What Should Apparel Brands Consider Before Selling on the Amazon Marketplace?
The discussion of whether apparel brands should sell their products on Amazon continues to evoke conflicting opinions from retail experts.
According to a recent announcement, Gap is just one of the latest brands (in addition to Levi Strauss and Calvin Klein) to sign on with the growing Marketplace.
“We are always considering all of the opportunities beyond our traditional mix of channels and stores. Amazon is certainly one, and there are others as well,” Art Peck, CEO of Gap said at the apparel brand’s shareholders meeting.
According to reports, Amazon is the second-largest apparel retailer (just behind Walmart) and although there are variety of benefits for brands seeking rejuvenation and access to Amazon’s customer base (specifically the Amazon Prime customers), we continue to see the rise of concern among brand manufacturers including but not limited to: the loss of brand image and pricing control.
We gathered the pros and cons from a group of leading retail experts to help brands better understand the factors they should consider before deciding whether to sell on the Amazon Marketplace.
Retail & Ecommerce Marketing Roundtable
Meet the Retail Experts
Lee Peterson, EVP Brand, Strategy & Design: WD Partners
Lee has more than 30 years of collective experience as a retailer, a strategist and as a leader in brand and design. He brings an innovative approach to strategic assessment and brand development by understanding cultural trends, consumer demographics, and buying behavior across multiple industries.
Lee offers a well-rounded and informed approach to designing customer-focused retail and restaurant experience, and believes stores must perform for the retailers, as well as the consumers. Lee’s list of globally recognized clients include: Eddie Bauer, Samsung, CVS, New Balance, Luxottica and Walmart.
Brian Numainville, Principal: The Retail Feedback Group
An accomplished consultant and leading expert on consumer-centered marketing research, Brian has more than 20 years of experience managing high-level marketing research operations focused on B2C, B2B, brand and employee communication, GIS and site location research.
As a Principal of Retail Feedback Group, Brian partners with organizations throughout the United States to develop and execute a wide range of research and feedback programs. He is also a well-known commentator who appears regularly in a variety of publications, both online and off, as well as a thought leader who presents at many business conferences.
In addition to research, Brian’s skills include a wide range of public relations experience ranging from press release writing to serving as corporate spokesperson for a Fortune 500 company. He also coordinated numerous cause-marketing events in the Twin Cities, as Chair of the NFC Foundation, which generated significant publicity and awareness, and were a significant factor in the selection of Nash Finch/The NFC Foundation as a Jefferson Award Winner.
Nikki Baird, Managing Partner: Retail Systems Research
Nikki Baird is Managing Partner at Retail Systems Research, an industry market intelligence firm specializing in the impact of technology on the extended retail industry. She focuses on trends impacting the consumer-retailer relationship, along with their supply chain and marketing implications.
She has written research and articles on topics ranging from omni-channel strategies, in-store marketing and technology, store performance management, supply chain and multi-channel fulfillment, retailer-manufacturer collaboration, merchandising, and loyalty and promotions management.
Pat Petriello, Marketplace Manager: CPC Strategy
Pat Petriello is a former professional seller on Amazon.com, Amazon.co.uk, eBay, Buy.com and former member of Amazon Seller Service Team.He joined CPC Strategy after working for Amazon in Seattle and managing over a quarter million SKU’s as a professional seller.
He now manages the Amazon Sales Acceleration Program (ASAP). This program is designed to equip professional third-party sellers with a Marketplace strategy focused on ongoing optimization and channel growth.
Carlos Arambula, Strategist One Ninth & Co-Founder: MarcasUSA
Carlos brings over two decades in the domestic, U.S. Hispanic, and international marketing arenas on both sides of the brand – client and agency.
Carlos began his career in public relations working on crisis management and political campaigns. In the early 90’s, he made a move to work on the emerging U.S. Hispanic market where he was disappointed at the lack of research resources and data available for strategic development. More alarming to him was the decade old axioms being utilized as doctrine on Hispanic market approaches that failed to properly recognize the characteristics of the fluid and growing segment.
After some years in which he dramatically improved the marketing efforts and returns of clients, Carlos returned to work in the mainstream consumer market with global network agencies that eventually lead him to international work on category and brand development in developing markets.
Shep Hyken, Chief Amazement Officer: Shepard Presentations, LLC
Shep Hyken is a customer service and experience expert and the Chief Amazement Officer of Shepard Presentations. He is a New York Times and Wall Street Journal bestselling author and has been inducted into the National Speakers Association Hall of Fame for lifetime achievement in the speaking profession.
Shep works with companies and organizations who want to build loyal relationships with their customers and employees. His articles have been read in hundreds of publications, and he is the author of Moments of Magic®, The Loyal Customer, The Cult of the Customer, The Amazement Revolution and Amaze Every Customer Every Time. He is also the creator of The Customer Focus™, a customer service training program which helps clients develop a customer service culture and loyalty mindset.
Carina McLeod, Management Consultant: eCommerce Nurse
Carina is an Amazon Retail Specialist and eCommerce Consultant with over 7 years experience in Buying at Amazon, launching new categories into the UK and 3 years supporting and managing Sellers and Vendors in growing their businesses on Amazon via Vendor Central and Seller Central.
She can speak ‘Amazon’, proficiently – understanding their requirements and systems and most importantly she knows what it takes to become a successful Vendor and Seller on Amazon.
By having her own online retail store, she understands the daily challenges businesses face in the eCommerce world and can support and guide them through these.
Q. If I’m an apparel brand manufacturer, what factors should I consider before establishing a presence on Amazon?
Lee Peterson – EVP Brand, Strategy & Design – WD Partners
“The first thing you should consider would be whether or not you mind Amazon doing what you do themselves some day. People forget that Barnes & Nobles tried to sell on Amazon initially. How are they doing?”
“People also forget that Toys R Us also did that. How are they doing? Sure, those are retailers, but the same principles apply. Opening up your books to the future king of global retail is a mistake.”
“Unless you’re a start up. If you’re new and you’ve got something you want the world to see, being a part of a search on the place consumers go first on line is a good idea. But you’ve got to know when to pull the plug. Ie; when your brand can carry itself. Otherwise, rule number one above will take hold.”
Brian Numainville – Principal – The Retail Feedback Group
“Brands must carefully consider the risks versus the rewards when contemplating a presence on Amazon.”
“On the positive side, establishing a presence on Amazon opens up a potentially vast exposure to your products in a way that might be difficult to achieve on your own. Think of it like a ‘virtual mall’ and by virtue of your presence there you gain visibility you otherwise wouldn’t have available.”
“And, your product might come up as recommended to potential buyers who are looking at products like yours. Finally, if you don’t have an online presence this is one way to be active in that regard in a big way.”
“On the other hand, if you are on Amazon your products can be quickly compared against your competition (and perhaps Amazon’s private label) on price, quality and other measures (although If you have a unique or specialty product, the competitive comparison might be of lesser concern).”
“In addition, despite all of the publicity about falsified or paid for ratings, the reviews on Amazon often play a part in a shopper’s decision to purchase, especially if they know little about the product themselves. Amazon also retains a great deal of data about how products sell so you sacrifice that important information, and it could even be used against your brand. And, don’t forget about the revenue sharing.”
“There is no “wrong answer” when it comes to brands establishing a presence on Amazon. But one must carefully consider how a presence there will impact your brand awareness (for good or bad), your online strategy, your sales and the related data.”
Nikki Baird – Managing Partner – Retail Systems Research
“The most important thing for a brand to consider, when looking at a relationship with Amazon, is whether the brand is strong enough to stand on its own. Amazon is a marketplace, which means you’ll be competing with literally thousands of other manufacturers, including Chinese and Malaysian factories that might even make other products for you.”
“If your brand stands for something, and has strong appeal on its own to consumers, then you’ll do great. Because people will come there looking for YOUR black jeans or sarcastic T’s or puffy high-tops, or whatever it is that you make. But if your brand is relatively unknown, then it will be a struggle, because you will be primarily competing on price – black jeans for $14.99 vs. black jeans for $24.99, for example.”
“Without brand as a guide to quality and lifestyle meaning, Amazon does very little to help you justify a price difference over something that looks very like what you already have. That’s why UGG has invested in Amazon presence like it has – it has the strength of its brand to back it. Sure, you can buy knockoffs, but if you want UGGs, nothing else will do.”
“It’s in that kind of position of brand strength where a relationship with Amazon can drive a lot of traffic, and a lot of business, your way.”
Pat Petriello – Amazon – CPC Strategy
“A brand manufacturer entering the Amazon marketplace will need to consider the core components of success on Amazon which include but are not limited to fulfillment, content, paid advertising, inventory management, customer service, pricing, catalog expansion, and an understanding of the competitive landscape in the vertical they compete in.”
“However, brands will also need to have a strategy in place for how they will establish, protect, and actively police their brand on Amazon.”
“Regardless of if a brand decides to sell to consumers on Amazon as a 3P Seller or directly to Amazon as a Vendor, they will want to make sure they protect the brand they’ve put so much resources into building.”
“Whether it’s updating distribution agreements to prohibit other Sellers from selling on Amazon, discontinuing liquidation campaigns which result in products showing up on the marketplace, or having a process for monitoring and pursuing unauthorized Sellers, it’s much easier for a brand to protect themselves from the start than it is for them to have to clean it up down the road.”
Carlos Arambula– Strategist One Ninth & Co-Founder – MarcasUS
“I believe that technology simply makes the known processes more convenient, for example the process of creating a music playlist is essentially the same one from the late 70’s. You buy the music, you gather your favorite tracks from multiple artists, and you compile it in portable device. It’s a lot more convenient now.”
“You can buy the music anywhere you have mobile service, the portable device is part of your phone, and listening to your playlist is definitively less cumbersome. Having a social circle has gone through the same transition; it has not made the shy folks popular, or the socially awkward gracious. All the opposite, the popular have become social media stars while the shy hide behind technology.”
“Think of commerce in the same manner as the aforementioned. Amazon is the big retailer that carries all the brands, a very convenient virtual megastore with endless aisles. It competes with branded retailers, who also have their own virtual giant stores where they can carry every single item in inventory (That was the point of the Retail Wire comment why GAP should not sell in Amazon).”
“So back to Amazon, and the question: If I’m a brand manufacturer, what factors should I consider before establishing a presence in Amazon?”
“I would say it depends on the development of your brand. If your brand is well developed and it has a loyal consumers, I recommend to approach it the same way you approached it when you first persuaded the buyer at the traditional brick & mortar retailer to accept your brand; you merchandised it, bough into the retailer’s circular, purchased a retail support media schedule and tagged the end frame with the retailer name (the typical “available at…”).
“Maybe you created a specific spot to support the retailer, delivered merchandising programs, product demos or samples, supported the retailers seasonal sales or philanthropies, and above it all continued supporting the brand outside of retailer support.”
“If you have a new brand and you want to introduce it via Amazon, you still have to follow the same approach. Promote the brand in the media your consumer target is utilizing, use social media to gain endorsements and encourage trial, sample the product if it applies, create a buzz and tell the consumer where your product is distributed, and support your distributor.”
“Ultimately, the marketing principles used for brick & mortar applies to virtual retailers. I would advice any brand manufacturer not to get confused by the new color, shape and size. Amazon is a distribution point, and the 3P’s still apply.”
Shep Hyken– Chief Amazement Officer– Shepard Presentations
“I’m coming at it from the angle of the customer. I’m not a marketing expert but I am a customer service expert – and my feeling is, after watching all of my clients and immersing myself into all things related to business – I am a big fan of Amazon. I’m also a big fan of having a presence. I think you have to recognize that Amazon does a great job. They can do a lot (fulfillment, etc.) but there is a cost to doing business with them.”
“Something to consider: There’s a product that I particularly like, just for fun, rather than buying it direct from the manufacturer – I went on Amazon. It was less expensive on Amazon than buying it directly from the manufacturer. Right away I thought, whoa – I can’t believe that!”
“So my point is – there needs to be a consistency. Like any other customer service channel -whether I’m talking to someone on the phone or responding to an email – there needs to be a way to do business that is going to keep everyone happy. I think the moment you become inconsistent in any part of your business – you erode confidence.”
“My thought is, you must keep consistency in the brand image. Your product images, descriptions, etc. need to be consistent with what your customer’s experience on any other channel. I think it also needs to be consistent in the pricing experience. As a retailer, if you are selling in your store and someone can go on Amazon and buy the items that you stock in your store (for less expensive) that’s not so good. It should simply be an extension of your brand and your store.”
“If Amazon for whatever reason decides to start to control your brand image in a way that you don’t like – then don’t sell on Amazon. But I do think as a manufacturer, you have some control over it (pricing, brand image).”
“If I’m truly the manufacturer, who else am I selling to? Am I undercutting my own customers – who are buying from a space in their retail stores? That needs to be strongly considered as well. And, how will my retailers react to me having a presence on Amazon – which ties into: Am I going to undercut them or am I going to create inconsistent pricing?”
“So maybe as a manufacturer you need to lay out some ground work – what is the suggested retail pricing, discount and how low can they go? There needs to be these agreements in place.”
“You need to have total transparency with your retailers if your going to create your own channel and bypass your consumer distribution channel. Because you’re going as the manufacturer direct to consumer rather than working through the distribution channel which are your retailers.”
Carina McLeod– Management Consultant– eCommerce Nurse
Firstly, the brand manufacturer should think about how they would like to sell on Amazon; directly to Amazon as a Vendor effectively via wholesale, direct to consumer and become a Seller on Amazon or a mix of the two. To decide the route to take the brand manufacturer needs to decide whether they want control over their listings and pricing or if they are happy for Amazon to manage this where there is no guarantee they will sell at MAP.
Also it depends on whether the brand manufacturer is happy to list as a Seller and be listing items against their distributors and other retail customers and if this could cause upset.
Other factors to consider are profitability and marketing budget. Brand manufacturers may see a greater margin by selling direct to the consumer as a Seller, however they may see larger orders if selling as a Vendor.
Also when working with Amazon as a Vendor or Seller it is important the brand manufacturer allows a marketing budget to set up targeted cost-per-click advertising to help drive traffic and sales and increase overall brand and product visibility on Amazon.
Amazon is a big place and listings can get lost so the brand manufacturer needs to invest in marketing strategies to get their listings in front of the customers.
For more on brand selling on Amazon, email [email protected]