Amazon’s Secret Superpower

When was the last time you bought something on Amazon? Earlier today? Yesterday? Within the last 30 days?

For tens of millions of people in the US, the frequency of purchasing products on Amazon rivals any destination outside of maybe the local grocery store. “The Everything Store” has everything we need, anytime we need it, all from the comfort of our couch. And while Amazon may have everything, we all keep coming back because our experiences buying from Amazon are usually positive.

According to the Forbes Annual Brand Value Ranking, Amazon has the 4th most valuable brand in the world behind only Apple, Google, and Microsoft.

When considering the number of purchases or interactions a customer will have with brand in a yearin other words, the number of times a brand can create a positive or negative customer experienceAmazon clearly carries tremendous positive momentum from one transaction to another. Amazon is able to maintain this customer loyalty in spite of the fact that over 56% of sales on the marketplace are from products sold by other companies.

Amazon’s most undervalued core competency, a secret superpower, is consumer confidence. Consumer confidence for Amazon is its ability to create a consistent customer experience even when millions of products come from invisible sellers on the Amazon Marketplace that Amazon may or may not even fulfill.

Those same purchases we talked about above, can you even remember what you bought or the brand that it was from? How often do we buy a mostly brandless item and place our trust in Amazon because it was a “best seller”?

If consumer confidence is Amazon’s secret superpower, could it also be its kryptonite?

Imagine if you had an allergic reaction the next time you purchased a “best-selling” multi-vitamin. Or take a look through the 1-Star Reviews with the word “explode” on Amazon’s own private label AAA batteries.

Amazon’s greatest existential threat is a cascading loss of consumer confidence.

Unfortunately, this risk is only going to increase overtime. Although Amazon is increasing the safeguards for consumers by increasing the standards required by sellers and brands on the platform, the intense competition, increasing platform fees, and increase in transportation costs create incentives for sellers to cut corners in the production of their products. If one of the most reliable ways to create a best-selling product on Amazon is by selling the cheapest product, eventually compromises will be made.

It’s for this reason that Amazon should change the incentives for sellers and brands based on performance and total sales. Amazon doesn’t need another seller of wooden spoons, there are over 3,000 search results for that term. Inevitably there are varying degrees of quality in those search results. Rather than Amazon turning customers into guinea pigs, left to surface bad products from invisible sellers through product reviews, Amazon should proactively align itself with the very best sellers by offering discounted fees when certain revenue and performance thresholds are met.

Amazon has been adding thousands of new sellers to its platform every day for years. It’s time Amazon invested in the best 1% of their sellers and brands while also raising the barriers for new sellers on the platform to better protect consumers and Amazon itself.


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