Can Amazon Be Trusted?

Scaling Retail on the Go: Internet Retailer Conference (IRCE) June 2018 – Amazon Central

Our technology and marketing expert went to Internet Retailer Conference (IRCE) in Chicago. Interestingly enough, his main takeaway was a question: Can Amazon really be trusted? This was the same question I posed a few years ago, and observations of the tech giant’s latest strategies only serve to further support the need to pause and consider their potential intentions for retail brands.

My Amazon Private Label Prediction

I’ve given interviews about Amazon’s foray into private label before. And Mandeep’s feedback about IRCE reminded me of my 2016 chat with Internet Retailer:

Syama Meagher of retail consultancy Scaling Retail says she can see the appeal of private label to Amazon, but thinks the e-retailer will need to do more before consumers will view it as a fashion destination. “If you are any retailer missing a category and you can do it cheaper, it is a good money-making opportunity,’ she says. ‘But what it looks like is Amazon saw what their best sellers were and introduced their own versions.”

Risks in 2018 and Beyond

If you’re not familiar with IRCE, it’s devoted to all things e-commerce. It was exciting to see they’ve added a separate track for fashion for the first time, but disappointing that the main focus was on Amazon Business. They minimized everything related to launching independent brands while thrusting the tech platform into the spotlight. Amazon is moving fast and furious into fashion and retail.

One of the biggest surprises is their new trademark business. You can trademark your brand in the U.S and put it on Amazon. They’ll make sure no one duplicates your products or reuses your images – anywhere in the world.

So coming out of IRCE, is Amazon safe? Should we trust (and can we trust) them? They’re making it so easy to protect your brand around the world, use their fulfillment, etc. But can we trust them to not knock off our products? Is this an attempt to knock off and private label? Or do they really have sellers’ businesses at the heart of their solutions? We really hope their customer-centric approach applies to B2B customers too.

Can Amazon Be Trusted?

Three years ago, I had a conversation with someone whose brand was selling on Amazon. They weren’t making huge margins, but the volume of business represented a large percentage of their overall sales. This CEO was so nervous to leave the business because it looked good, though the situation wasn’t optimal. Amazon is creating a glass house where everything is self-contained. Make sure you’re not reliant on them to do business. If you do, it’ll be difficult to get out once you’re in.

And remember that they may be big, but they do have to be mindful of how they proceed from here on out. If they undermine their brand partners, it won’t matter how big they are. Their reputation will be damaged and cause a shift away from the platform. We’ll know more about where their allegiance lies soon…

Potential Antidotes

Now that you understand a little bit more about what’s happening with the platform, here are a few solutions to put to work…

Innovation

Innovation of any form (product, marketing, business models…) is necessary to compete. This applies to fresh startups all the way up to enterprise businesses. In fact, stores like Macy’s and Nordstrom have to continue to innovate, if they’re going to be around in the next 5-10 years.

“Hacking” the System

A recent Glossy read shared some creative legwork happening over at OPI, the nail polish brand. OPI sells on Amazon, but wanted more insights into the customer data they notoriously retain. They took matters into their own hands and launched a newly revamped website, incorporating Qubit personalization software. Now they can get search and browsing data for a healthy percentage of their sales, even though their shopping cart is connected to Amazon. That’s one way to work with them…

The Blockchain

We recently heard about Shopin in WWD. It’s a company leveraging the blockchain, so retailers can benefit from each other’s purchase data without directly sharing it with one another. It offers AI-powered, decentralized product recommendations, taking the power away from e-comm aggregators like Amazon.

It’s described as a “universal shopper profile” and gives customers power over their data. They can choose to keep it private or share some or all of it in exchange for cryptocurrency rewards (regular currency or shopping tokens). The aim is to give retailers access to shoppers who want to be engaged through marketing and to wean them off their reliance on centralized marketing platforms like Amazon – but also others like Google and Facebook.

It’s still early, but we’re keeping an eye out for Shopin and any other alternatives that pop up on the horizon.

So… can Amazon be trusted? Brands currently do the bulk of the work, and they’re met with tough terms and conditions. Taking a step back to look at their history, we can’t say if their latest offerings are for brands’ best interests. We’re definitely taking a wait-and-see approach here!

Have you been selling on Amazon, but you’re ready for the world of direct-to-consumer sales? Call us at 310-957-5264 or send us an email at hello@scalingretail.com. We’ll schedule a 30 minute consultation session to see if we’re a good fit. Our team of experts can help you develop a viable strategy that allows you to take control over your business to increase margins and revenue.