The article that Amazon had taken off the internet.

In December of 2017 this article, an interview by an industry colleague and contributing writer for many direct to consumer magazines, Amazon claimed it was riddled with inaccuracies and for that reason to please remove it from the internet.  Unfortunately my colleague complied.

In light of all that’s going on with Amazon, and the fact that the last time I checked free speech was still a constitutional right, I have reposted it.

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FRIDAY FORECAST: LIFE AMID AN AMAZONIAN WORLD:

5 FAST TAKEAWAYS FROM DIRECT MARKETING MASTER WENDI COOPER

Introduction by Rick Petry.
This is one of an occasional series featuring direct marketing leaders who will share five key insights they have learned from their career in marketing and advertising.

This week your Friday Forecaster sat down with direct marketing master Wendi Cooper, a prominent direct marketing industry creative director, marketing director, award-winning content producer, podcast host and speaker.  Currently Wendi is Creative Marketing Director and Branded Content Producer at Lumeni Productions, Inc., an Entertainment Solutions Company in Burbank, CA.  Wendi also owns and operates other companies, one being EGPRO, LLC –  easyGopro – Go time just got easier ergonomic toilet stool, Squatty Potty’s #1 competitor.  easyGopro is made in USA and sold around the world primarily on Amazon.com, generating $1.4 in it’s first 2 years on Amazon.  Launched in November 2014, easyGopro has gone through a lot of the changes Amazon has had in the past 4 years .  Much of our discussion revolved around the opportunities and pitfalls that Amazon presents to product marketers.

One MUST sell on Amazon – that’s the problem

A 2016 study from Bloom-Reach indicated that 55% of consumers start their product research on Amazon. With the growth in Prime membership and its services, it is likely that the number is now even higher. What does it mean? It means that if over half of your prospective customers are initiating their product research on Amazon, you would be foolish to not have a presence on their marketplace. The reason: if you are not on Amazon, (you are not optimizing the ability to leverage the advertising dollars of competitive brands who are driving consumers to Amazon in your category, because prospects will be served up information about competitors which could very well divert a potential sale to you, if you are not on Amazon you cannot leverage that type of tactic, not only competitor’s deep pockets but also Amazon’s SEO for your brand.   The key here is to not waste your SEO/SEM time and money competing with Amazon on your terms.  Sure, as marketers, we’d like to think that our leads, albeit SEM, social media, Instagram, TV ads, etc., will automatically go to our brand website, but it’s very likely that is not the case, Amazon’s ability to optimize search is unparalleled, Amazon has more money than G-D, and controls the algorithms within the Amazon eco-system, which always give them the advantage, period.  Amazon can be your best friend or your worst enemy, finding the balance is the right place to be.

Understand the Differences Between Seller Central vs. Vendor Central on Amazon
So let’s assume you agree that you need to be selling on Amazon. For all intent and purposes I am talking about brands not 3rd party sellers.  Then it’s critical to understand the differences between being a { brand} Seller and a Vendor because each of these classes of marketers have unique opportunities and threats.  Seller Central means you are selling directly to the consumer through the Amazon marketplace whereas Vendor Central means you are effectively a wholesaler to Amazon, which is by invitation only or through Vendor Express which I highly do not recommend and I believe has been discontinued due to being a total debacle and horribly managed.  We launched in November of 2014 when Amazon was more of a partner than a competitor.   However, Amazon’s algorithm allows them to track successful products and work with those  brands, which gives them an unfair advantage.    Being a Vendor will cause you to lose 80% of the control over your detail page, images, offers, etc., and allows 3rd party sellers to list the item also.  (This problem for brands is solved if you can get Amazon to give you Gated Brand Registry).  You can establish MAP pricing with Amazon, but you lose control of everything else.  Plus, you run the risk of Amazon deciding to create an Amazon Basics product after using your product to test the market.  ( I was told this directly from an x-Amazon employee now working as a consultant for Sellers and Vendors.)

As a brand SELLER you are competing with your Distributor, Amazon.
By selling direct-to-consumer on Amazon (Seller Central), you are putting yourself in the position of essentially competing with your distributor (Amazon).  For example, Squatty Potty, our #1 competitor became a Vendor Central supplier last year and easyGopro immediately saw a precipitous drop on our sales, which we never recovered, I mention because I think that is important.  They could afford to do so because they had been showcased on Shark Tank, twice if not three times, and their partnership with home shopping juggernaut Lori Grenier and their clout with BB&B, and retail, left no room, literally, on the shelf for easyGopro.  The key term “toilet stool” will bring up many toilet stools but the one that will always take precedence on Amazon is Squatty Potty because Amazon controls that product and the algorithm for which Sellers bid on key terms.   Remember, that with Amazon, prospects coming to the site are not ‘your’ customer, even if driven by your SEM or marketing dollars to Amazon – they are Amazon’s customer.  While it is an incredible marketplace, one with low barrier to entry, and drives volume, it can be a Faustian bargain where you give up a lot to gain a place at the table.”

Make sure to set-up Brand Registry, Enhanced Content Pages and an Amazon Store Front.
So if you elect to sell directly to the consumer? How do you win what might feel like a rigged game? Set up your Gated Brand Registry which “gates your brand from 3rd party sellers on Amazon, and will allow you to create a dedicated Storefront – which gives you a direct URL, www.amazon.com/easygopro – to be embedded in your ads or social media as a direct link to your “store” without any competition appearing on the page.  Gated Brand Registry prohibits 3rd party sellers from listing your brand on Amazon – which is what keeps one safe from China’s counterfeiters.   Prior to the [new] StoreFront option our marketing dollars would drive consumers to an easyGopro detail page laden with competitor products.  Enhanced Content pages used to be a perk for Vendors, but this year Amazon opened those up to registered brands.  AMS (Amazon Marketing) does need to approve all changes, but this added content keeps Brands par with what was once a perk only for Vendors.  The catch for the storefront is that consumers can only find our dedicated storefront by clicking on a direct link, it does not appear through normal search results within Amazon’s algorithm.  Searching for easyGopro on Amazon will result in our list of items, but also with the competition clearly and prominently placed on the page.  But, at least our marketing dollars are better used. I may want to add that the volume of sales on other retailer sites is very small compared to sales on Amazon, plus with the API’s that Amazon has for its affiliates – a lot of traffic and sales that occur on Amazon are because of their efforts (thank you). In fact, easyGopro was on Walmart.com, HomeDepot.com, and many catalogs, but at the end of the day, Amazon out-sold all of them.  Clearing the legacy online of those partners gave us the ability to drive all sales and control our brand to either Amazon or http://www.easygopro.com.  These are the only two places to buy our product.  Any other place is a 3rd party reselling it, period.   Plus the fees that one has to pay transactional platforms such as Commerce Hub remind me of the days when websites were charging $1.00 a transaction to simply process an order, but that’s a different subject.

 

Fees, Fees and more Fees.

Another challenge with regards to Amazon is mounting fees for Sellers.  Vendors all fees are paid by Amazon – the cost of giving up control of your brand.   For example, as a Seller you always want your product to qualify for Prime, free shipping (under $35.00), which will also give you ranking preference and will not affect your ability to have the Buy Box.  Whilst we may believe as a consumer that the shipping is free, it simply is not.  The Seller pays for it and gets no credit at all.   Fees are broken into:  FBA fee and marketing or listing fee.  Our item that has an average price point of $22.99 and our fees can be as high as $11.00 with FBA (Prime).  If we drop ship for Amazon, our fee is reduced to $4.56 – $5.46 or the average price that Amazon pays UPS | USPS to ship our product to Zone 8 – furthest point in continental USA.  You see, Amazon is not giving free shipping to any consumer, it’s smoke and mirrors to make the consumer believe they are generous and take care of their customers, but there reality is that Sellers are charged each time a customer orders PRIME, it is not Amazon paying, it is the Seller.    Also, to qualify for Prime inventory must be in an Amazon’s distribution center (FBA).  Which then adds FBA fees, monthly storage fees, and longterm fees if the product isn’t moving quickly enough to the level of inventory one keeps.   It’s calculated by the cubic space taken-up.  Our product was designed to stack and nest so it would not take-up unnecessary space on the shelf in the warehouse or on the retail shelf but Amazon doesn’t care.  We are charged for each stool we send regardless of their space saving design.  Our storage fees during the holiday season have been as high as $12,000 in one month taken directly out of our Seller account as our inventory sat on the docks for 6 weeks.  Needless to say that eats into one’s profit.  So inventory control is paramount to profitability, of course, but when one is charged for triple storage fees for their product to be on the docks (unsellable) for 6 weeks, that’s just WRONG.

Then there is the bidding on sponsored key terms to keep your ranking strong as competition grows, and since Amazon controls the algorithm,  how can one possibly bid higher than the distributor controlling it all while selling competitive products, i.e., Squatty Potty and inserting conveniently in places that distract the attention of consumers away from your listing.  Then there are the Lightening Deals or Deal of the Day (by invitation only), one not only pays fees associated that run between $300 to $500.00 one needs to offer an additional discount that is at least 10% lower than the lowest price the item sold for in the past 30 days.  And then of course, you cannot run a deal unless the inventory is in an Amazon warehouse.  Fees, fees, and more fees.   If you want to play on Amazon, then you surely will pay.

There are other programs such as Amazon Exclusives which was Amazon’s attempt at an Etsy type model for “craft brands”, and a total disaster that has been dismantled.  Our experience with Amazon Exclusives was horrible. After attending a special summit for Women Owned Business that were top Sellers on Amazon,  Amazon approached me and promised the world but delivered nearly nothing.  They made it sound like giving them total exclusivity would surely increase our sales as they would put more marketing muscle into our brand for a small additional fee of only 5%.   We removed our product from Home Depot.com, Walmart.com and bought back any legacy product that was on the market form catalogers, because our sales were projected to increase by 15-20%.  Needless to say they did not.   But what was worse, was getting full control back of our listings took nearly 1.5 years, if not longer due to the terrible confusion at Amazon catalog.

 In the end, Amazon has been a brand builder for us, this I cannot deny.  But as Amazon grew and things changed and continue to change every day,  it’s critical to understand that consumers love to shop on Amazon and for that reason it would be unwise to ignore the power they have to sell goods.  Plus, it’s always smart to have your product where  consumers shop, and that’s Amazon.   A dedicated brand site is helpful but consumers want convenience, free shipping and a hassle free shopping experience.   In the end Amazon is that place.  But, that doesn’t make their policies fair nor ethical.

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