D2C Models on Amazon: Benefits and Strategies

If you are not currently selling D2C on Amazon, you may want to add it to your 2024 strategic roadmap.

Consumers who regularly buy directly from brands online have grown from 60% in 2023 to 68% in 2024. The trend on Amazon in recent years is hard to miss, with most new brands adopting a D2C model on Amazon as their default strategy.

In the current economy, shoppers are prioritizing better pricing, free shipping, and free returns, which makes Amazon a no-brainer for brands looking to pivot to or expand their D2C model.

What are the Benefits of a D2C Model on Amazon?

Stronger Brand Presence

One of the significant benefits of a D2C model on Amazon is the ability to establish a stronger brand presence. Shoppers have a high degree of confidence in their purchases when buying directly from the brand. By owning the channel, you can ensure that your brand store, brand content, product pages, and messaging are accurate, cohesive, and consistent with your branding across other channels.

Third-party sellers can often be more opportunistic than strategic, leading to duplicate listings, unauthorized bundles, messy product pages, incomplete or inaccurate information, and a confusing experience for shoppers. With fewer sellers, you can better understand demand and optimize the efficacy of your PPC ads. This clarity allows for more accurate identification and implementation of growth strategies.

Stable Pricing

A major advantage of the D2C model on Amazon is stable pricing. By eliminating all or most of the other sellers, your pricing becomes stable and your margins predictable. Although channel control can be challenging, it is achievable and allows you to price your products consistently with other sales channels. This stability eliminates price as a deciding factor for shoppers. Additionally, this control gives you the flexibility to conduct price testing to determine the best margin-to-sales ratio.

Increased Sales

Can adopting a D2C model on Amazon actually increase sales? Yes, if implemented well. Here’s how:

Clear Data: Better insights into effective growth strategies.

Inventory Visibility: Helps in staying in stock and improving demand planning.

Efficient Ad Spend: Higher buy box hold rates mean your ads are visible more often, with no competition for keywords against other sellers on the same listing.

Improved Organic Placement: Amazon’s algorithms favor products with more traffic, sales, and reviews, leading to better organic placement over time.

Hyper-Personalization

Another benefit of the D2C model on Amazon is the use of hyper-personalization. Amazon, for example, uses hyper-personalization to deliver timely and relevant product recommendations based on a customer’s search history, leading to a smoother shopping experience and increased purchases. Similarly, fashion brand Dynamite employs hyper-personalization to send curated email campaigns related to specific customer interests like office wear, demonstrating an understanding of their customers' real-world needs.

Overcoming Challenges in Adopting a D2C Model on Amazon

Loyalty to Existing Accounts

Many brand owners are concerned about the impact a D2C pivot may have on existing accounts with long-term strategic partners. While loyalty is admirable, it's essential to prioritize what makes sense for your business growth. Adopting new strategies, like the D2C model on Amazon, can elevate brand value, support sales in other channels, and capture more market share from shoppers who prefer Amazon.

Fear of Losing Sales

Some brand owners worry that selling directly on Amazon will cannibalize their website sales. With over 2 billion site visits every month, customers are likely already looking for your products on Amazon. The goal is to retain customers at higher margins. Consider doing the math to understand your actual margins, factoring in higher conversion rates, more unit sales, and less impact on your fulfillment team. The myth that Amazon FBA and Platform fees make it impossible to profit is not accurate.

Concern About Lack of Knowledge or Resources

Change can be intimidating, and it's unwise to make a shift without fully understanding its impact. When considering a D2C pivot, common concerns include inventory management, shipping logistics, time commitment, and margins. Confidence in your strategic decisions is crucial. While some brands choose to navigate this alone, hiring an agency may be worth exploring.

Utilize LFBBD's Amazon Seller Database for Maximum Impact

As an Amazon seller, you face several pain points, such as understanding market demand, identifying potential buyers, and optimizing your product listings. Leveraging the right tools and resources is crucial to address these challenges and maximize the benefits of adopting a D2C model on Amazon. LFBBD offers a comprehensive and verified Amazon seller database that can significantly enhance your D2C strategy by providing access to decision-makers, brand owners, and product managers.

With LFBBD’s database, you can:

Identify and Connect with Key Buyers: Gain access to detailed profiles of Amazon FBA sellers and potential buyers, helping you reach the right audience.

Access In-Depth Data Points: Utilize information such as store size, product category, and contact details to tailor your marketing efforts.

Ensure Accuracy and Relevance: Benefit from human-researched and verified leads to reduce wasted efforts and increase conversion rates.

By integrating LFBBD's Amazon seller database into your D2C strategy, you can streamline your marketing efforts, increase sales, and build a stronger brand presence on Amazon. This tool helps you overcome common pain points by providing reliable data and actionable insights, ensuring your success in the competitive Amazon marketplace.

Mr. MD Riad Mia