The Rise of Premium Brands on Amazon

To stay competitive, premium brands have to meet the preferences of the digitally native shopper. This means ignoring Amazon is no longer the obvious choice.

When you think of shopping on Amazon, you might think of restocking on household essentials like toilet paper, batteries, or dog food. (And if you’re like me, you’re placing that order a week later than you should have and feeling very grateful for next-day delivery.) But of course, there’s a whole lot more to the giant retailer, including a growing opportunity for premium brands.

While many premium brands had long resisted Amazon, a meaningful shift began pre-COVID that was greatly accelerated during the pandemic. According to Bain & Company, online luxury purchases reached $58 billion in 2020, compared to $39 billion during the year before. Even as the US and many other parts of the world begin to return to “normal”, the prominence of online shopping for premium and luxury goods shows no signs of slowing.

Meeting the shopping expectations of the digital native consumer

Millennials are the largest living generation — there are over 80 million in the U.S. alone. They’re also the generation with the most buying power and the strongest preference for online shopping. Millennials are entering the prime spending years of their mid-thirties when, according to Pictet Wealth Management, they become the largest discretionary spenders with average annual spending growth of 3–4 percent. Further, a 2019 study by Power Review found that 85.9 percent of millennials make purchases online, with online shopping accounting for 60 percent of total purchases. These astounding numbers only increased with COVID. 

Not only are under 40 shoppers buying online, Amazon is where they go for all phases of the online buying process – from product research to price comparisons, to ultimately, purchase. According to Feedvisor

  • 66 percent of online shoppers go to Amazon first for inspiration when they don’t have a specific product in mind.
  • 74 percent of consumers start their online shopping searches on Amazon when they have a product in mind versus just 21 percent on Google.
  • And a whopping 89 percent of buyers say they’re more likely to buy from Amazon than other eCommerce sites.

Smart assortment to attract new to brand shoppers

Looking at the numbers above, the question for many premium brands has become how not if to sell on Amazon. Premium brands generally do not put their entire catalog or their most expensive lines or products in the marketplace, but with the right strategic assortment (think core product and colorways, best sellers, and lower-priced items), Amazon becomes a key channel to attract millennial shoppers and new to brand business via gateway and evergreen products. By layering in advertising and promotional opportunities, premium brands can reach the 213 million+ unique US visitors a month in the marketplace to drive brand awareness and education. This is visibility they could not get anywhere else.

Controlling and elevating the brand on Amazon

For premium brands, it’s also important to control brand storytelling and presentation on Amazon, so they can deliver an equally premium and aligned experience to their DTC website and brick and mortar store. And Amazon is making it easier than ever to do that. Today, premium brands leverage Seller Central opportunities like branded storefronts, A+ Content, the Manage Your Customer Engagement (MYCE) tool, and similar features to control and elevate the shopping experience on Amazon.

To compete and stay relevant with today’s shopper and future generations, premium brands have to approach their distribution strategy by taking into account the consumer mindset, search habits, and shopping preferences of the digitally native shopper. That means ignoring Amazon is no longer the obvious choice. With the right strategy and execution, Amazon can be a valuable and profitable channel for premium brands.

of online shoppers start searches on Amazon vs 22% on Google
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of shoppers are more likely to shop on Amazon than other e-comm sites
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YoY increase in online luxury good sales
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