Is Selling on Amazon the Cure for High Customer Acquisition Costs?

As emerging brands navigate an increasingly competitive digital landscape, many are turning to marketplaces (specifically Amazon) to acquire new customers.

As more direct-to-consumer (DTC) brands face heightened competition and rising cost-per-acquisition rates online, many have disinvested in their branded ecommerce experiences and doubled down on unique brand opportunities found on marketplaces like Amazon.

Global beauty accelerator SuperOrdinary has helped emerging brands drive growth through branded ecommerce and marketplaces — from Amazon and beyond. With its new “Amazon antidote,” a multi-faceted Amazon distribution strategy, the company has helped brands see an average lift of 88% on the site within the first year.

“There have been a lot of stories about DTC brands hitting the skids, some even filing for bankruptcy, and I think a lot of that is driven by intense marketing costs and low ROI,” said Julian Reis, Founder and CEO of SuperOrdinary in an interview with Retail TouchPoints. “This should encourage brands to think carefully about exploring Amazon as a viable channel to pick up some of that slack, because acquisition costs are already embedded in Amazon. Having a presence there and being able to connect with so many more customers through the platform is just one massive advantage.”

Reis shared his perspective on how the DTC landscape will continue to change, and how brands can capitalize on the unique value of marketplaces like Amazon — especially during critical selling holidays like Prime Day.

Retail TouchPoints (RTP): What are some of the market dynamics impacting your clients today, especially as they try to build their DTC businesses?

Julian Reis: The cost of acquiring new customers online is expensive — and that’s here to stay. That’s because it will only grow more challenging to drive customers to branded DTC websites. There are two key reasons for that:

  • Traffic is much more dispersed across many more platforms. As we bring more brands into the market, as we start using creators to drive traffic, and as algorithms change, all of these factors feed into a more challenging and complex environment.
  • As consumers, we are inundated with so much content these days, which makes it incredibly difficult to find the brands we want. For brands, that makes it much more difficult to stand out.

That’s why I believe DTC websites are on the decline. Brands need to be where the consumer is and, often, they’re on these mega-marketplaces — especially Amazon.

RTP: What unique challenges do brands face as they work to build their presence on Amazon?

Reis: Amazon is such a monster to manage, and you really need to understand all the capabilities to optimize your brand. It’s not just about listing your product; it’s about understanding how to engage with reviews and all the different nuances. Even though we have clients in other categories, we’re truly focused on beauty, so we need to make sure that these brands perform, particularly in times like Amazon Prime Day, which is coming on July 11.

Amazon is all about controlling the Buy Box and, usually, you get into the Buy Box based on price.  But we help brands control that Buy Box by helping them with the overall brand account, including brand messaging, because we know brands don’t have the resources to manage everything. They especially don’t have the time to manage unauthorized sellers who try to resell damaged or used products, and with our new services, we’ve been able to remove those unauthorized sellers at an almost 60% success rate.

RTP: You have helped brands grow not just on Amazon but through international marketplaces like Alibaba. Can you distill any lessons from your global expertise that can help brands be successful on Amazon?

Reis: Brands need to be a lot more flexible and understand where growth is coming from. If you’ve seen incredible growth over the last three or four years, don’t expect that to continue. It’s important to be on the offense and make sure that you’re prepared to enter new markets because that takes three times longer. There is so much brand fatigue out there, so you need to be prepared and plan to put your best foot forward, making sure that your presence on these platforms is crisp.

In terms of growth, we have seen an incredible bounce-back in the Asian markets, particularly in China, which I know some people in the industry were fairly concerned about. But I believe global markets are picking up in a meaningful way, which gives me a lot of excitement. As brands’ DTC sites go down, we encourage them to tap into the massive opportunity in international markets and marketplaces.

RTP: Do brands every try to resist selling on Amazon because they feel that it degrades their brand?

Reis: I think the sooner brands recognize that although this isn’t always a clean environment, it is a very real channel for them because that’s where the consumer is. It’s inevitable.

We’ve seen some brands that have straddled the line, saying that it’s brand degradation to be on Amazon or that it doesn’t fit with their mission and what the brand stands for. But ultimately, the consumer wants convenience, free shipping through Prime and one-click checkout. They don’t want to go to a High Street retailer website that has all these complications.

You just need to make sure you have control over the brand and what people are seeing about your brand. If you don’t have that control, you’re subjected to some information [going] missing, which ultimately could damage your brand. At SuperOrdinary, we’re a bit control obsessed, so we keep all the functions in-house to make sure we can focus on brand protection, content, advertising operations and fulfillment. [This allows us to] create a top-tier experience for the customer. Then, we feed back all the information we get from Amazon, which provides very detailed analytics around brands, to create detailed reports on performance.

RTP: What are the unique ways brands can drive traffic to their products or storefronts on Amazon?

Reis: Amazon is developing a lot of exciting content tools to drive demand generation — tools that are not available on other websites.

For example, [SuperOrdinary works] with creators that can create their own wish lists through Amazon so they can drive traffic directly to specific products. This is a really nice way to create demand for your product without spending money on advertising. We’re always thinking of ways to drive traffic from other platforms to Amazon to drive those sales up.

Going forward, we see the top of the funnel being a very big, important advantage for us, because we have all our creators that we can connect to brands. If you think about what customer acquisition costs are, it’s really to engage with these creators at scale, which is very time-consuming and expensive for brands doing it alone. Sometimes a piece of content may hit, but most often, it doesn’t. That’s why, as a company, we’re building an ecosystem around these creators and helping immunize brands from some of these cost increases.

RTP: And how can brands best optimize their results on Prime Day?

Reis: The consumer continues to look for very special deals, obviously. But typically, we’d see low consumer spending the first half of the year because consumers were getting ready for Prime Day. But this year, we’ve seen incredible growth in the first half of the year, and Amazon itself has just continued to grow and grow, so we think that this Prime Day is going to absolutely kill it.

It’s really important for brands to hit hard on these events because sometimes, they can get up to 30% of their annual sales in just one day. Because we help brands with their advertising, doing collaborations and setting the brand up — which is all a very technical exercise — it takes a lot of preparation over several months.