Amazon’s work to onboard manufacturers is showing fruit
In the last few years, news articles covering about the rise of Chinese direct brands on Amazon.com have come out – mostly noting odd brand naming as a tell-tale sign. This uptick in new brands has been part of the plan for Amazon to go direct to the source for products – China. More than just funny-sounding brands, these manufacturers are making real inroads by going direct to consumers putting Amazon sellers on their heels, and displacing decades-old product dominance.
Amazon has made it easy for anyone anywhere in the world to sign up for a Seller Central account and get selling online. In particular, Amazon has been rapidly onboarding Chinese manufacturers to increase selection and competition in the US. The result has been this explosion of new brands on Amazon, sometimes with odd names or marketing.
Idoo wants you; the price is right, and so is the marketing
Idoo came to my attention as a gardening hobbyist when I saw that they had launched a competitive line to AeroGarden owned by Scotts Miracle Grow; the line is focused on kitchen hydroponic herb growing systems, and these systems have become quite a popular item on Amazon over the last decade.
Idoo launched its hydroponic systems about 3 years ago on Amazon.com and since has been steadily dropping its price until it reached the #1 sales spot for its category. They have top-notch Amazon marketing materials, and they update them seasonally.
For example, Idoo is promoting Mother’s Day on their detail page by May 1, which I consider a bit ahead of the curve for most sellers. If you browse their direct-to-consumer site, they go out of their way to assure you they can help with any problems that come up and get you excited about their product with an engaging time-lapse video.
Idoo expands product lines focusing on margin and price sharpness
The main products Idoo launched were air mattresses and kitchen hydroponic systems. As they gained a foothold, they launched several variations in each of these product lines – in every case, carefully undercutting the previous category incumbent by a few dollars. Idoo’s pricing strategy appears to be to undercut the everyday price by a few dollars and regularly run lightning deals at an even lower cost to get maximum visibility on their products.
Expanding internationally to UK, and Germany
Idoo has a nice direct-to-consumer site where much of its marketing materials live and some information on its contact page. Idoo was officially founded in 2015, and since finding a market in the US, they have expanded to UK and Germany. On Idoo’s official website, they mention they were founded in 2015 and, interestingly, that they have expanded their focus into the UK and German markets.
In the UK market, Idoo has entered first with their premium inflatable mattresses, and the hydroponic system is secondary in sales at least. Their German offerings more closely match the US with a high sales volume on their air mattresses and hydroponic systems.
If Amazon is true to form, they will advocate for companies like Idoo to implement Buy with Prime on their direct-to-consumer sites to keep their foreign supply chain investments low.
Bad news for Amazon Sellers or good news for Amazon customers?
More competition directly from manufacturers is a good thing for Amazon customers, lower prices and selection are what Amazon is all about. Sellers, on the other hand? For most sellers competing directly with manufacturers is a part of business, and they are prepared to add value beyond acting as a direct import agent. Sellers who are just importing goods, adding a markup, and listing will have more of their business degraded over time. Still, it’s concerning to almost any business or brand owner to see a large company like Scotts get squeezed in its own product category by what would be one of its manufacturing partners in another setup.
Amazon has made it easy for anyone to directly import consumer goods into the US – not just Americans. While there are tremendous hurdles for foreign manufacturers to jump to enter a new market – Idoo shows its possible and scales to more than just the US. At the beginning of 2023, Amazon cut ties with many European distributors in an effort to cut its own costs and further eliminate middle players in the direct import business.
There are still very real challenges for the manufacturer-to-seller route – the biggest one that jumps to mind is returns. Manufacturers are locked into a higher cost structure without a warehouse to do returns from FBA or customers, including destroying returns or otherwise paying a 3rd party to handle them.