Unless you’ve been living under a rock for the past 20 years or so, you probably already know that Amazon has emerged as the dominant force in the global marketplace. As the world's leading online retailer, it has revolutionized the way both consumers and businesses shop.
Yet, many manufacturers haven’t quite been convinced that they should be selling their products on Amazon. And of those who want to sell on the platform, a significant portion isn’t entirely sure where to start.
To get a better sense of how manufacturers are thinking about and approaching Amazon, Enceiba partnered with B2B Ecommerce platform Corevist to survey manufacturers and shed some light on the relationship between manufacturers and the ecommerce giant. Let’s explore our findings about their level of awareness of and intentions for Amazon.
Amazon Dominates Ecommerce
Before we delve into the details, it's important to understand the sheer dominance of Amazon. The platform currently accounts for more than 50 percent of US online retail sales and is now the go-to platform for product searches, with 61 percent of product searches beginning on Amazon. Furthermore, Amazon Business, the global B2B marketplace, has already achieved $35 billion in gross sales in 2023 and that is projected to more than double by 2025. With tools tailored for B2B buyers and its disruptive impact on traditional channels, Amazon Business has become the fastest-growing segment of Amazon.
How Today’s Manufacturers Approach Amazon
To get a baseline picture of how manufacturers view and engage with Amazon, Enceiba, and Corevist surveyed more than 70 B2B and CPG manufacturers about their thoughts and approaches to Amazon.
We sought to understand manufacturers’:
Overall awareness of Amazon’s influence among buyers
Awareness of current Amazon presence – whether planned or not
Understanding of Amazon’s features and capabilities
Perceptions of Amazon – competitor, sales channel, or something else
Long-term intentions regarding Amazon
Following are some of the key questions we asked, along with the results:
1. How does your organization view Amazon today?
More than 40 percent consider Amazon both a sales channel and a competitor.
Do you believe Amazon will be a significant player in your product category in 5 years?
2. Are your products currently on Amazon?
3. If you sell directly on Amazon today, what selling approach do you use?
4. Are resellers selling your products?
5. Do you know who all these resellers are?
6. Are your products found on Amazon Business and are you selling through a branded presence?
7. If you are not selling on Amazon, what are the primary reasons?
The Road Ahead for Manufacturers on Amazon
Despite the growing recognition of Amazon's importance and influence, many manufacturers currently lack control over the channel. Concerns about channel conflict and limited knowledge about managing content and brand presence hinder their progress. However, an overwhelming majority of manufacturers (72 percent) say they expect to be selling directly on Amazon within five years, overcoming these challenges.
One notable finding was that when manufacturers don’t fully control their brand presence—i.e. when selling 1P—the brand and product content often suffer from suboptimal optimization. However, when manufacturers sell directly through 3P, there is a significant improvement in branded and product content, resulting in a better overall customer experience.
Best Practices for Manufacturers on Amazon
Based on our findings (and our long-term experience managing B2B Amazon presences), there are a handful of things a manufacturer can do to ensure success on the platform. Key strategies include:
Choose an Appropriate Selling Model:
Vendor Central (1P): Selling directly to Amazon with fulfillment handled by them.
Seller Central (3P): Setting up a store on Amazon and managing fulfillment independently, using Amazon's fulfillment services (FBA), or using a certified 3rd party.
Check out this blog post to understand the differences between these two models.
1. Optimize Brand and Product Content:
Focus on descriptive titles, high-quality images, and videos, detailed product descriptions with bullet points, enhanced brand content, and customer reviews. All of these are strictly available to the Seller Central (3P) model.
Leverage Amazon Prime, the world’s most successful loyalty program, to obtain enhanced visibility.
2. Proactively Manage Your Brand:
Establish brand control through Minimum Advertised Pricing (MAP) policies, distribution agreements, and Amazon Brand Registry.
Utilize Amazon Storefronts to tell your brand story and employ enhanced brand content.
3. Boost Visibility and Marketing:
Leverage paid search and organic search optimization
Consider paid promotions to increase visibility and drive sales, especially when your brand presence is relatively new.
4. Leverage Expertise and Resources:
Dedicated resources and expertise are essential to navigate the complexities of selling on Amazon.
Content planning, web merchandising, operational execution, and paid marketing require careful attention and a mix of internal and external resources.
Amazon and Beyond: An Integrated Strategy
Today’s manufacturers are increasingly recognizing the need to embrace Amazon as a sales channel, but their concerns about channel conflict and limited control often hinder their progress. By implementing best practices for content optimization, brand management, and Amazon’s
marketing tools, manufacturers can establish a powerful presence on Amazon while proactively managing and mitigating issues around channel conflict.
While Amazon presents immense opportunities, manufacturers should also consider their own branded B2B ecommerce channel, integrated with their existing ERP systems. By developing both an Amazon presence and its channels, manufacturers can effectively meet customer needs in a highly competitive environment. Integrating Amazon into an overall eCommerce strategy will position manufacturers for success in this constantly evolving digital era.