When I first wrote this article, the introduction was going to be a story of me discussing how I was halfway through Whole30 this month, hangry, completely bored of it, and wanting to quit.
The end result was going to be something vaguely inspirational, and at least a little humorous.
Then I stumbled upon two things in the business world that caught my eye, and I scrapped my original email.
- Amazon’s Celebrity Store
- Spotify going all in on podcasting by paying $340 million for Gimlet Media and Anchor
Though these two subjects might at first seem completely unrelated, the strategy behind both of them can be summed up in a single, two word thesis:
Let’s break it down.
- The Celebrity Store at Amazon
I was on Amazon the other day when I saw a banner that caught my eye – a picture of a celebrity and a call to action to check out the store.
I clicked on it (because clicking on ads I haven’t seen before is a hobby I look forward to almost every day), and after going down the rabbit hole I stumbled upon the Celebrity Store at Amazon.
Currently, there are 28 celebrities each with their own “store” on Amazon, with a curated collection of different products that, presumably, they use.
Some of these celebrity stores are in partnership with other brands, some promote the celebrity’s own product line (like Gronk Fitness), and some of the products are, unsurprisingly, AmazonBasics (which is Amazon’s own brand of products).
After taking a look at the celebrity store for 3 minutes, I only had one thought.
In 2011 Marc Andreessen (venture capitalist) wrote an essay titled “Why Software is Eating the World” (Google it if you haven’t read it), and while that is 100% true, I think a more tangible and front-of-focus statement is this:
Amazon is eating the world.
I’d love to do a longer analysis of Amazon in the future, but I don’t think in 2019 the statement that Amazon is eating the world is controversial.
Bezos and Company have been pretty transparent that their goal is to take a percentage off the top of all economic transactions.
And in terms of B2C purchases, they’re already almost there.
More than 70% of people use Amazon for product discovery.
50% of PEOPLE use Amazon at least once per week (that number is even higher for Prime members).
Amazon no longer even bids on Adwords Product Listing Ads (PLAs), because they own so much of the product discovery funnel already.
They were paying Google for customers they already had.
Amazon has commoditized most products, marginalized physical stores, and in many cases cut out brands completely by private labeling or manufacturing their own variants (AmazonBasics)…And selling them for cheaper, of course.
When a product becomes commoditized on a marketplace like Amazon, there’s only ONE way a company can compete on anything other than price.
A strong enough brand causes people to do crazy things, like line up outside stores for DAYS before a product is released to pay inflated prices on products that on a spec level are technically inferior (Apple).
Or literally pay people and engineers to develop apps to purchase products in microseconds before the brand runs out of stock (Supreme).
Brand marketing overcomes the race-to-the-bottom price tag arms race that goes hand in hand with commoditization.
Ultimately, brand marketing comes down to distribution.
On the internet, distribution is synonymous with attention.
A CPG brand partners with an influencer (actor, musician, celebrity) because that celebrity has distribution.
People are paying attention to that celebrity. People want to be like that celebrity at some level (consciously or unconsciously).
When that celebrity makes a recommendation, either directly (in a paid commercial), or indirectly (being seen using a product), the people who are paying attention to that celebrity see that, and a percentage of them buy the product.
Think that tendency doesn’t apply to you?
Think again – you do the exact same thing when you buy something based on the recommendation of a friend or family member.
I’ve even seen this with my own content (albeit on a much smaller scale).
When I’m asked the question about which marketing book is best, I always answer with Influence: The Psychology of Persuasion by Robert Cialdini.
In my opinion it is one of the most underrated and valuable books on marketing, copywriting, and psychology ever written.
And while I’ve answered that question a few times, I’ve received dozens of emails from people telling me they’d seen my recommendation, bought the book, and absolutely loved it.
A have a small community of people who pay some amount of attention to me (and I thank you for that 😊), and when they saw that recommendation, a percentage of them bought the book.
Chances are, as a result of reading this article, at least one other person will buy Influence today.
Maybe that person will be you (in all honesty – I highly recommend it if you haven’t read it).
Brand marketing works on this EXACT theory – it’s just done at a larger scale.
Put simply – it’s Attention Arbitrage.
SO… back to the implications of the Amazon Celebrity Store.
Let’s pretend you’re CMO of a CPG soap brand.
Sure, soap is a commodity, but if you have a strong enough brand you don’t care. You can sell your soap for pretty much whatever price you want, and as long as you still have a community that identifies with your brand, and you haven’t been caught putting deadly chemicals in your soap, or had too much bad press about poor labor conditions in developing countries, you can probably leverage the distribution of celebrities and other influencers to keep selling your product indefinitely.
Maybe Amazon has ripped off your product with an AmazonBasics version of soap for 1/10th the price, and while this is frustrating and you probably lost the low range of your market, you’ve still got a strong brand and can still sell against the higher range of your market on that basis.
But what happens when Amazon starts moving into the BRAND game too?
And not in a direct way (I don’t see Amazon ever trying to make “Amazon-branded products” compete on the basis of brand – it doesn’t fit their business model), but rather in a way that creates a PLATFORM for influencers to go direct-to-product and leverage their own brands and distribution?
These “Celebrity Stores” would have virtually zero barrier to entry, and would give the owners a direct cut of EVERY sale via the Amazon Affiliate program that’s already in place.
It completely cuts out the middle man (in this case, the CPG brand).
Think about it – why would Jimmy Fallon partner with (for the sake of argument) a cologne company when in a few minutes his team could throw up a “Jimmy Fallon Store,” and have private labeled cologne products of their own ALREADY proven to be loved by the market (in this fictitious example because the cologne is already a highly-rated, market proven AmazonBasics product), and take a direct cut from every sale they drive?
He wouldn’t. From a purely financial standpoint, it would almost never make sense to do anything else.
Now extrapolate that power out to ANYONE.
A “Celebrity Store” like this would completely cut out the middle man, and most consumer brands completely.
And Amazon is still in the background, quietly taking a cut from every purchase.