March 20, 2015: This week was a very rough one for manufacturers and their relationship with Amazon. Amazon announced they will be ending the 'Amazon Webstore' service in July 2016. Many people may not realize that Amazon offered a private label web hosting, but Yeoman estimates they host almost 2,000 sites. Many of these sites are original manufacturers like Fiskars, Cuda, Black and Decker, Eclipse, Lacoste, Remmington, Sesame Street, and Isaac Mizrahi to name a few.
For a manufacturer, the appeal was clear: A world class hosting platform that uses the exact same product data they have to create to be successful on Amazon. Amazon leads B2B and B2C when it comes to product details online, an area that all manufacturers have struggled with since the internet evolution started. They have to create high quality data to get on Amazon, why not leverage it for their own site.
A recent UK study found over 67% of buyers visit branded pages to find out information about a product BEFORE heading off to shop. Vague, brochure-like, or non-existant brand manufacturer sites are a thing of the past. So too are 'marketing sites' that simply push a theme or message. Consumers want product details and webstore seemed like a fit for Amazon and the manufacturer.
So why did they shutter it? Yeoman estimates that only 15% of the 900+ webstore users were original manufacturers. The majority of the rest were third party marketplace sellers and online retailers looking for a web solution for their retail strategy. Webstore simply did not have the same level of features that 100s of ecommerce hosting competitors offered. However, Amazon's prices were very aggressive and offered some of the lowest operating costs in the business. Add it up - small clients who paid dirt cheap for hosting yet were constantly pushing for more features...... It's a money loser for Amazon so they're pulling the plug.
All manufacturers will need to revisit their site usage, but can take a pause. This change won't happen until July 2016 and several major hosting players are working on migration plans. Yeoman will realize a recommendation guide next week, but in the meantime there are 5 items to factor in:
- Design migration - Demand your existing design be migrated by the vendor
- Product synchronization - This is the big one. A shared Amazon/Store product catalog was the #1 benefit of an Amazon webstore. Most vendors have some level of synchronization, but look for a 'full synch' including images, descriptions, and features
- Monthly cost - Not a major concern, the market pressure keeps everyone closely aligned
- Processing fees - This will bother folks that generate $1m + from their sites, Amazon had the best rates of every provider
- Stability - Now is the time to question this. Amazon's move surprised every client, partner and even a few Amazon employees we spoke with. Look towards a vendor fully vested in ecommerce.
The good news is you have time. However, anyone on webstore should have an evaluation and vendor selection completed by August 2015. That gives you a full year to migration and cutover.
For clients, Yeoman will release it's general assessment of the webstore alternatives later in April.