Case Study: How this indie DTC startup snatched Amazon's #1 spot from a heritage brand's status icon
A lesson for DTC brands on tapping into their digital competitive edge and driving incrementality
DTC brands have historically shied away from Amazon because of the lack of control over customer data and engagement, and high fees and pricing pressure from Amazon which erode profit and lifetime value. Brands are concerned that launching on Amazon will cannibalize their DTC sales, and shift focus away from their strategic values.
This is all changing, with DTC-native brands like Casper, Glossier, and Blue Apron all carving out a significant share of Amazon’s market.
Even smaller, indie brands — with lower budgets and more risk of eroding their brand value proposition — are launching on Amazon earlier and earlier in their lifetime.
This shift reflects a growing recognition of the platform's potential.
DTC brands are realizing that Amazon unlocks several key advantages:
A big addressable market. Who are easier to reach and lower in the purchasing funnel. Organic traffic can drive a significant portion of sales.
Marketing efficiency. There’s a halo effect of your spend on DTC channels, which is that customers will recognize and search for your brand on Amazon. So placing ads in search to win sales ends up being relatively low cost, driving down blended CAC.
Competitive advantage. For indie brands who typically have built highly refined brands and digital presence, they have a natural competitive edge over traditional brands and generic whitelabel sellers.
Clear channel differentiation and value within an omnichannel business. Amazon offers the ultimate accessibility and convenience for customers, which is something that DTC doesn’t truly offer. But DTC can be a platform for unique and exclusive offers, while Amazon is better for always-on core.
DTC remains the most popular choice of channel for newly-minted brands, thanks to high profit margins and the control over customer data and engagement, which helps to refine product offerings and build loyalty. However, the DTC model is becoming more difficult to fuel with acquisition costs skyrocketing and retention tactics like subscriptions losing popularity.
But investors and lenders are still looking for a healthy share of eCommerce sales in a brand’s P&L, to diversify and derisk because as an overall channel it has stronger growth potential than retail, better profitability, and requires the digital marketing expertise which is critical for adaptability.
So, a healthy Amazon share of the omnichannel P&L is a huge plus for brands, proving that a brand stands out in a highly competitive and fast-growing market.
So how do you grow as a scrappy DTC brand on Amazon? You deliberately steal share from legacy brands.
The high-end water bottle brand Owala did just that, and won: Owala’s FreeSip bottle currently owns the #1 placement in Amazon’s Home category, ahead of the iconic Stanley’s Quencher tumbler at #2.
The high-end water bottle market has taken off in the last few years, especially on Amazon, with Stanley absolutely crushing it.
Much of this rivalry played out on social media, with both brands leaning heavily on influencers to build brand affinity.
But the driver behind the move was Owala’s brand and product design.
Owala was founded in 2020, with the goal of creating a stylish, innovative and functional bottle that tap into the trend of water bottles as a fashion accessory. Owala's unique products, like the FreeSip bottle, have resonated with customers looking for both style and practicality
Owala launched on Amazon in 2021, recognizing the platform's potential to reach a broader audience.
What Owala did differently
They had leadership buy-in and team alignment: Their early launch on Amazon proves they were bullish about the potential of the channel. Operationally, they have clearly prepared to succees: one of the reasons that Owala beats Stanley is because Stanley is frequently out of stock. Owala doesn’t make that rookie mistake. They take the Amazon channel seriously, with exclusive products and custom creative. This takes a lot of operational alignment, which starts with leadership buy-in to the idea of growth on Amazon.
Translated their strong offsite brand presence to the marketplace: Owala mastered their use of social media to drive brand affinity with their target audience. Go to their Amazon store and PDPs and you’ll see a seamless translation of their messaging onto Amazon, but masterfully optimized for the Amazon platform and consumer. Their PDPs are optimized for ease of purchase, and their products stand out on the digital shelf.
Curated a tailored product assortment:Â Instead of mirroring its DTC catalog, Owala bundled products and tailored offerings specifically for Amazon customers, enhancing perceived value and driving sales. This strategy allowed them to optimize their presence on the platform and cater to the preferences of Amazon shoppers. Cleverly, keeping a highly curated catalog (without the long tail typically available on DTC) drives average conversion rates up, boosting rank and organic sales. Bundling, on the other hand, supports profitability.
Refined the shopping experience to meet customer needs: Owala has a history of customer data-driven decision making for marketing and product development, and they’ve translated this into a range of Amazon-exclusive products and strategic advertising placements to improve the customer journey.
Investing early and aggressively in targeted marketing to capture bottom-of-funnel customers:Â Owala implemented bottom-of-funnel PPC campaigns immediately upon launch, capturing high-intent traffic and boosting visibility against competitors. This early investment in advertising was crucial for establishing their brand presence on Amazon and driving initial sales
This success is both inevitable and remarkable
Owala's success demonstrates that even smaller, indie brands can thrive in a highly competitive marketplace against brands with marketing budgets multiples bigger.
In fact, with their unique but engaging branding built entirely digital, indie and DTC brands are perfectly positioned to generate and tap into demand on Amazon.
They drive hype and loyalty, pushing up traffic efficiently. It’s almost inevitable that success on DTC will spillover to demand on Amazon in the form of branded searches.
What’s not inevitable is that a DTC-first brand would build such an effective presence on Amazon that is so effective at capturing that demand.
This is remarkable because it takes quite different skills, resourcing and mindset to scale on Amazon. This was a high-intentionality outcome for growth.
The key lessons for DTC brands:
If you’re doing your [digital] marketing right, high-intent customers will be looking for you on Amazon. You may not be able to afford missing out on that cheap traffic, especially with rising CACs on social media.
Amazon requires a tailored and intentional approach, starting with strategic alignment and dedicated resourcing. You need to build out Amazon-specialist capabilities within your team to stand out and capture demand.
How to be successful as a DTC brand on Amazon
Commit. Ideally, your executive team understands the potential of Amazon and pushes growth as a strategic agenda item with resourcing behind it. You can’t get this right in 2024 by expecting a team member to handle it as a part-time project. That might actually hurt you, as Amazon’s algorithm punishes early slow sales and rewards fast takeoffs, allegedly in the long-term too.
Think strategically about your assortment and catalog. You don’t have to mirror your DTC selection. You can bundle to improve margins and AOV to offset the low retention on the channel, and leave items off that won’t work well, like exclusives and long-tail non-core SKUs. Also tailor your creative and copy to the category by auditing the best-in-class players and aiming to make yours just a bit better.
Add bottom-of-funnel PPC immediately, to capture intent driven from everything you’re doing to drive awareness on DTC. Lean into branded search ads, sponsored brand, and category searches next to your key category rivals. Invest in bidding for the #1 & 2 search slots, especially on launch. Again, the first 3 months after launch are critical so you want to make sure you invest enough early to boost the flywheel.
Monitor your KPIs and content. Keep a close eye on traffic, branded search, conversion rates, and search funnel metrics like % of total clicks for a search term (which you can find in Amazon brand analytics). If you notice anything off, review the shopper journey on site to see if something’s broken, changed, dropped, or needs to be improved.
Have dedicated channel operators. Amazon is a very complex and hard-to-control channel. Your account can get switched off on a technicality, and seller support is a nightmare to deal with. You need someone who’s dedicated to the account — and becomes an expert in navigating it — to handle operations. The #1 rule of Amazon is to never go out of stock. This is one of Stanley’s mistakes. If you do, you’ll struggle to reach previous levels of sales. So make sure your supply chain is set up properly. It’s not a bad idea to have agency support.
Be prepared for resellers, copycats, and hijackers. Ideally, you launch early enough that there are no other sellers selling your brand. But be ready to face lost buybox, stolen images, and fake planted reviews.
The good news is that there’s strong potential for DTC brands. It just needs some strategic thinking and good execution to be tapped into it.