The name of the game right now is "Differentiation, Differentiation, Differentiation".
“Location, location, location” you’ve probably heard this mantra countless times when it comes to real estate. Location governs the desirability and marketability of a property. Synonymously, if we were to put this under the context of Amazon FBA, the name of the game right now is “Differentiation, differentiation, differentiation”.
Think about this: Why should your customers choose your product over the others in the market? How is your product unique compared to your competitors?
Chances are if you’re struggling to answer the questions above in reasonable depth, the products you are selling on Amazon currently lack product differentiation. But not for long… we’re here to help!
What is product differentiation?
Let us first break down what product differentiation is and what it entails.
Product differentiation is a marketing strategy that distinguishes your products from your competitors so that you can stand out to your target market. In other words, it’s an exploration process to find what consumers would desire if you were to level up your product. There are many ways to differentiate your product on Amazon FBA, to name a few: offering a product of superior quality, increasing the number of features, or through custom branding. The ultimate goal is to solidify and develop your unique value proposition (UVP) which should be user-centric and communicate distinctly what is in it for consumers and why your offerings cannot be easily substituted.
The importance to differentiate your product on Amazon FBA
With 1.3 million new sellers joining the Amazon marketplace in just 2020 alone, the competitive landscape is more crowded than ever before, which means that you’ll have to work much harder to sell and generate leads — especially if you’re selling a homogenous product. A differentiating strategy based on price (alone) is simply not sustainable. Price wars where companies aggressively lower prices in an attempt to capture more customers and market share are not only harmful to a company’s health, but also creates many market inefficiencies. To rub salt onto the wound, anyone can just grab a product mark down the price.
All this comes to show how important product differentiation is. To make it clear, this is not meant to be a substitute for product research, but instead should be used in harmony together to create the best outcome. The bottom line is that while metrics such as monthly sales, profit margins, and units sold are important, as a seller you shouldn’t stop at just the numbers. Once you find a product that has high demand and low competition, it’s important to safeguard your hard work by constantly challenging the status quo and finding innovative ways to stay up on top.
Let’s explore 5 different ways to differentiation your product on Amazon FBA and identify the right strategy for your business.
1. Find Market Gaps by Solving an Unsolved Problem
There are mainly two ways to find market gaps. The first way is a self-exploration process where you look into your own everyday life to see if any products are unsatisfactory and you wish to see be improved (e.g the air coming out of the hairdryer is too hot and you wish you could adjust the temperature of the air). Putting yourself in the consumer’s shoes to understand the root of the problem will also give you an edge to market the product and convey pain points more clearly to your consumers.
The second way is by analyzing your competitor’s product reviews to not only determine what consumers love about the product but more importantly, what improvements they want to see. Usually, the most informative reviews come from product listings that have two, three, or four-star ratings. More specifically, these reviews tend to have a good balance between die-hard product evangelists and critics that demand more from the product (which suggests room for improvement). This will allow you to gauge the satisfaction of the current products available in the market within your chosen category, help you identify recurring frustrations and complaints of buyers, and turn them into your secret weapon.
Some questions you can use to evaluate reviews are: Is the quality of the product lackluster? Do consumers wish the product was made with a more sturdy material? Was there a lack of options in terms of colors offered?
Each of these complaints and concerns put forward by consumers is an opportunity for you to work closely with your manufacturers to level up the products and create something consumers will become more satisfied with. The beauty of this tactic is that dissatisfied customers will often propose a solution to their problem. This makes your life easier as a seller. All you have to do is determine the feasibility of the change that you plan to make on a product, ensure that with the improved version margins are still competitive among that category, and bring the product to life.
2. Differentiation by Origin and Ethical Buying
In the current Amazon FBA landscape, 75% of products are sourced from China through platforms like Alibaba, Taobao, and AliExpress. Most likely, the recent items you bought from Amazon were manufactured by these suppliers too. While there is nothing inherently bad about products made in China, buyers tend to be influenced by a country of origin effect where consumers associate the quality of the product with the country of origin.
In this case, China is known to be the “world factory” that produces a wide range of items for countless brands. Hence, they are dubbed the jack of all trades, master of none. Since many of these manufacturers are producing a wide assortment of products at an increasingly fast rate, both sellers and buyers are often concerned about how reliable the finished products could be. Perceptive values associated with the origin of the product will carry over onto the products to either make them more or less desirable. So the next time you source your product, remember to take into consideration where the product is manufactured! It matters in the grand scheme of things.
In recent years, the importance of sustainability and finding new ways to counter climate change has been championed by many. Both companies and manufacturers have partaken in increasingly more sustainability initiatives which include: better supply chains, energy efficiency, resourcefulness, as well as ethical sourcing.
Furthermore, the pandemic has supercharged many local communities to #shoplocal. For example, if you were selling on Amazon.ca, products made in Canada would immediately become more attractive to Canadian shoppers knowing that they are reinvesting back into their economy.
Businesses that care about where they source their products and integrate sustainability into their business values are immediately more attractive in consumers eyes. Recent research shows that 83% of consumers are willing to pay a premium on products that are made locally, ethically, and sustainably, compared to their homogenous counterparts. The bottom line is that ethical sourcing makes a difference and when done right, it can help elevate your business and put forward values that consumers want to buy into.
3. Value-added: Bundling and post-purchase services
When selling your products head to head with your competitors, competition could start to get stiff. But there are ways to add complexity to your business to provide a tangible offering by shifting the focus from cost to value. One of these value-added strategies is bundling — a marketing tactic that involves packaging multiple complementary services or products together and offering them for a single discounted price (sellers also only pay for one flat fee rather than a fee for each product). A classic example is a bundled computer package consisting of all things needed to help a computer become fully functional: monitor, keyboard, mouse, and software. While each individual item could be bought separately, the value comes from not having to waste time on further research like comparing specs whether or not the products are compatible (e.g USB-A vs USB-C). In addition, bundles usually have cost savings of around 7-15%. At a higher level, some sellers also like to do “pure bundling” where groups of products that are only available as a bundle aren’t sold separately (e.g limited edition products).
*Note: Bundles are not the same as a multipack — multipack is composed of the same products whereas bundles consist of variations (at least two different kinds of products) of a complimentary item.
4. Value-added: Post-purchase Customer Experience
a.) Personalized Post-purchase Messages + Special Discounts
A lot of Amazon sellers are underestimating the power of email marketing to nurture past shoppers to long-term loyal customers. Shoppers instead are getting generic confirmation emails provided by Amazon SES (Simple Email Service). There are so much you can do to improve the customer journey and stand out with your streamlined purchase experience.
The key is to make sure your post-purchase emails are not too pushy. The emails are to help them stay engaged. Ideas for post-purchase emails include:
- Asking customers for a product review and to follow up to see if they are satisfied with their purchase. More positive reviews on your listing will not only improve your SEO ranking but will also become good social proof to help garner interest for your product in the future.
- Provide a discount code that customers can use the next time they purchase one of your other products.
- Invite your customers to join your email newsletter to stay up to date with new products that they might like.
If all of this sounds like a lot of work, don’t fret, there are many software available out there that can help you build an automated email campaign. While we are still in Beta and have Feedback and Email automation software in the works, there are a couple of others we would recommend in the meantime:
b.) Generating Creative Content Around The Product
We’ve all had products that we’ve used only once, and buried in our garage never to be seen or heard of again. The majority of the time, customers who purchase these types of products either find it too complicated to use or they’ve run out of ideas to put it to good use.
But there’s a way to spark excitement for your product once again. One of the ways is to create content (e.g tiktok videos or ad creatives) surrounding your product and post it on social media or send it to customers in the form of an email. This can potentially bring back old trends, or even start new ones. It helps customers that recently purchased from your store to help them appreciate the product more and refresh their memory of who you are. I mean, see how well it worked for fidget spinners.
Another way to spark excitement and add value to your customers post purchase is to provide them with complementary items that help give the product you are selling a second life. These “complementary items’ don’t have to be tangible. They can be intangible like a virtual cookbook for the cooking pan they just recently purchased.
5. Branding and Custom Packaging
A lot of the time when we purchase from Amazon, our products come in minimum viable packaging which consists mainly of shrink wrap and polybag and the classic Amazon “khaki” coloured box. One of the easiest ways to set your brand and products apart on Amazon is by building a visual identity through product packaging. Much like when we associate “Checkmarks” with Nike and “Golden Arches” with McDonald, packaging can convey attributes of your brand, from simplicity to sophistication.
Nice-to-haves on Amazon product packaging:
- Visually appealing: Unique artwork, pops of color and an easy to remember logo.
- The simplicity of Design: Keep it simple because in packaging less is more. With too many images or words, it can take away from the product image.
- Product Inserts: You can leverage printed cards and pamphlets to request reviews, provide company contact information, or subscribe to your email list and social media accounts for your brand.
The ultimate goal of branding and custom packaging is to evoke feelings of excitement for your customers. With a chic personalized package that is “gram-worthy”, it would also allow customers to showcase your product to their friends on social media — which is a great way to gain further traction for your products!
The End Game
You’re competing with hundreds — if not thousands — of other sellers on Amazon. Go through our 5 ways to differentiate your product on Amazon from the rest of the competition, and choose the best strategies that will benefit your business the most. This will help your Amazon FBA products get noticed and allow you reinforce your long-term strategy.
We also want to reiterate that product differentiation isn’t a replacement for product research but should be used in harmony together to get the best results. Speaking of product research, we’re opening our Esparkify Amazon Product Research Tool (Beta) to the public to use for free for a limited time. Check us out!