Can brands — and now Etsy — compete with Amazon?

Amazon launching Handmade to compete with EtsyI am not an Etsy shopper but am pained nonetheless to hear that Amazon is launching Handmade — a marketplace that will compete directly with Etsy.

The truth is that I am conflicted about being pained. In my personal life — and I know this is true for many of my industry colleagues — I buy many things from Amazon.

In my professional (digital marketing) life, though, I prefer to buy from brands direct because I’ve seen Amazon assert itself as a category killer, which is not good for competition and causes lots of angst in the industry. This was a big topic at  IRCE15, same as it’s been in prior years.

From the consumer’s perspective, buying from Amazon is usually cheaper and definitely easier.  Brands realize better margins when they sell direct, and they need to put those to work to better compete on price. Lower prices resonate with shoppers as does an improved site experience and frictionless checkout. For brands struggling with mobile conversion rates, try giving discounts on merchandise purchased through smartphones, and it will help. See Red Roof Inn’s execution of this tactic to the right.Red Roof Inn gives promotional discount for smartphone users

These are just some ways brands can compete smarter and more effectively against Amazon. For now, Amazon will remain a powerhouse distributor because their footprint is so large. Brands are not likely to give up such a high volume of sales even if the margins are tight, the customer data they receive back from Amazon is restricted, and/or that Amazon is competing against them in digital marketing, driving up their marketing costs.

In Amazon’s decision to compete With Etsy, though, I believe they are exploiting another set of vulnerabilities that are unique to Etsy.  Etsy merchants are prohibited from mass producing merchandise and/or using partners to ramp up production. Ultimately, the more successful an Etsy merchant becomes, the less likely they are to benefit from it due to compliance with Etsy’s Terms and Conditions.  This is likely what Amazon is looking to blow wide open: a plethora of budding retail operations looking for a partner to help them scale. Amazon also has controls in place to a address counterfeiting — one of a few reasons that Etsy’s stock has declined in the past month.  

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