Every day there are about 3,400 new sellers on Amazon. And most importantly: 86% of them are already profitable. With these figures, it is not difficult to think that the Amazon-native brands (the brands that are born and sold on Amazon) are going to star in the next transformation of the brand ecosystem.
The first transformation: Digitally native vertical brands (DNVBs)
The They are, as their name in English indicates, those brands that are natively digital, that are born online and are sold online.
Their products are usually cheaper than those of traditional brands, although they are not considered low cost, but fair price: By selling without intermediaries and without commissions to wholesalers or distributors, they can offer products directly to the final consumer and, therefore, cheaper than those of traditional offline brands.
Without going any further, the term digitally native vertical brand was coined by Bonobos: one of the most profitable DNVBs and was acquired by Walmart for 310 million dollars.
Nevertheless, the vast majority of these models do not end up being profitable. The reason is usually in attracting customers, which is the most complicated part of the strategy of these companies. They can easily reach revenues in the tens of millions, but the moment of having to scale them, find more clients and increase their value is difficult.
The second transformation: The Amazon-native brands (ANBs)
The Amazon-native brands are those brands that are born on Amazon to be marketed on Amazonunlike the DNVBs.
Currently, More than 50 % of products sold on Amazon come from of your marketplace business model, in which sellers are those who sell their products through Amazon. But why is this second transformation going to be revolutionary?
1. The brand benefits from the Amazon storefront
The main benefit of selling a product on Amazon is the growing environment. Having your brand on Amazon means that you have your products on an environment that grows 30% annually.
Customer acquisition (the biggest obstacle for digitally native brands), is in this case covered by amazon. Sellers who sell their products through Amazon pay a commission of only 15% on the PVP. And we say “only” because the profitability of attracting customers with Amazon compared to this commission is more than profitable.
If traditionally the brands of the offline era captured their customers with their stores on Passeig de Gràcia or Gran Vía, the equivalent analogy is that digital brands today sell more products if they are in the Amazon storefront.
2. The market is democratized
Amazon allows anyone to start selling, unlike the traditional model, where success is restricted by channel access. Regardless of the agreements and strategies between brands and retailers, all new brands can be introduced on Amazon under equal conditions and without channel limitation.
3. Product reputation is prioritized
In this case, the branding used in traditional offline brands make way for product marketing. The customer, instead of being convinced by a flashy banner or advertisement, is convinced by the product’s own reputationbuilt by the opinions of consumers and the number of sales.
4. The user experience is the same
As a user, there is no difference in the experience when buying a product from the retailer’s own site than from a marketplace like Amazon. For practical purposes, for those who buy, everything is the same, the way of buying remains practically intact.
5. The brand can be scaled and taken outside of Amazon
It is a less frequent option, but the brand can be extracted from Amazon and set up its own online store. It is also still possible that a certain product is start selling on other offline retailers, taking advantage of Amazon’s reputation and multiplying its distribution channels and profits. For this, the brand’s resources have to have a certain scope, which certainly not all ANBs have.
From among most notable Amazon brands we can stand out Anker, an electronic accessories brand specializing in portable batteries and chargers. Founded by Steven Yang, a former Google engineer, this company made a public offering for sale with a valuation of 8,000 million dollars in 2020. In addition, it closed the year with a growth of 57%, achieving more than 1,000 million dollars in sales.
Another success storyin this case Spanish, It’s the one from Cecotec. The famous small appliance brand was born on Amazon and became enormously popular in part thanks to its flagship product: the Conga robot vacuum cleaner. Cecotec is today the sales leader in small electrical appliances in Spain. But not only is it a sales leader in the Amazon marketplace, but it already sells in other offline retailers and has 400 million euros in sales. This is a clear example of a brand that was born in Amazon and little by little and almost silently becomes a leader in its sectordisplacing traditional brands.
How to scale an Amazon-native brand
In all this context born : a company designed for buy brands, apply synergies and scale them. Yaba is dedicated to buy marketplace brands (especially ANBs), companies that have created their own brands and are selling them on marketplaces like Amazon. When these ANBs reach a point of maturity where they are ready to sell, Yaba can spring into action to grow them.
As we said at the beginning of this article, 86% of ANBs already have profitable businesses, but the process of scaling the brand is complex: lack of resources and structure makes the step difficult to take.
We experienced the first great transformation of the brand ecosystem in the last decade, when natively digital brands such as Hawkers, Casper or Glossier emerged, among many others. But today, we are ready for the next transformation, the one that is already being produced and the one that will change the brand market in the coming years: the Amazon-native brands. Although at the moment we can only see the tip of the iceberg, there is a whole conglomerate of brands such as Ankers, Florence or Cecotec, which together with a company like Yaba, will break the principles of traditional marketing and advertising.
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