D2C Brands and Amazon. Frenemies?
Leveraging Nature, Social and Me
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DTW
During the Week, more details emerged about Facebook’s new audio products thus effectively pitching it in the path of ClubHouse and Twitter. Of course, the existing creators favourites are Spotify, Apple podcast and Amazon podcast. Everybody including the standalone creators are looking for the next pathway to customer’s consideration set and what could be better than being in her ears directly.
Though Amazon is still catching up on the audio products other than Alexa which are their sleuth in customers’ homes. They have an unprecedented last mile connectivity which make them inevitable partner for any retail brand whether national or D2C. During the last festival season, 600 sellers saw more than Rs 1 crore in sales and nearly 6,500 sellers saw more than Rs 10 lakh in sales during Amazon's Great Indian Festival sale event. As per the Business Standard report , Amazon received orders from 99.3 per cent of India’s pin-codes.
This extraordinary reach makes Amazon indispensable for even smaller brands including many D2C brands. Many purists would argue that selling on Amazon or any other marketplace does not make you a D2C as you might still be using an intermediary. In fact , many anti-marketplace activists would advocate discovering D2C brands on marketplaces but going directly to D2C brand websites to complete the orders thus saving them about 30% commission.
Amazon deserves special mention because it is not just an intermediary marketplace but also a powerful seller on its own platform thus making it difficult to avoid the suspicion of using the sellers’ data to improve its own products. Both Facebook and Google act only as gateway to customers through their ad platforms and thus end up on the right side of D2C brands. Apple is an exceptional player as it has taken the mantle of privacy focussed platform thus negating the narrative of being a big bully through its absolute control of hardware and App Store. Emerging platforms like Pietra are trying to solve the conflict of interest problem by being an enabler. They help a creator select a manufacturer, customize her product, hold samples, and order her first batch of inventory right away thus covering everything from inspiration to unboxing.
What Amazon brings in its relentless focus on customers and its extraordinary data about customer behaviour on its platform. Over last decade, Amazon has reduced its dependence on Google for product search and a large proportion of product searches now originate on Amazon this making it indispensable for brands with smaller marketing budgets. This coupled with personalised recommendation algorithm and seamless buying experience makes it harder for smaller D2C to avoid being on Amazon marketplace. To conclude, despite the criticism of abusing sellers’ data to further its own agenda, Amazon can still help the D2C brands through an intricate play of last mile connectivity, large customer case and extraordinary personalization.
An excerpt from Jeff Bezos last letter to Amazon’s shareholders has an interesting advise for all of us- Individuals, Businesses, Communities.
If you want to be successful in business (in life, actually), you have to create more than you consume. Your goal should be to create value for everyone you interact with. Any business that doesn't create value for those it touches, even if it appears successful on the surface, isn't long for this world. It's on the way out.
OTW
Over the Weekend, I had extensive discussion with my village Pradhan and college friend on various aspects of rural development but mostly around preparedness and response to Covid19 pandemic. I was much impressed by his vision and commitment to ensure health and economic activity for the larger population.
April 24th also happens to be National Panchayati Raj Day to commemorate Panchayati Raj Act (73rd Amendment) coming into force on April 24, 1993. Of major legislation introduced over last few decades, PRA is one of the most consequential for large Indian population. During the pandemic, it has been seen that local leadership especially in rural areas has been crucial in fulfilling the twin objectives of protecting health and ensuring economic sustenance. They have been instrumental in setting up contact tracing and managing quarantine facilities like the one created in my village during the second wave. Central and state government must empower village leadership to focus on three strategic areas of containment, clinical management and community engagement.
Young leaders like my college friend Sudhir Raturi are making it easier for citizens to face the challenges thrown by Covid19. Panchayats are almost like D2C brands as they are closest to direct democracy that we could imagine and execute. The problems and problem solvers are both local and thus the leadership is able to connect better with local needs especially in a VUCA (volatility, uncertainty, complexity, and ambiguity) world. More power to Sudhir and other frontline leaders.
Let us make it easier for Sudhir and others by staying at home while continuing to Wear Mask, Maintain Six Feet Distance and Wash Hands. Appeal to my younger friends - Please get vaccinated as soon as possible. Hoping to see you soon in person.
I Love You
Shailendra
PS- If you have not responded yet, please answer this survey to share your feedback on newsletter.
I agree with the statement that 'despite the criticism of abusing sellers’ data to further its own agenda, Amazon can still help the D2C brands through an intricate play of last mile connectivity'. Amazon is not only giving them a platform to sell but is also helping them in their marketing and surviving tactics in this pandemic. Much like with Zomato, small food places and Dhabbas has got a chance to sell even in the lockdown keeping their business alive
I have read the newsletter "So, What's the Big News?", this is amazing how a platform like Amazon have the hold all over but my question is on the part "Facebook is about to launch its own audio product", what are your opinions on this as currently there's news about how the privacy of millions of user is on stake.
From this perspective, the new launch for any brand which is big enough yet making mistakes, which keeps customers' faith at stake, is even a correct decision?