Let’s talk about branding in the age of Amazon and Shopify. Are these two leading solutions going to ensure a bright future for your brand? Well, it’s not that easy. See our point of view below.
Over the last years we’ve been managing paid search and shopping ad campaigns for several small and mid-size companies. These companies have presence on Amazon and they also have Shopify-based stores. The setup looks perfect at first sight. Unfortunately, not everything is too straight-forward.
For the most of these businesses Amazon turns into the main source of revenue in no time. The other ecommerce activities outside Amazon are abandoned. The short-term approach is clear – you want to focus on the area that brings in revenue today. Thinking about tomorrow is difficult if today is a busy day.
Let’s spend 10 minutes thinking about tomorrow, though. This is how long it will take to read this article.
In our meetings with business owners we often hear mentions “we are building a brand” or “my brand”. We all want to build brands. Are we really?
What is a brand?
Building a brand takes a lot effort, time, and money. A brand is that identifying mark, logo, symbol, word, phrase, or even person that businesses use to make their product stand out from the crowd. The combination of these elements creates what’s known as “brand identity”. Brands can be legally protected – they are trademarked.
Why would a company go so far to build and protect its brand? With time, significant effort and investment, a brand becomes an umbrella, which hosts an array of elements. Here you find a purpose, a specific positioning, a promise, even a personality. Let me name a couple of car makers with strong brand identities. Volvo stands for enhanced road safety. Toyota stands for reliability and durability.
Strong brands sell. As a brand owner you can even charge a premium without fear your sales may suffer. That’s the power of branding.
Well, building a strong brand is a long-term game. It requires a lot of internal and external attention. Internally, you monitor the quality of your product and service, advertising, timely shipping, customer service. Externally, you watch your competition, analyze user feedback, monitor your brand’s online reputation.
These above activities are hard to manage. Being a small or medium business, you don’t always have human and financial resources to manage and hone your brand’s identity. You start looking for shortcuts. Revenue comes into the focus, and branding is put aside for better times. Amazon FBA come in to help to get sales rolling. A Shopify site is probably set up too as a second revenue avenue.
What is Amazon FBA?
Amazon FBA (fulfilled by Amazon) is Amazon’s offering to businesses and companies that want to tap into Amazon’s multi-million visitors. Setting up shop with Amazon is relatively easy.
In simple terms, you need to go through these 4 simple steps to set up your Amazon FBA sellers account:
- Create your Amazon selling account and log in to set up FBA.
- Add product listings to your Amazon catalog and specify FBA inventory.
- Prepare your products for safe and secure transportation to an Amazon fulfillment center. You will need to follow Amazon’s packing guidelines and shipping requirements.
- Ship your products to Amazon: print ID labels and send the products over to Amazon.
Once Amazon receives your products in their fulfillment center, Amazon is ready to start selling your products. You need to replenish the inventory when needed.
What is Shopify?
Shopify is not Amazon’s alternative. View Shopify as an ecommerce platform that hosts your e-store.
Shopify is a set of tools. It’s your online store allowing you to publish and manage your product inventory. It gives you access to tens of payment methods. It offers paid and free addons to connect your online store to other services and platform like Facebook, Google, the same Amazon.
Setting up a Shopify store involves more steps compared to an Amazon store. You are basically building a web site from ready-to-use modules. You need a domain name, a theme, a set of addons. Your monthly fees will depend on what Shopify package and what tools you choose.
Amazon and Shopify – Who Wins?
With an Amazon FBA account and a Shopify store in place, business owners are divided about where to spend more of their effort and time.
We witness a lot of situations when Amazon wins over Shopify. Small business owners cannot spend the same amount of time managing sales on both platforms. They often go with the line of lower resistance. Managing Amazon sales is easier even if the recurrent Amazon fees may affect profitability. But we will not be going into the costs and fees on the two platforms. This is a separate topic.
Amazon winning over Shopify is also supported by numbers. If your business makes $200K in revenue per month on Amazon and barely $10K/month via Shopify, you lean on to Amazon.
As a business owner, you are still surprised why the same product is doing so well on Amazon and fails on Shopify. You think about it for a while and then carry on with Amazon. This is what we have faced with several of our current and former clients.
Are You Building a Brand by Selling on Amazon?
Now let’s talk about branding again. We were asking our clients if they are still building a brand by focusing on Amazon only. They were all affirmative – in their minds they are doing a good job in promoting their brand on this platform.
Our point of view is that they are wrong. Building a brand on a platform hosting millions of products and receiving millions of visitors daily is next to impossible. Let’s explain this point.
Amazon has over 150 million visitors per month in the US. Something like 10 million visitors in Canada. The multi-million numbers are valid for the UK, Germany, and other countries where Amazon is active.
Amazon is a Marketplace
Amazon sells millions of products from thousands of businesses and companies from local and overseas markets.
In the physical world, Amazon can be compared to a huge supermarket with large doors that are always open. The flow of visitors never stops. These visitors pass by your small corner and grab a product or two from your shelves from time to time. Because the flow of visitors is so big and so constant, these occasional sales turn into good revenue.
Do these users care about your brand on Amazon? No, they do. You are a convenience, a commodity. They throw your product in their electronic cart and move on to another product.
By selling your products on Amazon you have access to millions of visitors. But you don’t know your Amazon audience. You don’t interact with them at all: you don’t engage with them on social media or via email, you don’t give them special signs of attention with special perks or gifts, you don’t call them. You are just a seller. Those “give-us-your-review” emails don’t count.
Being a Seller is Not Bad
There is nothing bad in being a seller and making good money. This is a good strategy for a lot of small businesses. Some businesses may be in the survival mode and such sales are a breath of air.
At the same time, selling a product and building a brand are two different things. If you decide to sell your Amazon seller account to a third party, how much will it cost? The price will be just the price of the available product inventory. No premium for all the time and effort you put into it.
Amazon does not care about your brand. They care about their own brand and revenue they get from sellers. This is their business model, and this is ok.
Can You Build a Brand With Shopify?
Building a brand with Shopify or any other e-commerce platform, like WordPress, has a bigger promise.
Look at your ecommerce website as a physical boutique with its own windows and its own doors. You can shape the design and looks of your boutique the way you want. You can decide to invest more into design or into features. You can experiment with product photography, with product page layout, homepage features. You can set up a blog, collect and send emails, create custom promo offers.
By setting up shop online, you are launching in the business of both selling a product and building a community. Your growing community is what starts your brand. When a mention of your product category triggers your brand’s name in your customers’ minds, you have a brand.
What’s the Magic Formula for Online Brand Building?
There is no magic here. Good investors prefer to diversify their portfolios. We also recommend not to put all your eggs in the same basket. Don’t give your gold to Amazon only. If you are committed to your business, build a brand. A developed brand is easy to grow further, reinvent, or, ultimately, sell.
A mixed approach is also an option. Selling in both places – on Amazon and via your ecommerce site – with brand building on your radar all the time is good strategy.
Think about tomorrow!