By Martin Heubel, Amazon Strategy Consultant at Consulterce
There’s been a lot of talk about Amazon’s recent weblab to remove customer reviews in search results.
What nobody talks about? It solves a core problem for Amazon:
It lowers the barrier for 1P brands to launch more channel-specific selections.
That’s because most brands are reluctant to update their price-package architecture. After all, they would lose all customer reviews for their existing best-selling product.
So unless vendors need to relaunch their portfolio across channels, they tend not to replace existing products out of fear of losing their sales rank and customer review count.
Now, why is Amazon interested in promoting a different price-pack architecture?
Three reasons:
1. Improved variable cost structures
Products specifically designed for the online channel help Amazon lower its variable handling and shipping costs. They can ship in their own product packaging (SIPP) and require less space in the online retailer’s warehouses.
2. Removal of operational inefficiencies.
Products in more efficient packaging also reduce the time for inbound and preparation to ship to end customers. This overall improves Amazon’s operational efficiency in times when a lean supply chain setup is a set target by CEO Andy Jassy.
While brands also benefit from lower prep chargebacks, Amazon had trouble convincing vendors to relaunch their existing top sellers in SIOC or Frustration Free Packaging in the past.
With a different display of customer reviews in beta, Amazon seems to be trying to build a business case that shows the opportunity cost of not launching channel-specific assortments.
3. Competitive advantage
Last but not least, online-specific selection also reduces price pressure for Amazon. If an item gets launched in a different pack format, it makes it harder for shoppers to compare it with other offers in the market.
Leading Amazon to be less aggressive with its price matching policy, as long as there’s a unique value proposition through the lens of the customer.
This is an attractive proposition to brands looking to escape constant profitability discussions with Vendor Managers. And the more brands launch channel-specific assortment, the more it creates a first-mover advantage for Amazon.
Final thoughts
Whether or not the online retailer continues to roll out the alternative display of customer reviews, Amazon will gain valuable insights from the current beta phase across markets.
But make no mistake: it will be shoppers, not brands, who will ultimately decide whether the new display of product reviews will remain or be long forgotten in a few months.
For further information and support, contact Martin Heubel here
