Nike is great at a lot of things. They are the world’s largest supplier and manufacturer of athletic shoes, apparel and equipment, and the world’s most valuable sports brand. But according to a separate article that quotes the CEO of Nike himself, even Nike is still exploring how to be successful in the Amazon marketplace.
The challenges companies face on Amazon are numerous, but let’s review the most common challenges and outline a path to success. There is a common expectation and belief that Amazon is going to behave like a traditional retailer; that Amazon is going to take inventory, establish a sales strategy, and focus their efforts on selling their products. This idea has left brands disconcerted and free falling into the obscurity of Amazon.
In sum, these companies establish commercial terms based on the traditional retailer experience, which constrain and limit their ability to invest in resources, growth, and innovation for the Amazon channel. They discount wholesale, provide MDF funds, and give additional dollars above and beyond their business norms, hoping this will incentivize Amazon to sell more but are often disappointed.
The problem is that companies must take 100% responsibility for results, just like direct to consumer e-commerce, but instead, they put the blame on the retailer for mediocre performance. They also staff the Amazon channel like a traditional retail relationship with a sales rep, which is completely misguided. The Amazon channel requires authority as a P&L owner and resources of the largest growth and direct to consumer opportunity you have. This standard is unrealistic for most because they lack information and experience to make informed decisions. The levers and tools that have traditionally worked in retail do not garner the same market responses on the Amazon platform. This leaves the company feeling bewildered and left with only a few comprehensible options: follow other non-market leading brands from 1P to 3P with the same non-performing
First things first, forget your expectations that Amazon is going to sell your product for you. Amazon is a platform for consumers to find products they want to purchase. The job of a brand is to create life-impacting products and to provide meaningful engagement that builds a relationship with the consumer. Let the consumer know you are there, and cultivate a trusting connection from that presence.
Hinge helps our clients understand their specific opportunity in the Amazon marketplace After establishing the foundational elements for success, we estimate how much share of that market we believe you could achieve with the apt strategies, capabilities and investments. The goal is to alleviate uncertainty, help our client understand, and fearlessly execute strategies to increase the probability of success, as we have mutually defined it.
Secondly, stop giving away the farm. Not all channels are created equal. Costs of doing business online with shipping, marketing, continuous search optimization, content development, graphic design, copywriting and promotions all need to be factored into an overarching business plan to distinguish what are viable commercial terms. The wholesale price should be set being cognizant of cooperative marketing, damage allowance, freight allowance, charge backs, and reporting costs. There is not an easy button. Each product has a unique profitability model based on cube size, shelf life and average sales price. We help our clients protect margins and allocate funds to attain the sales objectives and greatest return for their business with intentionality.
Lastly, be the leading force of the business. If you want to be successful, you must take 100% responsibility for the results of your business. We provide analytical insights to allow our client to make stronger decisions. From this, we source the expertise and speed to execute toward our desired outcomes. Most corporate organizations and group services are designed for optimal support of existing channels that have been developed over decades.
The Amazon and greater digital channels require a redesign of processes and capabilities for responsive and dynamic, daily and weekly engagement. Additionally, executive P&L authority needs to be delegated to the owner of this channel to make swift decisions for the greatest impact of what could be your fastest growth channel. The clear majority of organizations we engage with cannot shift culture and processes in a year or two, much less next quarter. Hinge has helped our clients fast track these outcomes by partnering to provide a complete turnkey service that aligns with our clients C-suite, and delivers end to end capabilities from negotiations, analysis, strategy, content development, marketing, promotions, demand planning, forecasting and execution. The speed, information, strategies and expertise have helped our clients go from millions per year in sales to millions per week.
Pioneered by former Amazonians, Hinge helps
businesses disrupt the Amazon marketplace in an age where
change is certain & fortune favors the bold.