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Amazon Is Loosening Its Grip on Customers and Letting Some Sellers Reach Out to Them

Carlo Allegri | Reuters
  • Amazon recently began piloting a tool for some companies to communicate with customers who opt to follow them.
  • Amazon has long prohibited merchants from soliciting customers unless it concerned things such as the status of their order.
  • The company has rolled out several tools to help businesses build a presence on Amazon as it faces competition from the likes of Shopify.

Amazon is quietly rolling out a way for some sellers on its site to engage with shoppers, in a move that represents a departure from its historically tight controls over customer data.

Last week, Amazon began piloting a tool that enables U.S. companies that are part of its Brand Registry program to email marketing materials to shoppers who have opted to "follow" their brands. These companies can then notify those shoppers when they launch a new product or promotion.

The follow button is featured in areas such as a businesses' store page and videos on Amazon Live, Amazon's livestream shopping platform.

The tool, called "Manage Your Customer Engagement," is designed to drive repeat purchases for vendors and sellers and help them build a more robust following on Amazon's sprawling marketplace. In a video describing the tool, Amazon urges companies to "build your brand with Amazon."

Amazon's decision to let third-party companies contact shoppers is somewhat surprising. Amazon has long prohibited businesses that sell on its site from soliciting customers directly, keeping data such as their email addresses private, largely to shield shoppers from spam. Merchants could communicate with shoppers via a messaging feature on Amazon's site, but only when it concerned things such as the status of their order.

Shoppers' contact information will continue to remain private. Amazon will give companies aggregate data when they use the tool that shows them how many emails will go out when they decide to share marketing campaigns with their followers. Companies can also view metrics to see how their campaigns were received.

As its third-party marketplace continues to grow, Amazon has sought to court major brands and build a more robust library of high-quality products on its site. Issues with counterfeiting and pricing tactics have made some brands wary of increasing their Amazon presence, but the coronavirus pandemic pulled in some of those who may have been hesitant to sell on the platform.

More than three-quarters of U.S. brands, or roughly 78%, are currently selling on Amazon's marketplace, up from 55% in 2019, according to a February report from Feedvisor, which helps brands grow on e-commerce marketplaces.

For now, the free tool is only available to members of Brand Registry, a program launched by Amazon in 2015 as a way to help businesses curb the sale of counterfeits. More than 350,000 brands have registered to be part of the program, which has since expanded to include other benefits.

An Amazon spokesperson told CNBC in a statement: "Amazon is committed to serving our shoppers by helping them engage with their favorite brands. With Manage Your Customer Engagement, brands will be able to initiate email campaigns about new product announcements and offers that Amazon will send to shoppers who choose to follow the brand."

Businesses have been requesting that Amazon launch more services to help them build more durable relationships with shoppers on the site, said Fahim Naim, a former Amazon employee who now runs e-commerce consultancy eShopportunity.

On Amazon, which hosts millions of products, it's crucial for brand owners to be able to stand out among a sea of competitors. To that end, the company has increasingly launched new tools or improved existing ones, such as Amazon Stores, which are akin to a landing page for businesses, or Amazon Posts, which is an Instagram-style, shoppable feed of lifestyle product images. Amazon has also given companies more tools to personalize their product listing pages, such as interactive videos.

Features like these have increasingly become table stakes on e-commerce platforms such as Shopify, WordPress and Adobe's Magento, Naim said. Those platforms have attracted small- and medium-sized businesses looking to set up a web store by offering an array of plug-ins and app integrations.

Giving companies the ability to expand and differentiate their presence on Amazon also builds trust with customers, Naim said.

"Amazon wants you to be more cognizant of the brand you're thinking about because then you're going to go back on the platform to buy it vs. off of there," Naim said, adding that customers may be more likely to buy a product if they know the brand.

Ash Crawford, co-founder of coffee and tea maker Quivr, said the ability to email promotions and product launches to customers will be valuable, since his brand currently has no way of reaching its customers on Amazon.

"Amazon considers the customers 'Amazon's customers' and not ours," said Crawford, who has been selling on Amazon since the beginning of last year. "This tool appears to be a loosening of those restrictions and a controlled way to reach out and to engage with customers of our products."

The tool also addresses one of the biggest pain points among vendors and sellers — getting a new product off the ground on Amazon.

Companies will often promote new products on Facebook with the hope that they can drive traffic to their listings on Amazon, or by inserting marketing materials in packaging.

"Amazon is so algorithmically driven based on historical data, so if you have something that has no historical data, it's very, very difficult to get Amazon to even order enough product," said Andrea Leigh, vice president of strategy and insights at e-commerce advisory firm Ideoclick and a former Amazon executive. "So this would give manufacturers another tool to try to promote new items."

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