AmazonBasics: A strategic guide to remain competitive

Tell us: What do you do when you need to buy something?

Many consumers nowadays head straight for Amazon to browse what’s available and within their budget.

This behavior is confirmed by research firm Survata: 49% of U.S. consumers’ first product search starts on Amazon.

In a sense, Amazon acts more like a traditional search engine than a traditional retailer.  

Consumers have abandoned Google for the retail giant to use as their primary search engine. Even Eric Schmidt conceded his company’s loss in Google searches back in 2014:

This means a product search on Amazon is a strong signal for purchase intent. Take advantage of this pivotal (and transparent) moment in the Amazon customer journey.

Your product can be found by these interested shoppers if it is:

• unique
• fits a niche
• in-demand
• listed with keyword-rich descriptions and high-quality images.

Marketplace success can be further cemented by highly positive reviews and ratings.

Retailers who’ve optimized their page listings and marketed their products in creative ways have even achieved viral success.

But here’s the rub: when customers buy your product on Amazon, the customer isn’t yours. The buyer data belongs to Amazon -- their name, address, search terms, clicks and keywords strings.

This kind of big data gives the company incredible product insights that are ideal for developing new products for their private label brands.

And as Amazon took notice of retailers’ skyrocketing success, they wanted a slice of that market share. If a product is a viral hit, Amazon might try to make its own private label version (AmazonBasics) and offer it at a significantly lower price. Now instead of seeing Amazon as a multichannel blessing, retailers may view their hit product as a curse.

So don’t get comfortable. You’re simply a guest in Jeff Bezos’ marketplace.

But this new reality can help fuel your development as a brand.

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Your AmazonBasics strategy

With AmazonBasics’ strengthening position in their own marketplace, you might hastily pull your product from the marketplace. Your next move might be to invest in SEO and SEM to bring attention to your own eCommerce store.

No matter how hard you try, there’s no way to outspend Amazon in advertising.

But think of Amazon’s move to launch an AmazonBasics version as a signal of high sales volume, warranting their own entry into that category.

Study Amazon’s moves, their product listings, marketing and sales offers. Review comments and complaints meticulously to see if there are aspects you can improve upon.

Look into the history of their products. How many are still there? How quickly do they remove a listing if a product isn't a hit as originally forecasted?

You’ll notice Amazon changing their pricing model on a frequent basis to test buyer sensitivity.

Based on your study, you can do one of three things:

1. Compete by delivering a better price, a better shopping experience, or better marketing (thorough product listings, social sales, referrals or affiliates).Compete on quality. Just because there’s an AmazonBasics patio umbrella doesn’t mean the company will create a product line with varying colors, materials or finishes. AmazonBasics is targeted towards value-oriented buyers. But not all buyers are swayed on price alone. Or re-frame products as “On Sale” despite costing more than Basics. The value of the premium offering at a discount could be enough to convince a particular buyer segment to Add to Cart.Or simply leave the category.

AmazonBasics was created to sell profitable products at high volume. If you can differentiate your product catalog with niche or high-quality features (and positive customer reviews), you can protect your products from getting edged out of a category.

RELATED: [3 strategies to grow your Amazon eCommerce business]

Image screenshot of AMAZONBASICS HOMEPAGE

Emotional > Transactional

It’s challenging to find news articles that don’t bemoan Amazon’s dominance. The retail (and search engine) giant does a few things incredibly well, particularly providing a seamless shopping experience.

One thing that Amazon lacks (and where you can shine) is the establishment of an emotional connection between the buyer and your products through branding and marketing.

Consumers make emotional purchases: buying the same baking flour that grandma used in her recipes, fast relief for a crying baby, a lovely diamond necklace for that special someone, a Harley-Davidson for his 55th birthday.

Compare that to transactional purchases with daily deal sites, CPG brands or AmazonBasics. Daily deal sites rely on extreme discounting to gain customers, who rarely come back for a second purchase. This strategy also led to their demise.

Shoppers are looking to develop genuine relationships with brands who understand who they are. You can convey this through better branding, genuinely personal marketing, and a better product thanks to insights from customer reviews and feedback.

If you’ve made a strong emotional connection with the customer, they’d go back to the Orders page and click the “Buy it Again” button. Or ideally, they’d purchase it directly from your website.

Diversify

AmazonBasics isn’t the death knell of your product line. Let its dominating presence propel you to better create and market your products, and provide superior customer service.

Also, think about your overall business strategy. We always recommend diversifying your sales channel, and to even experiment with other marketplaces or by going wholesale. Test your own product catalog by offering niche or hard-to-find products that have minimal risk of being targeted by AmazonBasics.

When you’re ready to expand, TradeGecko’s inventory and order management software works with Amazon to streamline operations and help you reach more customers worldwide, 24/7.