It can be overwhelming to try to understand all the business changes a seller must make to integrate with Amazon. Once implemented, however, the payoff is huge, because it allows the seller to capitalize on Amazon’s robust customer reach and strong customer loyalty. There are some subtle and not-so-subtle differences between Amazon and Google, not only with regard to consumer behavior, but also in the ecosystems, logistics and targeting capabilities of each platform.
What Makes the Amazon Customer Different from the Google Customer?
While there is substantial overlap between users on Google and Amazon, there are several key attributes that can be considered unique to Amazon customers.
Amazon customers are extremely loyal
Amazon disrupted the way customers shop online with the introduction of the Prime program. Shoppers that used to be happy with a standard five- to seven-day shipping window now expect purchases delivered on their doorstep within two days (for free!). While that sets a high bar for keeping customers happy, it has also proven to pay dividends by building a large, loyal customer base, with Prime membership recently topping 100 million. Those loyal customers are very valuable, spending an average of $1,300 on Amazon a year in addition to their $119 annual subscription fee. Non-Prime customers, while not as invested in the platform, still spend approximately $700 on Amazon each year, according to Consumer Intelligence Research Partners data.
In addition to Prime, Amazon’s low pricing, extensive product offering, and strong reputation for customer service keep shoppers coming back. It is through these customer-focused business practices that Amazon has captured consumer trust—and 44% of US e-commerce sales, according to Internet Retailer data.
Amazon customers are ready to buy
While customers research purchases on both channels, discovery on Google tends to follow a different path. Customers lean on engines like Google when they don’t necessarily know what product they want and need more research to figure that out. On Amazon, the customer has a higher purchase intent and uses the platform to read reviews and assess product quality before buying. Customers go to Amazon to find and buy—in fact, 49% of product specific searches start on Amazon, while only 36% start on search engines like Google, according to a 2017 Survata survey. Additionally, a staggering 92% of customers that start product searches on Amazon also complete their purchase on. Bottom line: Amazon’s customers are lower in the funnel and ready to convert.
What Do Sellers Need to Do Differently for Amazon?
Retailers can choose to sell on Amazon to take advantage of its loyal, lower-funnel customer base. The appeal of showcasing products to shoppers on the largest e-retail site in the US is overwhelming. However, before diving in, there are several key aspects worth considering to ensure that your business will run successfully on Amazon.
Amazon requires a higher seller investment for order logistics
Most retailers have an existing website where customers buy products with an existing fulfillment process for e-commerce sales. Since Google sends customers to the retailer’s site, selling on Google doesn’t require a new system to fulfill orders. While a retailer may need to create a product feed to support Google Shopping, order fulfillment and inventory management can operate within the existing system. To sell on Amazon, however, businesses must create new order fulfillment processes or change their existing ones. They must wholesale products to Amazon, ship products to Amazon in approved packaging to use Fulfillment by Amazon (FBA), or create an order system to accept and fulfill Amazon orders through their existing warehouses.
Amazon owns the customer data and experience
Since Google directs customers to the retailer’s site to place an order, the retailer owns and has full control over that customer’s data. On Amazon, customers complete their purchase within the Amazon system, with the seller getting no access to that customer’s data. This can be a challenge for any retailer trying to build brand loyalty, since you cannot remarket to customers and aren’t able to incorporate any customer data into future people-based marketing strategies. On Google Search, you can use audience data, but audience targeting is not allowed on Amazon Search and has limited functionality on Amazon Media. When a customer buys from Amazon, he or she is an Amazon customer first.
Amazon requires a dynamic pricing strategy
One of the primary goals for retailers on Google is to drive customers to their website to make a purchase. In order to provide a consistent customer experience on their site, retailers rarely change the price multiple times in a day, unless they are running a special promotion. However, pricing on Amazon is treated much differently. Amazon lists competitive pricing as one of the key ways for sellers to increase their chances of winning the coveted Buy Box. As a result, sellers will often change their prices multiple times a day, either manually or with a tool. Overall, this is good for the customer because the price shown tends to be the lowest price available across the web. However, it can create logistical challenges for sellers, who need to be able to support dynamic pricing to be competitive on Amazon.
Amazon demands quality service for their customers
Amazon expects anyone selling on its site to meet certain standards in terms of customer service. There are requirements for keeping customer inquiry response times, order defect rates, seller cancellation rates, and late shipment rates below a certain percentage. Failure to comply with these standards puts sellers at risk of being suspended from selling on Amazon – sometimes permanently. Reinstatement, if it happens at all, can take weeks or months. It’s critical that sellers have their logistics for customer service, inventory updates, and shipping lined up prior to activating listings on Amazon to avoid potential issues.
While it can be challenging at first, figuring out how to successfully navigate Amazon’s unique ecosystem as a seller will provide long-term benefits to most e-commerce programs. All signs point to Amazon’s continued dominance in the industry. Investing the resources now to build a presence on the marketplace will pay off for years to come. To further explore the benefits and intricacies of advertising on Amazon, download the Amazon Advertising Playbook.
By Melissa Reilly, senior Manager, SEM and feeds at Merkle & Danielle Waller, manager, Amazon and product marketplaces at Merkle
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