Amazon is driving down prices in consumer tech, reports the New York Times, and changing the nature of brands in the process.

Experts believe the future of consumerism looks like this: we’re going to get better products for ludicrously low prices, and big brands across a range of categories are going to find it harder than ever to get us to shell out big money for their wares.

There’s a hidden hero in this story — or, if you’re a major brand, a shadowy villain. It’s Amazon.

Let’s take an example: Wyze is a camera that automatically shoots video and stores it online until you want to view it. It costs $20. Nest’s and Netgear’s comparable indoor cameras sell for around $200 each

Wyze’s low prices are instead born of two ideas, both connected to Amazon

To hit the $20 price, Wyze licensed the camera’s hardware from a Chinese company, then created its own software. It also cut out just about every middleman, including most retailers.

Wyze is just breaking even on its first camera. How do they know it will sell? Amazon.

Customer rankings and reviews on Amazon have become just about the most important factor in how consumers buy electronics products; because Amazon pages come up high on search results like Google’s, a positive rating on Amazon can effectively make a brand — and a negative rating can break one.

Here’s how companies such as Wyze operate on Amazon: to win a certain product category — portable chargers, say, or children’s night lights — the company is obsessive about monitoring customer feedback, including the rate at which its products are returned.

One company hired industrial designers to improve the look of its devices — which also helps it stand out from other commodity devices on Amazon’s results page.

They spent heavily on Amazon ads (these show up as “sponsored” results on Amazon’s search page), and sometimes sold products at a loss during one of Amazon’s daily or seasonal deals to get a boost that lifted all of its products in the website’s search rankings.

Other companies view Amazon as a kind of product road map — they look for categories dominated by high-priced items from well-known brands, and then try to create better, cheaper versions

“As this takes off, it really makes you start to question, you know, what is a brand in the Amazon age?” said Scot Wingo, executive chairman of ChannelAdvisor, an e-commerce consulting firm.

“In a way, Amazon is providing all this information that replaces what you’d normally get from a brand, like reputation and trust. Amazon is becoming something like the umbrella brand, the only brand that matters.”

 

 

 

 

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