Category: Buy With Prime

Multi-Channel Fulfillment (MCF) costs are increasing – is Fulfillment by Amazon (FBA) next?

What will happen with 1P brands and vendors currently under negotiations with Amazon?

It’s almost the end of April 2023 and time for some reflection and honesty. Let’s face it, 2023 has been challenging so far.  We’ve seen layoffs at most of the large incumbents (Amazon, Microsoft, Meta, Google, and others), inflation, while virtually all businesses are looking for cost savings at every customer touch point. 

So what does this all mean for Amazon 3P sellers and 1P vendors? In the simplest terms, it means higher expenses and difficult negotiations. MCF has already seen a price increase and it’s likely it will be even more expensive as we approach Q4. 

Amazon will no doubt use Prime Day to demand more deals from brands of all shapes and sizes and will likely also use the always-crazy fourth quarter as another inflection point to increase costs associated with shipping, warehouse space, etc. 

Brands and vendors are almost certainly facing a year in which Amazon only gets more (and more) expensive. 

What can you do to manage these costs?

Frequent readers of this blog know how much emphasis we place on brands possessing a thorough understanding of their unit economics.  Use that data (again, at an ASIN level) to negotiate as hard as possible with Amazon to ensure you have some protective measures related to margins and profits. 

Don’t despair! 

Throwing your hands in the air if you just don’t care is simply enough.  We get it. 

Brands are in a tough position, is Amazon nothing more than a necessary evil?  Hmmm, where else (besides Amazon) can you sell as many units, reach as massive of a purchasing audience, and generate as much revenue as you do today, selling via Amazon?

The answer is nowhere. Currently, no other platform as powerful as Amazon exists.

But fear not, we suggest using 2023 as the year in which you remove those non-performing ASINs from your Amazon account and begin to sell via other channels such as your Direct-to-consumer (DTC) website. If you’re smart, and we have faith in you, you should also leverage Buy with Prime (BwP) to reach as many of those 157 million plus Prime members. 

Be strategic about the new products you add to the mix on Amazon.  Does this product generate enough margin and profit for your business? If the answer is no – do not list it. 

For lower-priced products (less than $50 per unit) bundle them together to grow your average order value (AOV).  And in case you missed the memo, selling any item for less than $10/unit on Amazon is akin to throwing money away.  Your order volumes would need to be MASSIVE to generate a profit. 

In addition, our internal research has shown that in many cases sellers are competing against lower pricing from sellers from completely other markets, like those where sellers can survive with either smaller labor needs and/or pay for more staffing at lower costs. 

Getting into an Amazon price war with these brands will not end well. 

Do you have a “leaky” Amazon sales channel?  Are you competing with a roster of unauthorized resellers selling your product on, or to Amazon?  If so, talk to us about creating and implementing an authorized reseller program.  Do it now!

Have a plan! Ensure that you have an ironclad minimum advertised price (MAP) policy for your distributors and resellers. Also, ensure that your manufacturing partners are contractually prevented from reselling your products to, or on, Amazon. Competing against your own partners is a recipe for migraines and diminishing returns!

Bottomline: Brands/sellers should control as much of their brand and product Amazon ecosystem as possible!  Accentuate the positive and do everything in your power to ensure that Amazon’s impending cost increases (winter is coming!) do not effectively kill your best-selling products or business. 

We’d very much like to hear about your marketplace pain points and serve as your guide on this journey. Let’s get started – reach out to us today.  

Since the invite-only launch of Buy with Prime (BwP) in September of 2022, participating merchants are most likely uncertain about what they can (and should) do next to generate momentum for their enrolled products. Here’s our quick overview covering how Buy with Prime partner brands should leverage Amazon’s advertising tools to drive traffic to product detail pages.

Please take a few minutes to better understand the various Amazon advertising program types that partner brands can use to accelerate sales growth. It’s also worth noting that brands enrolled in the Buy with Prime program do not personally create or manage this advertising, instead, Amazon Display Advertising agency partners (like our team here at Equity Commerce) are responsible for building, manage, and reporting on these campaigns.

Amazon Advertising Tools Available for Buy with Prime Brands

Currently, there are three Amazon advertising options to consider:

• Amazon Sponsored Brands
• Amazon Demand Side Platform (DSP)
• Amazon Display Ads

Amazon Sponsored Brands

Designed for brands enrolled Amazon Brand Registry, this option is meant for partners that want agency-managed access to Amazon advertising inventory. Sponsored Brand advertising is now available to sellers and brands who are part of the Buy with Prime program and who do not sell via the Amazon marketplace. This program is currently in “closed beta” for non-variant products (products with parent-child relationships). Products with parent-child relationships (sizes, colors, etc.) are excluded from this option but may be added in the future.

Amazon Demand Side Platform (DSP)

An agency-managed Demand Side Platform that enables brands and sellers to programmatically purchase advertising to reach new and existing audiences both on and off of Amazon. 

Amazon Display Ads

Agency support is also required for Amazon Display Ads which is only open to brands and sellers that are leveraging Buy with Prime.

Social Ads for Buy With Prime

Promote your products on Facebook and Instagram. Social Ads for Buy with Prime help you reach engaged shoppers with dynamic social ads that automatically feature the Buy with Prime badge.

In conclusion, both new-to-Amazon and Amazon-native brands have an early adopter advantage to use Buy with Prime and various Amazon advertising programs to build sustainable e-commerce businesses away from Amazon.

Helpful Link – Buy with Prime Knowledge Center

Are you ready to multiply your brand equity?  Contact us today!

A big question in the investor community and on Wall Street relates to Amazon’s future.  Has Amazon’s marketplace business plateaued?  This central question is the frame of reference (and arguably, the catalyst) for the introduction of the Buy with Prime program in the fall of 2022. 

With the continued emphasis on Buy with Prime, it’s becoming apparent that Amazon wants to share (if not infuse) some of its eCommerce DNA with smaller and medium-sized brands.  By opening access and creating products out of what were formerly discrete business units (advertising) and services (fulfillment, payments)  – such as we’re seeing with Buy with Prime – we believe there is a HUGE opportunity. By using the best parts of Amazon not called “the marketplace” these emerging online businesses have the power to automate full-funnel advertising tactics and world-class logistics – and focus on building a brand through product development and customer service.  

In this post, we take a fifteen thousand-foot view of Buy with Prime’s potential future, how Amazon is using the program as a trojan horse, and what else we see in our ecommerce crystal ball.

The Evolution from Closed to Open

Amazon started out as an online bookstore that sold its products to consumers.  Books by their nature were data-friendly in terms of building an online catalog and Bezos and team were able to quickly create Earth’s Biggest Bookstore. 

In 2000, after some experimentation with online auctions and zShops, the Amazon marketplace launched with the goal of creating an endless aisle with a nearly infinite product selection. Amazon’s management team was clearly focused on “getting big fast” while understanding that access to more and more products and categories would play a vital role in both customer acquisition and customer retention. The combination of selling to consumers directly (1P or first-party via Vendor Central) and via the marketplace (3P or third-party via Seller Central) offered Amazon a clear path and even some friendly competition between its retail team and the seller community it was nurturing to grow listings and dramatically expand selection. 

Trojan Horse, Shopify Hack, or My Little Pony?

No secrets here, but Amazon has invested heavily.  First in its logistics and warehouse network (aka “the moat”) and more recently in its advertising capabilities. The company is famous for solving internal problems first and then offering these same services to outside third parties to generate additional revenues. Think about Amazon Web Services or AWS – and how Amazon created it internally and oh by the way, essentially invented a new type of business based on selling cloud infrastructure.  Amazon is in an enviable and unique position in that it can offer access to other businesses to leverage its logistics network and advertising solutions.  Oh and the cherry on top?  This also negatively impacts rivals such as Shopify and Google. 

Q: What is the biggest challenge facing small to medium-sized e-commerce businesses? 

A: Finding and retaining customers. 

In 2021, Shopify opted to partner with Google and Meta to create a way for Shopify merchants to create and target lookalike audiences with ads on their platforms fueled by sales data from their stores. 

In essence with this partnership, Shopify made the decision to stay out launching its own high-margin advertising service. Why? Not only would this help Shopify to generate more revenue (investors really like that, by the way) but it would also give them a full-funnel advertising play.  

What do we mean by full funnel? Currently,  Amazon is the only advertising solution that also owns transactional data (now almost three decades worth) that has been curated from customer product searches to customer purchases. This data in turn enables a compelling advertising engine for sellers and brands to efficiently and intuitively target Amazon’s most valuable customers, Prime members (now more than 200 million worldwide!). 

In contrast, Google’s business model has become almost entirely dependent on search advertising revenues.  We won’t even mention the Department of Justice and its recent civil antitrust suit beyond this sentence.  But clearly, any advertising competition from Amazon adversely impacts Google’s revenue long term. 

It’s our position that Amazon’s Buy with Prime program will effectively siphon off advertising revenues from Google. It is also with noting that for Amazon advertising to succeed and truly become a Google “killer” Amazon will require significant scale from off-of-Amazon for the service to deliver consistent profits.  And this is where we believe that Buy with Prime also hits the target and like with all other elements of Amazon, the goal is always to get the proverbial flywheel accelerating as quickly as possible.

New Business Model or What?

We see an opportunity for a new and leaner business model to emerge. Direct-to-consumer (DTC) brands can begin to dip their toes into Amazon’s waters by leveraging Buy with Prime instead of looking for third-party logistics (3PL) partners and instead of using that increasingly tired and traditional digital media (sorry Google). 

The new business model is neither completely direct-to-customer nor is it marketplace-native but rather, the new approach relies upon leveraging parts of a very strong third-party (Amazon logistics and Amazon advertising) to grow and nurture a brand to success and profit. 

The efficacy of this new business model is of course predicated on one thing.  Money!  

Amazon must offer better pricing than 3PLs. Amazon must have better rates than incumbent freight carriers.  And finally, they must make their advertising and marketing more efficient and affordable than other media solutions.  If they can achieve this triple play in costs, efficiency, and effectiveness, watch out.

While incumbent and emerging DTC brands will continue to use software-as-a-solution (SaaS) platforms like Shopify, BigCommerce, etc. to build websites to sell their products to consumers, it’s the emergence of logistics-as-a-solution (LaaS) that has been unleashed via Buy with Prime that serves as the ultimate wake up call to 3PLs, freight carriers, and digital media incumbents. 

So what does this all mean? While Buy with Prime is still new and in development, the jury is out! Buy with Prime if it is not nurtured, supported, and maintained by Amazon could lead to nothing.  However, we believe the stakes are too massive for Amazon to “launch and leave” this program.  Amazon’s been building and getting big fast for almost 30 years now, we feel confident that Buy with Prime is the future of Amazon and ecommerce in general. If you agree, disagree, or would like to debate any of this, please reach out to Equity Commerce today.  We look forward to hearing from you. 

How Did We Get Here?

In the past decade, we have seen a new type of brand emerge from the e-commerce landscape.  We’re talking about the growth of direct-to-consumer (DTC) brands (like Casper, Dollar Shave Club, Warby Parker, Glossier, etc.).  Credit these brands for finding and filling product gaps thanks to a customer-direct approach while skipping the headaches and bureaucracy associated with brick-and-mortar retail distribution and selling via marketplaces.

DTC brands still face numerous challenges though. In many cases, after factoring in the rising customer acquisition costs (CAC) – bottom-line results can prove to be underwhelming. And as a percentage of total sales and revenue for a given product category, the DTC channel is still a drop in a much larger retail bucket.

DTC brands grew quickly during the late 2010s when venture capital was plentiful and customer eyeballs were readily accessible via social media – especially Facebook advertising. Fast forward to the 2021 iOS privacy update which severely impacted social media advertising – and now a looming recession – and it’s obvious these brands no longer enjoy the smooth sailing they once did.

In this article, we will discuss the basic differences between direct-to-consumer and Amazon marketplace-native brands. We’ll also begin to cover the rationale and logic behind why these brands should seek to build business away from the Amazon marketplace.  And we’ll close with that opportunity we’ve already deemed THE biggest opportunity of this year.  

The Current Chaos

Let’s begin by addressing the current chaos facing DTC brands. In the most simple terms, the entire sector faces crazy, ridiculous, and downright astounding customer acquisition costs. Much of these costs can be attributed to poor digital marketing efficiency.  Translation: Not enough new customers!  Marketing and advertising a DTC brand to a large audience is difficult. And it’s also tough to encourage those consumers to convert to purchasers.  To make matters worse, in 2022 many DTC brands saw those new customers they’d previously converted, churn out of play.

Direct-to-consumer brands leverage Shopify and other software as a service (SaaS) platforms like BigCommerce and WooCommerce, to build their brand websites via scalable and quality web development access at an affordable price. 

In many, these D2C brands have also resisted selling via marketplaces like Amazon due to the perception that marketplace participation would somehow negatively impact brand equity.  Let’s hope this does not prove to be a fatal mistake. Based on December 2022, Retail Touchpoints special report, it’s clear that consumers rely upon marketplaces just like Amazon, to discover new brands.  This means that if a DTC brand is not part of a marketplace, those products are less likely to be discovered. 

In contrast to DTC brands, marketplace-native brands are in their most basic form – brands that were created and designed to effectively (or functionally) only be available to marketplace consumers buying items on Amazon. These brands are built on SEO, keywords, and “white space” opportunities to rank high in Amazon search results. But beware, these particular Amazon waters can be especially treacherous. In fact, a major concern of marketplace-native brands is the very real fear that Amazon might launch an Amazon private-label version of their very same product (hello Amazon Essentials). 

It’s our position that these marketplace-native brands, similar to DTC brands, may be suffering from a myopic business vision when or if, they fail to recognize the opportunity to strategically leverage Buy with Prime to build their brand’s businesses away from Amazon by strategically using the best parts of Amazon to augment their own ecommerce business. 

We’re confident that in 2023 marketplace-native brands will begin to embrace and leverage Buy with Prime to find new audiences.  Of course, the other benefit is that thanks to the data brands own they’ll also be marketing to these new-to-brand consumers via email after they’ve made a purchase via Buy with Prime. 

No surprise, but as marketplace-natives, these brands are familiar and comfortable with both the good and bad of Amazon.  When these brands rely on that experience combined with Amazon’s legacy of innovations and their own scrappy presence, they’ll be positioned to grow their market share. 

It’s our view, on the other hand, that DTC brands built on Shopify and other SaaS platforms will play it safe while opting to wait and see how things shake out with Buy with Prime. It is worth noting that as of early 2023, only BigCommerce has created a native solution to help merchants easily adopt and try Buy with Prime. At the end of January 2023, Amazon will open the Buy with Prime program to US sellers.

Turning Chaos Into Opportunity 

One of the more interesting developing stories in 2023 is how marketplace-native brands will leverage Amazon’s advertising platform to grow business – and get this – to grow businesses away from the Amazon marketplace. It is as simple as creating a compelling e-commerce website via Shopify, BigCommerce, or Woocommerce. And then, this is important, focusing on sending traffic to the site via Amazon advertising.

What makes Amazon’s advertising so interesting in 2023 – is the opportunity to use it to drive customers off of Amazon. Google, Facebook, and “traditional” advertising solutions do not offer a complete funnel experience – from search to purchase. The opportunity to design and create advertising audiences to target Prime customers (now more than 200 million worldwide!) and to send that traffic to a brand’s DTC website should be considered a HUGE assist for marketplace-native brands seeking to build and strengthen real direct-to-consumer businesses – and again, without the hassles and expense of customer acquisition and logistics – thanks to Buy with Prime.

In summary, marketplace-native brands have a massive opportunity in 2023!  They should utilize Amazon’s own advertising and logistics tools. And use them to grow businesses that are out of the reach of Amazon’s marketplace management team. Expect a deluge of direct-to-consumer brands to jump towards Buy with Prime once Amazon Advertising becomes more adopted and ubiquitous.

We understand that parsing data, considering marketing options, and at the same time, building a brand is a huge effort. If you’re seeking answers and assistance to challenging questions like these – we would welcome the chance to be your resource.  We know that we’ll have a lot to talk about.  Please reach out to Equity Commerce so we can start today!

Costs of Logistics and Customer Acquisition: The Two-Headed Beast!

Let’s assume you’re the owner of a small or medium-sized e-commerce company.  What are your two biggest challenges?  Based on recent conversations with business owners like you, we predict the double-headed costs of logistics and customer acquisition are at the top of your list.  Getting products prepped and ready for shipping and finding the right customers for your brand are likely your consistent and ongoing challenges. 

In an unrivaled bid to address both of these costly problems, Amazon unveiled the Buy With Prime program in the fall of 2022.  The beauty of this new solution is that it answers those two costly and challenging questions by providing the best of Amazon (world-class logistics and ease of reaching customer traffic) without sacrificing control or the requirement to sell directly on Amazon.

In this post, we discuss the invite-only Buy with Prime program and how it was designed with a purpose – to help small businesses to offer better customer experiences.  

Say Hello to Prime and Prime Benefits

The Buy with Prime program enables brands and sellers that utilize Shopify, Woocommerce, BigCommerce, and Adobe Commerce/Magento Direct-to-Consumer (DTC) websites to seamlessly sell their products to Amazon Prime members (now more than 200 million worldwide!).

By using familiar Amazon Prime logos and icons on DTC product detail pages and websites, brands, and sellers can quickly communicate a sense of trust to consumers who might be new to the brand and/or first-time visitors to the brand website. Buy with Prime also brings additional value and consumer confidence since it enables DTC brands a quick and recognizable payment and checkout option via Amazon Pay.

Buy with Prime also allows e-commerce businesses to leverage Amazon’s world-class logistics prowess to offer speedy two-day (or even quicker in some markets) shipping and free returns. Sellers and brands can also take full advantage of Amazon multi-channel fulfillment (MCF) to fulfill orders placed off of Amazon via other marketplaces and as noted earlier, via DTC brand websites. 

Buy with Prime also provides brands and sellers the opportunity to unleash the power of Amazon’s advertising platform to grow revenue and to reach and acquire new customers when they embark on a product discovery journey away from Amazon. 

What’s the Catch, this is Amazon After all…?

One of the first questions that Buy with Prime raises for brands and sellers is who owns the valuable data generated from the program.  The answer is simple. Brands own their data.  And the data is secured by the same technology that secures Amazon.com. And for those that might have read too fast, it is worth repeating that brands do not have to sell directly on the Amazon marketplace to participate in the Buy with Prime program.

As a slight caveat, we should also note that brands and sellers will be wise to use Buy with Prime strategically to ensure that they do not cannibalize their other marketplace sales. In addition, Buy with Prime does not currently support bundles or product unit-quantity packs. This means brands and sellers should think long-term about the appropriate product mix that will sell best while also matching strategic goals via Buy with Prime. 

In conclusion, we are enthusiastic fans of the Buy with Prime program.  We believe the program offers a compelling and attractive new opportunity for brands and sellers to grow their businesses away from Amazon by selectively using the best and most powerful parts of Amazon.

If you’re seeking answers to challenging questions related to logistics and customer acquisition – we have a lot to talk about.  Please reach out to Equity Commerce so we can start that conversation today!

WTF! Does it feel like you’re speaking a completely different language as an Amazon seller? One fact quickly becomes apparent as you embark as a merchant in the Amazon marketplace – there are dozens (check that, hundreds!) of acronyms and specialized jargon that make the learning curve a bit steeper than you may have anticipated.

It’s important to have a basic understanding of these acronyms. Having a cheat sheet or even some notes like this should help you when discussing your business with colleagues, peers, and of course Amazon support. It’s also worth noting that you are likely never to be 100% fluent.  That’s because Amazon is continually innovating and launching new programs every year. The list of acronyms will steadily increase over time.

But fear not! The team at Equity Commerce is here to help. Stick with us as you deliver on your KPIs and those SOPs. This initial list is far from complete – or even exhaustive.  But in our opinion, this batch of decoded acronyms will help you get started. 

The Amazon Acronyms – Part One

AGS* (Amazon Global Selling) – This program enables sellers to list and customers to purchase products in 13 online marketplaces around the globe. Think of AGS as Amazon’s version of cross-border e-commerce. 

* Since it’s Amazon, there’s always a complicating factor, LOL. Amazon Games Studios (video game developer) also uses this acronym. So be sure the context of your AGS query speaks to global markets (and not alien dragons invading our globe).

AMC (Amazon Marketing Cloud) – This is a measurement solution related to Amazon’s advertising programs. It’s designed to enable advertisers to analyze and generate insights in a privacy-safe and cloud-based clean room across pseudonymized signals.

AWD (Amazon Warehouse Distribution) – This is the Amazon logistics solution launched in the fall of 2022. AWD is aimed at helping brands and sellers use Amazon in a manner similar to third-party logistics solutions (3PLs). This program is currently by invitation only and thus far, offers limited information to external audiences.

CRaP (Cannot Realize a Profit) – This acronym describes products, based on Amazon algorithms, that are unable to generate a profit due to shipping costs, excessive inventory, and/or pricing issues. Similar to real-world crap, the CRaP designation in the context of your products should be avoided at all costs. Financial impacts can be catastrophic – and losing money stinks.

FBA (Fulfillment by Amazon) – This is a service that enables sellers to outsource order fulfillment (picking, packing, and shipping) to Amazon. Sellers ship their products to Amazon FCs (aka fulfillment centers) and Amazon handles all of the logistics for sales made on Amazon.

FBM (Fulfillment by Merchant) – Instead of FBA, this is when sellers fulfill orders made on Amazon through their own picking, packing, and shipping processes and/or through the use of a 3PL (aka a Third Party Logistics provider).

MCF (Multi-Channel Fulfillment) – This is an option built on the FBA model where Amazon offers fulfillment solutions to sellers. This service is for product orders made via external or non-Amazon sales channels such as a brand’s own D2C (aka Direct-to-consumer) website and other online marketplaces.

TOS  (Terms of Service) – A key aspect of selling on Amazon relates to policy compliance. In other words, brands must follow the terms of service outlined by Amazon, in order to sell to consumers. Keeping your account in good standing and following SOPs (aka standard operating procedures) is the goal. A seller would be considered in breach of their TOS, by leveraging non-compliant or unethical tactics. This could include buying product reviews in bulk and/or using “black-hat” software to artificially inflate your Amazon search ranking.

FYI – Don’t do it!

LOL and FWIW

Again and TBH, we could go on and on here. But for now, we hope this quick guide helps you to navigate the communication streams of Amazon. As a marketplace seller, these acronym-named programs can help run your business in a more streamlined manner. It’s also vital that sellers and brands have a thorough understanding of their unit economics when considering any of the solutions mentioned above.

And FWIW, before we end this article, here’s one more acronym to consider.

BwP (Buy with Prime) – This is another newer (2022) program where customers can shop from direct-to-consumer retailers and check out with fast, free shipping as an Amazon Prime member. Look for the Buy with Prime badge to instantly purchase a product with the fast, familiar Amazon checkout experience.

And speaking of BwP, Equity Commerce is proud to be a Buy with Prime Agency Partner. If you are interested in learning more about Buy with Prime or if you have questions about an Amazon acronym that’s driving you crazy, please reach out to Equity Commerce – we are here to help.