[Music] this is the Amazon flywheel also known internally at Amazon as the virtuous cycle it's the founding model for growth of the amazon marketplace by opening up its marketplace to third-party sellers Amazon significantly increases its product selection and in turn improves the experience for Amazon customers this great customer experience drives more customers to Amazon which motivates more third-party sellers to join the marketplace adding more new products which again improves the customer experience at the same time more sellers means more competition this competition forces lower product prices which further improves the customer experience leading to more
customers and sales the platform's growth also creates economies of scope and scale leading to lower overall transactional costs for Amazon savings that Amazon passes on to consumers by driving prices even lower for their improving customer experience these factors continually feed each other and drive growth all of which feeds customer experience traffic and sales while Amazon's flywheel works well for Amazon and its customers it creates a significant challenge for brands Amazon's hands-off approach results in huge numbers of unauthorized resellers offering your branded products on Amazon often undercutting your brand's desired price points third-party sellers can also
use display names on Amazon to easily disguise their identities making it hard for brands to identify these sellers and police the sale of their products the Amazon flywheel presents three main challenges first because of Amazon's preeminent visibility to customers and retail partners products sold the low retail price points upset retail partners and customers who acquire the product in a store or on the brand site at a higher price this lower price drives down the perceived value of the brand second pour product photography and product content is pushed to Amazon by unauthorized sellers devaluing your product
and brand in the customers mind third customers assume they are purchasing a genuine product directly from a brand or from Amazon but many are surprised to receive poor or negligent customer service from unauthorized sellers while some receive counterfeit products sold under the brand name if you want to leverage the Amazon channel for brand growth without devaluing your product or brand you need to implement a solid Amazon strategy based on three pillars channel governance branding optimization and growth based advertising harnessing these factors will help you create your own marketplace flywheel that drives sales and organic growth
for your brand on Amazon [Music]
