Most first-party vendors believe they’re one breakthrough away from a true partnership with Amazon. They’re wrong.
A few weeks ago, I found myself presenting to the board of a Fortune 500 company. The business was performing well on Amazon. They were on track to reach their growth targets, maintained healthy margins, and executed a robust strategy to navigate the current macroeconomic uncertainty.
Yet despite their success, the board members – particularly the CEO – remained uneasy about Amazon. And it didn’t take long until I understood why.
A few minutes into my presentation, the CEO asked:
“Why isn’t Amazon interested in partnering with us across all retail channels? Why are we left with the same tools and processes than our competitors, despite our significant position in the category?”
As I reflected on this question, I realised why so many leadership teams struggle with the online retailer:
They believe there’s a hidden partnership opportunity that their teams simply haven’t been able to unlock.
The truth, however, is much more revealing.
The illusion of a partnership
In its pursuit of building the Everything store, Amazon has become an algorithm-led, transactional retailer. The company recognised that traditional retail ‘relationships’ often meant accepting lower margins and performance defects – compromises that would prevent Amazon from scaling beyond its competition.
Yes, their Retail teams may attend your QBRs and leadership meetings if you command meaningful market share or category relevance.
But don’t mistake this for a partnership.
Amazon is interested in the status of your brand and the value it brings to your shared customers. They’re not talking to you because they ‘like’ you or your teams. This is thinking stuck in the early days when Amazon was more dependent on brands than brands were on Amazon.
Today, the reverse is true.
Why partnerships with Amazon won’t work
If you seek a partnership approach, trying to develop tailored strategies, brand campaigns or brand days/weeks, you’re missing the point entirely:
Amazon seeks standardisation, which unlocks automation and cost efficiencies. Not partnerships that increase the complexity of managing the joint business by ignoring SOPs and automated processes.
Most brands that claim they have a great ‘partnership’ really mean Amazon bends the rules for them in exchange for economic favours (aka trade investments). So if your team calls Amazon a great partner, I can almost guarantee that your cost-to-serve this customer is higher than anyone else’s.
It’s about time you remove the word ‘partnership’ from your Amazon vocabulary.