Amazon: friend or foe? This presentation looks at the ways to work with Amazon, its opportunities and threats for brands and the winning distribution strategies for you.

1. 1
Amazon
is eating
the world
Thursday January 10th 2019

2. 2
Everyone is familiar with Amazon
-
The Marketplace
-
Amazon is valued at around 1 trillion dollars, as of
february 2020.
Business Users

3. 3
A logistics infrastructure
-
50Prime Air planes, Fulfillment by Amazon
Beyond the marketplace, an e-commerce ecosystem
-
Business Users
An ever increasing and
accessible inventory
-
Amazon Business & Amazon Basics
Deeply rooted customer
interfaces & services
-
Alexa, Dash, Prime

4. 4
Most sold product segments Fastest growing product segments
What are the best selling products on Amazon?
-
Home & Kitchen
> 5,5B$
Publishing
> 5B$
Sports & outdoors
> 4B$
Consumer electronics
> 8,5B$
Luxury Beauty
> 400M$
Pantry
> 500M$
Grocery
> 1,5B$
Furniture
> 1,5B$
YoY
47%
YoY
38%
YoY
33%
YoY
33%

5. 5
But today
Let’s focus on what
Amazon means for
vendors

6. 6
Anker is a Chinese company selling electronics, like
smartphones and laptops chargers.
Do you know Anker ?
-
M $ of total sales in 2017567
Bn $ valuation in 2017+1

7. 7
At the beginning, Anker was…
-
A simple product page on Amazon
In 2011 Steven Yang created Anker and commercialized
its first charger on Amazon marketplace. Knowing the
nuts and bolts of the platform, Steven Yang quickly
makes Anker the best ranked smartphone charger of the
marketplace. Only 1 year after its launch, more than
1000 orders are passed every day.

8. 8
As you understood...
Amazon is an eldorado for
vendors

9. 9
Amazon is part of millions of customer’s daily usages
150 M Amazon Prime
subscribers 64% of US households
are Amazon Prime
members
55 % of product research
are initiated via
Amazon US

10. 10
And it works for millions of SMEs in the world
300Knew SMEs started to sell their
products on Amazon in 2017
40M
of products were sold by
SMEs during prime day 2017
(+60% YoY)
140KSMEs made more than
100.000$ of Total Sales on
Amazon in 2017.

11. 11
But an eldorado that can
turn into hell.

12. 12
Amazon sped up the fall of Toys“R”Us
-
Why is Amazon responsible ?
In 2000, the world toy champion makes a strategic mistake and signs a
10-year contract with Amazon to become its official toy supplier. In
return, Amazon demands, among other things, that the company
abandon its website, pay it $50 million a year, plus a percentage of
sales.
But Amazon does not respect its exclusivity contract and is expanding
its offer by bringing new toy retailers into its marketplace. Toys "R "Us
takes Amazon to court and gets $51M in 2006. The company can then
launch its own sales site, but will not manage to catch up.
references
100K8K
references

13. 13
Amazon weakens Hachette for about 8
months of negotiations
-
Why is Amazon responsible ?
In 2014, Amazon wants to implement a single price of $9.99 for e-
books in the United States. Hachette refuses to lose its margins.
Amazon then takes retaliatory measures: longer delivery times,
impossibility to make pre-orders, while Hachette relies on press
actions and influential groups.
After 8 months of arm wrestling, Hachette finally retains control of its
prices while having financial incentives to lower its prices (more
visibility in the event of a promotion).

14. 14
Whether I should go on
Amazon ?
What should you do ?
-
Better than knowing
How to play with
such a giant ?
The real question is

15. 15
Websites describe unethical
practices of some vendors
But Amazon’s threat is just one threat among others over the marketplace
-
Solutions are emerging to help
companies to choose the best products
for sale on Amazon

16. 16
Risks related to the platform
intermediation
Opportunity cost of not being listed
on the platform
• Access to a database of more than +310 M
active clients and +100M Prime
subscribers
• Facilitated geographic expansion
• Ease of execution and low entry barriers
• Margin deterioration
• Increased competition and price pressure
• Dependency to a third party
• Brand image deterioration
• Loss of client direct contact and data
Amazon, blessing or curse for my business ?
-

17. 17
3 Steps
to efficiently think about your distribution
strategy at the age of Amazon
Get to know them !
Know yourself !
Connect : chose the best connection
mode
1 -
2 -
3 -

18. 18
1 Get to know them !
Amazon, Ok but which one ?

19. 19
You probably know the Marketplace…
-

20. 20
Other customizable formats allow a better brand image management -
E-Boutiques on Prime Now Amazon Branded Store on the marketplace

21. 21
And a galaxy of tools allowing Amazon usage to be very modular
-
Amazon Echo Advertising Amazon Pay
Interact with clients in
a personal way and
offer them original
experiences.
Convert more
visitors into
customers on my
own website thanks
to Amazon's
payment brick.
Amazon Dash
Create recurrence
for convenience
and everyday
purchases.
Fulfilment
Outsource the
preparation, packaging
and shipping of goods to
customers. Amazon also
manages product
returns.
Find, capture and
engage customers
along the way
through advertising
solutions.

22. 22
Take advantage of my customers' interactions with Amazon touch points :
Amazon Pay
-
Allsaints has integrated
AmazonPay into its e-commerce
site, reducing its checkout time
by 70 seconds.
The results are there because
Allsaints has seen 24% of its
customers using the Amazon
Pay solution and observed a 15%
increase in their average
shopping cart.

23. 23
2 Know yourself
!
What is my offer ?
What is my value proposition towards
Amazon ?

24. 24
Is my value proposition compatible with Amazon distribution ?
-
Coca-Cola is above all an emblematic product
and brand, whatever the distribution channel.
Coca-Cola does not differentiate itself through a
specific distribution strategy or customer
relationship. Distributing on Amazon then presents
the same constraints as distributing through its
usual distribution channels.

25. 25
Is my client relationship part of my value proposition ?
-
Chewy maintains an intimate relationship with its
customers through a personalized 24-hour telephone
customer service and the sending of personalized
words (birthday cards, words of condolence) at major
events that mark the lives of pet owners.
As advice is not very present in the Amazon
experience (the user is left to his or her own devices
and customer service is limited to after-sales service),
it would not be advisable for Chewy to distribute
its products on Amazon.

26. 26
Is my product distribution part of my value proposition ?
-
Dollar Shave Club offers a unique shopping and delivery experience that cannot be experienced through the Amazon platform at this
time. The customer subscribes to Dollar Shave Club and receives their razors on a recurring basis at a frequency they have previously
determined, and the unboxing experience captures the brand's offbeat universe and gives the customer a sense of belonging to a community.

27. 27
Is my positioning compatible with Amazon distribution ?
-
While Monoprix was signing a partnership with Amazon, Michel-Edouard Leclerc did not deny having been approached as well, but
explained that this was not compatible with Leclerc's positioning.
“Amazon has become synonymous
with accessibility, in terms of price
and availability, and this is
something we have been saying for
30 years. ”
Michel-Edouard Leclerc, CEO of Leclerc
“We prefer to be distributed
on our own rather than
to let Amazon take over
our commercial image ”
Michel-Edouard Leclerc, CEO of
Leclerc
Conversely, Leclerc continues to work on its competing offer
from Amazon: The Drive which represented a considerable
growth relay for Leclerc is now completed by the Pedestrian
Drive.

28. 28
2 Know yourself
!
What do I have that could be of
interest for Amazon ?

29. 29
Monoprix, an access to the French food retail for Amazon
-
Monoprix launches on Amazon Prime Now: more than 6,000 products are now available for delivery within a two-hour
time slot for Parisians who are members of Amazon Prime.
Monoprix’s value
for Amazon
• A partner in a new market in
growth: food in France
• Purchasing power
• Premium positioning
What Monoprix negotiated
• Same prices than those on Monoprix.fr
• A dedicated e-shop

30. 30
Sears Auto Center offers a physic distribution network to Amazon
-
The U.S. distribution group has announced that its Sears Auto Centers will offer a full installation and balancing service for any tire
purchased on Amazon: the customer selects their tires, their Sears Auto Center and the desired date and time for the tire installation and Sears
will contact them to confirm the appointment.
The value of Sears
for Amazon
Growing in a sector that requires a
physical distribution network to
develop
What Sears
negotiated
Maintaining customer relations
and obtaining customer data: here Sears
auto center is not disintermediated
by Amazon while the Sears group is in
trouble.

31. 31
Still, negotiating with Amazon is not an
easy task.
-
Nike succeeds in obtaining a commitment from Amazon to
proactively combat counterfeiting by itself removing unauthorized
distributors from the platform rather than waiting for complaints from the
brand, while this is denied to the Swatch Group.
Bn $
of Total
Sales
in 2017
34
8
Bn $
of Total
Sales
in 2017

32. 32
3 Connect: chose the best
connection mode
Which strategy delivers on Amazon ?

33. 33
Nike.comShould-I distribute all
my product portfolio ?
-
Nike only distributes a selection
of entry-level products
on Amazon and prefers to distribute
its top-of-the-range products
and the most personalised in its own right
Nike on Amazon

34. 34
Are my products at risk in front of Amazon Retail ?
-
In 2016, Amazon launches a notebook stand very similar to the one from Rain Design, best seller
on the platform for 10 years with a 5-star rating for 2500 customer reviews, and markets it at half the
price, thus degrading Rain design's sales and margins.
% of Amazon Basics’s
products have a higher
grade than 3,5
Amazon Retail, a key pillar of Amazon’s
strategy
Amazon analyzes feedback from users of
all the products to develop perfect products
and competitors.
Objective :
To sell its own products and increase its margins
96
$
43
$
20

35. 35
Review my product portfolio, to better understand what I can distribute on
Amazon ?
-
FABERNOVEL has been commissioned by RAJA, the
leading European distributor of packaging products, to
carry out a study on the impact of Amazon Business.
● What threat does Amazon Business represent
for a player like RAJA?
● Can or should RAJA distribute its products on
this platform?
To answer these questions, FABERNOVEL worked with
RAJA on the redefinition of its value proposition
(between commodities distributor and logistics service
provider) and thus helped RAJA to identify which
activities are most at risk with respect to the Amazon
Business model.

36. 36
Are my products already
distributed on Amazon by
third-party vendors ?
-
LVMH refuses to market its products on Amazon
because it would degrade their brand image.
However, some products are already offered on
Amazon by third party vendors.
Why not market your products yourself and
thus control your brand image through
product descriptions and regain margin?

37. 37
Only distribute on or co-
create with Amazon ?
-
In November 2017, Calvin Klein partners with
Amazon and creates an exclusive collection
available only on Amazon and in pop-up stores in
New York and Los Angeles.
A unique experience is offered in the pop-up stores:
the underwear is customizable, prices are
adjusted in real time as on the Amazon site and
the customer can see it by scanning the product's
barcode, and the fitting rooms are equipped with
an Amazon Echo allowing the customer to ask Alexa
questions or control the light in the rooms.

38. 38
How can Amazon enrich my customer
experience ?
-
Volvo has partnered with Amazon UK in the summer of 2018 to offer
a seamless customer experience: have a Volvo V40 delivered to your
home free of charge for a test drive.
Amazon Prime members living in London, Birmingham, Manchester and
Edinburgh were able to try the Volvo V40 for free by simply choosing a
slot on Amazon.
The car is delivered to the front of the customer's home by a Volvo
specialist who then accompanies the customer for a 45-minute test drive.

39. 39
For the vendors…
Better than a strategy on
Amazon, a strategy at the
age of Amazon.

40. 40
3 reflection steps to efficiently think about its distribution strategy at the
age of Amazon
-
Get to know them1
Know yourself2
Connect3
Connect
to existing
networks
Create
your own
networks
Easy to do
Hard to do
High
value
Limited
value

41. 41
Get to know them1
Know yourself2
Connect3
Connect
to existing
networks
Create
your own
networks
Easy to do
Hard to do
High
value
Limited
value
3 reflection steps to efficiently think about its distribution strategy at the
age of Amazon
-

42. 42
Some key figures to have in mind on e-commerce and Amazon in
France
-
30MOnline shoppers in France
(+3% YoY)
29MUVPM on Amazon FR
(+23% YoY)
4MUVPD on Amazon FR

43. 43
$83,7Bn
+23% YoY$38,5Bn
+42% YoY
$6,7Bn
+130% YoY
Amazon ranks third behind Google and Facebook for advertising
spendings
-
World advertising spendings Q1-Q3 2018
Source : announcements of financial results from several sources

44. 44
Product research increasingly often starts on Amazon
-
Source: BloomReach Survey, 2016
Starting point of a product research

45. 45
Amazon, does it only concern those selling on the platform ? Not only…
-
2 categories of vendors in Amazon’s vision
Endemic vendors
= Those selling on Amazon
Non-endemic vendors
= Those not selling on Amazon

46. 46
Earned
media
growth
You already know Amazon’s flywheel, it also works for media
-
The classic triptych Paid, Owned, Earned can also be found on Amazon.
The most important component is Earned Media and in particular
ranking on research results.
Paid
media
Owned mediaEarned media

47. 47
What is Paid / Owned / Earned equivalence on Amazon ?
-
Paid media
> Sponsored Products
> Sponsored Brands
> Product Display Ads
> Amazon Display Ads
Owned media
> Products description
> Amazon Stores
Earned media
> Ranking search
> Consumers comments and
grading
> Recommandation widget

48. 48
What are the available levers to use Amazon ?
-
Endemic vendors Non-endemic vendors
✓ Paid media
✓ Owned media
✓ Earned media
✓ Paid media
✘ Owned media
✘ Earned media

49. 49
Let’s start with Paid Media, there are 2 main families of Amazon
advertising products
-
RETAIN
CONVERT
ENGAGE
REACH
Generate new long-term
demand
Generate new demand in the
short term
Valuing existing demand
Reactivate a past request
AmazonSponsored
Ads
AmazonDisplay
Ads
Objective Format

50. 50
Amazon Sponsored Ads comes in a variety of 3 formats :
#1 Sponsored Products
-
Mode of purchase
● CPC bidding
Targeting
● Key words
● Automatic

51. 51
Amazon Sponsored Ads comes in a variety of 3 formats :
#2 Sponsored Brands
-
Mode of purchase
● CPC bidding
Targeting
● Key words

52. 52
Amazon Sponsored Ads comes in a variety of 3 formats :
#3 Product Display Ads
-
Mode of purchase
● CPC bidding
Targeting
● ASIN
● Product category

53. 53
Amazon Sponsored Ads, how do you buy some ?
-
Pay Per Click
Self-service
platform
Stock
management
Lost buy Box
Benchmark :
€0,5 CPC

54. 54
The Buy Box, what it is : here Garnier benefits from the Buy Box
-

55. 55
In case of a Lost buy Box, the brand is not the one listed on the button,
but a vendor.
-

56. 56
The Buy Box is the number #1 sales
contributor
● Percentage of perfect orders: 95%.
● On-time delivery: 97%.
● Percentage of order traceability: 95%.
● Late delivery rate: <4%.
● Cancellation rate: <2.5%.
● Delivery time: <14 days
● Customer response time: 90% of responses within 24
hours
Eligibility criterias
to the Buy Box
La Buy Box, why it is important, and how to minimize the rate of Lost
Buy Box
-
Sources : XSellco, CPC Strategy
90%of purchase are directly
done from the Buy Box

57. 57
Amazon Display Ads
-

58. 58
An advertising campaign for an endemic vendor lies in a strong
collaboration between commerce and media
-
Media studio
> Provide reporting
detailed and in real time
performance: by SKUs,
by franchises,...
> Alert the brand if low diffusion
or sudden evolution
of the conversion rate
KAM / e-KAM
> Provide a complete and
exhaustive SKU listing so as not
to restrict distribution or lose
potential
> Take into account and share the
specificities of each retailer: lost
buy box rates, promotions,
special operations, etc.

59. 59
● Free self-service product
● Build a customised mini-site with all or part of its product
catalogue
● Integrate branded content (e.g. video) to promote it
● Redirect traffic to awnings with Amazon Sponsored
Brands format
Based on drag-and-drop modules, the Blinds help
the consumer to know the product offer of a
brand
Amazon Stores, brand corners dedicated to highlight product catalog
-

60. 60
Being well listed on Amazon, a
combination of relevance and
performance
-
Amazon's A9 algorithm is mainly based on
performance: Comparison of sales
and customer opinions in relation to the competition.
It is also based on the relevance :
content of the product sheet
Working well
the content of the Amazon
product sheets
will promote conversion
and thus impact
the ranking.Key factors are :
● Sales
● Product comments
● Stock availability
● Amazon’s margin

61. 61
71% of the factors impacting the act of purchase are related to the
product sheet. This one is key.
-
Content
External characteristics
Product information
Additional images
Positive comments
Price
Brand
Colors
*Source : Amazon
34
15
22
20%
4%
5%

62. 62
Quick anatomy of a good product sheet
-
Photos du produit
haute qualité
Produit en stock
Bullets points
détaillés
Titre détaillé
Commentaires
clients

63. 63
Precise and optimized price
Highlight of color choice in the description
Bullets and description bring
useful information to the product,
reassures users and encourages them to
purchase
https://www.amazon.fr/Bourjois-Rouge-Velvet-Rouges-
L%C3%A8vres/dp/B00J8K7JNY/ref=sr_1_1?s=beauty&ie=UTF8&qid=1538994304&sr=1-
1&keywords=bourjois+rouge+a+levre+edition+velvet+326011
Quick anatomy of a good product sheet
-

64. 64
On the opposite, what is a bad product sheet
-
Incomplete title :
quantity, format, color
https://www.amazon.fr/Rouge-L%C3%A8vres-Hadid-LOr%C3%A9al-
Paris/dp/B074N359ML/ref=sr_1_1?ie=UTF8&qid=1538993452&sr=8-
1&keywords=Rouge+%C3%A0+L%C3%A8vres+Mat+Gigi+Hadid+L%27Or%C3%A9al+Paris
Description of the product that does not
provide additional information.
Informative chips with no added values.
Repeat the same keywords
has no SEO interest

65. 65
Pages A+ allow detailed product
information
-
&+18%
+9%
of sales increase on average
*Source : Amazon
of views increase

66. 66
Amazon product sheet can also help to be better listed in SEO on
Google
-
1
4
1
2
On the Galaxy J3, Amazon product sheet
ranks 4th
On the Galaxy J5, Amazon product sheet
ranks 2nd just behind the brand website

67. 67
In the end, earned media growth is a result of upstream work
-
Earned
media
growth
Paid
media
Owned mediaEarned media

68. 68
● Amazon has through its community a club of testers
called Vine.
● These testers allow to initiate comments on a new
product and thus create confidence for a potential
buyer.
● Vine reviews are considered useful by 76% of Amazon
site visitors.
● There are no eligibility criteria, and the price is variable
according to product categories.
● Knowing that the first filter applied on Amazon is the
"comment > ⅗" filter, this eliminates products without
comments.
● The advertiser does not have a direct relationship with
the testers, Amazon is responsible for shipping the
products to be tested to the appropriate people.
Amazon Vine can help to trigger comments on your product
-
90%des visiteurs d’Amazon lisent
les commentaires clients

69. 69
Example : Nivéa brush PURE SKIN
-

70. 70
Amazon also integrates product demand projections and total revenue data by category into ARA,
per product, the other products looked at before purchase (ARA Premium).
The product conversion rate and the volume of visits per product is not disclosed.
Pilote your Amazon sales performance with ARA (Amazon Retail
Analytics)
-
ARA measures the performance of
products sold on Amazon, in
particular 2 KPIs are important to
Amazon :
1. %Lost Buy Box = nb of pages
viewed in LBB / nb of pages
viewed total
1. %Replenishable Out Of Stock
= nb of out of stock page
views / nb of total page views

71. 71
Advertising on Amazon is like Paris 18th district, a place full of potential
where to invest
-

72. 72
Where to start ?
-
Which type of vendor are you ?
Endemic vendor Non-endemic vendor
• Apply for Brand Registry if your products are
sold on Amazon without your control
• Carry out an Amazon presence audit (content,
product sheets, etc.)
• Anticipate the organizational aspect between
trade and marketing
• Identify the criteria for targeting affinity with
its products
• Launch a first test campaign to benchmark
Amazon vs. the other advertising used networks.

73. 73
the Future
Distribute
Thank
you.
CONTACT
Joachim Renaudin
Lead Analyst
+33 6 85 17 94 23
joachim.renaudin@fabernovel.com