The Future of Amazon as a Service

Fifteen years ago, we were talking about the rise of software-as-a-service and the impact that digital-first platforms would have on the brand marketing space. In 2020, we saw the rise of Amazon-as-a-service platforms.

The concept of Amazon-as-a-service, or AaaS, didn’t begin in 2020. But as the year wore on, and people began relying on e-commerce platforms more than ever before in history, the concept took off. Reaching the first page of Amazon became paramount for brands hoping for digital success, particularly now, during the tumultuous holiday season.

Amazon was a distribution channel long before becoming an advertising platform. The company has held its title as the No. 1 U.S. e-commerce retailer for years, but its market share has continued to grow as the pandemic has persisted. It’s expected to reach 40% market share in the coming year. That means brands will have to continue prioritizing Amazon as a key sales channel in 2021, and they will also have to take the steps necessary to ensure they are beating out digital-native competitors for the coveted first-page real estate on Amazon’s marketplace.

How brands will win on Amazon

As they look forward into 2021, there’s a good chance brands will be moving beyond traditional guidance from in-house advertising technology leaders. Without being able to rely primarily on omnichannel sales, brands will instead have to look at more streamlined ways to cut through the noise.

Benjamin Pipat is an executive at Jellyfish, a digital agency with an established history in the technology space. Through its Amazon consultancy, Seelk, Jellyfish regularly works with brands looking for advice on how to beat the Amazon algorithm.

Pipat believes that the consumption habits consumers have formed during the pandemic are unlikely to change in 2021. More people have grown accustomed to buying online, and people who already made purchases online before the pandemic are now buying an even wider range of goods, including groceries and daily needs items.

Pipat says this trend, combined with Amazon’s market-leading customer experience standards and increasing competition on advertising placements, has reinforced the need for brands to address the channel with specific focus and resources.

“Brands who don’t adapt and invest may be left far behind once first movers have secured highly defended page-one positions,” Pipat says.

Some brands saw the writing on the wall and started restructuring their Amazon strategies long before the pandemic took hold this spring. These are the brands that have come out on top as we wind down the year, having already built out compelling product pages and elevating their supply chains to Amazon’s standards.

“Performing on Amazon isn’t dark magic; it’s the outcome of a continuous equilibrium including great content, always-available products, and retail-driven advertising strategies,” Pipat says. “Digital-native brands have understood this, and have invested the necessary tools and resources to maintain what is often called the flywheel effect.”

The flywheel effect is a subset of systems thinking in which a system is a reinforcing loop that has the potential to take off over time. Digital-native brands have been at the forefront of the AaaS trend, and as a result, they have been much more likely to invest in the strategies that lead to the first page of results on Amazon’s marketplace.

Some brands missed the first boom in March but reacted in time for the fourth-quarter surge, while others are still pondering whether or not to invest in AaaS in 2021. Looking forward into the coming year, Pipat says brands that have already invested in Amazon will need to revise their strategies. Others risk falling behind completely on the Internet’s premiere commerce venue.

“What is sure, is that [in 2021], many brands will have built consistent Amazon strategies and operations, and it will be much more difficult to catch up,” he says. “The rules of the game haven’t changed. The size of the prize has just grown significantly faster than expected, and fast-movers will have a long-term advantage.”

Stephanie Miles is a senior editor at Street Fight.