How Amazon’s Private Label Brands Can Teach You To Scale Your Business
Posted on: August 30, 2019 | Posted by: Chuck Kessler |
It’s impossible to overstate the role that Amazon plays in eCommerce. Even without meaning to, they can effect huge change on everyday events. When they act with intention, their influence can completely destabilize the entire business landscape.
While that might introduce an untold number of complicated problems for large companies trying to compete with the eCommerce giant, I think you’ll see that it’s a very good thingfor small, private label Amazon sellers like yourselves.
Amazon’s Tug-of-War Prowess
For me, Amazon’s nimble market-based footwork brings to mind sunny afternoons watching Basque villagers compete in lengthy battles of tug-of-war using a long knotted cord.
The most effective technique was to surprise your opponents by allowing them a substantial amount of “won” cord, which would temporarily unbalance them at which point the first team would, upon an unspoken signal, collectively pull the cord and drag the startled, losing team over the center-line.
The combined ability of Amazon’s sheer economic power and knack for contracting and expanding the market to closely match their eCommerce aptitudes is just good business. It’s also extremely difficult for their competitors to keep pace with.
Amazon holds an almost insurmountable advantage because their global financial position is absolute in scale and allows them the luxury to play a very long game.
Almost immediately following Amazon’s nativity as an overachieving bookseller, merchants started carving out lucrative niches for themselves.
They made that happen by finding gaps in the marketplace, sourcing corresponding products at increasingly low prices, then offering those handpicked products as third-party sellers. This phenomenon allowed Amazon to rapidly scale up, while virtually eliminating risk.
Amazon has been very busy in the 14 years since they unveiled their first private label brand Pinzon, which featured household goods.
Now, Amazon not only creates their own in-house brands, they also encourage other companies of all sizes to help them populate their increasingly vast eCommerce market with “Amazon exclusive” brands.
According to TJI Research (which provides information and analysis about Amazon across industries), as of July 2019, there are currently 141 distinct Amazon private label brands, including Amazon Elements, Amazon Basics, and Rivet in addition to 598 Amazon exclusive brands.
Recently, Amazon’s investment in men’s and women’s fashion has so dramatically accelerated that within the next year, according to Morgan Stanley, Amazon should overtake Walmart as the largest clothing seller in the United States.
Using Competing Companies to Help Build Out the eCommerce Business Landscape
In the last few years, after exponentially increasing their own in-house private label products, Amazon appears to be moving into another phase of their eCommerce business model.
Their new tactic seems to be to motivate competing companies to create brands that will sell exclusively (and compete directly with Amazon) on its own e-commerce platform.
Helping Companies “Accelerator” Their Brands
After using the rapid deployment of their own private label brands and effectively “homesteading” or populating the eCommerce frontier, Amazon is now trying to encourage the rush to settlement by other more established brand manufacturers.
Launched in late 2018, Amazon Accelerator was created to offer sellers prominent placement on Amazon’s website and individualized support from Amazon’s marketing team. It also gives the Amazon the exclusive right to buy the brand for a predetermined price on just 60 days notice, according to the Wall Street Journal.
While Amazon might be bringing about huge, possibly unsettling changes for the larger companies operating on their marketplace, they are also creating tremendous opportunity for the far more agile individual private label Amazon sellers.
Amazon is Busily Leveraging Data; So Should You
Data is king, and Amazon benefits from the direct feedback of shoppers. The combination of customer’s choices and product reviews lets Amazon know what they like or dislike about an item.
How many brands can so effectively and on such a large scale use their own internal search data in order to carefully curate future private-label products?
Just Imagine . . . what would it be like to be able to dig through years of product reviews in order to source what customers love or hate about a product?
Or, how about having a better understanding of a customer’s desire to see a well regarded product in another color, fabric or configuration?
All that is visible to Amazon. They are in a position to capitalize on that valuable information in their creation of new niche products to fill in gaps in the market.
Here’s the best part; all that data is available to you.
Amazon has already done the heavy lifting. Through a mixture of eCommerce super-gravity and undeniable influence, they have stretched the selling possibilities as far as the horizon.
The vastness of this new eCommerce frontier is what makes new opportunities for individual sellers so numerous.
Private label sellers on Amazon simply need to identify the lucrative gaps in the freshly tilled business landscape.
Your goal should be to find a way to duplicate Amazon’s successful approach and mine that same crucial data that will become the difference between being on the first page with the Buy Box, or languishing on page 5 of a prospective customer’s search results.
There’s Really No Other Way to Say This
SaaS (Software as a Service) is a method of software delivery that allows data to be accessed from any device with an internet connection and a web browser.
It’s not a new idea, but like much of the prescient thought that springs forth from our institutes of higher learning, the idea out-paced the technological architecture to deliver it.
The origins of a shared resource environment such as cloud computing date back to the 1960’s. In a 1961 speech to MIT students, John McCarthy, a renowned computer scientist that won the Turing award for his work in Artificial Intelligence, famously said, “computation may someday be organized as a public utility.”
Now it’s here and . . .
This is where the company I work for comes into play.
Those of you who read my blog-posts have hopefully come to understand that I truly enjoy writing about technology and eCommerce. I try to report what I see. I do work for Helium 10 and love the company. We have a great work culture that combines adult-size portions of both excellence and fun.
Having said that, my first responsibility is to look for facts. In reporting for this article, that path travels in a direct line straight through cloud computing to SaaS and Helium 10’s suite of software tools.
Beating the Helium 10 drum is not something that I am required to do as a blog writer for this company. I’m lucky. They send me out to look for eCommerce technological truths.
And, here’s a big one.
There really is no substantial difference between the way that Amazon is able to exploit their proprietary information and the way that you, as Amazon sellers, can drill down to find endlessly useful data models with these invaluable tools available from Helium 10.
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