In the 9-ish years I've worked in eCommerce - at large online retailers, and for brands selling on multiple channels - I've seen a lot.
I've worked with and for small mom-and-pop brands making low 5-figures, 6-to-7 figure brands intent on 10xing their growth, and 8 figure brands who are fully scaled and still growing steadily year over year.
Now, let me state the obvious: not all 6-figure brands are set up (or aspire to) to grow to 8-figures.
But, I've noticed some key differences between the big fish and the little guys.
Here are some of them.
What 8-figure Amazon brands are doing
Building their brand off-Amazon
I could stop this post here. This is the biggest differentiator between big Amazon brands and smaller brands.
Big brands invest in building their brands and top-of-funnel advertising off platform.
They are rarely invested in only selling on Amazon (that would be way too risky, anyway), but see the platform as an important bottom-of-funnel customer capturing tool in their channel strategy.
Brand-building and advertising off-platform does three things:
- It stimulates branded search on Amazon, which means new customers will be searching directly for your brand on Amazon (instead of just searching for the generic category term). This drives low CPAs.
- This also promotes the flywheel effect early on in an ASINs life, driving up organic rank for category terms, and helping your products reach new customers not familiar with your brand. It also makes your non-branded PPC ads more effective.
- In parallel, investing in ads and content off-Amazon also keeps your brand top-of-mind for customers, which drives repeat purchases. Typically a very difficult thing to do on Amazon, which has very limited retargeting and remarketing abilities with PPC ads.
This doesn't preclude using Amazon for some top-of-funnel tactics like DSP (although I have some thoughts about that, which I might write about later), but primarily, the chain of events is:
- > Build awareness and intent on other digital and traditional media platforms
- > Capture intent on Amazon whenever a customer searches for your brand or product.
Delivering a memorable and unique product
Great brands have unique, memorable, and differentiated products.
Dude Wipes is a great example of this. They took a commodity product (flushable wipes) and created an awesome product that was 1) targeted to a very specific customer, and 2) very different from their competitors (packaging, scents, name, brand voice).
It's hard to scale if you're selling something generic, like the nth private labelled iPhone charger. Unless you're Amazon Basics, which of course, is competing on their memorable and trusted brand.
A memorable and unique brand with a differentiated USP gives customers a clear reason to purchase and return.
Pricing profitably
I've been looking closely at pricing tactics of big brands over the last few years, both true mass-market and higher-end. Some of them price Amazon as their lowest channel, others DTC, others still Walmart and Target.
But none of them get into pricing wars with other brands.
I read an article recently that Amazon is taking an average of 50% of Sellers' revenue.
This is a wild, although not altogether unsurprising, idea.
However, I guarantee that most brands selling on Amazon who are around in 5 years won't be those who are comfortable taking home 50% of their GMV.
This likely leaves pennies after covering their costs, and nothing to scale in the future.
Big brands - those who presumably have the know-how to build and sustain a business - are comfortable pricing at a level that allows them to operate profitably.
What they aren't doing
Arbitrage
I have not found a 7- or 8-figure Amazon brand who is doing arbitrage. If you know of one, tell me about it.
As I learnt in Finance 101, true arbitrage in the 21st century doesn't exist at scale.
Reseller who are buying off one channel/one Amazon market and selling into another Amazon market will eventually be put out of business by the brands themselves when they realize the opportunity. It just doesn't work at scale.
Obsessing over SEO optimization (without investing in ads)
I giggle when I see posts about the latest SEO optimization hacks for Amazon.
Amazon has doubled down on the amount of search spots they're giving over to ads over the last couple of years, and if think you can win on SEO optimization alone, you're probably kidding yourself.
If you're not spending correctly on ads on-and off-platform (and yes, also making sure you're displaying organically and for paid placements for the right keywords), you're leaving money on the table.
This is why figuring out breakeven ACOS, and knowing your LTV and ad payback, is so critical. You need to know how much you can spend on ads and how much revenue you're going to bring in from each customer, so you can comfortably invest in that ad inventory to capture high-intent searches for branded and generic terms.
Most small Amazon brands I know of don't have any idea what their LTV is on Amazon and don't know how to calculate payback.
Meanwhile, they're spending hours researching long-tail keywords that aren't likely to get them any conversions because customers aren't familiar with, and don't trust, their brand.