Goodbye, Steak Dinners: Amazon is the Ultimate Game of ‘What You Know’
It’s Sunday morning and you’re walking in the park with a friend on the way to lunch. You come upon two elderly men setting up a chess game.
Your friend turns to you and offers a challenge: Pick the winner and he’ll buy lunch. If your player loses, the meal is on you. He’ll even let you pick which competitor you’d like to back.
It’s a nice day and you’re not in a hurry, so you indulge.
You briefly introduce yourselves to the combatants and find out one of them is a former world chess champion, while the other is a retired executive from Milton Bradley.
Who do you choose?
This, of course, is a rhetorical question.
A version of this situation, however, is one we see play out quite frequently here in the world of e-commerce:
A brand is looking for a partner to implement a strategy that will increase their sales and profitability on the ever-competitive Amazon channel. Given the self-service nature of the channel, the logical choice is one who truly understands the ‘game of Amazon’ and how to ‘win.’
However, the traditional retail mindset — concerned foremost with brick-and-mortar considerations like shelf space – often gravitates naturally towards the option that fits an outdated model, focused on decades-old status quos and rounds of golf.
So, rather than evaluating potential partners by their strategic knowledge of the channel, they’re drawn to direct associations with Amazon itself.
Back to our two old men in the park, if the goal were to pick the player who knows the most about the process of manufacturing the chess pieces, or the one who could get your idea for a new board game in front of the right people, the retired executive is likely the better choice.
But Amazon is a playing field where the more knowledgeable, strategic, and specialized competitor is going to win every time. And just as manufacturing chess boards doesn’t mean you’re any good at (or even play much) chess, the vast majority of category managers and buyers at Amazon spend very little time operating tactically within Vendor or Seller Central.
There are, of course, caveats to this, and situations where contacts within Amazon’s walls can be very important. From time to time, these contacts are helpful in knowing about and being provided access to new or special programs.
For that reason, MPS maintains relationships with a host of current category managers, buyers, and with leaders at programs like AmazonFresh and Prime Now. And, for example, we are currently working with Amazon within their new agency-driven self-service AAP platform.
But connections alone do very little to increase a brand’s visibility, conversion rate, return on ad spend, or revenue on the channel; nor can they provide any additional ability to control costs or lessen the effect of 3P sellers.
After decades of shelf space being the ultimate determinant of a brand’s success, Amazon’s very structure is that of a wide-open, strategic battle for visibility and market share.
Under this new paradigm, steak dinners and connections are no longer competitive advantages. It’s simply the smartest, most strategic competitor that rises to the top.