To Amazon Or Not To Amazon!
That is the question that keeps many a Hamlet in the marketing and sales business in India awake at nights.
For an established brand with widespread awareness, a loyal consumer base and strong traditional distribution, Amazon is just one more channel.
However, when it comes to a new brand in a competitive market the question of whether or not to place their product with a big-box e-tailer like Amazon is a critical and fraught question.
Given the increasing relevance of e-commerce in most categories, for a new or small business digital marketing and e-commerce offer the lowest cost go-to-market route.
The question that most new or small consumer businesses and brands would therefore face is whether to focus exclusively on building and promoting their own e-commerce platform or have their product available both on their own e-commerce platform as also with the relevant big-box e-tailer — the generalists like Amazon and the category specialists.
The pros of being on a big box platform are immediate reach and visibility.
The cons are data asymmetry and low brand engagement.
The big box e-tailer has all the data on consumer interest and purchase in the category and the brand has none.
This would give the big-box e-tailer a deep advantage if and when the e-tailer decides to launch its own private label brand. AmazonBasics is a prime example of a data-driven private label strategy.
However if the category is a crowded one and most of the competition is already selling on the platform the data issue is moot.
As for brand engagement, on Amazon the dominant brand is Amazon. Especially when to consumer searches for a category and is faced row after row of choices. In such a case the product brand becomes almost a commodity.
Brand engagement is less of an issue when a consumer specifies a brand in her search.
That, however, is likely to happen only when the the brand is already an established brand.
So how does a newcomer brand decide on “To Amazon Or Not To Amazon” question?
To my mind the answer hinges on, as it does with most questions in life, on a complex set of interacting factors.
Some of the factors at play would be the stage in the product lifecycle that the category is, the price and consumer segments the brand is addressing, the competitive set and strategy, the overall distribution scenario and channel shares.
Even when all the factors are taken into account the answer to the question might be different from different points-of-view
It is about PedalSpark a successful direct-to- consumer seller on the company’s own e-commerce platform of $4000 luxury e-bikes.
PedalSpark is now planning to launch a cheaper, entry-level model at around the $900 dollar mark.
The marketing and sales team have different opinions on whether PedalSpark should put this cheaper model up for sale on the Amazon platform in addition to their own platform.
The case study outlines the different arguments.
And as in all HBR case studies two experts offer their reads. And viola the two offer diametrically different but equally convincing answers!
Expert One advocates that not only should PedalSpark put the cheaper $900 model on Amazon but it should also consider putting the $4000 model also on Amazon. The extra reach that Amazon offers, according to this expert, overrides any negatives.
On the other hand Expert Two suggests that PedalSpark should focus on building the brand and consider launching the brand on Amazon once the brand strength reaches a level when it can be sure that a substantial number of potential buyers on Amazon would search for “PedalSpark e-bikes” instead of just “e-bikes”.
The HBR case study is available at around $10.
While “To Amazon Or Not To Amazon” is a sticky question the question on whether or not to invest in reading the full case study is not.
Just do it!