AmazonBasics awakens: will Amazon copy your product?

AmazonBasics awakens: will Amazon copy your product?

Have you seen the Bloomberg article? It’s called “Got a Hot Seller on Amazon? Prepare for E-Tailer to Make One Too.”

My 40-word summary:

Amazon’s got lots of data on what sells and what doesn’t. They use the data to make their own products, mostly under the “Amazon Basics” label (est. 2009). The label has 3000+ items and a hand in everything: tech, clothing, home, kitchen, etc.

Here is the article, for reference.

They cite the example of Rain Design’s laptop stand. It was doing well, then AmazonBasics made a cheaper one without infringing on the patent, and took some market share.

Off the bat:

  1. Don’t get upset with Amazon. It’s a smart move, and it’s their playground. It’s private label at scale.
  2. Prepare yourself now so that Amazon can’t take your profit later. That’s what this piece is about.

First off, are you even at risk of AmazonBasics sweeping your market?

Yes, if your product has 2 or more of these traits…

- a crowded consumer-facing category (electronics, home, kitchen, baby, fitness, to name a few) 
- sells for $20 or less (average price among the top 100 AmazonBasics products =$19.52) 
- generic (if you and your competitors products all look alike, Amazon can undercut you and it’s game over)
- a physical product (as opposed to an app, book, or service)

Here are 6 things you can do now to avoid the squeeze…

(1) Bundles.
Amazon Basics has historically not copied unique bundle offers. So, by creating a bundle/kit/set you can keep your edge. They cost too much to produce and it’s not, well, basic.

(2) Luxury positioning.
More to the point, it’s not “Amazon Deluxe”… it’s “Amazon Basics”. It will deliver mass-market, $20-ish products. They price low to get sales, but also to force third-party vendors to price competitively, for the benefit of Amazon shoppers. But here’s your immunization: if your product attracts a customer who prefers to spend $200, $500, $1000 for quality, you’ll be safer than the seller with the generic mass-market version.

(3) B2B.
Expand your product line to include untapped areas of Amazon: B2B, Industrial & Scientific, senior care, or adult. Can your product be modified to serve businesses? Could you sell to interior designers, office decorators, and restaurants? Talk to your supplier and see what they’ve got.

(4) ‘Little guy’ positioning.
Are you the founder? Is your product made-in-America? Can you provide personalized customer service? AmazonBasics can’t use these selling points, but you can.

(5) Patents.
If you created your own product, a provisional patent application from the United States Patent and Trademark Office will give you 12 months of temporary protection in the USA for just $130 (it’s the “patent pending” status). So for the next 12 months, you can decide whether it’s a viable idea and then complete the whole patent. Or not. Though I wouldn’t depend on IP, since there are always ways to design around patents. Disclaimer: this isn’t legal advice; consult a licensed attorney before taking action to protect your intellectual property.

(6) Diversify.
Don’t rely on Amazon as your sole source of income.

Yes, optimize your Amazon listings. 
Yes, get reviews with a service like ours. 
Yes, rank your products and get more sales.

But after that, branch out.

Once your Amazon store makes reasonable sales ($20,000/month in revenue, for example), invest in other channels: your own e-commerce website with ads and social media driving traffic to it; retail distribution; and other third-party online retailers.

If you’re going to put all your eggs in 1 basket, you should own the basket. Amazon owns this basket, and they’ll crack you for omelettes when it’s convenient.

To sum up, get immune to AmazonBasics with:

(1) Bundling. 
(2) Luxury positioning.
(3) B2B products.
(4) ‘Little guy’ positioning.
(5) Provisional patents.
(6) Diversification.

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