Amazon is hoping to figure out social commerce before social networks can solve shopping. It announced TikTok-like functionality that could turn Amazon into a discovery destination. Last week, Amazon launched Inspire – “an in-app shopping experience that gives customers a new way to discover ideas, explore products, and seamlessly shop from content created by other customers, influencers, and brands they love.” The experience is similar to a TikTok feed, featuring endless photos and videos shoppers can swipe through. Once they see something they like, they can buy it in a few clicks. 

Amazon wants shoppers to spend time in the Amazon app even when they don’t want to shop. It is trying to solve a weakness most shopping websites and apps have in the U.S. – consumers only open them when they know they need something. They do not open them to browse casually (they open apps like TikTok instead). Thus, e-commerce is very transactional and does not have the same discovery and browsing experience as physical retail. “The internet lets you buy, but it doesn’t let you shop,” wrote independent analyst Benedict Evans.

Prior to making the Inspire announcement, Amazon had largely abandoned attempts to innovate in shopping. It discovered the “Minimum Viable Amazon” a decade ago and has been only slightly improving it since. Over the past few years, advertising has even replaced product recommendations and personalization on the company’s e-commerce site. “Amazon really solved buying, but it killed shopping in the process,” said Emily Weiss, the founder of the beauty brand Glossier, told Recode back in 2019.

Amazon Inspire app

The challenge is that Amazon’s Inspire content will compete for attention with other apps like TikTok, YouTube, Instagram, and dozens more. While those platforms have added shopping functionality over time, they are not focused exclusively on shopping. For example, despite TikTok driving massive traffic to Amazon during Prime Day, it also has so much more. Meanwhile, Pinterest is in the process of incorporating a shopping element, with the image sharing and social media company acquiring AI-powered shopping platform The Yes early this year to further bolster the “evolution of our shopping vision.”

Amazon’s new shopping feature is TikTok-like only on the surface; without content, it will not work. But Amazon has confirmed that brands, influencers, and – crucially – other shoppers will be able to post content on it. If Amazon could attract a large volume of content from hundreds of millions of shoppers, it could build social network-like functionality seen on TikTok and other apps. Although, Amazon already tried launching social networks – like Spark in 2017 – which went nowhere. When announced, Amazon described it almost exactly as it described Inspire five years later, “When customers first visit Spark, they select at least five interests they’d like to follow, and we’ll create a feed of relevant content contributed by others. Customers shop their feed by tapping on product links or photos with the shopping bag icon.”

Today, social apps are ahead in the commerce race with Amazon. Practically all have launched some version of e-commerce functionality. Amazon is catching up, but social features are a unique challenge, which, even given Amazon’s excellence in other fields, will be very difficult. Social commerce is a competition for attention, and that is where Amazon will face the biggest hurdle – stealing it from TikTok, YouTube, and Instagram.

Joe Kaziukenas is the founder of Marketplace Pulse, a business intelligence firm focused on e-commerce. 

The list of best-sellers on Amazon is different day-to-day – and it is not merely new trends replacing old ones. Instead, it is brands that did not exist until very recently pushing out other newly-launched and short-lived brands in order to take the top spots. What do almost all of these brands have in common? Their names are unrecognizable, unpronounceable, and unmemorable – and the brands, themselves, are only exclusively for the purpose of selling on Amazon.

In the headphones category on Amazon, for instance, 1,800 different products from almost 700 brands were among the top 100 best-sellers in the last twenty-four months. The category consists of nearly three new products from almost one new brand every day replacing current items in the best-sellers list. Those brands are pseudo-brands with names like NUBBYO, LAFITEAR, NANMING, AIWONS, or HWCONA, and they are numerous. In fact, only five brands – Apple, Samsung, Sony, Soundcore, and Tozo – had a product in the headphones best-sellers list for the entire twenty-four months. Just twenty have been in it for over 500 days (70 percent of the time). More than half of the brands were on the list for only five days or less, which means that hundreds of brands gained some momentum, and then ultimately got lost among the sea of lookalikes a few days later. 

Headphones are not an outlier. Most Amazon categories exhibit this behavior, and there does not appear to be a slowdown in terms of the share of each category’s top-selling list that consistently gets replaced by newer brands. While top brands – which are often well-established names – across the board retain their positions, new entrants enter the best-sellers list on a daily basis over the past few years on a very consistent basis.

Brand moats on Amazon, then, are rare but not impossible. Unsurprisingly, Apple, Samsung, and Sony are always on the list, but there are also brands like Soundcore (owned by Anker, one of the Amazon-native brands, which has since publicly listed on the Shenzhen Stock Exchange) and Tozo that do not have the pedigree of established brands. There are hundreds more that gain some success but fail to establish market position, and thousands more that try every month to replicate some of that success – and again, this pattern is not only playing out when it comes to headphones, but across a wide array of categories on Amazon – from apparel and beauty products to electronics and toys. 

The consistency with which so many new brands are launching on Amazon is having an impact beyond the Seattle-based titan’s platform, itself. In order to be eligible for Amazon’s Brand Registry, an initiative that enables sellers to “gain better control over their product listings” and to gain increased “access to advertising solutions, which can help you increase [a] brand’s presence” on the sweeping e-commerce marketplace platform, Amazon mandates that companies must be able to show that they have a registered trademark in the U.S. As a result, no shortage of these Amazon sellers are making a beeline for the U.S. Patent and Trademark Office (“USPTO”) and seeking to register new trademarks in order to be eligible for Amazon’s Registry. 

This has led to a spike in trademark applications being filed with the USPTO, mostly from applicants in China. “As of June [2021], the increase [in trademark applications] was roughly 63 percent higher than the previous year, which translates to about 211,000 more applications,” the national trademark body stated in a blog post. “And in December 2020, alone, the USPTO revealed that it received 92,608 trademark applications, an increase of 172 percent over December 2019.” In July 2021, the backlog of pending trademarks at the USPTO has surpassed 900,000 for the first time.

(There has been a rising emphasis on the potential for fraud in connection with many of these applications, with applicants attempting to get around the USPTO’s actual use requirement by submitting photoshopped images that appear to show how their trademarks actually being used. Chances are, this type of fraud is likely at play when it comes to some of the unpronounceable terms (think: UMQN, AHY JS, AIVYU, JGTG, and FKRF, among others) that appear on the list of more than 15,000 trademarks in a final order for sanctions that the USPTO issued in December against Yusha Zhang and Shenzhen Huanyee Intellectual Property Co., Ltd. for engaging in the unauthorized practice of law.)

For those brands – many of which appear to be a randomly generated string of letters (take VBIGER and MAJCF, for instance), the brand name, itself, is not important, and the only reason they go through the USPTO registration process is to unlock the Brand Registry service on Amazon, among other benefits. They succeed or fail on Amazon despite the brand name. (Most often, they fail.) Because of this, shopping on Amazon is unlike any other retailer. At the same time, the definition of what “brand” stands for – both in terms of the source of the goods themselves, which is more often than not largely unknown to the buyer, and any potential for goodwill associated with that brand, which is slim given the short shelf life of these brands, for one thing – is also proving to be increasingly distorted on Amazon, too. 

Amazon’s marketplace is evolving, however. Many more sellers are thinking about moats beyond the number of reviews, and aggregators buying those Amazon-native sellers are building portfolios of brands with the hope of turning them into recognizable brands. (Funding for Amazon aggregators is down over 80 percent in 2022; last year by September 2021, aggregators had raised nearly $9 billion in new funding. This year, the figure is only $2.3 billion.) Hero Cosmetics, for instance, the acne care brand born on Amazon, was acquired for $630 million in September week. Hero launched on Amazon in 2017 with one SKU that has since become the No. 1 beauty product on Amazon.

These developments are not going to curtail the chaos on Amazon, but the incentives are starting to look different. It has never been easier to launch a brand on Amazon like it is today, and yet, it has never been harder to launch the next Anker.

Joe Kaziukenas is the founder of Marketplace Pulse, a business intelligence firm focused on e-commerce. 

In November 2019, Nike stopped selling its goods wholesale to Amazon. It did not need Amazon at the time, and it needs them even less today – accelerated by the COVID-19 outbreak, direct e-commerce jumped to 30 percent of Nike’s sales, a mark it had previously expected to hit only in 2023. Amazon, on the other hand, does need Nike. After the split, the possible scenarios were that Amazon would find a different way to source Nike goods wholesale, the third-party marketplace would source the full Nike catalog, or that Nike would reverse its decision. None of those scenarios happened. Shoppers, instead, bought other brands on Amazon’s platform. 

According to Marketplace Pulse analysis of best-selling products in relevant categories, Nike products mostly lost their position after pulling out of Amazon. For example, in the Men’s Running Shoes category, Nike was one of the best-sellers for years. Amazon sold out by the end of 2019, and since then, the best-selling Nike product has been averaging #15 place.

“As part of Nike’s focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail,” a representative for the said the company last year of its decision to cut ties with the Jeff Bezos-founded behemoth. As it turns out, Nike had primarily agreed to the pilot in 2017 in exchange for Amazon increasing its efforts to police counterfeit and unauthorized third-party sales

“For years, Nike had refused to sell directly to Amazon, fearing it would undermine its brand. Nike executives were unhappy with how unauthorized sellers continued to be widely available on Amazon,” wrote Khadeeja Safdar at the Wall Street Journal. The pilot did not work. “Nike officials were disappointed the deal with Amazon didn’t eliminate counterfeits and give the brand more control over gray-market goods.” As a result, Nike never brought its full catalog to Amazon, and instead, pulled the plug on the parties’ “pilot” entirely. 

Shoppers did stop looking for Nike on Amazon, though. Searches for its products have remained in the top 1,000 most-searched terms, and Amazon’s third-party marketplace continues to provide some, though limited, selection. “Nike shoes for men,” one of the brand’s most searched terms, most often lead to shoppers buying the Nike Men’s Revolution 5 Running Shoe. It costs more on Amazon than it does on other sites, and has a subpar product page compared to other category-leading products.

Nike is likely okay with being presented poorly on Amazon. That makes shoppers go to or download its app instead. The strategy is working because Nike is averaging 100 million visits to its own website and maintains one of the top 10 most-downloaded shopping apps in the world. As a result, Nike’s online sales were up 83 percent in the second quarter, adding $900 million to its total sales. “The accelerated consumer shift toward digital is here to stay,” said John Donahoe, CEO at Nike, discussing the quarter’s results in September. 

Nike’s departure from Amazon sent waves through the brand’s ecosystem. However, Nike is an exception. In other words, it looks for channels that can create new growth. For Nike, Amazon could sell – Nike would argue poorly – to its existing audience, an audience that is increasingly taking the extra steps to transact directly with Nike. With that (and other factors) in mind, it does not need to accept the tradeoffs that come with selling on Amazon at the expense of maximizing revenue. 

Nike realized that it does not need to fix its issues with Amazon. It could instead build a channel without those issues. Nike is focusing on what it can control and ignoring what it cannot.

Joe Kaziukenas is the founder of Marketplace Pulse, a business intelligence firm focused on e-commerce.