August 27, 2024 • 41 mins
What if you could navigate Amazon's evolving marketplace and come out a winner? In this episode of Brand Fortress HQ, we make sense of the rising competition from Chinese sellers and platforms like Temu, and what it means for your brand. Discover Amazon's bold strategy to create a lower-cost marketplace segment, allowing Chinese manufacturers to sell directly to consumers, and the potential fallout for premium brands. Learn how government-subsidized shipping and tariff exemptions give Chinese sellers a leg up and explore the effects on low-priced sellers already established on Amazon.
But don't worry, we're not just here to spell out problems; we're offering solutions. U.S.-based brands can still carve out a dominant niche by leveraging targeted customer marketing and emphasizing a strong brand identity. We dive deep into understanding American consumer preferences and crafting a resonant brand message. You'll hear about the importance of identifying your customer avatar and tailoring your message to build loyalty and stand out from price-focused competitors. This episode is your playbook for capitalizing on the aggressive advertising strategies of Chinese sellers while maintaining a robust presence on Amazon.
Lastly, get the lowdown on the competitive landscape as Direct-to-Consumer (DTC) sellers flood the Amazon marketplace, driving up advertising costs and ratcheting up the competition. We highlight strategies for building a strong brand and maintaining direct customer communication to foster loyalty and repeat sales. Learn why strategic pricing, value addition, and offering warranties or guarantees can provide your customers with peace of mind and cement your brand's position. This episode is packed with actionable insights to help you navigate and thrive in Amazon's rapidly changing ecosystem.
🚀 Transform your brand on Amazon by building a powerful customer list with the After Purchase Funnel Blueprint course. Click here to get the full course for free.
➡️ Ready to go deeper into your Amazon FBA journey to accelerate your success? Get your hands on ALL of the Brand Fortress HQ resources, mentorship, and knowledge base by visiting us at BrandFortressHQ.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome everybody to the Brand Fortress HQ podcast
For this episode.
We are live again on LinkedIn,and today what we're gonna be
talking about is your brand'sfuture on Amazon, specifically
talking about Chinese sellersand the battle for brand
survival, and I think this is areally important conversation
that we had prior to this thatwe wanted to bring to the
(00:20):
podcast, just because some ofthese are continuing changes,
but understanding kind of thedetails and what's happening in
the landscape, especially whenwe start looking at overseas
sellers and what impact that hason products that may have
worked in the past before thatprobably won't work in the
future, and then also brandsthat, quite frankly, aren't
going to exist, at least fromthe U S perspective, anymore on
(00:40):
Amazon in the next couple ofyears.
And then on the ad side, we'regoing to talk a little bit about
how things are changing overthere as well.
So I'm going to start off with,as we started this discussion,
matt, what maybe kind of piquedyour interest the most as we
talked about brands' futures onAmazon and how things have
changed with Chinese sellers.
Speaker 2 (01:02):
Well, I mean, the biggest thing that I've been
paying attention to in the spaceis this new marketplace and I
don't know if it's a separatemarketplace or what, but it's a
lower cost place of Amazon thatit looks almost as if they're
giving Chinese manufacturers theability to sell direct in its
(01:22):
own kind of low price corner ofAmazon, which I mean that's
super interesting, and there's alot of people that shop just on
price and are going to Amazonbecause they can get things for
the cheapest that they can.
Interesting how that plays outand how hard Amazon is going at
(01:45):
courting these Chinesemanufacturers to sell on this
kind of marketplace to competewith Timu or Temu or Shine or
however you pronounce, thoseother lower cost marketplaces.
Speaker 3 (01:58):
Well, it's interesting, as you were
mentioning, that one of thethings that honestly didn't come
to mind the other day when wewere discussing this, but it
kind of comes to mind now, isthat it may end up being kind of
this dichotomy on the Amazonplatform.
I would assume, amazon beingAmazon, that this new
(02:19):
marketplace will be a subset ofAmazon's system.
I don't anticipate it being acompletely separate marketplace.
I mean, they've built somethingpretty significant at Amazon,
so it strikes me that it makesmore sense for them to keep it
within the ecosystem.
But by the same token, I wonder, once this platform opens,
(02:41):
depending on how it's structuredand what it ends up looking
like, because obviously wehaven't seen it yet.
It does actually make me wonderwhether a lot of those low
priced current Amazon sellersmay shift to that new subset of
the marketplace.
Will they remain in the mainyou know Amazon area or will
(03:04):
they end up in this kind ofsubset marketplace, that's, you
know, again trying to competewith with Timu?
If that happens, there's achance that it may actually help
some premium brands in a sense,you know directly, just because
a lot of the sellers that noware sitting at the top of the
category, oftentimes simplybecause they're the lowest
(03:25):
priced items.
If they shift over into thatarea of Amazon, it may move some
of those premium brands closerto the top and give them more of
an opportunity to sit top ofcategory.
Speaker 1 (03:36):
Well, I think maybe we need to just maybe rewind a
little bit for folks that maynot be super up on kind of
T-MU's model and some of theother things that have existed
in the past.
So the first thing that I'llsay and again, you guys feel
free to jump in where you thinkit makes sense, and if there's
something that I get wrong in it, which is when we talk about
(03:56):
Teemu, one of the big advantagesis because of the way tariffs
work and shipping and that typeof stuff.
Basically, the Chinesegovernment massively subsidized
shipping into the United States.
In addition to that, the waythe tariff laws work in the
United States is if you'rebringing in a product that's
under a certain dollar amountand I believe it's somewhere
(04:18):
between like 70 and $80,essentially it's duty free, so
they don't pay any tariffs on it.
So you combine the fact thatthey have incredibly cheap
shipping in order to bringproducts into the US market and
the fact that they're not payingany tariffs on it, which that
right there is a competitiveadvantage versus all the other
US sellers that if you'rebringing in a significant amount
(04:41):
of product, you're paying somesort of tariff in a lot of cases
on that product to bring itinto the United States.
So right there, they've createdan unfair advantage.
So that's kind of theunderstanding, the Teemu model
and what Amazon is basicallydoing and, as what we've seen in
the last couple of monthsspecifically is, they are
courting Amazon or, excuse me,chinese sellers and
(05:04):
manufacturers, to essentially bethat same model as Tmoo, but
only on Amazon, because Amazondoesn't want to lose market
share to specifically to Tmoo,but also kind of that whole
model in general.
So that's the way I understandit.
Is that what you guys areseeing as well when we talk
about kind of this Tmoo modelselling low to mid-tier price
(05:25):
goods on Amazon?
Speaker 3 (05:26):
I don't think you got anything wrong there.
That sounds like a prettyaccurate representation of the
way that it's functioning andthe way that we would anticipate
that this new subsetmarketplace is going to function
on Amazon.
And then, in relation to what Iwas just saying a moment ago, I
think it would be a question ofthe sellers that are already on
the platform.
Many of them, of course, areselling FBA, you know like
(05:49):
they're shipping the products in, and of course, Amazon has been
for a while.
And I guess this is anotherimportant part of the
conversation is that it isn'tjust this new platform that has
Amazon kind of courting thoseChinese sellers and giving them
advantages over American sellers, because even the Chinese
sellers that are already onplatform and aren't necessarily
(06:10):
using that same model, theystill have an advantage in terms
of shipping their product indirectly to Amazon.
It's actually one of the reasonsthat we've started using
Skewdrop, which is a stagingwarehouse in China that ships
directly to Amazon warehouses,because we can actually get
significantly reduced shippingrates by doing that, because
(06:33):
we're essentially takingadvantage of the Chinese model
that already exists and sothey're already receiving that
benefit on that side.
So if you're a low pricedAmazon seller and you're
shipping products into stagingwarehouses here in the US and
then taking it into Amazonwarehouses, you are already ata
significant disadvantage versusthe Chinese sellers in your
(06:55):
category.
And again, if you're selling ata similar price point, you know
down at that low end you willnever beat them because they're
willing to take lower marginsthan you and they have lower
expenses than you do.
So if you're trying to competein that arena with price being
one of those significantcompetitive factors, you will
lose.
Speaker 1 (07:15):
Yeah, and I think you know just I'm going to go out
on a limb here and even put anumber on it which I would say
you know previously if you wereselling a product under probably
$15, you're really going tostruggle and I would say that
that is probably going to reachup into more of the $20 to $30
range.
Now, that's really going todepend.
Everybody's margins are alittle bit different.
So you might have a competitiveadvantage and we've talked
(07:37):
about it here before where maybeyou already have a built-in
audience, where you've got10,000, 50,000, 100,000
followers on social media oremail addresses or something
like that.
That process can still win.
But if you're looking at purelyusing the basic blocking and
tackling of Amazon ads andbringing in a product, this the
(08:02):
same, maybe slightly better,than what somebody finds on
Alibaba I think that you knowwe've been saying this for a
while, but I think even more sonow those brands are basically
at least the US based version ofthose brands is going to
disappear, if they haven'talready, in the next year or two
, because of these changes thatwe're seeing in the
incentivization by, you know,essentially the Chinese
(08:24):
government, along with ourtariff laws and some other
things that make it almostimpossible for a US seller to
compete in that lower tomid-tier product area.
Speaker 2 (08:37):
This is just more of a reason to do all the things
that we've talked about sincethe very beginning of these
conversations is diversifyingand making sure that you're
doing the things to build yourbuild an actual brand and, at
the same time, build an audience, because, I mean, that's that's
the way to compete and that'sthat's really what the future of
, and it's the the evolution ofrunning this like an actual
(09:00):
business has been happening overthe course of the last five
years anyways, but this is evenmore so.
You know, making sure that youare building a brand that your
consumers care about, andsolving problems or enhancing
their lives and getting theiremail addresses at the same time
, like these are the stuff thatwe talk about, and this is the
reason why things like that area benefit, because not just
(09:20):
relying on Amazon.
Traffic is going to be a lotmore difficult in the next year,
and it already has become andit will continue to be so.
Speaker 3 (09:26):
Well, differentiation is always the key, right.
I mean.
Anytime you're going to enterinto any market or you're going
to remain competitive in amarket, you have to have a
significant differentiation fromyour competitors.
And if you have looked at priceas a potential differentiator,
then that's the area whereyou're going to struggle, and if
you don't have much else, it'ssomething significant.
(09:49):
You know, I mean you candifferentiate in a lot of very
small ways but, reasonablyspeaking, if you're selling in
that lower price tier, most ofthose things are not going to be
important enough to thecustomer that you're selling to
for them to actually buy yourproduct versus some Chinese
product that's 10% or 20% lessexpensive than yours.
(10:10):
So if you have kind of theseminor differentiators beyond
pricing and you think that'senough, that's going to get you
over the hump and continue tomake you competitive in that
area, you're wrong.
That's not going to continue tobe a play that you can make,
and so you're going to have tomake a transition.
I think it's important for usto point out we're making this
statement and look, maybe wecould be wrong, maybe this isn't
(10:34):
what's going to happen, but thewriting on the wall seems
pretty clear, the direction thatthings are moving and so don't
just hear this and say, oh well,I guess my business is screwed.
You know, chinese sellers aregoing to beat me and there's
nothing I can do and I guess Ijust quit, I'll move on to
something else.
Take this as in my current state.
(10:56):
If I don't make any adjustmentsto the way that I'm running my
business and my brand, then yeah, I'm screwed.
But if I change, then I have anopportunity here, because
there's certain things thatChinese sellers in a lot of
cases either can't do or won'tdo.
You know, because they cancompete on price, they can beat
(11:17):
you on price.
So they don't have to do a lotof those other differentiation
things that you need to do somany of them won't choose to.
A lot of those otherdifferentiation things that you
need to do, so many of themwon't choose to.
So it eliminates a largeportion of your competition and
kind of sets them over in thislittle category over here.
If you can do somethingsignificantly different that you
know they're not going to do,it creates a hurdle they're
probably not going to jump over.
(11:38):
So that's the takeaway here youhave to make those adjustments,
don't just say you're screwedmake a change.
Speaker 1 (11:46):
Well, I think that's such a great point, and just to
build off that just as a firstof all, from a very high
perspective, is that what I tryto take away is, anytime that
there is a crisis, if you will,within your business, whether
they be big or small is tryingto think about what is the
opportunity within that crisisfor your business to take it to
(12:06):
the next level.
And so a couple of things atthe tactical level that I really
think about here.
In this situation, what we'vealready seen, and if this rolls
out kind of the way we think itwill, with a lot more Chinese
sellers coming onto the Amazonplatform and selling in the US,
it means two things.
One, brands with the big B,meaning that they've really
(12:26):
figured out their color scheme,they figured out they have a
brand name that's not just acollection of numbers and
letters or certain names thatobviously are not US-based, and
that type of stuff.
Brands that really put theeffort into building a brand and
doing branding with a big B aregoing to have an advantage.
(12:49):
The other thing is is that,especially as to see who's had
the biggest increase in salesvelocity in the last 30, 60 days
(13:09):
or whatever, and it's typicallythese Chinese sellers that are
very, very aggressive with PPC.
Well, if we already have agreat review profile and a
strong product that allows us totarget their listings, so now
they're putting a ton of moneyinto essentially getting this
visibility and we're able totake sales from them by being
(13:30):
much more targeted, by targetingtheir listings, because our
brand is on point and you canactually use that in order to
leverage kind of the ad dollarsthat these Chinese sellers are
putting into trying to gaintraction on the platform to
catapult your brand forward.
Speaker 2 (13:53):
That's definitely one of the places that I still see
room for differentiation isChinese sellers really still
aren't great at the big B whatyou're calling the big B they're
still not.
Yes, ai has made them better atthings like copywriting.
I think that I see, overall,chinese sellers are getting a
lot better at that, but my mom,who is not an Amazon seller in
any way, shape or form, canstill pick out a Chinese seller
(14:14):
on Amazon pretty effectively andI think that matters to a
certain subset of consumers Iwould say most consumers.
If most people knew what aChinese brand looked like on
Amazon, I think a lot ofUS-based consumers would stay
away from them for a lot ofreasons.
But my mom can pick them outand she stays away from them,
and that's, I think, still aplace where we, as building big
(14:34):
Bs, can differentiate and standout in the search results is
what our main image is and howwe speak to the consumer in our
copy consumer in our copy.
Speaker 3 (14:45):
Well, and I think one thing that it comes back to is
that you have to recognize thatChinese sellers don't understand
American culture.
They don't.
You know like, there's a lot ofthings that we have an
advantage in if we are actuallyfocusing on building a brand
Like they.
There's a lot of things that wehave an advantage there, and
one of the things that I wouldsay is, if your primary driver
is is price competition, thenoftentimes it tends to be the
(15:09):
case that you ignore the idea ofwho is my actual target
customer avatar.
You don't really spend a wholelot of time delving into who is
my copy speaking to.
Does it speak the language ofthe person that would be most
interested in my specificproduct?
And is my product differentenough from somebody else's
product that it even makes senseto have a target avatar?
(15:32):
You know like.
So I think part of that is, ifyou are one of these brands,
that's in the crosshairs.
Building out a brand essentiallymeans, yes, you know, getting
your color scheme right, havinga good logo, having a name that
actually makes sense and isn'tjust gobbledygook.
You know like.
Yes, those things are key, butmore than that it is people
(15:56):
become loyal to a brand for acouple of reasons.
Essentially, one is you treatthem well, and hopefully really
well in comparison to otherbrands.
The second is that they likewho you are or what you stand
for, or you know those sorts ofthings Like it resonates with
them right.
That's the branding piece youknow.
(16:17):
You have to convince thatparticular customer that your
brand is the better brand to buyfrom versus all of these other
brands, because you are inalignment with them.
Because you are in alignmentwith them, people like to buy
from businesses that support thesame things that they do, that
think the same way that they do,that you know that value the
same things that they value.
(16:38):
You can't do that if you don'tknow who your target customer is
, because if it's everybody,well then you've got liberals
and conservatives, you've gotpeople who are religious and who
aren't religious.
You've got people who arefitness nuts and those who
aren't.
Those are that pets, those thatdon't.
Who are you talking to?
You have no idea who you'retalking to, but if, instead, you
(17:01):
narrow that down and it may beeven just choosing, it may not
even be a bunch of marketresearch that says who is the
best customer for my product.
It might just be.
Let me select a good customerfor my product.
Really flesh out this veryspecific customer avatar.
They're, you know whatever.
They're conservative, religious, they have a large family,
they've got dogs, you know.
They have a management position.
You know, whatever you outlinethat Then you can start speaking
(17:22):
their language and then yourbrand starts to resonate with
them, and if you treat them well, then it resonates only that
much more.
And now you have the big Bbrand.
Speaker 1 (17:32):
Well, I think the important thing there, too, is
that people sometimes get kindof, you know, stuck where they
feel like they have to chooseone or the other, and sometimes
and sometimes you do but alsokeep in mind that, like, you can
take that same product and youcan use it to speak to multiple
audiences.
So I think a perfect example Iwas just speaking with a client
(17:54):
that they're working ondeveloping a new product that
they're in the ATV accessoryspace, and so the product that
they were looking at hadbasically two very specific or
different purposes.
Well, if we look at that, I meanwe don't want to try to make
that product speak to both ofthose purposes, because now what
(18:14):
we've done is we've diluted themessage to where somebody
that's like hey, you know, if,if I want, you know, if I'm a
sportsman, then this may not befor me, whereas if I'm, you know
, more of a recreational driver,then you know this may not be
for me.
So now we need to.
We take that product and weit's the same product and we
just build two listings One thatspeaks to, you know, the
(18:37):
sportsman audience and all thethings that they care about, and
then another listing thatspeaks to.
You know that.
You know recreational user andall the things that they care
about, and so you know I thinkthat's the other thing that's
important to keep in mind too isthat you do have the
flexibility to tailor a productto multiple different audiences.
(18:58):
Now there's definitely somemore work involved in that, but,
to your point, you know thatallows you to really speak very
clearly to that audience thatthat specific product is
designed for and still keep it,you know, within your brand
message.
Speaker 2 (19:12):
Well, there is a lot of work, but it's less work than
launching a new product.
And I can think of anotherreally good example.
I was watching Brandon Young wasshowcasing our data dive and it
was a hanging closet organizerand the intention of the brand
owner was to build it fortravelers, like people that were
(19:34):
getting in planes and puttingthis travel organizer inside of
their suitcase.
But as they dug through thesearch demand for it on Amazon,
they also found a completelydifferent subset of people that
were in RVs that also weresearching for a type of
organizer solution for their RVs, but there was nobody that was
(19:55):
really speaking to that consumer.
So what they decided in this itwas like a masterclass that I
was watching is to make anotherlisting specifically for RV, and
you had a whole differentaudience of people that were
searching for completelydifferent things that saw the
same product but positioned in adifferent way, with images that
were inside of an RV as opposedto inside of a hotel closet or
(20:17):
something like that.
So I mean you have one productthat was very intentionally for
people getting in airplanes, butnow, with different images and
different search terms, that youthey're targeting is a
completely different audiencethat they're targeting with the
same product, just differentimages.
So like yes, it is a lot ofwork to do something like that,
but, like I said, it's a lotless work to do that than it is
to go through the productresearch and launch a whole new
(20:40):
product.
And you can do that with oneproduct.
Just talk to differentconsumers.
Speaker 3 (20:43):
Well, and also I mean they.
You know, in that example theyessentially found this deep blue
ocean that nobody else wasfishing in, you know, and they
didn't have to develop a newproduct.
Like, the product alreadyexists, they already have the
molds, they have a manufacturer,they have.
So there's, there's a lot ofpieces that are already in place
there that they don't have tochange.
It's just the marketing piecethat has to change.
You know, like, okay, we neednew copy, we need a new ASIN, we
(21:05):
need whatever.
Maybe we need a new brand, butmaybe we don't.
Maybe we can sell into the samebrand and just sell that
product under two differentlistings, two different
audiences.
Something to think about Ifyou're going to choose those two
different audiences, does thebrand name that you already have
is that one that's going todistract from the copy and the
marketing?
Is there a better brand namethat you could use?
(21:27):
If there is, maybe you shouldrun that route, but it's not
necessary and as long as at thefront end of it it could be just
testing, like, okay, I don'tthink the brand is helping us in
that category, but I don't knowif it's hurting us either.
So we'll keep the same brandname, we create two separate
listings.
Let's test it and see how thatmarket goes.
You know you can always makeadjustments down the road, but
(21:47):
that opportunity to sell tothose two different audiences is
really critical.
And I think it's important alsoto back up, and that is.
We started this conversationwith the idea that you are not
going to be able to compete onprice with Chinese sellers.
That is not going to happen.
The further we go forward, themore problem that's going to be.
I mean, unless some significantchange happens in American law.
(22:10):
You know whatever you know likemaybe, but given the scenario
that we have right now, there'sno way that's going to happen,
and so, therefore, you can'tcompete on price anymore.
You probably.
If that's the case, you mightas well raise your price if
you're not going to competethere.
But if you're going to raiseyour price now, you need
branding with a big B, likethat's the only way forward.
(22:31):
If you're going to sell at ahigher price point than a lot of
other brands sitting in yourcategory, you have no choice but
to follow this brandingmechanism, and that's the point
at which that target avatarbecomes important, or avatars.
Speaker 1 (22:44):
Yeah, and I'll even throw I know we talked about
this a little bit and I thinkthis is related as well which is
I don't think a lot of folkshave been paying attention to
this, but I think over the longrun, this is going to have
equally, if not more, of animpact for kind of those low to
mid tier price products, whichis Amazon is already testing
(23:05):
serving ads to services andother folks that are not sellers
on Amazon.
So what does that mean?
That means, if you look at adcosts I mean we've seen over the
last couple of years, reallysince from the pandemic and post
pandemic, the ad costs havecontinued to go up as things
have gotten more competitive, etcetera, et cetera Well, what
(23:26):
this means is that ad costs aregoing to continue to go up and
probably will go uppercentage-wise more than they
have over the last couple ofyears, because Amazon
essentially, is going to open itup to be something akin to
Google, where if you're aservice, as long as you're
following Amazon's terms ofservice, even if you're not
(23:47):
selling a product on Amazon now,you can advertise on Amazon.
So that's going to makeespecially when we start looking
at keywords and those types ofthings a lot more expensive for
things like sponsored productads, which are very accessible.
I mean, it doesn't take atleast in order to spend a dollar
.
Now whether that dollar givesyou the return you want, that's
a whole nother discussion, butat least to start spending money
(24:08):
on the ads platform, amazonmakes that incredibly easy, and
so you're going to have a lot ofpeople out there that are in
services and other industriesthat are going to look to Amazon
for a better ROI than whatthey're getting with Google or
Facebook or other marketingplatforms, and that's going to
significantly raise ad costswhen we look at traditional
(24:29):
sellers that are selling FBA onAmazon.
Speaker 3 (24:33):
I also think that there's a few other things that
are going to happen with that, Ithink.
First of all I think mostlyyou're going to end up with two
different types of sellers thatenter in that space and cause
issues, cause a rise inadvertising costs.
I think you're going to haveDTC sellers that have been
selling on their website foryears and they really, really
(24:55):
have their branding dialed inand they understand marketing
right.
These are the guys who reallyknow what they're doing and now
Amazon opens the doors to a muchbetter advertising platform in
the sense of the data that'savailable and how you can target
customers actual buyers, right.
So, as a D2C, if I come intothat space and I've got my
(25:17):
branding really dialed in, I'mgoing to be super efficient with
my advertising, which meansthey're a serious competitor to
people on Amazon.
So costs are going to go upbecause their D, dtc and their
branding is so dialed in.
They can spend more on adsbecause they convert so well,
like just because their brandingis good.
(25:38):
So costs are going to rise as aresult of them.
Costs are also going to risebecause you've got another
subset of those individualscoming into the platform who are
clueless, but they are going tosee Amazon as a tremendous
opportunity for advertising abrand new one.
Right, they're going to throwmoney at it, not knowing what
they're doing, paying PPCs thatare way above what they really
(26:00):
should be paying, and so our adcosts are going to go up again
as a result of that.
So I think those two categoriesof DTC sellers are really going
to cause us some significantproblems once that door opens up
, and it's going to createissues.
Something else that comes tomind is that we may also find
the performance of our listingsbegin to decline, because my
(26:24):
guess is, as they open the dooron that, those D2C sellers
aren't only going to beadvertising in the search
results, they will likely haveaccess also to advertise on our
listings.
So those DTC brands that reallydo have a brand like they've
really built it out and they'vegot it dialed in they're going
to be advertising against yourproduct on your listing, and if
(26:47):
your branding is not dialed in,you are going to lose that
customer to that brand offsite,and so your conversion rates are
likely actually to go down ifyou don't really start dialing
in your brand.
Speaker 1 (26:58):
Well, I think the other thing.
Again, you bring up a goodpoint with the direct to
consumer, but I think the otherthing that I want to point out
there is it's not only thosebrands that are not selling a
physical product on Amazon, butjust, you know, think about if
you're a health coach and youstart targeting supplements and
exercise products.
Again, that's probably a veryminor example.
(27:18):
But there's a ton ofservice-based businesses out
there that can afford to spend$100 per customer for customer
acquisition, and so they'll behappy to pay, you know, 10, 20,
$30 a click, because, quitefrankly, it's probably less than
what they're paying on Googleand Facebook, right?
Speaker 3 (27:39):
now, oh yeah, If you're a fitness trainer or
things like that and you want to, you want to get into the, you
know, start advertising onsupplements and things like that
.
Absolutely the prices that theycharge for a lot of that
consulting.
They can way outpace you interms of what they can afford to
pay.
Speaker 1 (27:54):
So I think, yeah, just keeping that in mind.
I mean you combine those twothings together and that means
for some categories you're goingto see a pretty dramatic
increase in ad costs in some ofthese different categories as
Amazon opens that up over thenext year or so.
Speaker 2 (28:09):
Yeah Well, and then wait till those brands that are
used to advertising off ofAmazon platforms start to see
some of those conversion ratesthat are going to be much higher
on Amazon than they are ontheir websites.
Speaker 1 (28:19):
They're going to see that juicy and they're going to
spend even more, so it's goingto be this perpetual cycle, yeah
, so I mean, I think, just kindof coming full circle to our
conversation that we startedwith, which is the brands that
are going to succeed at leastthe US-based brands that are
going to succeed and reallysurvive over the next few years
are going to be those brands atthe higher end of the pricing
(28:42):
brackets and those premium placebrands.
Speaker 3 (28:46):
Yeah, I also think getting back to something that
we mentioned and of course wetalk about it a lot, but it's
worth reminding people that thisidea of building out and really
getting your brand dialed in abig piece of that is having the
opportunity to actuallycommunicate with your customers.
You need to build a really loyalcustomer base that you can
(29:09):
repeat, sell to, that you canlaunch products to, that you can
consult and send surveys to andpolls to find out what new
products they want, whatfeatures they want, those sorts
of things so that launches gowell.
And so building out that brand.
If you want to make thatconnection with those customers,
you've got to be able tocommunicate with them.
And if you're an Amazon seller,the only way that's happening
(29:32):
is if you're building a list onthe backend.
So if you're not building alist, you're not building a
brand.
I don't care what you do withyour logo, I don't care what you
do with your copy and yourmessaging and everything else.
You are not building a brand onAmazon if you are not building
a list.
Speaker 1 (29:46):
Yeah, I mean, yeah, you're really just renting space
at that point and it's going toput you at a huge competitive
disadvantage over time.
And I mean and I think there'ssome good points there I mean,
email is probably the easiestway to get started on that, or
easiest kind of communicationmethod, but I mean it doesn't
have to be email.
You know you can use physicalmail.
(30:07):
There's, you know, text message, like there's, you know, other
opportunities out there in orderto build that brand and ideally
, you're using a mix of allthree of those in order to, like
you said, build that connectionwith your customers.
So they know you, they like youand they trust you, because
that's going to send you apartfrom 95% of the competitors, let
(30:30):
alone that happen to be fromChina, and, you know, really
help you continue to grow,whether that is on Amazon or
somewhere else.
As you take, you know, expandbeyond Amazon for your brand,
right, all right.
So, as we wrap up thisconversation, talk about what
(30:53):
brand builders can do as we seethis change.
Come on Amazon, what are maybeone action step that you would
give brands to take right now?
Speaker 2 (31:05):
Well, knowing that you're not going to be able to
beat these competitors thatwe've been talking about on
price, I think really startingto understand how you can
increase the value of your brand, even if it's just perceived
value, looking at with anobjective eye on the category
overall and asking yourself howdo I increase the value of my
(31:27):
products and my brand, asopposed to figuring out how to
beat Chinese competitors whowill always have the pricing
advantage over you.
Speaker 3 (31:36):
Well, I think that's really important, to just
recognizing that you can't justraise the price Like if you're
not offering more value, raisingthe price just means you're
going to sell less.
There's no way around that.
So, you know, building out yourbrand, part of that process is
going to have to be the valuepiece, and some of that is in
(32:07):
the product, but some of that,but the level of service that we
offer on the back end, you know, to those individuals that have
that warranty, you know makingthings really super easy for the
customer and fulfilling on thatand just doing everything that
you should be doing.
You should be doing.
(32:28):
But I think at the end of theday, I would come back again to
that idea of choosing eitherdoing the market research to
figure out who the best customeravatar or best customer avatars
are in your category, or justchoosing one or two or three
avatars in your category thatyou think makes sense.
Maybe you can't, maybe there'snot really a good way for you to
(32:49):
do the market research.
On that I would say the keywordresearch.
Somebody sometimes can do that,as Matt suggested with Data
Dive.
Sometimes you can find thatniche that nobody else is
hitting.
But either way, whether it'smarket research or whether it's
just kind of a gut feeling, likeI think these are two or three
different avatars that we couldtry to sell.
To Try it.
See, you know, like really putyour eggs in those baskets, like
(33:11):
say, okay, we're going tochoose these two avatars, we're
going to change the copy, we'regoing to update things, change
the images, really get themessaging on point for that
specific person, and then let'ssee what happens.
Like let's build out the brandaccording to that, get the
marketing on point and and seeyou know which resonates.
Maybe they both resonate, andso we continue to hammer on both
(33:32):
of them.
Maybe only one of them reallystarts to fly wheel, and so then
we put all of our eggs intothat basket.
But you know, at least try it.
You know you really do need todo that If you're going to raise
the price.
You got to know who you'reselling to.
Speaker 1 (33:51):
Yeah, and I would build off that for my action
step.
And again, this might besomewhat controversial, but I
think that lowering your pricefor a temporary amount of time,
for a strategic reason, can makesense, but just lowering your
price to try and drive salesreally is the lazy man's lever.
So think about how you caneither maintain your price or
increase your price by addingadditional value to your
customers, and that doesn'talways mean that you need to
(34:13):
have more of your product or abigger product.
It really can come from a lotof different areas.
And coming back to that big Bbrand conversation and idea that
we brought up earlier in thepodcast, so for folks that are
listening out there, I wouldencourage you to think about you
know, how can you add morevalue under that big B you know
brand umbrella?
Speaker 3 (34:35):
And without extending this out too far, just real
briefly.
I think it's importantRecognize the amount of money
that people spend for peace ofmind.
People pay for insurance andall sorts of things that have
only one purpose peace of mind.
So that is a value proposition.
If there's something related toyour product or the person that
(34:57):
you're selling to, that there'ssomething you can do for them
or offer them that provides themwith peace of mind.
Do not underestimate the valuethat that adds to your product
and figure out how you can putthat into your marketing and
your copy.
Speaker 1 (35:11):
Well, I think that's such a you know as much as I
want to wrap this episode upright now.
I think that that's such animportant concept that you know
well, we get to do what we want,so, and I think it's important
for listeners to reallyunderstand that, that idea of
peace of mind.
So, when you mean when you talkabout that, I mean what pops
(35:33):
into my head right away is isthat again talking about
depending on where you're at inthe market, if you're, you know,
on kind of that upper end ofthe market, and I'll just talk,
you know from, for me personally, from a customer perspective,
I'm at that point where, formost things, I am willing to pay
more for a solution that I havehigh confidence is going to
solve my problem, rather thanpaying less for something that's
(35:55):
going to, quite frankly, be ahassle into my head.
But I guess, when you thinkabout that from your brand's
perspective and kind of you knowwhat listeners should take away
, what does that mean?
You know what?
What do you want listeners totake away from that peace of
mind as a how they incorporateinto their brand?
Speaker 3 (36:16):
Well, I think one of those things is exactly what you
said, which is, if you thinkabout this idea of raising your
price, right, if you're going toraise your price, you are
selling to a different customer.
As soon as you raise the price,you're selling to a different
customer if you raise it in anysignificant way.
So then the question becomesokay, what's different about
that customer versus thecustomer I was selling to before
(36:37):
?
And one of those things ispeople people who have earned
their money, right, so somebodywho has money they're more well
off than somebody else and theyearned it then they tend to be
an individual who is, as yousaid, looking for solutions.
They're a solutions-orientedindividual.
(36:59):
So make sure that you'refocusing on that in terms of
what problems are you actuallysolving for the customer?
And, potentially, what problemscould you solve for the
customer that actually havenothing to do with your product,
but something else that youcould do on the back end that
you could offer them.
That's additional.
You know some service, you knowconnected to it that you could
(37:20):
offer.
That would.
That would again be a problemsolving type of solution.
And how could you advertisethat on your listing, right?
The other thing that comes tomind, of course and I'm always
going to come back to thisbecause it's the way I operate
but is guarantees and warranties.
If you can generate a goodenough review profile that makes
(37:40):
it fairly obvious that youactually stand behind your
warranty or guarantee dependingon the type of product, that is
because it doesn't make sensedepending on the product you use
one or the other but if you cancreate a profile that makes it
clear that you stand behind it,then a warranty or a guarantee
does offer additional peace ofmind and it does add value, but
(38:02):
you have to stand behind it.
You can't offer a warranty andnot stand behind it, because
anytime you deny a claim whetherit's warranty, guarantee,
whatever, if somebody asks forreplacement or asks for refund
or whatever and you deny that,you guarantee a negative review.
On Amazon and pretty muchanywhere online these days, you
guarantee that negative review.
If, on the other hand, you makethat process super easy for
(38:25):
that customer and you fulfill onit every time, then you almost
certainly guarantee a five-starreview out of that customer, and
that differential betweenadding a one-star review to your
listing versus adding afive-star review to your listing
.
That is an exponentialadjustment in terms of how that
affects your listing.
So I think warranties andguarantees are great.
(38:46):
Just be careful with them,because you better be, you
better fulfill on it.
Speaker 1 (38:49):
Yeah, well, and a couple of things there, and I
know we've talked about it acouple of times before, but you
know, even if you don't get thatfive-star review from it,
preventing a one-star is theequivalent, you know, of getting
you know like five, five to 10,five-star reviews, especially
with how the system on Amazon isweighted.
And then I would just encouragelisteners you bring up a great
(39:09):
point and obviously you have alot of great experience when it
comes to warranties.
I would encourage listeners tolisten to some of our episodes
where we talk specifically aboutwarranties and guarantees and
how you incorporate that intoyour brand and really get into
the details, because I thinkthere's a lot of value to be had
for listeners that want to havethat premium brand and are
(39:31):
looking for something else toadd value to their customers and
kind of that peace of mind thatyou mentioned.
Speaker 3 (39:38):
Yeah, I was just going to say briefly too.
It's really important torecognize there are far more
products that people are sellingthat you could easily apply a
warranty or guarantee to and beprofitable on it, not lose money
on it.
Not everything, every productdoesn't work, but far more
products than people think youcould offer a really strong
warranty or guarantee on andstill come out of it.
Speaker 1 (39:59):
Yeah, and again, I think some of the previous
episodes that we've done reallydo a good job of covering that
and how to think about how toadd a warranty or guarantee to
your product.
So if you're wondering detailsof how you do that, I would
encourage folks to go back andlook at some of our previous
episodes, because we've coveredthat in detail and with that, I
think this is a great place tokind of wrap up and talking
about what your brand's futureshould look like and really
(40:22):
thinking about how you cancontinue to add value so you can
be more on that premium end aswe see more and more competition
at that medium to low pricedarea that we're going to
continue to see on Amazon andall the challenges that occurs.
So with that, thank youeverybody for listening and
we'll be back here again foranother Tactics Tuesday.
Welcome everybody to the Brand Fortress HQ podcast
For this episode.
We are live again on LinkedIn,and today what we're gonna be
talking about is your brand'sfuture on Amazon, specifically
talking about Chinese sellersand the battle for brand
survival, and I think this is areally important conversation
that we had prior to this thatwe wanted to bring to the
(00:20):
podcast, just because some ofthese are continuing changes,
but understanding kind of thedetails and what's happening in
the landscape, especially whenwe start looking at overseas
sellers and what impact that hason products that may have
worked in the past before thatprobably won't work in the
future, and then also brandsthat, quite frankly, aren't
going to exist, at least fromthe U S perspective, anymore on
(00:40):
Amazon in the next couple ofyears.
And then on the ad side, we'regoing to talk a little bit about
how things are changing overthere as well.
So I'm going to start off with,as we started this discussion,
matt, what maybe kind of piquedyour interest the most as we
talked about brands' futures onAmazon and how things have
changed with Chinese sellers.
Speaker 2 (01:02):
Well, I mean, the biggest thing that I've been
paying attention to in the spaceis this new marketplace and I
don't know if it's a separatemarketplace or what, but it's a
lower cost place of Amazon thatit looks almost as if they're
giving Chinese manufacturers theability to sell direct in its
(01:22):
own kind of low price corner ofAmazon, which I mean that's
super interesting, and there's alot of people that shop just on
price and are going to Amazonbecause they can get things for
the cheapest that they can.
Interesting how that plays outand how hard Amazon is going at
(01:45):
courting these Chinesemanufacturers to sell on this
kind of marketplace to competewith Timu or Temu or Shine or
however you pronounce, thoseother lower cost marketplaces.
Speaker 3 (01:58):
Well, it's interesting, as you were
mentioning, that one of thethings that honestly didn't come
to mind the other day when wewere discussing this, but it
kind of comes to mind now, isthat it may end up being kind of
this dichotomy on the Amazonplatform.
I would assume, amazon beingAmazon, that this new
(02:19):
marketplace will be a subset ofAmazon's system.
I don't anticipate it being acompletely separate marketplace.
I mean, they've built somethingpretty significant at Amazon,
so it strikes me that it makesmore sense for them to keep it
within the ecosystem.
But by the same token, I wonder, once this platform opens,
(02:41):
depending on how it's structuredand what it ends up looking
like, because obviously wehaven't seen it yet.
It does actually make me wonderwhether a lot of those low
priced current Amazon sellersmay shift to that new subset of
the marketplace.
Will they remain in the mainyou know Amazon area or will
(03:04):
they end up in this kind ofsubset marketplace, that's, you
know, again trying to competewith with Timu?
If that happens, there's achance that it may actually help
some premium brands in a sense,you know directly, just because
a lot of the sellers that noware sitting at the top of the
category, oftentimes simplybecause they're the lowest
(03:25):
priced items.
If they shift over into thatarea of Amazon, it may move some
of those premium brands closerto the top and give them more of
an opportunity to sit top ofcategory.
Speaker 1 (03:36):
Well, I think maybe we need to just maybe rewind a
little bit for folks that maynot be super up on kind of
T-MU's model and some of theother things that have existed
in the past.
So the first thing that I'llsay and again, you guys feel
free to jump in where you thinkit makes sense, and if there's
something that I get wrong in it, which is when we talk about
(03:56):
Teemu, one of the big advantagesis because of the way tariffs
work and shipping and that typeof stuff.
Basically, the Chinesegovernment massively subsidized
shipping into the United States.
In addition to that, the waythe tariff laws work in the
United States is if you'rebringing in a product that's
under a certain dollar amountand I believe it's somewhere
(04:18):
between like 70 and $80,essentially it's duty free, so
they don't pay any tariffs on it.
So you combine the fact thatthey have incredibly cheap
shipping in order to bringproducts into the US market and
the fact that they're not payingany tariffs on it, which that
right there is a competitiveadvantage versus all the other
US sellers that if you'rebringing in a significant amount
(04:41):
of product, you're paying somesort of tariff in a lot of cases
on that product to bring itinto the United States.
So right there, they've createdan unfair advantage.
So that's kind of theunderstanding, the Teemu model
and what Amazon is basicallydoing and, as what we've seen in
the last couple of monthsspecifically is, they are
courting Amazon or, excuse me,chinese sellers and
(05:04):
manufacturers, to essentially bethat same model as Tmoo, but
only on Amazon, because Amazondoesn't want to lose market
share to specifically to Tmoo,but also kind of that whole
model in general.
So that's the way I understandit.
Is that what you guys areseeing as well when we talk
about kind of this Tmoo modelselling low to mid-tier price
(05:25):
goods on Amazon?
Speaker 3 (05:26):
I don't think you got anything wrong there.
That sounds like a prettyaccurate representation of the
way that it's functioning andthe way that we would anticipate
that this new subsetmarketplace is going to function
on Amazon.
And then, in relation to what Iwas just saying a moment ago, I
think it would be a question ofthe sellers that are already on
the platform.
Many of them, of course, areselling FBA, you know like
(05:49):
they're shipping the products in, and of course, Amazon has been
for a while.
And I guess this is anotherimportant part of the
conversation is that it isn'tjust this new platform that has
Amazon kind of courting thoseChinese sellers and giving them
advantages over American sellers, because even the Chinese
sellers that are already onplatform and aren't necessarily
(06:10):
using that same model, theystill have an advantage in terms
of shipping their product indirectly to Amazon.
It's actually one of the reasonsthat we've started using
Skewdrop, which is a stagingwarehouse in China that ships
directly to Amazon warehouses,because we can actually get
significantly reduced shippingrates by doing that, because
(06:33):
we're essentially takingadvantage of the Chinese model
that already exists and sothey're already receiving that
benefit on that side.
So if you're a low pricedAmazon seller and you're
shipping products into stagingwarehouses here in the US and
then taking it into Amazonwarehouses, you are already ata
significant disadvantage versusthe Chinese sellers in your
(06:55):
category.
And again, if you're selling ata similar price point, you know
down at that low end you willnever beat them because they're
willing to take lower marginsthan you and they have lower
expenses than you do.
So if you're trying to competein that arena with price being
one of those significantcompetitive factors, you will
lose.
Speaker 1 (07:15):
Yeah, and I think you know just I'm going to go out
on a limb here and even put anumber on it which I would say
you know previously if you wereselling a product under probably
$15, you're really going tostruggle and I would say that
that is probably going to reachup into more of the $20 to $30
range.
Now, that's really going todepend.
Everybody's margins are alittle bit different.
So you might have a competitiveadvantage and we've talked
(07:37):
about it here before where maybeyou already have a built-in
audience, where you've got10,000, 50,000, 100,000
followers on social media oremail addresses or something
like that.
That process can still win.
But if you're looking at purelyusing the basic blocking and
tackling of Amazon ads andbringing in a product, this the
(08:02):
same, maybe slightly better,than what somebody finds on
Alibaba I think that you knowwe've been saying this for a
while, but I think even more sonow those brands are basically
at least the US based version ofthose brands is going to
disappear, if they haven'talready, in the next year or two
, because of these changes thatwe're seeing in the
incentivization by, you know,essentially the Chinese
(08:24):
government, along with ourtariff laws and some other
things that make it almostimpossible for a US seller to
compete in that lower tomid-tier product area.
Speaker 2 (08:37):
This is just more of a reason to do all the things
that we've talked about sincethe very beginning of these
conversations is diversifyingand making sure that you're
doing the things to build yourbuild an actual brand and, at
the same time, build an audience, because, I mean, that's that's
the way to compete and that'sthat's really what the future of
, and it's the the evolution ofrunning this like an actual
(09:00):
business has been happening overthe course of the last five
years anyways, but this is evenmore so.
You know, making sure that youare building a brand that your
consumers care about, andsolving problems or enhancing
their lives and getting theiremail addresses at the same time
, like these are the stuff thatwe talk about, and this is the
reason why things like that area benefit, because not just
(09:20):
relying on Amazon.
Traffic is going to be a lotmore difficult in the next year,
and it already has become andit will continue to be so.
Speaker 3 (09:26):
Well, differentiation is always the key, right.
I mean.
Anytime you're going to enterinto any market or you're going
to remain competitive in amarket, you have to have a
significant differentiation fromyour competitors.
And if you have looked at priceas a potential differentiator,
then that's the area whereyou're going to struggle, and if
you don't have much else, it'ssomething significant.
(09:49):
You know, I mean you candifferentiate in a lot of very
small ways but, reasonablyspeaking, if you're selling in
that lower price tier, most ofthose things are not going to be
important enough to thecustomer that you're selling to
for them to actually buy yourproduct versus some Chinese
product that's 10% or 20% lessexpensive than yours.
(10:10):
So if you have kind of theseminor differentiators beyond
pricing and you think that'senough, that's going to get you
over the hump and continue tomake you competitive in that
area, you're wrong.
That's not going to continue tobe a play that you can make,
and so you're going to have tomake a transition.
I think it's important for usto point out we're making this
statement and look, maybe wecould be wrong, maybe this isn't
(10:34):
what's going to happen, but thewriting on the wall seems
pretty clear, the direction thatthings are moving and so don't
just hear this and say, oh well,I guess my business is screwed.
You know, chinese sellers aregoing to beat me and there's
nothing I can do and I guess Ijust quit, I'll move on to
something else.
Take this as in my current state.
(10:56):
If I don't make any adjustmentsto the way that I'm running my
business and my brand, then yeah, I'm screwed.
But if I change, then I have anopportunity here, because
there's certain things thatChinese sellers in a lot of
cases either can't do or won'tdo.
You know, because they cancompete on price, they can beat
(11:17):
you on price.
So they don't have to do a lotof those other differentiation
things that you need to do somany of them won't choose to.
A lot of those otherdifferentiation things that you
need to do, so many of themwon't choose to.
So it eliminates a largeportion of your competition and
kind of sets them over in thislittle category over here.
If you can do somethingsignificantly different that you
know they're not going to do,it creates a hurdle they're
probably not going to jump over.
(11:38):
So that's the takeaway here youhave to make those adjustments,
don't just say you're screwedmake a change.
Speaker 1 (11:46):
Well, I think that's such a great point, and just to
build off that just as a firstof all, from a very high
perspective, is that what I tryto take away is, anytime that
there is a crisis, if you will,within your business, whether
they be big or small is tryingto think about what is the
opportunity within that crisisfor your business to take it to
(12:06):
the next level.
And so a couple of things atthe tactical level that I really
think about here.
In this situation, what we'vealready seen, and if this rolls
out kind of the way we think itwill, with a lot more Chinese
sellers coming onto the Amazonplatform and selling in the US,
it means two things.
One, brands with the big B,meaning that they've really
(12:26):
figured out their color scheme,they figured out they have a
brand name that's not just acollection of numbers and
letters or certain names thatobviously are not US-based, and
that type of stuff.
Brands that really put theeffort into building a brand and
doing branding with a big B aregoing to have an advantage.
(12:49):
The other thing is is that,especially as to see who's had
the biggest increase in salesvelocity in the last 30, 60 days
(13:09):
or whatever, and it's typicallythese Chinese sellers that are
very, very aggressive with PPC.
Well, if we already have agreat review profile and a
strong product that allows us totarget their listings, so now
they're putting a ton of moneyinto essentially getting this
visibility and we're able totake sales from them by being
(13:30):
much more targeted, by targetingtheir listings, because our
brand is on point and you canactually use that in order to
leverage kind of the ad dollarsthat these Chinese sellers are
putting into trying to gaintraction on the platform to
catapult your brand forward.
Speaker 2 (13:53):
That's definitely one of the places that I still see
room for differentiation isChinese sellers really still
aren't great at the big B whatyou're calling the big B they're
still not.
Yes, ai has made them better atthings like copywriting.
I think that I see, overall,chinese sellers are getting a
lot better at that, but my mom,who is not an Amazon seller in
any way, shape or form, canstill pick out a Chinese seller
(14:14):
on Amazon pretty effectively andI think that matters to a
certain subset of consumers Iwould say most consumers.
If most people knew what aChinese brand looked like on
Amazon, I think a lot ofUS-based consumers would stay
away from them for a lot ofreasons.
But my mom can pick them outand she stays away from them,
and that's, I think, still aplace where we, as building big
(14:34):
Bs, can differentiate and standout in the search results is
what our main image is and howwe speak to the consumer in our
copy consumer in our copy.
Speaker 3 (14:45):
Well, and I think one thing that it comes back to is
that you have to recognize thatChinese sellers don't understand
American culture.
They don't.
You know like, there's a lot ofthings that we have an
advantage in if we are actuallyfocusing on building a brand
Like they.
There's a lot of things that wehave an advantage there, and
one of the things that I wouldsay is, if your primary driver
is is price competition, thenoftentimes it tends to be the
(15:09):
case that you ignore the idea ofwho is my actual target
customer avatar.
You don't really spend a wholelot of time delving into who is
my copy speaking to.
Does it speak the language ofthe person that would be most
interested in my specificproduct?
And is my product differentenough from somebody else's
product that it even makes senseto have a target avatar?
(15:32):
You know like.
So I think part of that is, ifyou are one of these brands,
that's in the crosshairs.
Building out a brand essentiallymeans, yes, you know, getting
your color scheme right, havinga good logo, having a name that
actually makes sense and isn'tjust gobbledygook.
You know like.
Yes, those things are key, butmore than that it is people
(15:56):
become loyal to a brand for acouple of reasons.
Essentially, one is you treatthem well, and hopefully really
well in comparison to otherbrands.
The second is that they likewho you are or what you stand
for, or you know those sorts ofthings Like it resonates with
them right.
That's the branding piece youknow.
(16:17):
You have to convince thatparticular customer that your
brand is the better brand to buyfrom versus all of these other
brands, because you are inalignment with them.
Because you are in alignmentwith them, people like to buy
from businesses that support thesame things that they do, that
think the same way that they do,that you know that value the
same things that they value.
(16:38):
You can't do that if you don'tknow who your target customer is
, because if it's everybody,well then you've got liberals
and conservatives, you've gotpeople who are religious and who
aren't religious.
You've got people who arefitness nuts and those who
aren't.
Those are that pets, those thatdon't.
Who are you talking to?
You have no idea who you'retalking to, but if, instead, you
(17:01):
narrow that down and it may beeven just choosing, it may not
even be a bunch of marketresearch that says who is the
best customer for my product.
It might just be.
Let me select a good customerfor my product.
Really flesh out this veryspecific customer avatar.
They're, you know whatever.
They're conservative, religious, they have a large family,
they've got dogs, you know.
They have a management position.
You know, whatever you outlinethat Then you can start speaking
(17:22):
their language and then yourbrand starts to resonate with
them, and if you treat them well, then it resonates only that
much more.
And now you have the big Bbrand.
Speaker 1 (17:32):
Well, I think the important thing there, too, is
that people sometimes get kindof, you know, stuck where they
feel like they have to chooseone or the other, and sometimes
and sometimes you do but alsokeep in mind that, like, you can
take that same product and youcan use it to speak to multiple
audiences.
So I think a perfect example Iwas just speaking with a client
(17:54):
that they're working ondeveloping a new product that
they're in the ATV accessoryspace, and so the product that
they were looking at hadbasically two very specific or
different purposes.
Well, if we look at that, I meanwe don't want to try to make
that product speak to both ofthose purposes, because now what
(18:14):
we've done is we've diluted themessage to where somebody
that's like hey, you know, if,if I want, you know, if I'm a
sportsman, then this may not befor me, whereas if I'm, you know
, more of a recreational driver,then you know this may not be
for me.
So now we need to.
We take that product and weit's the same product and we
just build two listings One thatspeaks to, you know, the
(18:37):
sportsman audience and all thethings that they care about, and
then another listing thatspeaks to.
You know that.
You know recreational user andall the things that they care
about, and so you know I thinkthat's the other thing that's
important to keep in mind too isthat you do have the
flexibility to tailor a productto multiple different audiences.
(18:58):
Now there's definitely somemore work involved in that, but,
to your point, you know thatallows you to really speak very
clearly to that audience thatthat specific product is
designed for and still keep it,you know, within your brand
message.
Speaker 2 (19:12):
Well, there is a lot of work, but it's less work than
launching a new product.
And I can think of anotherreally good example.
I was watching Brandon Young wasshowcasing our data dive and it
was a hanging closet organizerand the intention of the brand
owner was to build it fortravelers, like people that were
(19:34):
getting in planes and puttingthis travel organizer inside of
their suitcase.
But as they dug through thesearch demand for it on Amazon,
they also found a completelydifferent subset of people that
were in RVs that also weresearching for a type of
organizer solution for their RVs, but there was nobody that was
(19:55):
really speaking to that consumer.
So what they decided in this itwas like a masterclass that I
was watching is to make anotherlisting specifically for RV, and
you had a whole differentaudience of people that were
searching for completelydifferent things that saw the
same product but positioned in adifferent way, with images that
were inside of an RV as opposedto inside of a hotel closet or
(20:17):
something like that.
So I mean you have one productthat was very intentionally for
people getting in airplanes, butnow, with different images and
different search terms, that youthey're targeting is a
completely different audiencethat they're targeting with the
same product, just differentimages.
So like yes, it is a lot ofwork to do something like that,
but, like I said, it's a lotless work to do that than it is
to go through the productresearch and launch a whole new
(20:40):
product.
And you can do that with oneproduct.
Just talk to differentconsumers.
Speaker 3 (20:43):
Well, and also I mean they.
You know, in that example theyessentially found this deep blue
ocean that nobody else wasfishing in, you know, and they
didn't have to develop a newproduct.
Like, the product alreadyexists, they already have the
molds, they have a manufacturer,they have.
So there's, there's a lot ofpieces that are already in place
there that they don't have tochange.
It's just the marketing piecethat has to change.
You know, like, okay, we neednew copy, we need a new ASIN, we
(21:05):
need whatever.
Maybe we need a new brand, butmaybe we don't.
Maybe we can sell into the samebrand and just sell that
product under two differentlistings, two different
audiences.
Something to think about Ifyou're going to choose those two
different audiences, does thebrand name that you already have
is that one that's going todistract from the copy and the
marketing?
Is there a better brand namethat you could use?
(21:27):
If there is, maybe you shouldrun that route, but it's not
necessary and as long as at thefront end of it it could be just
testing, like, okay, I don'tthink the brand is helping us in
that category, but I don't knowif it's hurting us either.
So we'll keep the same brandname, we create two separate
listings.
Let's test it and see how thatmarket goes.
You know you can always makeadjustments down the road, but
(21:47):
that opportunity to sell tothose two different audiences is
really critical.
And I think it's important alsoto back up, and that is.
We started this conversationwith the idea that you are not
going to be able to compete onprice with Chinese sellers.
That is not going to happen.
The further we go forward, themore problem that's going to be.
I mean, unless some significantchange happens in American law.
(22:10):
You know whatever you know likemaybe, but given the scenario
that we have right now, there'sno way that's going to happen,
and so, therefore, you can'tcompete on price anymore.
You probably.
If that's the case, you mightas well raise your price if
you're not going to competethere.
But if you're going to raiseyour price now, you need
branding with a big B, likethat's the only way forward.
(22:31):
If you're going to sell at ahigher price point than a lot of
other brands sitting in yourcategory, you have no choice but
to follow this brandingmechanism, and that's the point
at which that target avatarbecomes important, or avatars.
Speaker 1 (22:44):
Yeah, and I'll even throw I know we talked about
this a little bit and I thinkthis is related as well which is
I don't think a lot of folkshave been paying attention to
this, but I think over the longrun, this is going to have
equally, if not more, of animpact for kind of those low to
mid tier price products, whichis Amazon is already testing
(23:05):
serving ads to services andother folks that are not sellers
on Amazon.
So what does that mean?
That means, if you look at adcosts I mean we've seen over the
last couple of years, reallysince from the pandemic and post
pandemic, the ad costs havecontinued to go up as things
have gotten more competitive, etcetera, et cetera Well, what
(23:26):
this means is that ad costs aregoing to continue to go up and
probably will go uppercentage-wise more than they
have over the last couple ofyears, because Amazon
essentially, is going to open itup to be something akin to
Google, where if you're aservice, as long as you're
following Amazon's terms ofservice, even if you're not
(23:47):
selling a product on Amazon now,you can advertise on Amazon.
So that's going to makeespecially when we start looking
at keywords and those types ofthings a lot more expensive for
things like sponsored productads, which are very accessible.
I mean, it doesn't take atleast in order to spend a dollar
.
Now whether that dollar givesyou the return you want, that's
a whole nother discussion, butat least to start spending money
(24:08):
on the ads platform, amazonmakes that incredibly easy, and
so you're going to have a lot ofpeople out there that are in
services and other industriesthat are going to look to Amazon
for a better ROI than whatthey're getting with Google or
Facebook or other marketingplatforms, and that's going to
significantly raise ad costswhen we look at traditional
(24:29):
sellers that are selling FBA onAmazon.
Speaker 3 (24:33):
I also think that there's a few other things that
are going to happen with that, Ithink.
First of all I think mostlyyou're going to end up with two
different types of sellers thatenter in that space and cause
issues, cause a rise inadvertising costs.
I think you're going to haveDTC sellers that have been
selling on their website foryears and they really, really
(24:55):
have their branding dialed inand they understand marketing
right.
These are the guys who reallyknow what they're doing and now
Amazon opens the doors to a muchbetter advertising platform in
the sense of the data that'savailable and how you can target
customers actual buyers, right.
So, as a D2C, if I come intothat space and I've got my
(25:17):
branding really dialed in, I'mgoing to be super efficient with
my advertising, which meansthey're a serious competitor to
people on Amazon.
So costs are going to go upbecause their D, dtc and their
branding is so dialed in.
They can spend more on adsbecause they convert so well,
like just because their brandingis good.
(25:38):
So costs are going to rise as aresult of them.
Costs are also going to risebecause you've got another
subset of those individualscoming into the platform who are
clueless, but they are going tosee Amazon as a tremendous
opportunity for advertising abrand new one.
Right, they're going to throwmoney at it, not knowing what
they're doing, paying PPCs thatare way above what they really
(26:00):
should be paying, and so our adcosts are going to go up again
as a result of that.
So I think those two categoriesof DTC sellers are really going
to cause us some significantproblems once that door opens up
, and it's going to createissues.
Something else that comes tomind is that we may also find
the performance of our listingsbegin to decline, because my
(26:24):
guess is, as they open the dooron that, those D2C sellers
aren't only going to beadvertising in the search
results, they will likely haveaccess also to advertise on our
listings.
So those DTC brands that reallydo have a brand like they've
really built it out and they'vegot it dialed in they're going
to be advertising against yourproduct on your listing, and if
(26:47):
your branding is not dialed in,you are going to lose that
customer to that brand offsite,and so your conversion rates are
likely actually to go down ifyou don't really start dialing
in your brand.
Speaker 1 (26:58):
Well, I think the other thing.
Again, you bring up a goodpoint with the direct to
consumer, but I think the otherthing that I want to point out
there is it's not only thosebrands that are not selling a
physical product on Amazon, butjust, you know, think about if
you're a health coach and youstart targeting supplements and
exercise products.
Again, that's probably a veryminor example.
(27:18):
But there's a ton ofservice-based businesses out
there that can afford to spend$100 per customer for customer
acquisition, and so they'll behappy to pay, you know, 10, 20,
$30 a click, because, quitefrankly, it's probably less than
what they're paying on Googleand Facebook, right?
Speaker 3 (27:39):
now, oh yeah, If you're a fitness trainer or
things like that and you want to, you want to get into the, you
know, start advertising onsupplements and things like that
.
Absolutely the prices that theycharge for a lot of that
consulting.
They can way outpace you interms of what they can afford to
pay.
Speaker 1 (27:54):
So I think, yeah, just keeping that in mind.
I mean you combine those twothings together and that means
for some categories you're goingto see a pretty dramatic
increase in ad costs in some ofthese different categories as
Amazon opens that up over thenext year or so.
Speaker 2 (28:09):
Yeah Well, and then wait till those brands that are
used to advertising off ofAmazon platforms start to see
some of those conversion ratesthat are going to be much higher
on Amazon than they are ontheir websites.
Speaker 1 (28:19):
They're going to see that juicy and they're going to
spend even more, so it's goingto be this perpetual cycle, yeah
, so I mean, I think, just kindof coming full circle to our
conversation that we startedwith, which is the brands that
are going to succeed at leastthe US-based brands that are
going to succeed and reallysurvive over the next few years
are going to be those brands atthe higher end of the pricing
(28:42):
brackets and those premium placebrands.
Speaker 3 (28:46):
Yeah, I also think getting back to something that
we mentioned and of course wetalk about it a lot, but it's
worth reminding people that thisidea of building out and really
getting your brand dialed in abig piece of that is having the
opportunity to actuallycommunicate with your customers.
You need to build a really loyalcustomer base that you can
(29:09):
repeat, sell to, that you canlaunch products to, that you can
consult and send surveys to andpolls to find out what new
products they want, whatfeatures they want, those sorts
of things so that launches gowell.
And so building out that brand.
If you want to make thatconnection with those customers,
you've got to be able tocommunicate with them.
And if you're an Amazon seller,the only way that's happening
(29:32):
is if you're building a list onthe backend.
So if you're not building alist, you're not building a
brand.
I don't care what you do withyour logo, I don't care what you
do with your copy and yourmessaging and everything else.
You are not building a brand onAmazon if you are not building
a list.
Speaker 1 (29:46):
Yeah, I mean, yeah, you're really just renting space
at that point and it's going toput you at a huge competitive
disadvantage over time.
And I mean and I think there'ssome good points there I mean,
email is probably the easiestway to get started on that, or
easiest kind of communicationmethod, but I mean it doesn't
have to be email.
You know you can use physicalmail.
(30:07):
There's, you know, text message, like there's, you know, other
opportunities out there in orderto build that brand and ideally
, you're using a mix of allthree of those in order to, like
you said, build that connectionwith your customers.
So they know you, they like youand they trust you, because
that's going to send you apartfrom 95% of the competitors, let
(30:30):
alone that happen to be fromChina, and, you know, really
help you continue to grow,whether that is on Amazon or
somewhere else.
As you take, you know, expandbeyond Amazon for your brand,
right, all right.
So, as we wrap up thisconversation, talk about what
(30:53):
brand builders can do as we seethis change.
Come on Amazon, what are maybeone action step that you would
give brands to take right now?
Speaker 2 (31:05):
Well, knowing that you're not going to be able to
beat these competitors thatwe've been talking about on
price, I think really startingto understand how you can
increase the value of your brand, even if it's just perceived
value, looking at with anobjective eye on the category
overall and asking yourself howdo I increase the value of my
(31:27):
products and my brand, asopposed to figuring out how to
beat Chinese competitors whowill always have the pricing
advantage over you.
Speaker 3 (31:36):
Well, I think that's really important, to just
recognizing that you can't justraise the price Like if you're
not offering more value, raisingthe price just means you're
going to sell less.
There's no way around that.
So, you know, building out yourbrand, part of that process is
going to have to be the valuepiece, and some of that is in
(32:07):
the product, but some of that,but the level of service that we
offer on the back end, you know, to those individuals that have
that warranty, you know makingthings really super easy for the
customer and fulfilling on thatand just doing everything that
you should be doing.
You should be doing.
(32:28):
But I think at the end of theday, I would come back again to
that idea of choosing eitherdoing the market research to
figure out who the best customeravatar or best customer avatars
are in your category, or justchoosing one or two or three
avatars in your category thatyou think makes sense.
Maybe you can't, maybe there'snot really a good way for you to
(32:49):
do the market research.
On that I would say the keywordresearch.
Somebody sometimes can do that,as Matt suggested with Data
Dive.
Sometimes you can find thatniche that nobody else is
hitting.
But either way, whether it'smarket research or whether it's
just kind of a gut feeling, likeI think these are two or three
different avatars that we couldtry to sell.
To Try it.
See, you know, like really putyour eggs in those baskets, like
(33:11):
say, okay, we're going tochoose these two avatars, we're
going to change the copy, we'regoing to update things, change
the images, really get themessaging on point for that
specific person, and then let'ssee what happens.
Like let's build out the brandaccording to that, get the
marketing on point and and seeyou know which resonates.
Maybe they both resonate, andso we continue to hammer on both
(33:32):
of them.
Maybe only one of them reallystarts to fly wheel, and so then
we put all of our eggs intothat basket.
But you know, at least try it.
You know you really do need todo that If you're going to raise
the price.
You got to know who you'reselling to.
Speaker 1 (33:51):
Yeah, and I would build off that for my action
step.
And again, this might besomewhat controversial, but I
think that lowering your pricefor a temporary amount of time,
for a strategic reason, can makesense, but just lowering your
price to try and drive salesreally is the lazy man's lever.
So think about how you caneither maintain your price or
increase your price by addingadditional value to your
customers, and that doesn'talways mean that you need to
(34:13):
have more of your product or abigger product.
It really can come from a lotof different areas.
And coming back to that big Bbrand conversation and idea that
we brought up earlier in thepodcast, so for folks that are
listening out there, I wouldencourage you to think about you
know, how can you add morevalue under that big B you know
brand umbrella?
Speaker 3 (34:35):
And without extending this out too far, just real
briefly.
I think it's importantRecognize the amount of money
that people spend for peace ofmind.
People pay for insurance andall sorts of things that have
only one purpose peace of mind.
So that is a value proposition.
If there's something related toyour product or the person that
(34:57):
you're selling to, that there'ssomething you can do for them
or offer them that provides themwith peace of mind.
Do not underestimate the valuethat that adds to your product
and figure out how you can putthat into your marketing and
your copy.
Speaker 1 (35:11):
Well, I think that's such a you know as much as I
want to wrap this episode upright now.
I think that that's such animportant concept that you know
well, we get to do what we want,so, and I think it's important
for listeners to reallyunderstand that, that idea of
peace of mind.
So, when you mean when you talkabout that, I mean what pops
(35:33):
into my head right away is isthat again talking about
depending on where you're at inthe market, if you're, you know,
on kind of that upper end ofthe market, and I'll just talk,
you know from, for me personally, from a customer perspective,
I'm at that point where, formost things, I am willing to pay
more for a solution that I havehigh confidence is going to
solve my problem, rather thanpaying less for something that's
(35:55):
going to, quite frankly, be ahassle into my head.
But I guess, when you thinkabout that from your brand's
perspective and kind of you knowwhat listeners should take away
, what does that mean?
You know what?
What do you want listeners totake away from that peace of
mind as a how they incorporateinto their brand?
Speaker 3 (36:16):
Well, I think one of those things is exactly what you
said, which is, if you thinkabout this idea of raising your
price, right, if you're going toraise your price, you are
selling to a different customer.
As soon as you raise the price,you're selling to a different
customer if you raise it in anysignificant way.
So then the question becomesokay, what's different about
that customer versus thecustomer I was selling to before
(36:37):
?
And one of those things ispeople people who have earned
their money, right, so somebodywho has money they're more well
off than somebody else and theyearned it then they tend to be
an individual who is, as yousaid, looking for solutions.
They're a solutions-orientedindividual.
(36:59):
So make sure that you'refocusing on that in terms of
what problems are you actuallysolving for the customer?
And, potentially, what problemscould you solve for the
customer that actually havenothing to do with your product,
but something else that youcould do on the back end that
you could offer them.
That's additional.
You know some service, you knowconnected to it that you could
(37:20):
offer.
That would.
That would again be a problemsolving type of solution.
And how could you advertisethat on your listing, right?
The other thing that comes tomind, of course and I'm always
going to come back to thisbecause it's the way I operate
but is guarantees and warranties.
If you can generate a goodenough review profile that makes
(37:40):
it fairly obvious that youactually stand behind your
warranty or guarantee dependingon the type of product, that is
because it doesn't make sensedepending on the product you use
one or the other but if you cancreate a profile that makes it
clear that you stand behind it,then a warranty or a guarantee
does offer additional peace ofmind and it does add value, but
(38:02):
you have to stand behind it.
You can't offer a warranty andnot stand behind it, because
anytime you deny a claim whetherit's warranty, guarantee,
whatever, if somebody asks forreplacement or asks for refund
or whatever and you deny that,you guarantee a negative review.
On Amazon and pretty muchanywhere online these days, you
guarantee that negative review.
If, on the other hand, you makethat process super easy for
(38:25):
that customer and you fulfill onit every time, then you almost
certainly guarantee a five-starreview out of that customer, and
that differential betweenadding a one-star review to your
listing versus adding afive-star review to your listing
.
That is an exponentialadjustment in terms of how that
affects your listing.
So I think warranties andguarantees are great.
(38:46):
Just be careful with them,because you better be, you
better fulfill on it.
Speaker 1 (38:49):
Yeah, well, and a couple of things there, and I
know we've talked about it acouple of times before, but you
know, even if you don't get thatfive-star review from it,
preventing a one-star is theequivalent, you know, of getting
you know like five, five to 10,five-star reviews, especially
with how the system on Amazon isweighted.
And then I would just encouragelisteners you bring up a great
(39:09):
point and obviously you have alot of great experience when it
comes to warranties.
I would encourage listeners tolisten to some of our episodes
where we talk specifically aboutwarranties and guarantees and
how you incorporate that intoyour brand and really get into
the details, because I thinkthere's a lot of value to be had
for listeners that want to havethat premium brand and are
(39:31):
looking for something else toadd value to their customers and
kind of that peace of mind thatyou mentioned.
Speaker 3 (39:38):
Yeah, I was just going to say briefly too.
It's really important torecognize there are far more
products that people are sellingthat you could easily apply a
warranty or guarantee to and beprofitable on it, not lose money
on it.
Not everything, every productdoesn't work, but far more
products than people think youcould offer a really strong
warranty or guarantee on andstill come out of it.
Speaker 1 (39:59):
Yeah, and again, I think some of the previous
episodes that we've done reallydo a good job of covering that
and how to think about how toadd a warranty or guarantee to
your product.
So if you're wondering detailsof how you do that, I would
encourage folks to go back andlook at some of our previous
episodes, because we've coveredthat in detail and with that, I
think this is a great place tokind of wrap up and talking
about what your brand's futureshould look like and really
(40:22):
thinking about how you cancontinue to add value so you can
be more on that premium end aswe see more and more competition
at that medium to low pricedarea that we're going to
continue to see on Amazon andall the challenges that occurs.
So with that, thank youeverybody for listening and
we'll be back here again foranother Tactics Tuesday.
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