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The Internet Retailer Conference + Exhibition (IRCE) @ Retail X was held in Chicago between June 26-28, 2019. The event featured analysis of the most important factors that will shape e-commerce through the end of 2019 and in the years ahead. Two major topics discussed throughout the event were a dilemma for e-commerce players of whether to utilize Amazon’s services and the evolution of signals of credibility in e-commerce.
Marketplaces continue to gain traction globally and within the United States. Per speaker Fareeha Ali, 92% of US consumers shop from marketplaces. While 55% of US consumers purchased from a U.S. marketplace other than Amazon, Amazon is still the dominant e-commerce marketplace in the U.S. While Amazon presents several major benefits for brands – including lots of traffic, the ability to easily reach international audiences, and reliable shipping.
Fahim Naim, the founder of eShopportunity, laid out some of the risks brands face in deciding to sell on Amazon. These include possible cannibalization of a brand’s sales from other channels, the fact that Amazon is the one who owns the customer relationship and the likely possibility that Amazon’s policies will change in unfavorable ways for third-party sellers in the future. In short, there are big benefits to selling on Amazon, but they come with sharp costs.
A number of speakers at IRCE @ Retail X gave advice on whether brands should sell on Amazon and how those that decide to do so can work to protect themselves and get the most out of the relationship. Two of these were Moiz Ali, CEO and founder of Native Cos, and Eric Hutchinson, co-founder of Resident, in a session titled “How to Balance Direct-to-Consumer and Amazon”.
Moiz argued that it’s possible to launch a brand without Amazon, but that “the larger you get, the more Amazon makes sense.” Hutchinson echoed this advice, highlighting that for Resident, Amazon only becomes an option once a product has gained sufficient scale to be drop shipped from the manufacturer. Both also work to keep overall control, and neither puts their full product portfolio on Amazon.
Another topic discussed often at IRCE @ Retail X was the fact that while building trust with consumers is only growing in importance for e-commerce players, the ways brands signal credibility is changing. Joe Gagliese of Viral Nation and Taylor Offer of Feat Socks argued that the role of influencers has changed rapidly in the last three years.
In 2016, an influencer could generate large sales for brands simply by posting about an item. Now, influencers are so prevalent and involved in marketing that it seems almost every post is a promotion. In a session titled “Go Offline to Build Online: Plan and Track Brand Awareness”, speakers Chase Fisher, founder of Blenders Eyewear, and Luke Droulez, CMO of Parachute Home, both touched on the evolving role of influencers. Both argued that the future of influencers will depend more on non-conventional influencers, such as athletes and podcasters, who can add a dimension to the relationship with the brand beyond social media influence.
As conventional influencers see their role in product discovery and promotion reduced, consumers inevitably look to other sources to gauge a product’s credibility. One major reason was given by multiple speakers, including Naim of eShopportunity, as a reason for brands to sell on Amazon despite the possible downsides, is the role Amazon reviews play. Amazon reviews and a strong star rating conveys a high degree of credibility to shoppers. Per Naim, some brands even find that as a result of Amazon reviews, brands find that sales on their own site increase.