Should you be nervous about the Amazon launch? What should you be doing right now to prepare? Is there a way to protect your company from the effects of the launch? Curamando’s Partners and e-com experts answer 9 of the most important questions about the Amazon launch.
If you would like to learn more about Amazon’s launch in Sweden, we’ve also written two blog posts about this:
1. As an e-tailer in Sweden – should I be nervous about the Amazon launch?
Johan: “Nervous” feels a bit passive. If you’re in e-com, you should instead sharpen your offer. You have to become more relevant and work more and smarter with your customer insights. But – it depends a bit on what you sell and what customer relationship you have today. If you have loyal customers and you own your brands “all the way down” (and legally) without any competition, I don’t think you need to be too nervous. See it as an opportunity. It’s another channel to reach out in!
It, of course, depends on how Amazon will work in Sweden. Swedes like to shop in Sweden or in the Nordics where you recognize yourself in the customer journey and can receive packages with the help of logistics solutions that you know. It is not impossible that customers are a little hesitant at first.
Björn: In the beginning, there is always a resistance to, as a consumer, move from traditional e-commerce. I hear from many Swedes that they think Amazon feels impersonal, difficult to navigate, “typical American layout” and so on. It is likely that these impressions will change when tested. You may try to buy something non-critical, simple or cheap, and if it works, you may feel more confident in continuing. As an e-tailer, you also have to be able to divide it into challenges and opportunities. If you have high availability and the lowest prices on the market and the best delivery options – then you are strong today. But in the future – when Amazon is in place – other e-tailers will work on the same conditions. On the other hand, if you as an e-tailer today lag behind on the last mile, there’s an opportunity to let Amazon improve your delivery terms, for example.
Johan: If you only compete with low prices today, you should probably be a little nervous. Low price won’t exactly be a USP. It will become even clearer now – price transparency will increase.
2. As an e-tailer – should I start selling on Amazon?
Björn: You should definitely evaluate the channel. Regardless of whether you choose to start selling on Amazon or not, you must do your analysis and you must understand that business will not look exactly as before. Business and the competitive landscape will look different once Amazon is launched.
Johan: Amazon is an ecosystem, part of the infrastructure online – globally and in Sweden. You have to understand and familiarise yourself with the platform, just as you once familiarised yourself with Google’s ecosystem. Getting to know Amazon should be part of “e-commerce 101”.
“Getting to know Amazon should be part of “e-commerce 101.”
3. How do I prepare for selling on Amazon? What are the risks associated with this?
Johan: Just like when you optimise traffic and conversion for Google or on your site, you should start with a total scan. Are you good at product descriptions, content, or reviews and ratings? Make sure you have rich product data. Look on Amazon and find out what the product descriptions look like there and ask yourself if you live up to those expectations and requirements. It’s really about living up to the basic requirements of running e-commerce in general – then you’ve come a long way.
Björn: Perform an analysis of your products: Are the products already being sold on Amazon or am I in a niche that means that I will be able to differentiate myself? You may choose to invest in the products where you have a competitive advantage. I don’t think you should compete with your entire range if you have thousands of products – simply because it will take a lot to be the best on Amazon. Start with the products that are more likely to be successful, e.g. unique products, or products with a high margin where you really have the opportunity to compete with low prices.
4. Are there any risks related to not selling on Amazon?
Björn: Suppose you are in a market where you have a number of competitors. No matter what you do, some of your customers will move to Amazon. Then there will be a whole new battle for those customers. It’s simple – if you choose not to go there, someone else will take these customers.
Johan: Amazon will buy an awful lot of traffic. They are incredibly relevant, have large volumes and a wide range, fantastic content, etc. It’s likely that companies will be pushed down significantly in the search results, which means that they lose position and traffic. If you do not receive any exposure, you are simply excluded from that part of the customer journey.
“It’s simple – if you choose not to go there, someone else will take these customers.”
I think you’ll have to see the exposure on Amazon as part of your marketing strategy. Perhaps you’ll realise that you can’t be profitable on Amazon, but that you have to make sure you get the exposure regardless. Some form of presence is important. Over time, you might reach the customer.
5. Are there any industries that will be affected more than others? Which ones?
Johan: If you look historically at price comparison sites, you’ll see that the industries that are the most challenged are those that cover more “conscious purchases”. Industries where the product range does not change as often but are more static – home electronics for example – are included there. In the fashion industry, on the other hand, where you probably work with collections that are replaced at short intervals, there will probably be a little less competition.
Björn: It also depends on the type of company. If you have your own brand and sell your own products, it’s likely that you can benefit more from Amazon than if your company is pretty much a marketplace already (by selling many different brands).
Johan: Amazon is based on convenience – that you don’t have to think. The stuff is there, you know that the price is the best and that the delivery is fast. Completely frictionless! If you haven’t succeeded in creating that friction-free journey and cannot live up to customers’ expectations, you are in the risk zone – regardless of industry.
6. Is there a way I can protect my company from being affected by Amazon’s launch?
Björn: A short answer: Make sure that your company has the competence to understand what Amazon will mean for the company and what you should do to handle it. It is important to understand how to use the platform, and how to relate to it. You may come to the conclusion that it isn’t so bad and that it’s a great opportunity.
Johan: If I were a CMO or an e-commerce manager at a company right now, I would already be well-prepared and completely familiar with how the entire ecosystem works, and also initiated the relationships needed to be ready when it happens. Don’t stand and watch – get into it and learn. Also – make sure you have someone in charge of this, who pushes it forward and follows up!
Björn: Let’s compare it with Google Ads. When it was first introduced, many people said that it wasn’t a good idea to spend money on ads because no one clicks on them, but today you don’t sell anything online if you don’t pay for ads.
7. Is it likely that I will have to lower prices and work with smaller margins due to Amazon?
Johan: It will probably lead to a completely different margin structure. Just look at what it’s currently like in e-commerce in Sweden, where margins have already gone down. You have to have a business that is adapted to that reality – otherwise, it won’t work.
Björn: There are also margins in different dimensions. For many, logistics will be expensive on Amazon, which means that the margin on the bottom line will shrink. However, if you currently have an inefficient logistics setup and expensive warehousing, selling on Amazon might lead to logistics becoming more efficient – which in turn means that you don’t need to have the same margins.
Johan: Just as you adjust price levels based on price comparison sites, you will need to work on monitoring Amazon. You have to review your entire pricing strategy. Having the lowest price everywhere is not sustainable over time, for example. If a European inventory is shown on Amazon, Swedish products will be compared with similar products, but in a completely different market with a completely different margin structure.
Björn: Most likely you will need different pricing strategies on Amazon and on your site. The most heavily discounted prices on your own site used to attract customers to the site may not need to be as low on Amazon – as long as you’re competitive in that channel. Simply put – the right price in the right channel.
“Most likely you will need different pricing strategies on Amazon and on your site.”
8. What competence do I need in-house at my company to succeed?
Johan: Bring in someone who sets aside time to really work, test and try to understand how it works. Learn from the best on Amazon – what do they do? Why do some sell more than others of the exact same product? Probably because their customer journey is frictionless and that they have worked on building their brand.
Björn: You have to understand your position really well, understand how you stand out and then you have to learn how performance marketing works in this channel. How do I position myself? You need to master the supply chain and logistics flows, because on Amazon one major ranking factor is availability – always having your products in stock.
Johan: The warehouse is incredibly important and that is good, because it will increase the pressure on Sweden’s purchasing and supply chain departments to always have products in stock. Not having the product in stock at Amazon is the kiss of death. The biggest betrayal. Customer service is also absolutely crucial. All dimensions have to work smoothly.
“Not having the product in stock at Amazon is the kiss of death.”
9. What’s your best tip for Sweden’s e-tailers?
Johan: Be curious and turn this into your greatest opportunity. Enter with the mindset “how do we become winners on Amazon?”. That’s how you make it happen.
Björn: Do it now. Do not wait. And get help.