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Amazon effect: why is it important for your brand?

According to several specialists, a large part of the players in the world economy have been severely affected by what is known as the “Amazon Effect”. And for no one is it a secret that the success in which Jeff Bezos’ business has become has uniquely modified consumption and the way consumers approach brands.

Amazon, the king of e-commerce

To give us an idea it is enough to recognize that, until the middle of last year, Amazon was already responsible for 50 percent of total e-commerce sales in the United States, while covering 5 percent of total sales (digital and physical).

Thus, it is not surprising that the Global 500 2018 study of Brand Finance, placed Amazon as the most valuable brand in the world after which signature will record an annual growth of 42 percent to reach the sum of 150 thousand 800 millions of dollars.

What is the “Amazon Effect”?

The above figures give meaning to what is known as “Amazon Effect”. Although the meaning of this phrase can change depending on the industry in which it is used, the meaning of it lies in the difficulty faced by many brands and points of sale to compete with Amazon against the strengths that have managed to build in the market : large selection of items, fast shipments, free returns, low costs and “Prime” subscriptions. The set of these benefits have raised the expectations of customers so much that entering the competition has been more than complicated for most sellers.

The impact for other brands

The truth is that the Amazon Effect is another phenomenon that maintains the dynamism of the ecosystems of sales, increase competition and dilute borders to offer the consumer any type of product anywhere and at any time.

However, the reality is that the strong strategy to stop being a simple intermediary in the field of electronic commerce has exposed the true control that, from now and with greater force, Amazon has over all other brands, including those that operate outside of e-commerce.

The great success is the management and capitalization of the data held by the empire of Jeff Bezos. The use of this information is not limited to optimizing the operation of your platform to improve the experience of those who wear it.

Amazon has managed to transform the comments and insights that users offer when interacting with the products of other brands, to develop their own commercial offers that compete with the brands with the most history within their platform. The description of its Essentials line allows to observe with greater precision the phenomenon. According to this text, Amazon analyzes the comments of consumers to create high quality, comfortable products at an affordable price. They also presume that consumers approve and improve products through their comments on the e-commerce platform. The translation is simple: more knowledge, more volume, more sales, more own brand and greater power.

Will everyone depend on Amazon?

Although large retail players have information similar to that of Amazon and have managed to build their own brands with some recognition, the giant of electronic commerce has a great advantage: the immediacy of information (real time) and the ability to segment preferences. of the shopper with the same speed, depending on different criteria (by category, location) thanks to concrete intentions and with greater scope.

For brands, given the relevance of electronic commerce, this means capitalizing on their presence in Amazon – a great window to reach consumers – but paying a high cost: consumption learning data. Not being in Amazon would mean the loss of opportunities to connect with the consumer; However, it can turn into a dependency relationship that becomes a future ballast inside and outside of e-commerce actions.

One piece of information could make the risk clear: At the end of 2017, Nike sold 30 percent of its products through Amazon; however, the sports firm will not be able to capitalize the more than 70 thousand references of the brand (according to Morgan Stanley) that appear in the online platform for future actions.

Published inE-commerce

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