Allume Group

How Scrappy, Disruptive Brands are Stealing Your Market Share on Amazon

On June 6, 2017, I’m heading to IRCE to speak at the Amazon & Me day on “Negotiating with Amazon”. There are a great roster of speakers lined up, including consumer brands seeing great success online. I hope to see some of you there!

Both in my consulting practice and during my ten years at Amazon managing categories, I have repeatedly witnessed the remarkable rise of a certain type of brands to large, competitive players in their categories. The Grocery Manufacturer’s Association and BCG released a report that stated, “…brick-and-mortar market share and shelf-space prominence do not translate into digital sales, and nimble new competitors with disruptive strategies…stake out leadership positions and are then hard to dislodge.”

recent Bain article echoed these trends. “…15 years ago, large brands were more likely than small brands to outgrow their categories consistently year-over-year. Today, small brands have the edge as 23% of them outpaced their category growth every year from 2010 to 2014, compared with only 14% of larger brands.” This growth is heavily skewed to e-commerce (or as Bain affectionately called it, “non-traditional grocery channels”).

Sidebar: When do you think we’ll embrace e-commerce as “traditional”? How old must we be? I feel like a grown-up perpetually stuck at the kids table. It’s getting embarrassing. But I digress…

This is an exciting or disturbing trend, depending on who you are. If you are the disruptive brand, this is an exciting trend! The world is your oyster! In today’s landscape, brands can go from zero brick & mortar presence to becoming large, established brands online, if they play their cards right. Effective online and social marketing can steal share away from years-old, established brands. In a world where the relationship with your trusty Walmart buyer no longer guarantees your success, brands can see tremendous growth by understanding and implementing some basic principles about e-commerce platforms (namely, Amazon).

If you are the more established, brick-and-mortar-focused brand, this trend likely seems more ominous. Your foothold, your shelf-space advantage with Kroger, your hundreds of million dollars of marketing and “customer insights”, and your strong relationship with your Walmart buyer no longer necessarily translate to success. You now need to know how to communicate directly with the consumer. You must re-invent yourself.

Disruptive brands are seeing great success selling online, without any brick and mortar or traditional distribution at all. How are they growing so fast, and what are they doing right? What exactly are these “disruptive strategies?”

Here are the most successful, disruptive strategies I have observed – and what seems to set apart the successful, disruptive brands from non-disruptive brands:

  1. They excel at thinking (and searching) like the customer

The lion’s share of customers go right to Amazon’s search bar and start typing away…and they’re not searching for “glowing, radiant skin” or “Look younger in seven days”, which is the type of copy that most brands put on their product detail pages on Amazon.

Customers are searching based on needs – wrinkles, dark spots, acne, etc. If they search these things, and your product detail pages or marketing campaigns do not contain keywords associated with these needs, your products will not show up in search results on Amazon.

Your product doesn’t exist if you don’t show up in Amazon’s search results.

Disruptive brands know how to ensure their products are merchandised correctly to address customer needs at the exact moment they have them.

Let’s take the product detail page, for example. Great packaging sells product from the store shelf. However, the digital shelf is different territory. A common mistake I see clients make is translating what’s on the package to the product detail page, and stopping there. That’s fine…but you need so much more! Go ahead and include all of that “Radiant skin” and “Look younger in seven days” copy – that’s great. Make sure it’s also full of common search keywords.

The sample principles apply to your search-based marketing programs on Amazon. Remember…customers have needs, and you are trying to fill them – the same, established marketing principle holds true in e-commerce. However, what’s different is the execution. The way to get your product in front of them is to ensure your product meets those needs – both theoretically and also contextually – like, within your actual text.

You could think of it as your “search content” and your “buy content”. The search content gets customers to the page to begin with. These are the terms a customer uses to search for your product. The “buy content” is for after they’ve arrived on your product detail page. This can be your inspiring marketing copy, your guarantees of making the customer look younger, your testimonials, etc. This is the content that converts them to a sale.

You can’t have a sale if the customer never discovered your product detail page to begin with. You also don’t get the sale if the customer arrives on your pages but does not see compelling information to make a purchase. You need both types of content and marketing. Disruptive brands know this! Now you do, too.

2. They capitalize on the 24/7, instant feedback business that is Amazon

We recently recommended to a client that they make changes to product content (to align them with the above-mentioned best practices.) Unfortunately, their internal process to update copy was – at best case – a six-week process. It needed to be developed by a copywriter, edited and iterated on with a Marketing team, copy-edited, reviewed by senior leadership, and then finally, posted to the web site. This is the Old Way.

If you run a search for “coffee” on Amazon, you’ll see a brand called Death Wish Coffee near the top of the search results. They currently have 13,259 reviews, 149 customer Q&A, and are the #2 top-selling product in Amazon’s coffee category. No one had heard of this brand a few years ago. There are several factors contributing to their success, but I bet a key factor is that it does not take them six weeks to update text on their page.

What does this look like in practice? Here are a few examples of the old way and the newer, “disruptive” way of doing things:

Old way: Content team updates and reviews product content (copy), copy-edits, and posts to web site (timeline: 6 weeks)

Disruptive way: Mine data for critical search keywords. Incorporate keywords into copy. Test and iterate different content across top 5 items. Test search ranking, rinse and repeat. (timeline: daily or weekly)

Commentary: You’re not going to print with this, people. You can change it tomorrow. Just get something up there and learn something.

Old way: Develop a comprehensive marketing strategy, get internal buy-in, and begin execution. Do not deviate from plan. Then measure. (timeline: 6 months)

Disruptive way: Develop a set of critical keywords. Decide on a search budget, and begin testing bidding on keywords. Rinse & repeat. Kill dead keywords, increase budgets on the stronger performers. (timeline: twice weekly)

Commentary: You don’t need a complete marketing strategy to start playing with sponsored products and headline search ads…and they’re not expensive. Just start bidding and start learning! Note: Your competitors already are.

3. They take risks and bend the rules…or at least consider them “flexible”

A client I worked with recently had a popular, low-sugar beverage. They believed that the fact that it was low-sugar set it apart and was a selling point. However, they had not yet included the term “low-sugar” on the packaging, product detail pages or marketing copy. In fact, they explicitly excluded it – even though the Amazon customer reviews repeatedly called this out as a significant benefit.

As a result, when running a search for “low-sugar” beverages on Amazon, their well-rated product did not appear in search results. When I asked, I learned that they technically could not call this product “low-sugar” for several reasons – I didn’t understand them all, and honestly, I stopped paying attention. I get it – larger corporations are under greater scrutiny to comply by established guidelines, etc. I’m not saying that all brands should throw all caution to the wind, but take some risks. Do you think the disruptive brands are playing by all of the “rules”?

Death Wish coffee calls itself “The World’s Strongest Coffee”. Do you think someone gave them permission to make that claim? Do you think they asked politely? Maybe they can prove that claim – or maybe they just made it anyway.

The thing is, even if they were asked to remove it tomorrow, they’ve already reaped the benefit of strong search relevance data in Amazon’s system, an incredible number of reviews, and a ton of sales and sales data for Amazon’s system – the flywheel is already running strong for Death Wish, and its unlikely to slow down.

Taking risks can sometimes buy you share. An ask for forgiveness, not for permission strategy may serve many brands well.

4. Internally, they look more like Amazon than like Kroger

(Sorry, Kroger. You just don’t move very quickly…and you tend to reward the status quo more than innovation.) Growth in e-commerce is often a result of the ability to change, react, and invent solutions to the ever-changing platform that is Amazon. Amazon changes the rules every six months, and you had better be ready.

In my consulting work and during my time at Amazon, I consistently come across brands who simply favor status quo over innovation – both overtly, in principle – and also more quietly in their performance management systems. In fact, many large brands strongly reward the upholding of the status quo to the point that employees are fearful of suggesting change. Many of these brands are losing market share to the disruptive brands – and frankly, I’m not sure some of these brands will ever recover what was theirs.

This “tried and true” thinking seems sound. If you’re a company that’s been successfully in business for 50, 75, or even 100 years, weathering the storms of the generations of retail (Mom & Pop shops, Club models, Online), and you’ve survived each evolution – why change now? In fact, wouldn’t it be smarter to steer clear of anything that might change the fragile balance of what you’ve created that has endured? Clearly, what you’re doing is working!

However, this is flawed thinking, because it isn’t working online, and it isn’t working with today’s consumer. Today’s consumer is different. E-commerce is different. E-commerce needs skills and techniques that unfortunately just aren’t present with many of my clients that run more established brands.

Amazon obviously knows this, as many might know from their much-discussed “Day One” philosophy. However, it’s not just a philosophy at Amazon – it is core to their success. This bias towards innovating is prominent in hiring practices, employee performance management, business Key Performance Indicators, and measures of success for projects.

At Amazon, upholding the status quo is, frankly, a punishable offense. Failures are quickly dismissed as learning, and taking risks is what is truly rewarded.

The disruptive brands know this. They know that today’s consumer is different, and they find ways to remain nimble and innovative – like Amazon! Since the Internet is a live, real-time, 24-hour store, innovation and learning can happen in minutes –even seconds. You must stay on your toes!