Is Amazon is coming to your territory? What does a company or brand need to do to take advantage of the oncoming entry of Amazon into their market? Or, if Amazon is already a dominant part of the ecommerce landscape in your country, how does a company set themselves up for future success?
It is exciting times that we live in now for the world of eCommerce. Amazon, the world’s leading ecommerce platform is actively entering new territories with the aim of bringing their revolutionary business model to what they see as inefficient markets with big opportunity.
In 2017 and 2018, if you are based in Australia or South East Asia, you are in for a change in the way the online sales game is played, as Amazon enters the fold. It is a very exciting time for brands, retailers and companies that are in a products based business. If you live in any other country where Amazon is already present, then it is hard to ignore the platform’s impact and reach.
To understand the kind of opportunity that Amazon presents for companies, we can look to the way it has dominated the US market. The platform has not just been able to convert existing consumers to the platform, it also significantly contributes to the increase in growth of the entire USA retail industry. Experiencing double digit growth since its inception, Amazon reached revenues of 135 Billion Dollars in 2016. (Internet Retailer)
Amazon is too big and too important of an opportunity to leave to inexperienced associates. There are roles that need to be filled to get the most out of this part of a business. Whether these roles get filled by one person, two people or a whole team, is up to the company and the strategy they have in place moving forward and the goals they want to achieve.
Let’s start out with the roles and duties that need to be handled for any team to grow on Amazon:
It is important that top priority is placed on content optimization. Remembering that content that looks good is not necessarily what sells. There needs to be strategic thinking involved in knowing the right type of images, sales copy and keyword research to use, then having the right resources in place to execute. Getting this right will give your products waves of free organic traffic and high conversion rates.
Amazon Marketing Service (AMS) Strategy and Promotions
AMS should be a focus of all brands’ Amazon strategy. It is Amazon’s in-house pay-per-click advertising system and it is a great way to get instant momentum, keyword data and consistent sales. It also has the benefit of boosting search rankings for products. Amazon like it when you pay them.
Positioning and Maintenance
Products need to be monitored and maintained. There are many factors that influence a product’s search rank and position in the market and these factors are constantly changing. The algorithm is constantly updated and changed. If you are not on top of this and constantly monitoring changes in your product performance that can be attributed to changes in the system or market, then you can lose market share rapidly.
Someone is needed to make sure that the metrics Amazon use to measure seller/vendor performance are as perfect as possible. Imperfect account metrics can have a significant impact in sales and can be very costly.
It is important to manage customers queries and complaints. Vendors have the added bonus of having Amazon handle their customer service for them, however, it is still important for all brands to respond to reviews and feedback from customers. Amazon can be an important touch point in consumer relationship management.
Fulfilment of Inventory/PO Fulfilment/Shipment Process & Handling
A staff member dedicated to handling purchase orders and inventory. Making sure there is always stock of hot selling items and managing inventory correctly will result in larger revenues and better cash flow.
Expansion into Global Markets
Amazon is global. Entering your local territory can be a stepping stone into other Amazon markets. With over 300 million active accounts, the potential is exciting.
Analytics and Reporting
If you are in an executive position in a corporation, I do not need to remind you the importance of accurate and insightful analytics and reporting. These reports need to go beyond the basics of what Amazon give you from within their platform. The analytics and reports need to be able to tell a story and provide data in a way that allow all decision makers to make insightful and correct strategic decisions.
Whoever is on board should be able to create models and systems to analyse results. Being able to see growth or decline of important metrics over time and across periods is vitally important to making informed and meaningful strategic decisions going forward.
Metrics should measure performance on your account as a whole and individual products. Creating effective systems and models is a costly and timely task to undertake, but one of vital importance.
What would be the ideal scenario in a perfect world, is to have someone in-house who has all the skills to manage the resources and team to optimise every component of their brand’s Amazon strategy. Unfortunately, brands are going run into some problems when they go out into the market to find these superstar players to come on board into the company. Especially if companies have goals of adding 7 or 8-digit yearly growth from Amazon revenues.
What companies will find when they go looking for an ‘Amazon Expert’ is that they are very hard to find. If they do somehow find a person who has the track record to be able to bring 7 to 8 figure growth into the business, they will not come cheap.
There are a few reasons for this issue. Firstly, Amazon experts are not created in schools, they are created in the field. Usually (not always) the people you want in your teams earned their expertise through trial and error with their own capital, their blood, sweat and tears. Building brands and selling products online that they themselves created or managed. Being amazingly successful on Amazon can allow you to live an amazing lifestyle of time and location freedom. Trust me, it’s pretty nice.
Secondly, besides the great lifestyle you can live, you can also be incredibly profitable.
These two factors, will make it incredibly unattractive for someone who has the skill to dominate the Amazon game for a brand, to make the decision to go back into a day job that has regular business hours for a standard pay check (even if there are commissions involved). This situation also presents another issue in that talent that have achieved these kinds of results for themselves may not be ready or suitable to work with corporate clients as a service.
Being able to find Amazon Marketplace A-Players is a big issue for companies, even in the USA, where Amazon has been present for over 20 years. It will be doubly difficult for a company in a country where Amazon has never existed before.
This might not be an issue forever. I predict in the next 3-5 years, that this skill set will be more commonly taught in schools to be used in the corporate world for large brands. The thing that companies need to think about is, can you wait that long? That’s a lot of money potentially left on the table with Amazon showing double digit growth every year since it’s inception.
So, what are the options for hiring a team or leader to handle an Amazon strategy?
(For the sake of transparency, I should inform you that I do represent a consultancy agency. However, I have tried to be unbiased in this review as both sides have legitimate advantages and disadvantages)
- Investing in the knowledge in-house for the future.
- Once trained, they will be there to instantly handle growth strategies, as well as issues and problems that arise.
- Full time employee dedicated to a company’s needs and only their needs.
- In-house intellectual capital.
- Physically present at headquarters.
- Ease of Communication. They work for the company, they answer directly as soon as possible.
- Extremely Hard to find A-Players.
- Money and Time cost of training and learning.
- Normal peripheral costs of employees (healthcare, 401k/Superannuation/CPF, paid leave, etc)
- Paid for their time. After the end of the day, they clock off.
- Risk of turnover. Once they are trained or have that track record of success, they will have a very valuable skillset. Competitive offers will come in for effective leaders with rare skills.
Hiring a Consultancy Firm
- Paid to perform. Client success is the agency’s success.
- Systems, knowledge, structures, reports and strategies have already been designed and tested. It just needs to be customized for a client’s specific niche.
- Can instantly mobilise ready assets for client growth. Zero time wasting, take advantage of the opportunity the market presents quickly.
- Will never leave, as long as invoices are paid and relationships are strong.
- Can let them go easily if they are not performing to expectations.
- Consultants are in the business of trusted advisory. There is a certain leap of faith, from both parties, that needs to be made for profitable partnerships.
- Setting aside future goals of the company for instant results. However, a good agency should work with corporate goals and be able to provide solutions that plan for success in short, medium and long term goals.
- Consultants could have multiple clients, meaning communication could be on their time. Set the expectations at the outset.
- Remuneration can be costly. Though if an agency delivers on the value that they promise, it is a worthwhile investment.
Some Final Thoughts Going Forward:
- Amazon is so important! You need to have a strategy moving forward. A company without an Amazon marketing plan, is a company without a plan.
- Now is the time to prepare. Especially if Amazon is about to enter your market. You need to get your team ready, BEFORE the marketplace launches. Get the right knowledge from the right people, so that you can execute your strategy to dominate Amazon.
- If Amazon is already a massive player in your market (USA, Europe, etc), the best time to start was 5 years ago. The next best time is now.
- Some key decisions for Brands moving forward:
- Hire in-house or through a consulting agency?
- How important is this sales channel for the company going forward?
- How to fill the roles needed to successfully implement an Amazon strategy?
- How much flexibility is needed when it comes to filling this important position?
- How soon do they need to get started?