Let me start by stating the obvious: we are living in the most exciting time in the history of the world for innovation and entrepreneurship in consumer goods and retail. Thanks to the evolution and ongoing simplification of e-commerce growth technology, it’s easier than ever to launch an online business with little knowledge of logistics, fulfillment, payment processing, web hosting, and a myriad of other previously required skill sets and specialties. And, as marketing technology continues to become more sophisticated in capabilities, yet easier to connect across all platforms and manage, the dream of owning a direct-to-consumer (D2C) brand is now within reach for just about any motivated person with an idea and an internet connection.
Of course, this all means there is more competition than ever to win the minds and wallets of potential customers and to promote e-commerce growth. And, as emerging D2C brands both large and small duke it out across the digital landscape, one-upping each other with the next great eye-catching and head-turning creative or campaign, one competitor looms larger than the rest: Amazon.
If you own a D2C brand, you’re already trying to answer the question: How can we compete with the world’s largest e-commerce store, the behemoth raking in over $200 billion (with a B) in 2018 and continuing to grow at head-spinning rates?
Well, whether you have an established e-commerce presence or are thinking of launching one soon, here are some tips for surviving in the Age of Amazon.
Types of Customer Relationships
Before I get to tactical steps and recommendations, let’s look at the current state of a brand’s relationship with the customer. I categorize customer relationships into two buckets: transactional and emotional.
Transactional relationships are just as they sound: meant to fill a customer need for a given item with the least amount of friction. Often, this is the relationship a customer is seeking for commodity goods like cleaning supplies, diapers, toiletries, and light bulbs. This could mean offering the lowest price, fastest delivery, the largest assortment of colors or sizes, the fastest checkout, and payment, or any combination of the above. Spoiler alert: Amazon is winning here, and the margin of victory is growing by the day.
Emotional relationships exist where there is something more than merely paying for a product. The customer has a real connection with the brand or business it is buying from, and is willing to pay a little more, or sacrifice on convenience to support the brand. There may be shared values between the brand and customer, a compelling brand story that resonates with the shopper, or maybe a personalized buying experience that sets the brand apart.
The Reality of Competing With Amazon in a Transactional World
The hard truth is, unless you are a massive brand with a large operation and budget, you are not likely to win by trying to compete with Amazon on transactional relationships. Take some time to look into the game-changing logistics and supply chain they have established, the unworldly SKU count and category diversification they offer, and unparalleled delivery options, and it’s easy to see.
The good news is, you can still build a healthy and sizable D2C business and e-commerce growth by competing and winning on your terms, and owning the emotional relationship with the customer, which is the area Amazon is ignoring (for now). Here’s my blueprint.
Content Is Still King
Yup, you’ve got to make great content. That doesn’t mean you need a blog. Or that you need to spend hundreds of thousands of dollars on video production and on-location photo shoots. Or even that you have to create a new story every day or week, or month. But it means you have to create a brand story that gives the customer a reason to care, and you have to effectively tell your story across all touchpoints, with some measure of frequency that keeps your story fresh and engaging.
Investing in great content will ensure your website is the best possible representation of the brand you are trying to build, and it will give you the proper ammunition to acquire customers in your direct response channels. Having a steady content stream will ensure your marketing calendar is filled with great product stories and brand moments that promote e-commerce growth, drive repeat purchases, and boost customer lifetime value (CLV).
Lock In Your Direct Response Channels
Creating great content is the first step. Equally as important is having a distribution plan for that content. Building proper marketing funnels for your message across paid social, email, display, and all other direct response channels will be your engine for driving traffic and e-commerce growth. Maximize the bottom-of-funnel opportunity by retargeting for recent cart abandoners and increasing bids on branded paid search terms to ensure you’re capturing all existing demand at the highest ROI possible.
Re-engage mid-funnel audiences with product updates, promotions, and extensions of your brand storytelling. And finally, chase new audiences with top-of-funnel brand awareness campaigns with content that gives the potential buyer a reason to buy or at the very least, learn more. Note that your top of funnel campaigns will typically have significantly lower ROI than the mid- and bottom-funnel campaigns, but will allow you to scale in the two lower buckets.
Bonus Tip: As Facebook advertising becomes more competitive and costs rise, continuing to test new channels and partners is critical to ongoing success. Building a brand entirely with Facebook ads no longer carries the same odds for success as it did even two years ago.
Own Your Customer Relationships
Once you’ve spent time and money earning a new customer’s business, it’s critical that you build a long-term relationship with them. The success of your business will depend greatly on increasing the CLV of your customer base. Remember, we are looking for emotional connections and relationships with the customer, not one-time purchases.
Make them feel great about their first purchase with you before the product has even arrived. Add thoughtful touches to the unboxing experience that makes customers want to share with friends. Engage with the customer where they want to be spoken to, but don’t abuse the lines of communication they have opened (I’m looking at you, SMS and email). Feature your customers in your marketing content. Ask for feedback and act on it.
Simply said: build a real relationship.
Sell on Amazon
Wait…what? Haven’t you spent the last 1,000 words telling us how we can be BETTER than Amazon?! How we can win on our own terms?
Yes, but hear me out.
There are multiple ways to sell on Amazon. Selling to Amazon as a wholesale partner, particularly if you are a small or startup D2C brand, is not going to be beneficial. However, there are smart ways to use Amazon’s massive audience to your advantage, by leveraging an Amazon Seller account. This allows you to list select items on Amazon, drive transactions, and control things like pricing and assortment. The key is to be strategic in your Amazon presence, keeping in mind that Amazon owns the customer relationship, and your margins on Amazon sales are lower. This can be a discovery vehicle for your products.
I recommend keeping a limited assortment on Amazon, so your e-commerce store has stronger merchandising and product choices. Move your old inventory to Amazon for liquidation and markdowns so you can keep your site looking more premium. And, take part in programs geared toward earning customer reviews for your products. Just know that you're likely going to need to allocate budget towards Amazon search, so that you can chase customers that are in the market to buy within your product category — even if they've never heard of you.
At the end of the day, there is money to be had by selling on Amazon. Just make sure your strategy maximizes your long-term vision and supports the e-commerce growth of your D2C efforts.
Nick Lamothe is a co-founder and managing partner at Trident Growth Partners. He has over ten years of experience promoting e-commerce growth for brands of all sizes.
Last updated on August 16th, 2022.