FBA Disadvantages: Amazon Can Inform, But It Cannot Engage
As Prime Day 2020 comes to a close and headlines report another record year for the popular Amazon sales event, it's easy to forget what gets lost in the annual sea of deals. Diluted brand identity and loss of customer engagement are two significant FBA disadvantages that more and more Amazon sellers are waking up to, as eCommerce continues its dynamic, disruptive influence on traditional retail.
"Consumers are doing a lot more research, being more thoughtful. Brands that do well need a site that engages and informs."
These are the wise words of Danielle Savin, Senior Digital Marketing Director at CapGemini, who you might remember from our summary of Deck Commerce's Retail During a Pandemic webcast back in June.
Why are we repeating this particular insight from Danielle here?
Because it highlights a key challenge for Amazon retailers at this time and, indeed, one of the primary FBA disadvantages that these retailers experience. Namely, that Amazon delivers a wealth of information for its customers but offers next to no engagement.
So with Prime Day orders placed and the hype receding, the industry's focus switches to how well parcel carriers will handle the volume of deliveries ahead of a very different 2020 peak season. For retailers, however, the comparison should be with how their brand looks as customers experience it through Amazon, rather than the more refined purchase journey that buyers enjoy when they come directly to the brand's website, app, or social media channels.
Herein lies one of the main FBA disadvantages we hear eCommerce entrepreneurs complain about time and again: losing control of their brand in Amazon's vast, impersonal ecosystem.
Functional, Not Fun
As a brand, Amazon inhabits a similar emotional space to the likes of Shell or H&R Block. It gets the job done, but you're not especially excited to hear the name or spend time with the company. Such brands are functional. They're rarely fun.
While that's perfectly acceptable for some product categories, Amazon isn't active in just one niche. On the contrary, it spans the widest spectrum of consumer products, including many that should inspire more than the mundane cycle of deliver-store-consume-repeat.
For the most part, the packages we receive from Amazon are frequent and functional. That makes the unboxing experience more of a task on your to-do list than a highly anticipated event, even for products that are more suited to the latter category.
You don't want your brand to fall into that uninspiring void. Amazon as a platform has the potential to help you reach a wider audience, but Fulfillment by Amazon leaves your brand in danger of delivering an ordinary, dare we say dull order experience.
FBA Disadvantages: Your Brand, Muted
While founders are undoubtedly excited about the look, feel, and experience their brand inspires, Amazon is singularly focused on price point and how much you can sell.
Naturally, sales are important. For retailers with a desire to build for the long term, however, customer retention and brand loyalty cannot be ignored.
Amazon does an excellent job informing the customer of what they'll get. With deep product listings, a standard format, and endless comparisons with competing products (which the platform would be just as happy to sell as yours), there's a clear path to purchase for shoppers who spend billions there every month.
What Amazon cannot do is engage your customers on any level beyond price. It throws your brand in at the deep end of a packed marketplace, waits to see if you can swim, then ponders whether or not it wants in on what you sell.
Small wonder, then, that sellers in this environment prefer not to leave the future of their brands in Amazon's uncertain hands.
Moving Beyond Amazon
Given the limitations we've just unpacked, it should come as no surprise that the vast majority of Amazon sellers also expand to other sales platforms.
According to a 2018 study by Feedvisor, 80% of retailers see the need to move beyond the walled garden of Amazon, where a quick shift in an algorithm can sink your products, or the company itself might decide to start a private label brand based on popular items you sell and simply undercut your product. Just ask Allbirds about that one.
Whether this means setting up shop with less rigid eCommerce sites or developing a strong direct-to-consumer strategy, moving beyond Amazon and FBA disadvantages is a common occurrence as brands begin to grow. Retailers want to assure themselves of a steady income and alternative sales channels should Amazon pull the rug from underneath them, with diversification to other platforms and DTC being clear paths to avoid putting all their eggs in Amazon's basket.
Notably, social media channels such as Facebook and Instagram are also moving to capture some of this expanded marketplace. Following steady growth in recent years and the rise of influencer marketing, social platforms are suddenly at the center of both marketing and selling as eCommerce spikes due to the pandemic.
All of which brings us back to the original point of this article: Amazon can inform, but it cannot engage. The difference between a dour brand profile on Amazon compared to the vibrant color and conversation of the same brand's Insta feed is always striking. It tells the story of why so many brands see FBA disadvantages as a threat to their brand identity and choose to move beyond Amazon as soon as they have the order volume and resources to do so.
Need help moving on from Amazon? Our team can help! Capacity fulfillment experts have a lot of experience working with established brands to avoid repeating the mistakes other retailers have made, as well as the pitfalls of dealing with Amazon.