Memo To: Jeff Bezos, Founder and CEO of Amazon.com
Memo From: Fast Company Marketing Roundtable Advisors
RE: Amazon Basics branding
This past weekend, Fast Company convened a virtual roundtable of marketing strategists and brand consultants solely for the purpose of advising Jeff Bezos, the founder of Amazon. The reason? Amazon Basics, Bezos' first foray into a private label product line. Shoppers can now buy blank DVDs and HDMI cables branded with the Amazon seal, with more products to be added to the line in the months ahead.
Product branding can do wonders for a company ("Intel Inside") or cheapen its brand (generic...anything). We convened a group of 11 experts to advise Amazon on how to do the former and avoid the latter. The best part is that great minds and advice are being offered up for less than the price of a DVD 100-pack…yes, for free…with no shrinkwrap.
Do White Label Products Make Sense for the Amazon Brand?
Your business today operates in a number of product categories successfully (books, electronics, diapers). Amazon’s brand essence is not tied to specific products or categories. Your brand is defined by the way it consistently delights users with a high-quality, reliable online shopping experience. Jennifer Aaker, Professor of Marketing at Stanford’s Graduate School of Business, says Amazon Basics can enhance the customer experience: “It doesn't necessarily boost the quality associations with the Amazon brand categorically. But it deepens and extends the Amazon brand experience beyond being simply a storefront.”
According to David Martin, President of Interbrand New York, “Amazon has managed their brand into the role of a ‘confidence’ brand. Loyalists think of the brand first for sourcing a wide variety of products, especially electronics. It’s logical to leverage this ‘confidence’ to stand apart in the commodity segment of everyday electronics.” What is Amazon’s “trust” worth?
Was Launching Amazon Basics a Good Move?
The vast majority of our experts endorse the Amazon Basics strategy. Many cited other retailer private label successes that should give Amazon ‘confidence’. “Consumers often rely on brand name retailers, electronic or otherwise, to preselect store assortments. The Amazon brand is trusted and, just like Sears-branded Kenmore appliances, Amazon may be able to do the same,” says John Quelch, Professor of Marketing at Harvard Business School.
The strategy will help the company boost profits, strengthen its position with suppliers, enhance the brand, and provide more value to the customer. Mark Ritson, visiting Associate Professor of Marketing at MIT Sloan School of Management and brand consultant to LVMH and Ericsson, says, “low supply costs will ensure that Amazon will likely make more money per product on their line than from selling other suppliers’ products.” And Scott Davis, Senior Partner at Prophet, thinks, “the supplier community is going to have to figure out how to play nice with Amazon or they could risk getting totally boxed out if this business takes off for Amazon, which I suspect it will.”
And Amazon Basics is likely just the beginning. Alex Goldfayn, The Technology Tailor and consultant to consumer electronics manufacturers and retailers, expects “25 products or more here in time for the holidays.” Goldfayn also sees the consumer benefiting from more choice and better value. “It's not going to cheapen their brand if they help customers save money on household tech ‘basics’ that some companies run up prices for. “
But risks remain. Not everyone agrees that Amazon is making a smart move. “Putting the Amazon brand on a line of value products will damage the Amazon brand," says Tim Calkins, Professor of Marketing at the Kellogg School of Management. "Is Amazon a value player or a technology and innovation leader? I’m not convinced the team at Amazon has figured this out.”
Jez Frampton, Group CEO of Interbrand, wonders “why these ranges (or more importantly the lack of several price positions, i.e. premium, standard, budget) are strategically important to their business or their customer relationships. I would have encouraged a clear offer on the core as a starting point.”
“If Amazon has plans to call their entire line of white label products--current and future--‘Basics’ they have made a giant mistake: I would never consider an HDTV a basic," says Martyn Straw, Former President of Interbrand.
Four Strategies That Will Make Amazon Basics Successful:
1. Realize your vision, which is customer-centric
“I do believe that this example is authentic and true to Amazon’s ultimate aspiration of becoming the world’s largest on-line retailer—from products and services to the support systems required to succeed—and supports their stated brand perspective of wanting to become the Earth's most customer-centric company. To totally fulfill this newer part of their promise they will have to figure out how to provide the levels of on-line support that their recently acquired brethren Zappos.com possess or that the Genius Bar provides in support of Apple today.” (Scott Davis, Senior Partner, Prophet)
2. Begin low, small (plan for good, better, best)
“Start with offerings in low differentiation, low involvement categories (like USB cables) and as consumer comfort with the idea of Amazon PL grows, expand the offering into more ambitious categories.” (Mark Ritson, visiting Associate Professor of Marketing, MIT Sloan School of Management, and brand consultant to LVMH and Ericsson)
3. Play to win, succeed with the 5Cs
“Give consumers more control, more choice, constantly refreshing change, customization and convenience…Only enter categories where you can quickly demonstrate (particularly in the product itself and the product experience) that relevant differentiation. Then you’ll establish a valuable expansion of the Amazon brand.” (Scott Miller, Chairman, Zyman/Core Strategy Group)
4. Beware of overreaching, be accountable
“If I can’t connect my TV for this evening, I will be very upset and I will fault Amazon. This damages the brand. It creates another level of accountability and responsibility for the Amazon brand. Best Buy has developed the Geek Squad and Apple has the Genius Bar in order to serve clients.” (Erich Joachimsthaler, CEO, Vivaldi Partners)
That's all for now, Jeff. Please let us know if we can be of further assistance. We are always open to having the Roundtable in Seattle or perhaps discussing a great BOOK idea!
Fast Company Marketing Roundtable Advisors
Kevin Randall is Director of Brand Strategy & Research at Movéo Integrated Branding (email@example.com). Kevin consults on brand matters to Fortune 500 companies and specialized healthcare and business-to-business organizations. His focus is understanding, integrating and applying research and brand strategy to create business and customer value. Kevin has been invited to speak on brand topics by Google and leading business schools and his articles have been published on six continents. His Movéo clients include Siemens, CareerBuilder, Molex, Hospira and Cancer Treatment Centers of America. Prior to joining Movéo, Kevin worked for Interbrand developing brand strategies for companies such as Abbott, Alcatel, Cricket Communications, Ford, GE, McDonald’s, Motorola, Nationwide, Roche, Smucker’s, and 3M.