David Greenblatt, the author, is CEO of Albert Scota company that helps retailers maximize their presence and grow their sales.
getty
On November 10, 2022, Gap Inc. known that this was the case partnership with Amazon Fashion. This is due in part to a challenge facing many retailers: financial concerns that have been exacerbated by the current global economy.
For a three-month period ending July 30, Gap Inc. a net loss of $49 million, or 13 cents per share. Amazon, on the other hand, looked around $470 billion in annual revenue in 2021, and the total percentage of the online market is staggering. Sales take up 40% of the U.S. e-commerce market this year, while the next 14 largest online stores together account for just 31% of the market.
Gap isn’t the first retailer to partner with Amazon. Victoria’s Secret launched its Amazon Seller accounts in April 2022, and The Children’s Place has been on Amazon since 2003. some retailers have questioned entering into such a partnership, afraid that this will lead to loss of property or control of the customer. This would mean losing valuable customer data that marketing teams could use for resell, upsell, or cross-sell opportunities.
With public stakeholders, however, the move appears to be paying off. In the first 17 days since the deal was announced, GAP stock rose 29%, while the Dow Jones Average rose less than 2% over the same period. So it’s possible that Gap’s choice indicates a shift in perspective on Amazon as a whole.
Is Amazon a retailer or a mall?
To understand Gap’s and other retailers’ partnership decision, we need to better understand what kind of seller Amazon is.
Initially, Amazon bought a lot from brands/retailers and then resold the products. This gave Amazon the opportunity to increase its product offerings and choose competitive prices compared to physical retailers. Today, Amazon encourages brands/retailers to sell their own products directly to customers through its platform, which has undergone major updates. This created a shift from Amazon.com as a retailer to Amazon as an online shopping experience.
For Amazon, this ensures it has the best product presentation and pricing, as well as brand investment in Amazon advertising. Meanwhile, brands and retailers get help in the form of shopper data and respecting customer brand ownership. The Amazon Storefront allows brands to create a series of landing pages to display their products in an ad-free environment. Amazon also enables brands to cross-sell on product pages and retarget customers using display ads.
Considerations for partnering wisely with Amazon
If you’re considering investing in an Amazon presence, there are a few things you can do to contribute to greater success. Here are some points to consider:
• Marketing: On-Amazon marketing can be an effective way to promote your brand, which is integral to a retailer’s success. There are different types of on-site marketing, such as a sponsored product or a sponsored brand banner on the search results page. Amazon also offers strategies for advertising both on and off its site, such as video or audio ads. It also has special programs like Business2Business, LaunchPad and Amazon Deals. Thoroughly research all of your options to determine what best fits your needs and budget.
• Manage expenses: Selling on Amazon can be as much as 30 to 35 cents of every dollar sold. These fees appear through commissions, ad purchases, account management, transaction fees, and other services. It’s important to stay on top of these expenses and find ways to reduce things like costly refunds and returns.
• Constant operational supervision: Partnering with Amazon to sell your products requires a lot of operational oversight to maintain revenue on the platform. In addition, retailers must stay abreast of Amazon’s ever-changing terms of service, both for brands and customers. So consider whether you have the bandwidth or expertise to pursue this endeavor.
• Logistic support: Managing inventory levels and timely shipping is critical, even more so when selling on Amazon. Seasonality and expiration date can add more complexity. This requires in-house efficient logistics support and an understanding of the support Amazon can provide.
Today, major retailers have the opportunity to join and take advantage of the ever-expanding Amazon channel. Despite early concerns, they don’t have to give up their uniqueness or their valuable customer relationships to benefit from this kind of partnership. By wisely entering into such a deal, retailers and brands can establish a relationship with the potential for a profitable lifetime.
ukbusinessupdates.com Business Council is the premier growth and networking organization for entrepreneurs and leaders. Am I eligible?
