ending, race to the bottom for pricing against other "me too" arbitragers, and things lik Amazon Basics.

And branding is one thing on its own (and no, branding is NOT just slapping your $5 Fiverr logo on your Alibaba import), but another is being different enough and adding enough new value to a product that will keep a brand that much stronger also. Independent websites (Shopify, etc) will still do well as long as they don't rely only on just flipping and repackaging Alibaba stuff like every other arbitrage entrepreneur out there.

The best way to survive long term is, and always will be, to create/provide something that is YOURS and uniquely yours. And preferably something that is challenging for someone else to rip off. Differentiation and unique value.

Whether you are a small or medium/big seller on Amazon, don't rely on all your products just being imported en-masse with just a logo slapped on, and "having an optimized listing". It can make good money for a while on Amazon, but never forget you are dealing with partial lack of control, a violation of one of the CENTS commandments. I always tell people the sooner you can establish your own sales channel (website) and control that, do it. Amazon should just be one of your sales channels.

And lastly - people often tend to forget there is a world out there. Amazon is huge in the US, sure. But in other massive markets such as Europe and Asia - Amazon is small or insignificant compared to other market forces there. There is soooo much opportunity.

I completely agree about the need to do better than simply repackaging Alibaba stuff. Too many have been doing that for too long and the Amazon "experts" are still teaching that as the way to go.

Unique products can still be found, but few are willing to make the extra effort required, although that effort can be considerably less than re-engineering existing products, or designing something totally new. I applaud those who do both, but finding unique products should not be ignored as an option.

As for slapping on a $5 Fiverr logo, that also is part of many e-commerce courses and does little to disguise the sameness that prevails among those who lack real marketing ability. They call it Private Labeling, but it's a poor way to differentiate. Helping overcome this problem was behind my writing of my second book about creating and sourcing labels and packaging that can help sell the product.

Finally, anyone relying only on Amazon has all their eggs in one basket, and that basket is being shaken.

Walter

 

[G-Man]

That's an interesting input.

I know nothing about brands nor branding, but it seems that guys who know how to innovate/improve existing products will manage to keep their heads above the water. However, guys who are simply re-selling existing stuff from Alibaba/Aliexpress will hardly reach a shore alive.

My pedestrian input: it comes down to the difference between having "customers" and having "fans".

 

[Vigilante]

Amazon can't harm mid tier brands. Walmart.com is coming on strong. Amazon is deriving 40% of their revenue from 3P merchants. Small sellers and resellers will disappear, but Amazon will continue to make 3rd tier, 2nd tier, and 1st tier brands stronger.

 

[Almantas]

That's an interesting input.

I know nothing about brands nor branding, but it seems that guys who know how to innovate/improve existing products will manage to keep their heads above the water. However, guys who are simply re-selling existing stuff from Alibaba/Aliexpress will hardly reach a shore alive.

 

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[Envision]

Thanks for replying.

Please correct me if I am wrong, but are you are implying that pretty much all small sellers, like ordinary folks who want to dip their toes into ecommerce will be swallowed by Amazon?

They are not getting swallowed by Amazon, they are getting swallowed by other people just like them out working them, out funding them, and out performing them.

The market is the market. Play or die.

 

[MJ DeMarco]

Why would they need books if they have a Washington Post in their arsenal?

Depends if you're in the market for knowledge or propaganda.

 

[MJ DeMarco]

BTW I am not convinced that the mainstream media Washington Compost buy by Amazon was a winner deal.

I doubt the purchase had anything to do with money. More like, it was bought so Amazon could bullhorn their desired narratives while protecting their entrenched oligarchical interests, which of course, is further buttressed by the lobbying and political class, a class that has no party affiliation because they're all the same.

TLDR: If any discussion of an Amazon monopoly / anti-trust activities gains steam, expect WAPO to counter narrative it.

 

[JAJT]

I suspect we'll see the following:

- Amazon will take over online sales for most "general" merchandise. Hell they kind of already have.
- Most 3rd party sellers will be left holding their dicks unless they have SERIOUS marketing chops. That's as long as amazon allows 3rd party sellers to operate in a profitable fashion anyway. The successful ones will be the guys and gals throwing serious money behind traffic/ranking/ads/etc... in profitable niches. Folks who come in with a few hundred bucks of inventory from China and calling themselves a brand won't even be a blip.

And something I don't think has been touched on in this thread yet:

- Buying from non-amazon websites will see a serious resurgence. Small brands focusing on quality, customer service, love, caring, craft, small, local, etc... will make very good money staying the hell away from Amazon and flaunting that fact (maybe not directly but through branding and messaging). They'll pride themselves on doing one or two thing really well (coffee, tea, toys, whatever) and become the next "big" micro brands with strong followings who kill it on social media, word of mouth, etc...

 

[million$$$smile]

Finally, anyone relying only on Amazon has all their eggs in one basket, and that basket is being shaken.

That is one of the best statements in this thread.

First and foremost, never forget that we as an Amazon seller are just a 'fulfillment center' for Amazon. They are ALL Amazons' customers and it is against their TOS to proselytize THEIR customers into buying outside of the Amazon marketplace. Anyone caught flagrantly doing this will usually find the exit without desiring to.

For me, they are just a necessary evil on creating revenue.

A revenue stream.

There is just too much loss of CONTROL. I look at them strictly as a marketing medium to move multiple products faster and in larger SCALE than I could ever personally do on my own. Cheaper? I am not sure about that, but definitely larger scale coupled with the ability to sell a gamut of products that would not work on a niche website.

But...

I believe one better have multiple ways of marketing via their own:

• website(s),
• wholesale distributing if possible,
• and even B&M sales to others

Another aspect also is that one can usually react faster when one sees opportunities that Amazon cannot necessarily 'compete' against even though one is utilizing Amazon for the sale.

Case in point: I market many, many different products on Amazon. I do not import directly any product I sell.

We all hear a different drummer, though we all consider ourselves entrepreneurs.

I have found that I can obtain products either locally manufactured or distributed (nationally distributed, but local) and acquire them within 24 hours of a fulfilled sale and not have to stock the merchandise. It can be done with inventory feeds and the like. Of course it has to be worth the time to pick up the product so there needs to be measurable sales. With enough varied products from the distribution point, one can do quite well. This works great when there are only a few available in sizes as an example because all other sellers are fearful to list the size and dropship due to the fact that they might be sold out before they were shipped. Mind you, these products sell for a minimum of $80-$150 each. We sell hundreds of the products this way monthly.

Also, another example that we have just had approved is negotiating a price and terms on discontinued products from a national manufacturer. These product 'styles' are in the hundreds with tens of variances each, thus creating thousands of potential sales. They are taking up too much inventory space for the mfgr and so he is a 'don't wanter' These items have been sold on Amazon for years in the a very popular category. The terms were awesome, to the point that they are willing to dropship for us providing we move the product fast enough.
So, the first option is to relist everything back on AZ (among other avenues) at a profitable discount and sell quickly, though that could very well take months as the inventory has variances. But, again not just Amazon, but contacting other companies that can utilize the product ie: better profits.

One has to develop a relationship by starting out small, but there are LOCAL suppliers/mfgrs that if the time is spent, it can be incredibly profitable.

Practice nimble.

 

[GuestUser450]

Arbitrageurs will get wiped out as Amz deals more directly with manufacturers (amz biggest competitor isn't ebay or walmart, it's alibaba). But Amz can't control brands or markets, they can only serve them at a discount. Personally, I don't think Amz is eating the world so much as markets are getting bigger.

 

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[Eskil]

It is the large and medium sellers that have a simple non-brand loyal product that should be worried about Amazon basics. If you are selling garbage cans or kitchen cutting boards, you could get crushed by them. Products that require some semblance of R&D are probably not going to be taken over by Amazon basics. They aren't coming out with sunglasses that will rival Oakley's or Rayban, but they might squeeze out the smaller sellers selling ordinary ones.

This exactly, I agree. All the "me too", arbitragers on Amazon will over time just get squeezed out, or best case - still make money - but face an never ending, race to the bottom for pricing against other "me too" arbitragers, and things lik Amazon Basics.

And branding is one thing on its own (and no, branding is NOT just slapping your $5 Fiverr logo on your Alibaba import), but another is being different enough and adding enough new value to a product that will keep a brand that much stronger also. Independent websites (Shopify, etc) will still do well as long as they don't rely only on just flipping and repackaging Alibaba stuff like every other arbitrage entrepreneur out there.

The best way to survive long term is, and always will be, to create/provide something that is YOURS and uniquely yours. And preferably something that is challenging for someone else to rip off. Differentiation and unique value.

Whether you are a small or medium/big seller on Amazon, don't rely on all your products just being imported en-masse with just a logo slapped on, and "having an optimized listing". It can make good money for a while on Amazon, but never forget you are dealing with partial lack of control, a violation of one of the CENTS commandments. I always tell people the sooner you can establish your own sales channel (website) and control that, do it. Amazon should just be one of your sales channels.

And lastly - people often tend to forget there is a world out there. Amazon is huge in the US, sure. But in other massive markets such as Europe and Asia - Amazon is small or insignificant compared to other market forces there. There is soooo much opportunity.

 

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[G-Man]

Rep to @Vigilante and @TeveTorbes

It all depends on what you think a brand is. Anybody can make sugar water, but you still buy Coke.

Will it make it harder for new brands, maybe maybe not.

Product still matters.

 

[BlakeIC]

Amazon is slowly butchering the small companies. Just take a look at the "Amazon Basics" products you find on Amazon.

Amazon is giving their own product priority in the search results over everyone else so that people buy theirs and not these other companies.

It is a matter of time before AMZ also starts limiting registrations for becoming a seller.

As someone who knows what makes products rank on Amazon, I am gonna milk the shit out of it until they boot me and other sellers off.

Soon Amazon arbitragers will be gone.

^My opinions...

 

[Sanj Modha]

Who's your competition? Amazon or FBA sellers? It's a beast but I'm not worried about it. There are things smaller sellers can do that Amazon can't because it's so big. For example, one of them is personalized customer service.

We sell a lot of products that are cheaper on Amazon but Amazon isn't always price sensitive. A good friend of mine sells off FBA and does really well. He told me about an example of a bluetooth shower radio which they sourced and branded. It wasn't selling at the lowest price (I think it was listed around $18.99) so he decided to up the price to something like $27.99 and it sold out.

I go back to the above comment - it's the difference between 'customers' and 'fans'. I buy from Amazon but I wouldn't call myself a 'fan'. It's my go to marketplace for cheaper items but it's not always the cheapest either.

 

[Vigilante]

Amazon stopped hiring merchants many, many years ago.

They started hiring MBA's who know algorithms.

Meanwhile, Wal-Mart and Best Buy have merchants who use tools to sell stuff.

That is why Amazon Basics are basic, but when you need sourcing or merchandising expertise, Wal-Mart and Best Buy still win.

 

[MJ DeMarco]

Buying from non-amazon websites will see a serious resurgence.

In general, the "buy local" and "buy from mom-and-pop" is definitely an angle that Amazon cannot compete on. And I think in this day-and-age, doing business with gigatastic corporations is not the preferred route, all things held equal. The problem is, getting to "all things held equal" -- Amazon can get you my books into your hands within 24 hours, sometimes hours; I takes me 4 days to get it into your hands.

 

[Almantas]

Hey, guys!

So, I've read an article about Amazon taking complete control of ecommerce, link is here.

What's your take on this? Do you believe that in few years only the few, very local and extremely customer-focused services/brands will survive and the rest will be slowly pushed aside by Amazon?

Do you believe that ecommerce guys will be left fighting for miniature breadcrumbs while Amazon takes away a complete pie off the table?

I am not in ecommerce and simply asking what others think.

In my uneducated opinion, Amazon is a platform that facilitates brand-building and should be used as a partner instead of a competitor. Also, instead of completely depending on Amazon, people should probably use it as another platform to promote/sell their products and then redirect them onto their personal websites, which has even better shopping experience than Amazon.

Just my 2c, what is yours?

 

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[Lionhearted]

Hey, guys!

So, I've read an article about Amazon taking complete control of ecommerce, link is here.

What's your take on this? Do you believe that in few years only the few, very local and extremely customer-focused services/brands will survive and the rest will be slowly pushed aside by Amazon?

Do you believe that ecommerce guys will be left fighting for miniature breadcrumbs while Amazon takes away a complete pie off the table?

I am not in ecommerce and simply asking what others think.

In my uneducated opinion, Amazon is a platform that facilitates brand-building and should be used as a partner instead of a competitor. Also, instead of completely depending on Amazon, people should probably use it as another platform to promote/sell their products and then redirect them onto their personal websites, which has even better shopping experience than Amazon.

Just my 2c, what is yours?

My bias here, I am considering making my own brand and selling on Amazon.
You never know what the motivation of the person writing the article is (other than going viral or getting clicks) they may be in a partnership with Alibaba, Jet or even Amazon and trying to manipulate the market. Who knows? I take most of what mainstream media tries to feed us BS. They really don't have a clue, in my eyes they are "Scripted". Do you think Amazon would spill the beans if they were going to screw the very people that made them into what they are? Seriously? No.
BTW Amazon makes huge money being the middle man between brand maker and the consumer. Brand suppliers are also Amazon customers. They buy Amazon's services and pay large fees to use them as well they pay Amazon to promote their products (paid advertising). If they squeeze them out they will no longer get those fees also they no will longer get the "creative energy" all these people bring to the market.
Amazon also knows that they have competition out there (Shopify?) and if they screw their customers (brand suppliers are customers) their customers will go elsewhere. As an entrepreneur I always ask,"How can I take advantage of the situation?" I also know that entrepreneurs are "usually" very quick on their feet and adapt quickly to a changing environment. I know one thing for sure, businesses that squeeze the market too tight always create a new opportunity for someone else (see taxi cabs and Uber for an example). I am thinking one of the customers who was squeezed out of business by Amazon (because Amazon bypassed them and went straight to the manufacturer) could wake up one morning and create their own Alt-Amazon that allows millions of entrepreneurs to do what Amazon used to allow them to do at lower fees or in a simpler way and BANG see you later Amazon. Understand that there is always a way to be creative and be the David in a Goliath situation. Remember at one time only had Ma and Pa general stores then we had department stores, then we had big box retail shopping, now we have Amazon and the world of online shopping, sooner or later someone will once again re-invent the wheel. Adapt or face extinction.

 

[Digamma]

Eh, nobody can predict the future. Like anybody trying to predict the stock market, it's just deluding yourself that your biases are accurate.

At the end of the day, if Amazon can do something better than you, and they care about doing it, then they will eat your cake.
If they can't, they can't. It's always about value provided.

 

[cutthroughstatic]

Great responses on this thread. It comes down to a few things:

Amazon doesn't control the market. They control a large portion of the traffic, but they don't and can't control the market.

We don't know what is 1 year, 2 years, 3 years out. As Amazon continues to take market share, they will eventually attract rivals. What Amazon did to brick and mortar, someone will one day do to Amazon. There will always be opportunities.

It comes down as always to value. If you can provide more perceived and actual value than Amazon or than another seller on Amazon, you'll win.

The internet is huge. There's tons of ways to get traffic. If Amazon starts eating up some of the sellers, people will get creative and find newer/better ways to get in front of their customers.

 

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[Vigilante]

Thanks for replying.

Please correct me if I am wrong, but are you are implying that pretty much all small sellers, like ordinary folks who want to dip their toes into ecommerce will be swallowed by Amazon?

Yes. I think that is inevitable, and happening already.

 

[Almantas]

Depends if you're in the market for knowledge or propaganda.

Depends if one can distinguish reality from fantasy and truth from propaganda...

 

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[biophase]

I think about this alot, what are your thoughts on Amazon making moves to buy the biggest brands in each niche to dominate their respective market?

For instance I have a hard time seeing an Amazon basic supplement line doing much damage. But if they were to buy BSN or Optimum or a huge move like that I could definitely see that being a massive problem for other sellers.

Same goes for other niches much like it. What do you think @biophase?

I can see Amazon going into the supplement business or any business where the R&D just isn't that complicated. For example, Amazon can take over diapers, napkins, plastic utensil, garbage cans, kitchen gadgets, batteries, pet supplies, etc... They can just walk into a lab and private label everything that the lab makes. If they make protein powder, it's probably going to taste crappy, but it will get the job done for many price conscious people.

I've always thought that a good strategy for Amazon would be, not to buy the brands, but to hire people from these brands. So let's say some small company is killing it on lawn furniture. I would find out who the main designer in that company is and hire him. Have them start the Amazon basics lawn furniture line. All of a sudden, this dudes gets a $10M budget and a team of 3-4 people under him. He could crank out products of higher quality than some guy at Amazon that is just private labeling everything.

I still buy Duracell batteries for important stuff. But for remote controls, toys, silly gadgets, etc... I buy a 50 pack of Amazon basics AA batteries. The don't last that long, but they are good enough.

I do compete with Amazon basics in some products, so I understand their quality. I know that there is no way to compete with them on price and quantity, but they really do go basic in terms of quality. I can import the same exact product that they sell, but I would never do that with my brand. The quality is too low. They sell 100pcs for $9.99, but I'm at 50pcs for $14.99.

It's obvious that the average buyer goes for the low price (and probably higher search rank) because they have 3000 reviews, but they are at 3.5-4 stars. I may have only 200 reviews but I'm at 4.5 stars.

 

[Sanj Modha]

You need to ask yourself - what is it that my business can do that Amazon can't? It's not so obvious at first but think about it.

Amazon is a huge so things like customer service will suffer. How can you make a difference and offer better? Also, can Amazon personalize EVERY order? No, but you can with branded packaging, a personal 'thank-you' note etc. Book stores are making a come back because they can offer an 'experience' like cosy reading spaces, coffee from Starbucks/Costa and so on.

There's a lot of smaller things e-commerce can do so focus on that.

 

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[Iammelissamoore]

I think this is really interesting. I mean, we can't deny the muscle-power Amazon comes with, they've been in the game really long and they are really dominating; however, there was once a time where generally big brands were dominating in their specific industries. Who was a "nobody" to come along and compete with them? Then, a lot of the small "nobody" brands began gaining market share and also began changing the game entirely, what these "nobody" brands were doing was they began reviewing what all these other big brands weren't doing and they began doing it.

No longer was it about a product selling because it had a big brand name, the "nobody" brands, without pointing fingers, began educating us about the benefits/harms of general products and they offered the alternative as a solution to the harms, which presented more responsibility on their part than the established brands, it reached a point where people were being more educated about what they put into their bodies/on their skin/in their hair/on their children etc., which changed the game entirely.

Though Amazon carries a lot of weight as a company, they can't do everything, or they can't think of everything, there will always be something they'll miss that some "nobody" just may be able to capture and run with it, it may not be as big as the Amazon brand, but it just may carry a lot of weight with it.

Isn't this what makes a Value-Based Fastlane/Unscripted Business? Isn't this where the difference is found?

 

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[Envision]

Small sellers won't get swallowed by Amazon because by definition, they are small sellers. Amazon is not entering a market that has low sales numbers.

It is the large and medium sellers that have a simple non-brand loyal product that should be worried about Amazon basics. If you are selling garbage cans or kitchen cutting boards, you could get crushed by them.

Products that require some semblance of R&D are probably not going to be taken over by Amazon basics. They aren't coming out with sunglasses that will rival Oakley's or Rayban, but they might squeeze out the smaller sellers selling ordinary ones.

I think about this alot, what are your thoughts on Amazon making moves to buy the biggest brands in each niche to dominate their respective market?

For instance I have a hard time seeing an Amazon basic supplement line doing much damage. But if they were to buy BSN or Optimum or a huge move like that I could definitely see that being a massive problem for other sellers.

Same goes for other niches much like it. What do you think @biophase?

 

[Eskil]

You need to ask yourself - what is it that my business can do that Amazon can't? It's not so obvious at first but think about it.
Amazon is a huge so things like customer service will suffer. How can you make a difference and offer better? Also, can Amazon personalize EVERY order? No, but you can with branded packaging, a personal 'thank-you' note etc. Book stores are making a come back because they can offer an 'experience' like cosy reading spaces, coffee from Starbucks/Costa and so on.

Yes! Time and again it comes back to ADDING VALUE. Things like what @biophase is doing with his current business. Not only selling product, but also adding value, building a brand, and building a community of fans that recognizes what you are doing for it. Come up with ways to give back, educate, help or in some way shape or form be more than JUST a profit machine. One plan I have for my own main brand is to get involved with schools and colleges by providing a training kit that can get young people interested in videography/filmmaking. Amazon can't and won't ever get into that level of value creation or community support for a brand.