October 18: Amazon Weekly News Digest
Is Google going to become a marketplace? Amazon eliminates minimum order requirement for free shipping, and other need-to-knows
In the midst of brands, consumers, and even regulators considering how much power Amazon exerts over retail these days, a new player could be emerging.
Also in this week’s news digest:
What Amazon’s new $0.01 order requirement means for brands
Amazon seeks sponsors for its 2019 toy catalog
New black-hat seller tactic: Facebook chatbots to drive incentivized reviews
What Jeff Bezos wants
Is Google going to become a marketplace?
This week we saw an announcement that suggests Google is looking to get into the world of commerce marketplaces rather than simply directing shoppers to 3rd party sites through paid and organic search:
Shoppers can now buy from merchants directly using google’s checkout and payment processor. This is a huge development as many shoppers already have their payment details saved with Google. It also means that purchases are covered by a Google guarantee and google handles returns and refunds. This recreates the sense of confidence customers have with shopping on Amazon.
Personalization and AR “lens” features, creating an engaging shopping experience for both exploration and reordering.
Find products both at local stores and online; and track prices for each merchant to be notified of price drops.
A potentially big differentiator to Amazon: Google will offset the carbon emissions generated from shipping each order. With Amazon’s free one-day shipping (event on low-value products), some shoppers are recognizing that convenience comes at a bigger cost. Google is appealing to the ethical shopper.
What does this mean for brands?
A small but growing number of shoppers are unhappy with Amazon’s dominance and what it means for competition and the environment. Of course, many brands feel the same way!
Google arguably has the most to lose from Amazon’s rapid dominance of online retail. They are losing ground on ad revenue growth, and building an attractive marketplace alternative is one way to stem the tide. New numbers from eMarketer show that Amazon is growing their search ad revenue at a rate of 30% year-over-year. So - watch this space.
2019 toy catalog seeks sponsored placements
According to documents obtained by Bloomberg, Amazon is charging brands to sponsor placements in this year’s toy catalog. The figure is said to be $2 million to get placements on the list, and the more sponsors pay, the more of their own products they can nominate to appear on the list.
What does this means for brands? Have you heard? It’s pay-to-play these days. However it does seem that Amazon was fairly opaque in how they did (or didn’t) display that it was a paid placement, which has drawn the ire of consumer watchdogs.
Amazon offers free shipping on inexpensive items
Vox reported this week that Amazon has eliminated minimum order amounts on what seems to be its entire first-party (vendor) catalog. Meaning that a $2.00 toothbrush could be shipped with free one-day shipping, rather than the previous $25 mininum order value.
What does this mean for brands? Vendors have seen this movie before: Amazon experiments with lower prices, finds that shoppers like it, then hold out their hat to get Vendors to fund the discounts.
Be prepared for tougher pricing negotiations. I discussed some ways to approach these in our Office Hours call this week, including considering moving to Seller Central.
Other things we’re reading:
Amazon Sellers Are Using Facebook Chatbots To Cheat Their Way To Good Reviews: Facebook ads touting “free” products are actually fake review programs commissioned by Amazon sellers. This is totally against the rules, of course, and not advised. But you should always know what unethical sellers are up too.
Beauty R&D teams are leaning on skin-care quizzes. Cult skincare brands like Curology and Tula are finding treasure troves of data from consumers who are interested in personalized products - discovering new niches and needs to focus on.
Settle down if you want to read this epic article that provides an insight into the mind and motivations of our retail overlord in What Jeff Wants. The writer spent 5 months interviewing current and past Amazon employees to learn more about what the future of retail (and…. space exploration?) looks like under his watch.