Blog

IS AMAZON COMPETING AGAINST YOU?

Posted by Jimi Patel | September 25, 2019

Nobody sells on Amazon like Amazon. With its expansion into private label, Amazon has shifted from being may-the-best-product-win retail platform to a direct (and not to mention, the biggest) competition of the sellers. For sellers, it’s been a love-hate relationship; they love Amazon for giving them a huge customer base and they hate Amazon for competing against them. Competing with Amazon – the thought itself is scary, but no one can do anything about it. What you can do is be aware of the situation and learn from it.Amazon and sellers are in a frenemy position where sellers are dependent on Amazon but are also competing against it.

Why Is Amazon Mostly Everyone’s Competitor?

AmazonBasics, the retail giant’s private label brand sells everything from tech accessories and kitchen gadgets to beddings and toys. Launched in 2009, it has grown to be the biggest retail trends of 2019. The brand started with selling a small selection of batteries and charging cables with a 30% lower price than competitor brands and in just a few months it was outselling some of the huge brands in that category like Duracell.

Amazon Basics

Though the batteries continue to be the top performers, the electronic departments also seem to dominated by Amazon with products like Fire tablets, Fire TV, Alexa and Echo devices. Today, AmazonBasics has listed more than 1000 individual products and most of them are ranking on page 1 with great reviews and ratings. If you are also selling in any of these categories (which obviously most of us would be), then Amazon is your direct competitor.

Amazon Has Data No One Else Has:

They know why did customer went to the product page and yet didn't purchased and they are not going to share that with you. No wonder their products do so well.

Amazon’s success is not simply about the brand. The detailed purchase data available to Amazon gives them an unfair advantage over the others. They can anticipate demand more accurately and by analyzing the click and purchase rates and they can make a more informed decision while launching new products. Amazon has access to all data, including:

  • What products customer search for
  • What terms they use for searching
  • What they actually buy
  • What they but at what prices

Amazon Has A9, Obviously Their Products Will Rank!

Winning or losing buy box equals thousands of dollars of sales earned or lost.

I agree that selling on your platform is quite normal these days. If you go to a grocery store to buy detergent, let’s say from Tide. I am pretty sure that you will see one detergent brand that is sold by the shop’s owner himself. The huge online retailers like Walmart have also offered store brands for years. Yes, it is competition, but it cannot be called unfair. What is unfair is that Amazon’s brand always seems to top the ranking and they always have the Buy Box. Multiple sellers usually compete in terms of price, review rating and shipping speed in order to get the sale, but most of Amazon’s products always have the Buy Box.

Amazon Echo Dot

When consumers ask Alexa to “buy batteries”, they will get just one option: AmazonBasics. How is that possible? Also, if you type the word “batteries” in the Amazon search bar, you will see a large Sponsor Brand ad banner stretching across the top of the screen for Energizer featuring its signature drum-playing pink bunny. But then you will see a lot of offerings from AmazonBasics most of them flagged with highly coveted badges like “Amazon’s Choice” or “Best Seller”. It’s no surprise that when Amazon launches a new product, it makes its way very quickly to the first page while other brands would take about a year to reach there and that also after optimizing the products, getting reviews, doing giveaways and running aggressive PPC campaigns.

Amazon Battery

Is It A Tilted Playing Field?

There have been many cases where sellers saw a dip in sales because Amazon has listed a similar product in their category. Now, apart from other sellers, their competition is directly with Amazon. Apparently, Amazon is also quite partial towards its listing. The lightning cable that Amazon sells has racked up dozens of complaints saying it’s a fire hazard and yet was the “#1 Best Seller” in its category for the longest time. Now we all know, just the word “fire” in one of our reviews would have got it blocked.

Amazon reviews

The competition isn’t just limited to private label brands. Third-Party sellers also face competition when the retail giant sells the same or similar product at a low price. According to BuzzFeed News, Anthony Monfet, a successful Amazon seller who had three different storefronts on Amazon had to stop selling one of his highest selling commodities just because Amazon started selling a similar product for $80 less. Until 2008, he was selling 15 Coleman tents a day for $199.99 each and then Amazon started offering the same Coleman tents for $119. Another company, Rain Design, saw a dip in the sale of its laptop stand just after Amazon began selling its own version for half the price which was reported by Skubana in 2016. No one feels good about it, but there is nothing one can do.

Amazon Basics Laptop stand

Rain Design Laptop Stand

Competing with Amazon is like opening a convenience store in front of Walmart.

This is what Amazon does:

  • Recognize the Best Seller in the category
  • Copy its design and create a similar product
  • Cut the prices down
  • Bring the product on the first page next to best sellers
  • Take all their sales

Well, Amazon Has An Unfair Advantage Over Us All:

The question is how can Amazon lower its prices so much and still earn a profit? Well, unlike other sellers on the marketplace, Amazon isn’t doing all this for profit and nor it needs to make money from all the product it sells. The eCommerce behemoth already has robust cloud services to offset losses. It just wants its customers to come back and shop again. 

Even if Amazon earns a cent in selling you something and you are a satisfied customer who decides to come back again, then Amazon has won.

Despite Being Competitive, Amazon Is A Great Teacher:

Probably you can win from all your competitors but not from Amazon.

But if you can beat it, you can learn from it. Amazon has shown us how to be a profitable Amazon seller by doing business by its standards. As Amazon professionalized the selling game, we as sellers learned to take our customers seriously. We started to meet the delivery windows, listened to customer’s queries and tried matched with Amazon’s performance. Amazon has increased the bar and forced us to do so. Here’s what you can learn from Amazon:

#1: Take Your Reviews & Ratings Seriously

Amazon Reviews and Ratings

96% of AmazonBasics products have at least 1 review and have a rating between 3.5 to 5 stars. If your product does not have a review, it means that it lacks the social proof the customers need to make a purchase. The customer won’t trust you and nor your product and hence, won’t but the product, no matter how beautiful your listing look. I know this scenario is similar to “You need a job for experience and experience for the job.” You need sales for reviews and reviews for sale. But there are several white hat tricks that can help you out. You can also create a star review rating breakdown of your product’s catalog. The products above 4.0 star ratings are perfect but you should focus on improving review rating of products having lower than 4.0 star ratings. See the table below:

Your brands start review rating breakdown

#2: Launch Products More Often, But Smartly

On average, Amazon launches 23 new products every month. The majority of these products are launched in Q1 and others are launched in Q2. Rarely does it happens that the product launched by Amazon does not work. It’s not that it never happens, but the ratio is very low. There are two things you can learn from Amazon. First, launch more products to stay relevant in the market. I am not telling you to launch 23 products a month like Amazon, but you can introduce new products in the market according to the size and capacity of your business. Second, like Amazon, do proper homework before launching any product. Conduct thorough Amazon Product Research or hire experts like us to increase the probability of success.

#3: Price Competitively

The average price of Amazon’s product is $22. Price can make or break your product. If your product is priced competitively, the chances of winning the Buy Box are also increased and you will have more chances of getting a sale from customers. Yes, Amazon can set a very reasonable price because they don’t care about the profits, but if you want to sell on Amazon, you can’t set a higher price than competitors saying your product is of great quality. That won’t work.

#4: Delight Your Customers

Amazon is the most “customer-centric” company in the world and they offer world-class after-sale service and super fast shipping on their products. The warm-hug experience of excellent customer service will also help you build a fanatic fan base which will come back to you because they have developed a trust in your brand. Over delivering to your customer will powerfully reshape your identity as a brand and will prevent them from going to Amazon.

#5: Revamp Your Listing

Most of Amazon’s product listings have Enhanced Brand Content, keyword-rich title and informative bullet points. AmazonBasics has a beautiful storefront too. If you want to stand strong in front of Amazon, your listing should too. Optimize your listing with the best keywords, make it more and more information-rich and add images and enhanced brand content to make it look enticing. An attractive main image can skyrocket your click-through rate and informative content can reduce the return ratio.  

Don’t Stress, There Is Space For Everyone To Coexist

As mentioned above, there is nothing wrong with selling on your own platform; anyone would have done the same. Unless and until there is no injustice done to your listing everything is fair.  And even if it is, all you can do is sit and watch; you are not going to court saying that you have added the best keywords in your listing and it’s not ranking while Amazon’s product is ranking with zero keywords in the title. That would be an utter waste of time. So it would be best if you learn from Amazon rather than sitting and crying. With the ever-growing customer base, Amazon has a place for everyone to sell, so don’t worry, you have got plenty of opportunities. If you need any help to Boost Amazon Sales, then contact us.

1 Comment