The following was previously published in an earlier edition of Marketing Insider.
Amazon’s dominance makes daily headlines, but a key question remains: What is Amazon’s strongest category? And what does that tell us about Amazon’s strengths today, and strategy for tomorrow?
Amazon’s greatest strength isn’t a traditional product category, but rather a type of product — utilitarian — that cuts across categories. Crucially, these products also share a characteristic straightforward path-to-purchase. Amazon’s expertise in utility includes both the product and the process, and this alignment fuels Amazon’s growth.
Utilitarian products are typically practical, inexpensive, and carry little risk associated with a poor purchase choice. They inspire little research, engagement or brand affinity. Think batteries, or headphones, or consumer packaged goods (CPGs) more generally — all categories where Amazon garners 85%+ of sales, and most brands don’t even try to sell directly on their own sites.
Amazon Has Mastered Utilitarian Products — and Utilitarian Purchase Journeys
Purchase journeys for these products are straightforward, often beginning and ending quickly on Amazon. There are few “side trips” to do research, or explore brand distinctions.
Amazon has mastered the science of nudging shoppers down the funnel, while keeping them onsite with every potential cue to purchase, such as consumer reviews or tags of “Amazon’s choice.”
Search activity for utilitarian products is also right up Amazon’s alley, featuring basic product descriptions rather than brand names. For example, searches on Amazon for headphones are generic (noise-canceling headphones, wireless earbuds), while Google gets more branded search (AirPods, Sony headphones).
Beyond Utility: How Does Amazon Grow?
Amazon’s utilitarian dominance ends where consumers are more engaged, and where brands have more resonance.
Consider women’s apparel. The top Amazon search terms in the category are generic product descriptors (leggings, tops for women), and the top brands on Amazon are the highly utilitarian Hanes and Lee. In contrast, the top search terms in the category on Google are all names of fashion brands.
Amazon isn’t an expert in fashion brands, or in their purchase journeys, which are longer, circuitous, and discovery-focused. Consumers often begin these journeys with branded searches on Google, followed by visits to brand sites, publishers, or social media.
Often a visit is paid to Amazon, but mostly for a quick price/availability check, followed by a return to a branded site or specialty retailer for purchase.
“Basic” More than Just a Brand Name for Amazon
Now it becomes clear why Amazon chose “Basic” as its core private-label brand name. The term encapsulates the type of product consumers want from Amazon, as well as how consumers shop on Amazon.
But it is equally clear how Amazon needs to grow, and that’s part of why it has quietly pivoted from private label offerings to exclusive brand partnerships. Basics works, but only to a point. Brands continue to resonate for consumers across many categories, and Amazon has work to do before it masters brands and the complex purchase journeys involved.