In analysis previously published on ClickZ, we look at why it’s not always the dominant brands in the brick-and-mortar world who are winning online.
While incumbent market-leading brands are getting more sophisticated in their engagement with Amazon, it’s often new and emerging brands that sell on Amazon that are now benefiting from early-mover advantage.
As the rate of eCommerce growth as steadily outpaced total retail growth by a multiple of three to four times, Amazon.com’s growth has outpaced eCommerce by one to two times, giving it a dominant lead in many of the world’s most mature eCommerce markets. According to Forrester, Amazon drove 60% of total US online sales growth in 2015, capturing $23 billion more in U.S. eCommerce sales in 2015 than the previous year (up from $77 billion in 2014 to $100 billion).
Alex McCord of Compass Marketing, an agency which works with some of the world’s largest CPG brands: “We’re now seeing the advent of what I’ll call e-commerce native companies: companies that come onto Amazon and other e-retailers and who are able to gain traction through getting a ton of recent reviews. They know how to work the Amazon algorithm and then launch products that, from the perspective of a brand in the brick-and-mortar world, have as low as zero market share. But in the world of unbranded search on Amazon and other retailers, they’re enormous players.”
So who is winning on Amazon?
Profitero analyzed our Amazon FastMovers reports between January-May 2016 to rank the best-selling products at Amazon in several key categories. We then identified the number of products that featured in the top 100 best sellers by brand to determine best-selling brands by category.
We found that in Grocery and Beauty, the best-selling brand is often not the brand that dominates that category offline. Healthy snack brand KIND tops the Grocery best seller ranking at Amazon, while in Beauty, Pure Body Naturals is the winning brand with an average of 5,465 customer reviews. ArtNaturals takes the #3 spot with 5,512 reviews.
If we look at the way shoppers discover and consider products, search at Amazon is the dominant pathway to products. More shoppers go to Amazon before Google when they know what they are looking for, and either want to find it or research it, according to a survey conducted by BloomReach last year.
New and emerging brands like KIND and Pure Body Naturals are winning with Amazon because:
Shoppers are searching for specific attributes (e.g. natural, gluten-free), and can much more efficiently find products on Amazon than navigating physical stores
Emerging brands are more aggressively optimizing their product content to place favorably in search
These brands are also often not widely distributed in brick-and-mortar stores, so shoppers have been trained to look for them at Amazon
But as Alex McCord of Compass Marketing further explains, “eCommerce native companies are always looking to optimize. They’ve got algorithms and they’ve got very smart people looking to find ways to usurp the number one, two, three, and four brands for any CPG category. Figuring out how to hold your own once you do not make it to the top is just as important as it is making it to the top of unbranded search.”
In Part 2 of this post, we’ll be discussing the importance of customer advocacy at the digital shelf and which beauty brand manufacturer is winning on Amazon.
About Profitero’s FastMovers reports
At Profitero, we analyze the best-selling brands at Amazon across 10+ categories every month in our FastMover reports, monitoring Amazon’s Best Sellers daily in the US (more that 4.9 million products monitored) and UK (more than 2.1 million products monitored).