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Why labels matter: Amazon tests out ‘Top Brand’ badge after ‘Amazon’s Choice’ gets grilled

Amazon is testing the “top brand” badge on fashion items, the company confirmed to Marketing. This comes as US senators grilled Amazon over its existing “Amazon’s Choice” badge last week, expressing concerns that it deceives consumers into purchasing products of inferior quality.

In a letter sent to Amazon CEO Jeff Bezos seen by Marketing, the senators said they were concerned that the “Amazon’s Choice” badge was assigned in an arbitrary manner, or worse, based on fraudulent product reviews. While they recognised that Amazon has taken actions in the past to combat fraudulent reviews, they said:

Amazon may be “exacerbating the problem” by actively promoting products with fraudulent reviews.

Additionally, the letter said: “The dearth of information on how Amazon assigns the badge has also led me to question whether Amazon is using the badge to promote its own products over competitors’ products, potentially disadvantaging smaller sellers on the platform.”

According to Amazon in a statement to Marketing, the Top Brands badge is a feature it is testing to highlight brands that customers love. On the other hand, customers will continue to see the Amazon Choice badge, which is a recommendation for individual items that are “highly-rated, well-priced products available to ship immediately”.

Meanwhile, eCommerce players such as ECHO Commerce Consulting’s managing partner Kyriakos Zannikos said the new label will impact purchasing decisions and is something that brands should not ignore.

He explained: “Visual clues like this can take the attention away from price for example, influencing a consumer to convert to purchase, even if there is another similar product listing costing a couple bucks less next to the one with the badge.”

On the motivations for such a feature, Zannikos speculates that Amazon is looking to increase conversions, and subsequently, higher gross merchandise volume for the company and its “top brand” partners. “We can assume how the badge is awarded depends on a mix of what Amazon thinks is good for their online customers based on data, and what is good for the company’s profitability. That being said, we will probably never get access to any data that can prove or disprove that,” he said.  However, he added:

I don’t think fairness plays a role here. Amazon has always done what’s “right for their online customers” and that’s a strategy none can debate against.

The onus is eventually on the consumer to make the judgement call, said Zannikos, as Amazon is only providing information based on what it thinks is important. Be it a good development or not, he said that it may be “less wise” for brands to alienate themselves from Amazon due to how big the eCommerce platform has become.

Advice for brands

The threat of the new badge, according to Stridec Worldwide’s founder Alva Chew, is the biggest to big brand names who traditionally have favourable exposure in big box retail, but are struggling to stay relevant and compete in the online space against more agile and innovative boutique fashion brands. He said: “Shoppers on Amazon don’t necessarily have the conventional brand loyalty that a big brand has come to depend on, for their premium margins.”

But rather than a threat, brands could also see the badge has a new opportunity. Chew believes that the badge is a tool that aligns big brands with Amazon’s overall market objectives, enabling both parties to reap the rewards together. Brands can look to work more closely with Amazon in a similar way major brands have launched exclusive Tmall stores in China. He said:

Retailers extract commercial benefits on these platforms not by asking whether is it fair, but understanding how the rules are applied so that they can play the game better.

He added that the move is not unexpected as platforms that control a “vast narrative of the social fabric”, such as Amazon, Facebook and Google, constantly tweak the rules and regulations to fit their own agenda. “Preferential display of merchandise has been around for as long as the concept of retail itself. When you walk into a departmental store, big brands are always placed move convenient locations where the footfall is the most dense. Hardly anyone questions the fairness of it,” he added.

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Such labels are also reminders for smaller merchants to pay close attention to their branding. Dominating search results for related terms and having high engagement and following on social media space can create a “strong sphere of awareness” that could excite sales and further growth, said Chew. This not only makes the merchant a “top brand” in its own right, but may also earned itself the badge that Amazon is giving out.

While the badge may be highly-coveted, Chew said it remains to be seen on how much influence it has on customers. He explained: “If you’re not brand conscious to begin with, the additional presence of a badge probably won’t affect your buying decision that much. If you’re brand conscious, then you probably know which are the popular brands already.”

On the flip side, Chew does not discount the possibility that Amazon may eventually monetise the “top brand” feature, if the label proves to result in better conversions. However, such a move may backfire, eroding consumers’ trust in the eCommerce giant should new or lacklustre brands be promoted simply because they have enough money to buy the recognition.

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