Should Brands Sell on Amazon?
At Gap's annual shareholder meeting back in May, CEO Art Peck said, "to not be considering Amazon and others would be in my view delusional." In early September, Lands' End announced that it would start selling some merchandise on Amazon, as the online behemoth's "credibility of being a desired fashion destination for shoppers continues to grow."
It may seem anachronistic to call Gap and Lands' End "early adopters," given that so many retailers and brands have been selling on Amazon for years. But in the apparel business, there's been a deep-seated trepidation about relinquishing any measure of control over brand equity.
However, moving forward more and more apparel brands will find that Amazon isn't just another online channel that they can take or leave – it's a primary platform that they must not only consider, but actively manage in order to reap the benefits and avoid the drawbacks. As retailers and brands rethink their omni-channel strategies, there are three top factors they should consider when approaching The Amazon Question:
- Follow the customer: Today, 43 percent of online product searches originate on Amazon. If you're not capturing shoppers on Amazon you're missing out on a major source of traffic and demand.
Apparel shopping on Amazon wasn't one of the e-commerce giant's original areas of focus, but as consumers have become more comfortable shopping online, and delivery programs like Prime allow them to order clothes and easily return what doesn't fit, clothing has become an increasingly large portion of sales on Amazon. For example, CommerceHub estimates that the value of third-party sales in the "Clothing, Shoes, and Jewelry" category grew 12 percent between Prime Day 2015 and 2016.
- Treat Amazon as a marketing platform: Today, Amazon functions as far more than a retail destination. Yes, you need to make a portion of your product catalog available on Amazon Marketplace because the demand is there, but that isn't enough. You also need to have a strategy for tools like Amazon Sponsored Product Ads that allow you to market your products to shoppers on the site.
In this sense, Amazon's "Marketplace" label is accurate. As in a physical marketplace with multiple stalls or stores, on Amazon you need to make sure your products stand out from the crowd. You need to play by the marketplaces rules — what kind of advertising and marketing options are available, how you can display your products, etc. — but the main objective is to get in front of shoppers and draw them in. An Amazon strategy that doesn't consider Sponsored Product Ads or optimize its product feed may as well be the stall way in the back of the marketplace that no one walks by.
- Deploy a multi-channel-selling approach: Selling on third-party marketplaces like Amazon, or via other external channels (e.g., social media platforms), doesn't have to mean losing control of your brand. On Amazon, for instance the Brand Registry program allows brands to take control of their product detail pages, controlling the content, detail, and images that are linked to official merchandise. By having an official presence, brands address shoppers' demand for broader distribution and reduce the demand for the unauthorized sales that are so common if you aren't selling your products on Amazon yourself.
Similarly, on Pinterest, brands can use "Rich Pins" to exert more control over how their products appear on this channel and deepen engagement. In particular, "Product Pins" include detail on real-time pricing, availability and store information and "Buyable Pins" allow users to buy products without leaving Pinterest. Both tools are specific to this particular channel, and require a dedicated strategy. By looking at different channels as centers of demand, you can evaluate each clearly and develop specific approaches that speak to those channels' audiences effectively.
The shift to online apparel shopping is accelerating, which requires brand to have a sense of urgency and double down on their e-commerce effort. Ultimately, the retailers and brands that will win are the ones that engage with shoppers where they are already spending their time, and then provide an experience that keeps them coming back. Amazon may not always be the epicenter of online apparel shopping, but in today's retail environment it is a source of demand and enormous opportunity that cannot be ignored.
Bill Kong is EVP of products and services for CommerceHub.