{"id":39790,"date":"2019-09-24T20:01:00","date_gmt":"2019-09-24T20:01:00","guid":{"rendered":"https:\/\/press-room.saatva.com\/?p=39790"},"modified":"2025-11-21T19:32:43","modified_gmt":"2025-11-21T19:32:43","slug":"how-to-build-a-successful-e-commerce-brand-in-the-age-of-amazon","status":"publish","type":"leadership_article","link":"https:\/\/press-room.saatva.com\/articles\/how-to-build-a-successful-e-commerce-brand-in-the-age-of-amazon\/","title":{"rendered":"How to Build a Successful E-Commerce Brand in the Age of Amazon"},"content":{"rendered":"\n

By Ron Rudzin, CEO & Founder of Saatva<\/em><\/p>\n\n\n\n

I\u2019ve been an entrepreneur my whole life–it\u2019s what I live to do. But when I look around at the current startup landscape, I often wonder what I would do if I were launching a business today. In just the last three years, gaining a foothold in e-commerce has become almost prohibitively expensive. Data and analytics have become such important drivers of growth that only the companies that can afford to invest heavily in their data and machine learning capabilities will become the dominant players in their space.<\/p>\n\n\n\n

But perhaps the biggest challenge facing any e-commerce startup today is the threat posed by Amazon. For any new DTC business, the appeal of the platform is undeniable. By some accounts, more than half of all online transactions flow through its portal. But the tradeoffs are huge. For starters, you may find yourself competing against a company with an almost unlimited access to capital and a willingness to lose money on its own marketplace. <\/p>\n\n\n\n

The best defense is to build a strong, differentiated brand. And in my opinion, that\u2019s almost impossible to do if you launch on Amazon\u2019s platform. It\u2019s simple math. Let\u2019s say you invest in out-of-market advertising to build brand awareness for your product. People will see your ad on TV or on the subway and want to learn more about your company. Most likely they\u2019ll Google your brand. And what happens? As long as you sell on Amazon, Amazon will show up in the top organic results for your brand search. More often than not, the customer will click. And once they do, you\u2019re on the hook to Amazon for a fee\u201415%, 20%, even 25%, depending on your deal\u2014and you still have to pay for the out-of-market advertising. For most companies, that math does not add up. <\/p>\n\n\n\n

Over the years Amazon has studied everyone\u2019s business. Not that they\u2019ve done anything wrong. But it stands to reason that once they\u2019ve learned the behaviors and spending habits of your customers, they\u2019d rather sell them their own products than settle for a cut of yours. (The same can happen even to brands that don\u2019t sell on Amazon<\/a>.) And what happens when, as was recently reported, Amazon tweaks its search algorithm to give favored placement to its own brands? For many people I know, it means a huge cut in revenue and profits.<\/p>\n\n\n\n

Like a handful of other companies (you can read about some of them here<\/a>), I\u2019ve opted to go a different route. For one thing, as a luxury brand the Amazon platform doesn\u2019t make sense for us. And because we launched a decade ago, when CPCs in the mattress space were lower, we could afford to invest in building out our own distribution network. That would be a lot harder today\u2014if one could afford to do it at all.<\/p>\n\n\n\n

So what would I tell somebody trying to succeed in e-commerce in the age of Amazon? It\u2019s hard but not impossible. It starts with building a trusted brand. <\/p>\n\n\n\n

Find your customer.<\/strong> Every business, whether you\u2019re a storefront or a website, projects a sensibility that appeals to a particular consumer. That\u2019s the essence of brand: What makes somebody buy one car or couch or mattress over another? Years ago, the only way to find your audience was to rent a retail \u201cbox,\u201d stock it with goods, blanket local print and airwaves with ads, and hope that people showed up. The advantage today is that data can help you find the customers who share your sensibility, and once you\u2019ve connected with them, data lets you build a relationship around the things that really matter to them.<\/p>\n\n\n\n

Amazon found their customer: It\u2019s everyone. Since you can\u2019t beat them at their own game, the way to win is to zag where they zig. Instead of selling everything to everyone, sell one thing (or a few things) in a very particular way to very specific people. The bigger players, who can afford to spend the most on data, will always have a leg up when it comes to finding their audience, but smaller startups can compete if they\u2019re smart about how they allocate resources. If I had it to do over again, I would have traded off some of my marketing budget and built my data team sooner. Even though top-line results might suffer in the early stages, the efficiencies driven by data will more than likely make up for it in the long run.<\/p>\n\n\n\n

Don\u2019t sell a product, sell a value prop.<\/strong> Nobody is better than Amazon at fast, cheap products that can be dropped on your doorstep. Amazon\u2019s zig: turn every product into a commodity. Our zag: over-index on product differentiation. That starts with a clear value proposition. When we were thinking about launching Saatva, I went out and bought every luxury mattress on the market. Then I ripped them apart and did a raw-materials analysis. With my background in home furnishings, I knew that I could build a bed of equal or better quality and sell it for half the cost if I didn\u2019t have to pay store overhead. That value prop gave rise to Saatva, and it has informed every single product decision we\u2019ve made in the decade since.<\/p>\n\n\n\n

Your value prop doesn\u2019t have to be about price\u2014it can be about design, convenience, exclusivity, social responsibility, or something else. But it has to be grounded in reality, not slick marketing messages, and your customer needs to clearly understand it. Otherwise you\u2019re just a \u201cme too\u201d voice in a crowded marketplace.<\/p>\n\n\n\n

Keep hold of your data.<\/strong> This is perhaps the strongest argument for resisting the lure of Amazon. When you sell on Amazon, the platform gains a view into your customer data, which tells it everything it needs to know in order to compete with you.<\/p>\n\n\n\n

Let\u2019s play it out with an example from my own industry, mattresses. Most of the new entrants in the space are \u201cbed-in-a-box\u201d companies, selling compressed mattresses rolled up and shipped to the customer in a 16-by-45-inch box. A lot of them did very well selling on Amazon. And wouldn\u2019t you know it? Last year Amazon introduced its own bed-in-a-box. Now, when somebody searches for those other brands, they will invariably end up competing with Amazon and dealing with massive price compression. Forget about brand awareness; in the customer\u2019s mind, the brand is simply \u201cbed in a box.\u201d<\/p>\n\n\n\n

Control your distribution channels.<\/strong> This is a big and expensive proposition in today\u2019s DTC marketplace. But if you can afford to do it, it\u2019s the best way to truly create a meaningful and sustainable brand. Ten years ago, it made financial and logistical sense for Saatva to invest in building a distribution network to hand-deliver our large and heavy luxury mattresses. If I had to point to one thing that has allowed us to succeed, it is the fact that we built this network before it became cost prohibitive to do so, which is why it remains unique in the online mattress space. <\/p>\n\n\n\n

But you don\u2019t need to be in the business of white-glove delivery to reject the Amazon model<\/a>\u2014just ask Glossier cosmetics, Bombas socks, or Harry\u2019s razors, which all opted to sell exclusively on their own platforms. It\u2019s no coincidence that those brands, all launched in the last six years, have become business and cultural successes. As Harry\u2019s co-founder Jeff Raider has pointed out<\/a>, why put your products on a third-party platform when you\u2019re already online?<\/p>\n\n\n\n

Help, don\u2019t sell.<\/strong> Consumers today have high expectations from a brand. They also have access to more information, good and bad, than ever before. The brand that wins is the one that puts being helpful above closing the sale. Sure, you can use data to identify customers\u2019 pain points, but it\u2019s what you do to solve those problems\u2014while always putting the customer\u2019s needs first\u2014that will empower them to make a decision that ultimately benefits your business.<\/p>\n\n\n\n

At Saatva, that means investing heavily in content that helps people navigate the often murky terrain of buying a mattress. We made it our mission to honestly answer any question a shopper may have about mattresses and sleep, even to the point of recommending a competitor\u2019s product over our own if we think it\u2019s a better fit. At the end of the day, the long-term benefit that accrues to your brand from being genuinely helpful outweighs any one individual sale.<\/p>\n\n\n\n

Deliver on your promises. <\/strong>More than anything else, reputation is what distinguishes a trusted brand. It\u2019s not enough to get the customer in the door or on your site; you want to build a long-term relationship that extends far beyond the sale. That means always being at the other end of the line (or the email or the text or the tweet) when they have a problem or a question, sticking to your warranties and policies, and never letting anyone walk away from an interaction unsatisfied.<\/p>\n\n\n\n

All sorts of wonderful things follow when you\u2019re a trusted brand. You can kick-start more product launches, because your customer base trusts that you\u2019re going to give them what they expect. You can learn what you\u2019re doing right and wrong, because now you\u2019ve opened a dialogue; at the end of an email campaign, we aim to be sure there isn\u2019t a single person we\u2019ve contacted who has any issues with our company or our products. When you find the right customer, target them with the right message, deliver a high-quality product, provide service beyond the sale, and keep your promises, you are positioning your brand for success\u2014now and in the future.  <\/p>\n\n\n\n

This article has been reposted on LinkedIn<\/a><\/strong>.<\/em><\/p>\n\n\n\n

<\/a><\/p>\n\n\n\n

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