Over the last year, we've seen massive shifts in purchase preferences and what products people want to buy. Given the unchartered territory of 2022, we decided to host a webinar to map out the possibilities and help Amazon Sellers and Vendors plan for the future — with the help of a panel of experts.
- Achal Patel: Co-founder and CEO of Cabinet Health, a health essentials brand for the modern consumer.
- Dan Simmonds: Amazon Director at OMG Transact, a specialist business unit based out of Omnicom Media Group that focuses on ecommerce.
- Hosted by Rael Cline: Co-founder and CEO of Nozzle, an ecommerce and advertising platform for Amazon.
Ultimately, the panel centered its strategic conversation within the context of Amazon.
- How understanding consumer behavior on Amazon is different from most channels.
- That your product detail page is ultimately the window to what you do.
- The role of trust, driven by Prime membership, makes Amazon different from other brick-and-mortar and ecommerce channels.
The panelists shared some of the hard lessons and how to apply them to take your Amazon business to the next level.
“You can't just take your learnings that you've applied to other sites, other retailers, and hope that works because it's not going to." — Dan Simmonds
P.s We were also joined by Rob Quattromini from Amazon, but unfortunately, we were unable to record this webinar or quote Rob inline with Amazon’s regulations. So we have put this article together to impart some of the knowledge we gained during this webinar with you.
Lesson 1: Align your business to Amazon
Running a successful Amazon operation requires a tight integration across all departments in an organization. Different strategies to data sharing can have a large impact on outcomes. Throughout, the panel discussed the importance of sharing data and how it can impact outcomes.
“Joining datasets and being able to attribute ads to sales is what makes Amazon unique. Amazon-native brands are just structurally set up to do that. A lot of large brick-and-mortars find the transition challenging.” — Rael Cline
The Product Query Engine
Dan defines Amazon as a product query engine. Amazon’s consumer-centricity feeds into the A10 algorithm which feeds into the product algorithm, so relevancy is far more important than in a brick-and-mortar store.
Rethinking your org structure
The panelists highlighted how having a cross-disciplinary core team — operating in harmony — was really critical to being successful.
“We have a weekly Amazon focused meeting including everyone from team members optimizing bullet points on customer-facing pages, to our PPC team and our Operations team.” — Achal Patel
Vendor vs Seller
There was also an interesting discussion on whether it’s preferable to be a Vendor or Seller, and whether you should switch between both. Dan is seeing brands split, and it's very rare they go one way or the other. As Dan pointed out, “You've got to be prepared that you have to have a different strategy for each channel, and the important thing is transparency.”
Achal’s approach is the opposite. To focus initially on control of pricing, offering and positioning, and from that position look at whether wholesaling makes sense. “For us, it's a learning experience of how do we go into more of a wholesale model”.
Getting Amazon wrong
Achal gave an example of his own ecommerce site, where most of the sales are kits. You buy a medicine kit from Cabinet Health and it has everything you need for your apartment or house. However, buying behavior on Amazon isn't aligned with that outcome. As Achal points out, “there’s a product channel fit that brands don't think through in detail.”
Based on search behavior and the pathway to getting to a particular product, there are high intent purchasers on Amazon for a certain type of purchase that are not present on other sites. By missing the fundamental research phase, you don’t know what keywords people are searching for.
Lesson 2: Invest in data and organization for 2022
Focusing on the relative merits of investment in technology, processes and people, topics included:
- The creation of new teams to take advantage of the latest advertising formats that are being rolled out.
- How to roll out these newer advertising types — whether display or sponsored videos.
- The impact of off-Amazon advertising opportunities through sponsored display ads and Amazon DSP.
One thing that came to the fore was using specialists to extend your skill sets:
“Groups like Nozzle really help us do that. We don't have the capabilities in-house to be able to fully understand what lifetime value is, and how much we can actually spend to acquire customers.” — Achal Patel
When to use an agency?
There was an interesting discussion about when to engage external agencies. Achal likes to develop a competency first before looking for a partner so his team can focus on new things. Conversely, Dan's customers like to partner from the beginning because they don't know enough to get started.
According to Achal, “we were running advertising fully in-house for two and a half years. In the last three months, we've brought on a third party agency to do a lot of the pay-per-click advertising.”
While Dan has seen clients engage almost immediately. “We have 100 ecommerce experts across 25 markets which gives us that local nuance, another really important factor in determining when it makes sense to work with agencies.”
Rael's view was that competition may be overhyped in certain categories given the short time to execute from many large brands who weren't on Amazon pre-COVID.
Dan reckoned that because many brands only had a short space of time to react to COVID, they had made some big calls on how they wanted to engage with Amazon, and thought there wasn’t going to be a particularly high success rate.
“I think people may overestimate the level of competition [on Amazon] next year” — Dan Simmonds
Achal reckoned that many new entrants weren’t executing on the important things. The things they find important in direct-to-consumer channels might not be as relevant on Amazon and vice versa.
Small details matter
“If you execute really well on all the small details on Amazon, you can be successful.” — Achal Patel
Achal praised Seller Central for its flexibility in changing price points. Noting how long it takes to identify the right price point and the right positioning in the market. “Anecdotally, out of the 50 products in our portfolio, we've probably changed prices on all of them over the course of the last three or four months.”
Where are the cannibals?
All the planets felt that Amazon was such a unique selling channel that cannibalization of sales wasn’t a major factor.
“Conversion rate is a multi-step function above our own ecommerce website" — Achal Patel
The key factor? Trust. Achal pointed out, “am I going to buy this product online from a retailer that I don't know versus it having an Amazon checkmark with some level of required barriers to cross?”
Keeping up with new features and ad types
Panelists also wrestled with the problem of how to keep up with new developments as Amazon continues to push out new features. Discussion on advertising went beyond pay-per-click, talking about display, and some of the new sponsored brand videos. It was agreed that the creative assets required to do that are not as easy to develop as a structure around pay-per-click.
Lesson 3: Embrace Analytics
Data, analysis and customer insights are all critical to the successful leveraging of new advertising types. Guests discussed how Nozzle helps provide shortcuts to the answers they needed, and how to make informed and targeted decisions.
"Amazon is an ecosystem. To succeed, you need to be able to have every piece of it working together."— Dan Simmonds
The panel discussed Amazon’s increasing support for API integration, creating a hub for Sellers and Vendors. There was a comment about how much effort it is from a tech angle to keep up with all the maintenance and new features of Amazon APIs — and how it was better left to specialists than trying to develop tech in house
“Customer Lifetime Value graphs is an example where we decided to make investments in Nozzle to really scale out our understanding of customer data.” — Achal Patel
Data underpins everything that is sold on Amazon and will help Sellers and Vendors plan better. Partnerships and tools, like those offered by Nozzle, are a great way to stay on top of data streams and make the right choices within a unique ecosystem and platform.
Nozzle’s business is about helping brands align with the specifics of Amazon and leverage customer and advertising data to make targeted decisions. Check out the webinar for the full story, or get in touch and learn how analytics can help grow your business in 2021.