How Brands Are Navigating Online Marketplaces, Especially Amazon

For many online brands, Amazon remains the primary gateway to consumers, but there is also perpetual talk of dissatisfaction with the platform, which has been catching flak for allegedly competing with third-party sellers. 

I connected with Dani Nadel, president and COO of Feedvisor, a firm focused on Amazon optimization, to discuss the state of online marketplaces, Amazon strategies, and alternatives for businesses looking for other platforms.

You commissioned research on brands, Amazon, advertising, and marketplaces. What were the biggest findings?

Our report surveyed more than 1,000 U.S. brands — from direct-to-consumer to Fortune 1000 companies — and found that the future success of brands will require a nimble and diversified e-commerce strategy with a strong and continuous presence on the discovery and transaction engines where consumers proliferate — on Amazon and e-marketplaces. The key findings include:

•  E-marketplaces remain a priority channel: As consumers continue to favor efficient shopping experiences, 42% of brands ranked marketplaces as the greatest e-commerce opportunity, along with social media (46%) and mobile (43%).
• Amazon Advertising works: 58% of brands reported seeing “great value” in Amazon Advertising, the highest percentage to date.
• Top-bracket spending on Amazon Advertising has increased: More than one in five brands spend $100,000 or more per month on Amazon Advertising.
• Brands are deploying a number of Amazon-specific tactics: 49% of brands used Fulfillment by Amazon, 48% used Amazon Advertising, and 43% used Amazon free returns in 2021.

There’s perpetual talk about dissatisfaction with Amazon, the elephant in the room. What does the data show about Amazon’s popularity with brands? What do you think is driving that popularity?

Brands report that due to Amazon’s positioning as the primary e-commerce channel for consumers, they leverage Amazon as a primary channel for sales growth (96%), gains in market share (94%), and new customer acquisition (93%). In fact, new customer acquisition is the single most important goal for brands advertising on Amazon (61%).

Amazon continues to rise in popularity with brands as it has created a convenient and efficient shopping experience that is difficult to match. Prime membership has reached over 200 million, and represents some of the most loyal shoppers, with 56% visiting Amazon daily and 47% making a purchase weekly, according to our previous research. Consumers shop on Amazon for three main reasons:

1. The vast product assortment with near limitless inventory fueled by Amazon’s fulfillment service (99% of consumers are satisfied with Amazon’s product assortment).
2. The unmatched membership benefits, including free expedited shipping, video streaming, music streaming, eBook downloads and free trials of other Amazon services, to name a few (47% of consumers say a loyalty program influences their purchasing decisions, and 74% of consumers are now Prime members, up 17% from the year before).
3. The convenience of optimized checkout with single-click checkout processes and subscriptions for household products (23% of consumers say these are the best parts of shopping on Amazon).

How can brands succeed on Amazon?

The future success of brands on Amazon will require a nimble and diversified strategy that includes technology to move and react quickly to changes in consumer demand as well as to fluctuations in their supply chain, pricing, and advertising efforts.

A top area for brands to focus on is the need to incorporate increased brand-building options connected to commerce by expanding advertising and activation opportunities that connect consumers from brand discovery to purchase. In fact, despite supply chain issues, 64% of brands selling on Amazon saw increased sales and revenue, with 48% of brands attributing their success to the implementation of new ad types and strategies.  

The ad types from which brands see the highest returns remain Sponsored Products Ads (44%) and Amazon DSP Ads (40%). However, Amazon has made great strides in enhancing their suite of ads that appeal to consumers’ consumption preferences and are viewable and heard on and off Amazon’s platform. These include video and enhanced audio ads, which 44% and 24% of brands are currently using, and 49% and 12% of brands plan to invest in for 2022. 

Brands advertising on Amazon should leverage their latest media analytics solution, the Amazon Marketing Cloud (AMC), for insights to understand the consumer path from the top of the funnel, as well as the journeys that bring external traffic to Amazon to better inform their strategies. 

Finally, brands should seek to experiment with their customer experience journeys by including a variety of entertaining and convenient options for consumers to engage with. Currently, 25% of brands are considering AR/VR, 23% are considering meta experiences, and 20% are considering accepting cryptocurrency as payment. As brands are contemplating these new opportunities, Amazon and marketplaces will likely adapt their offerings as popularity and use grows. 

As Amazon continues to expand its brand-building toolkit, advertisers will need to keep the customer (and their journey) front of mind.

Does the emphasis on marketplaces extend beyond Amazon? How are brands using marketplaces outside of Amazon?

In today’s retail ecosystem, nearly half of brands (46%) leverage e-marketplaces to drive sales, followed by acquiring new customers (45%) and building brand awareness (45%). Channel diversification is now critical for survival, with most brands currently on at least one marketplace other than their own online store and a majority selling on the trio of Amazon (45%), Walmart (25%), and Google (21%). 

Brands are trying to reach as many customers as possible, and with visibility and brand recognition playing a large part in consumers’ marketplace choices, brands who sell on Amazon, Walmart, and Google, have a much greater chance of reaching a wider audience. Especially now that each has made recent updates in advertising and search capabilities. 

When asked which channels brands would consider expanding to in 2022, 14% said Shopify, up from 10% the previous year — a 40% increase in interest. Other channels include Google (20%), Amazon (15%) and Walmart (15%).