John Pak is a Client Project Manager at Bobsled, an Acadia company
Earlier this year, an apparel brand came to me with a question. The brand was planning to upload many of its products to Amazon, and it wanted to know: should it list all of its catalog on Amazon, or should it save some products to list exclusively on its DTC site?
Since the rise of e-commerce, brands have been asking themselves this very same question. The answer, however, remains complicated.
On one hand: Amazon is the largest e-commerce platform in the world by revenue, and keeping a product off of Amazon risks missing a large swath of potential customers. Amazon also doubles as a product discovery engine, which could particularly benefit non-legacy brands.
On the other: Even as you put most of your catalog on Amazon, leaving a few products to sell exclusively on your DTC site gives you greater control over your customer relationship. By having customers directly checkout with you, you can gain a greater insight into who they are and what they want. When someone visits your DTC site, it is also easier to re-target them with advertising later.
So how do you pick which of your products to cross-list on Amazon, and which, if any, to save as a DTC exclusive?
Here’s a checklist.
How big is your catalog? If your overall product catalog is small—by which we mean you have 5-10 main products—then you should probably put all of it on Amazon. You want to have a decent assortment available on Amazon. That way, a) you can cross-sell to existing customers and b) shoppers have multiple pathways through which to find your brand in the first place.
You should only start to think about listing certain products as DTC exclusives once the size of your product catalog starts creeping into the high double digits.
Is the product evergreen? Any product that receives high search volume and high sell-through rates consistently throughout the year should absolutely be listed on Amazon. As they accrue positive reviews and sales velocity, evergreen products usually see their rankings on Amazon—and subsequently, their sales—improve.
You also don’t have to worry about overpaying in Amazon warehouse and storage fees the way you might with a seasonal product.
How much does the product cost? FBA makes selling on Amazon incredibly easy, but it also takes a large cut of your revenue. This means lower-price products never see big margins on Amazon. If your product retails for under $10, on Amazon, you’re making pennies on the profit, from what I’ve seen
These low-price products are usually the best candidates for DTC exclusives since these can be sold under a free-shipping threshold that you control. In this model, your profit margins will be higher on your own site than on Amazon.
How customizable is it? Amazon only lets shoppers customize their products across a few key categories. And often, only two variation themes are available, like size and flavor. But many brands want to offer a more sophisticated customization experience.
On its DTC site, the sunglasses brand Ray-Ban, for instance, asks its customers to choose not just the frame color, but also the lens color, size, bridge fit, and more. Shoppers can also design their own sunglasses through its My Design feature.
Ray-Ban lists many products on Amazon, but people who visit its website get far more in-depth customization options.
Source: Ray Ban
Highly customizable products like this are good candidates for DTC exclusives.
Do you have a rewards program? If you can convince customers that there is value to them in buying from your DTC site vs. buying from Amazon, then it’s worth reserving some of your products as DTC exclusives.
One easy way to do this? Build a rewards program. The skincare brand REN, for instance, has a Clean Rewards program that gives shoppers points every time they buy a product, refer a friend, sign up for their email list, follow them on Instagram, and more.
Source: REN Skincare
Are third-party sellers already offering your product on Amazon? If third-party sellers are already selling one of your products on Amazon, it’s not worth trying to make that product into a DTC exclusive.
Will you be doing exclusive drops or add-on products? Some of the best exclusive DTC products are add-ons or limited releases that will have special appeal to your most loyal customers.
A great example is the recent collaboration between the hot sauce brand Truff and Hidden Valley Ranch. The Truff ranch sauce is a whimsical product, designed more to drive engagement with loyal fans than to become a blockbuster product of its own.
For that reason, Truff launched it exclusively on its website. It also doubles as a way to gather customer data: New inventory comes in stock in small batches, so the company has a waiting list that allows it to capture customer emails.
You want to meet your shoppers where they are. While it’s smart for brands to entice people to buy from their DTC websites, they shouldn’t expect everyone to shop that way.
Let’s circle back to that original apparel example. I recommended that the apparel brand that reached out to me start by listing its most evergreen products on Amazon first. The brand also came up with a clever release plan for new products. Now, it launches every new product on its DTC site first, to capture the enthusiasm and spending money of its most enthusiastic fans. After 2-3 months, it uploads those new products to Amazon too.
The client acknowledges that many of its customers want to shop on Amazon, but it has still found ways to capture the benefits of a DTC exclusive.
In our conversations with clients, we have noticed that some executives are moving away from the idea that they should eventually funnel all of their customers to their DTC site. Instead, brand owners are increasingly accepting that even some high-frequency buyers may only ever buy from them on Amazon. Your first priority should be to make the shopping experience as smooth as possible, no matter what platform it happens on.
In general, we recommend erring on the side of listing most of your products on Amazon, especially when those products are higher in price. But there are plenty of times when it does make sense to retain a product as a DTC exclusive. You just have to be thoughtful about it: the products that are customizable, seasonal, low-price, and more are probably your best bet to keep off Amazon.
We help brands answer important strategic questions like these with our Amazon full channel management service.
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Tagged: Launching on Amazon, Amazon Account Management, Bobsled Marketing, Omnichannel, Amazon optimization