Everything that’s wrong with Amazon

Amazon courts U.K. ad industry with behind-closed-doors briefing.

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What does an Amazon brands want to work with look like?

Demand 1: Make it easy for us to be discovered on Amazon.

It’s no secret that Amazon keeps its inner machinations private, and now that it’s aggressively launching private-label brands, it’s rigging the game so Amazon-owned brands have the leg up. That’s not exactly a great set up for the brands that are hoping to scale on the platform.

“We’re testing selling on Amazon because I’m using it as a testing ground to understand how people discover us, what their purchasing patterns are,” said Aaron Luo, the CEO of luxury accessories brand Caraa. “But it’s hard to get discovered on Amazon, because we don’t understand the algorithm. It’s a black box. But from what we can tell, it’s a very small portion of customers that discover us through Amazon.”

As a result, Caraa keeps its best-selling and most expensive bags off of Amazon, in order to keep the bait as low-stakes as possible.

“It’s a little bit crazy that, considering how many retail searches start on Amazon, how little new brand discovery it drives. They could become a better partner to newer brands that don’t have the history,” said Luo.

Demand 2: Don’t just share customer demographics – prove that Amazon drives off-platform purchases.

Amazon’s black-box problem weighs on brands that find the lack of transparency hopeless, especially when learning how customer behavior on Amazon influences purchases on a brand’s website.

Andy Oshrin, the CEO of Milly, suggested it would help Amazon’s case if brands could track the customers that explored or bought the brand on Amazon, and then later purchased from their own e-commerce site. Basically, Amazon could demonstrate that it’s supporting a brand’s “rising tide of awareness,” by helping turn Amazon shoppers into loyal brand customers.

But alas, Amazon doesn’t share much information about who brands’ shoppers are on the platform in general, let alone their broader browsing and buying history.

Demand 3: Clean up counterfeits… Or build a nicer product page, whatever comes first.

So Amazon has a brand discovery problem. And it has a data-sharing problem. Then there are the aesthetics.

“If you look at the site, it’s not a place we want to be,” said one manager at a beauty brand. “But there are counterfeits and third-party seller on the site, so we’re forced to have a presence to at least try to capture some of those sales. So I guess my first complaint would actually be — do something about the counterfeits and illegal third-party sellers. Then, make it a prettier place to have a presence. Or if you can’t do the first, do the second. Honestly, it’s all a mess. And regardless of what Amazon thinks, branding matters.”

Unfortunately for brands, Amazon plays only by its own agenda. What this does, though, is create an opportunity for other retailers — be it direct e-commerce competitors like Jet.com, or department stores like Nordstrom — to play the good-guy-retail-partner role in contrast to Amazon’s domineering dictator.

They just have to figure out how to understand customer data first.

What we’ve covered

Nearly nine months after Amazon launched Spark, agencies, influencers and brands are all still reporting the retail juggernaut’s social media platform is failing to catch on.

  • Spark, which launched in July, is a social feed of photos similar to Instagram, but open only to Prime members. (Nonmembers can view the feed, but they can’t post.) The idea is for Spark to focus on products Amazon sells — users can post pictures and run “polls” asking whether certain products are better than others.
  • Digiday spoke to eight agency buyers, all of whom report Amazon barely mentions Spark in its pitches to them. And two influencers said they see no interest from brands they work with on other platforms in paying them to post on Spark.

To learn more about Spark’s fizzle, read the Digiday story here.

hough Amazon’s retail stronghold continues to pose a threat to companies both large and small, there’s one demographic the e-commerce giant has yet to crack: Gen Z.

  • In a survey of whether individuals made a purchase on the platform in the last month, 79 percent of millennials reported they had, while just 62 percent of Gen Z said the same.
  • According to analysts, Amazon isn’t appealing to experience-driven Gen Z shoppers, in large part because the platform’s main value propositions — namely convenience and cost — don’t speak to them.

Read about how Gen Z could threaten Amazon’s retail dominance on Glossy.

What they’re saying

“I don’t think about Amazon. I think they’re awesome in what they do — they’re also our neighbor in Seattle — and they keep us on our toes. But I don’t necessarily see that as competition to what we’re doing. We’re bringing an experience, new product, and cool ideas, and matching our customers to new brands. That’s very different than what Amazon is.”
-Olivia Kim, the vp of creative projects at Nordstrom, on why she’s not feeling the heat from Amazon.

Numbers to know

The Trump effect: President Trump attacked Amazon four times this week. Here’s a breakdown by the numbers.

$1.50 – The dollar amount the U.S. Postal Service loses for every Amazon package it delivers, according to Trump. [Twitter]
Many billions of dollars – What it’s costing the taxpayers to cover this damage Amazon is causing to the USPS. [Twitter]
5.2 – The percentage that Amazon’s shares fell, to $1,390.90 on Monday, after President Trump sent out a series of tweets attacking Amazon, saying that it’s costing the U.S. Post Office a “fortune” and not paying its fair share in taxes. [Chicago Tribune]
$53 billion – The market share Amazon lost after Axios reported the President was “obsessed” with regulating the company. [Axios]

What we’re reading

If Trump runs against Amazon, he will lose (Business Insider)
How Amazon’s relationship with the Post Office really works (Bloomberg)
How Amazon rebuilt itself around artificial intelligence (Wired)

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