— August 13, 2019
The deck is stacked against luxury brands when it comes to the major eCommerce platforms. Amazon, Target and Walmart all have intricacies that make breaking through as a luxury brand difficult. Some of the challenges are structural with the platform themselves – but shifting consumer preferences also make success on the major eCommerce platforms difficult for luxury brands.
Over two-thirds of U.S. consumers start their product searches on Amazon. Not having your brand visible on the platform limits your chances of being found. But the way Amazon’s A9 search algorithm is written creates its own obstacles for high-end brands.
Built for Conversions
Amazon’s stated goal is to provide the best experience for shoppers. And to do that they rely on putting the most relevant products in front of consumers every time they start a product search. How does Amazon determine relevancy?
Customer conversions is one of the most powerful relevancy signals in the Amazon algorithm. Product rankings and visibility is largely determined by what products are being purchased the most by Amazon shoppers. Brand recognition or loyalty on the platform has little to do with that.
Over 50% of Amazon shoppers said they are comfortable buying an unfamiliar brand on Amazon than they are in a retail store. If brands do not matter to Amazon shoppers – what does?
Amazon conversion rates go hand-in-hand with product pricing. Platform visibility is tilted in favor of sellers that offer the best pricing, customer service and product quality – regardless of brand recognition. And this is exactly where luxury brands struggle to compete.
A survey of Amazon shoppers revealed that pricing was the most important factor when making their purchasing decisions. And because of that good quality, lower priced items will have higher conversion rates and rank higher within Amazon search engine results.
This doesn’t mean that luxury brands should completely give up on the eCommerce platforms. There are different options for them to take when it comes to their eCommerce platform strategy.
What Luxury Brands Can Do
While brand names like Nike and Adidas are the exception, short-term success on platforms like Amazon is difficult for most high-end brands. But there are options that brand owners should consider to capture more sales in general and make a long-term play on eCommerce platforms.
Create a Presence on eCommerce Platforms
Listing your products properly on Amazon is essential for every brand. Close to 70% of online shoppers often compare products on brand-owned websites to the product listings on Amazon. Customer reviews on Amazon are great social proof when making a purchasing decision. Also, thrifty shoppers may be looking to see if they can save on shipping or even price by purchasing through Amazon.
Building properly optimized listings with high-quality images and content can help convey your branding and product quality to customers. It will help you project the same brand image and appearance of quality by investing in your eCommerce presence off your own website.
Compete for Branded Search Terms with Advertising
Utilizing Amazon’s advertising is another way that luxury brands can convert customers on Amazon. It is important to protect your brand by advertising on branded search terms. Your competition can bid on keywords related to your brand or product names.
While the competitor’s ad performance will probably be low (considering the shopper was searching for your brand to begin with), it makes the consumer aware of alternatives to your product that they may not have known before. And that can cost you brand loyal customers.
Focus on off-Platform Marketing and Brand Reputation
There is no doubt that spending more time on off-platform marketing efforts is where luxury brands should be spending the bulk of their energy. Influencer and content marketing should be the main way that you attract new customers – not by focusing your efforts on competing with low-priced Amazon products.
As we said before, the majority of shoppers on branded websites are searching Amazon anyway. Creating your presence on platforms like Amazon, and then protecting it with advertising, will help you capture potential sales without making it a huge focus.
Content marketing with blogs, videos and through social media can provide a much better return than doing huge product giveaways on Amazon to get to page one. It will also provide a stronger marketing channel for you to grow your brand over time.
The lure and promise of quick and fast Amazon sales is attractive – but the reality is your luxury brand will more than likely be fighting a losing battle.
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