Fast Facts: Amazon vs. the D2C Model

Fast Facts: Amazon vs. the D2C Model

With the Direct-to-Consumer (D2C) model on the rapid rise for many companies such as Warby Parker, Allbirds, FIGS and plenty of other smaller brands, you might be wondering if it’s the right direction for your business.

While many of our brand partners choose an omni-channel approach that leverages in-store sales and D2C alongside Amazon, here’s a breakdown of how D2C stacks up against Amazon.

While Amazon isn’t technically D2C, it has quite a few advantages for performing in a similar vein…

The Direct-to-Consumer Promise

D2C is a valuable business model provided that costs are kept low, according to Marker’s Alex Kantrowits. Initially, this was a huge boon for companies looking to leverage online sales and cut out middlemen, and was accelerated by the pandemic.

Now, many of those companies are reeling from shrinking margins, revenue contraction, and loss of stock valuation due to several factors…

D2C Downtrends & Amazon Uptrends

  • Facebook Ad $$$ Up, Brand Recognition Down
  • Apple Security = Less Tracking
  • Supply Chain Problems Persist

Advertising

  • Facebook Ads
    In the last 2 years, Facebook Ads have more than tripled. This eats into costs and has created a platform that is more competitive than ever, meaning that creating and maintaining brand recognition comes at a higher cost.
  • Amazon Ads
    Amazon, on the other hand, while seeing an increase in ad cost (which is to be expected) hasn’t experienced quite the same level as Meta — an attractive reason to leverage the ever-growing marketplace.

Security & Tracking

  • Apple iOS
    Ever since the release of iOS 14.5 back in Q2 ‘21, advertisers that rely on 3rd party cookies have been struggling to maintain accurate attribution metrics. Apple’s Ad Tracking Transparency (ATT) framework now gives users more control over who can track their activity, forcing advertisers to request permission before tracking.

    With the launch, Meta’s attribution has been off by anywhere from 30 – 50% according to some reports, resulting in more ad spend with less accurate data. Feels like throwing money into a blackhole.
  • Amazon Tracking
    Thanks to Amazon’s 1st Party relationship with consumers, sellers don’t have to deal with the major blow to tracking that Meta’s platforms are experiencing. Instead of relying on 3rd Party tracking, Amazon leverages shopping profiles since each user must sign up with an email address (regardless of whether they’re a Prime Member or not).

    This means more accurate attribution metrics and that your dollar goes further when advertising on Amazon.

Supply Chain Problems

  • Global Supply Chain Issues
    Another year and still more supply chain issues abound — the price to import a container of goods to the US from China has more than 7X’d (from $2k to $15k), and everyone is stuck vying for the same containers from just a handful of shipping companies.
  • Booming Amazon Logistics
    While Amazon is also beholden to the same international shipping delays that everyone else is facing, they’ve excelled domestically with an increase in fulfillment centers, new electric delivery vehicles, and an expansion of Amazon Air — 70% of the population now lives within 100 miles of an airport where Amazon packages are delivered.

    After all, 2-Day Prime Shipping is still delivered in 2 days.

When it comes to finding another channel to sell products, Amazon is a proven marketplace with a constant eye on the future. If you’re looking to step into Amazon or grow your existing catalog, why not start on the right foot with Macarta — one of Amazon’s official Advanced Partner agencies?

Reach out to us HERE to get the conversation started and see where Amazon can take you.




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