Amazon And You: How to Maximize the Partnership

AMAZON AND YOU

How to Maximize the Partnership

MIKE DUNCAN - CEO - SAGE ISLAND

MIKE DUNCAN CEO / CREATIVE DIRECTOR

[email protected]

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SAGEISLAND.COM

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FACTS ABOUT AMAZON

» Retail stores’ revenue is flat; Amazon continues to grow

» 6% of US retail sales come from e-commerce

» Amazon accounts for 60% of all US online sales growth last year

The Facts

Facts about Amazon.com




Amazon accounted for 60% of all U.S. online sales growth last year.





The record for most items moved from the shelves to the loading docks in one week is 2,086,548.

Last year, when Amazon's site went down for 49 minutes the company missed sales of nearly $5.7 million.

» Younger and wealthier shoppers

» Buying diverse range of products, notably apparel

» The average prime members makes $69K and is 36.5 years old

» Millennials make up 37% of Amazon shoppers—largest group

» Prime households spend $1500 per year; non-Prime households spend $650

Who Is Shopping On Amazon?

» Competitive pricing

» Robust reviews from customers

» Fast delivery – especially from Prime

Amazon Strengths

2016 AMAZON APPAREL

Amazon Apparel Brands

Franklin & Freeman - Men's dress shoes Franklin Tailored - Men's suits and accessories James & Erin - Women's clothing Lark & Ro - Women's clothing (Also available in Canada) Society New York - Women's clothing North Eleven - Women's accessories for cold weather Scout + Ro - Children's clothing

» Amazon has quietly launched 7 fashion brands

» Only sold on Amazon

Since 2005 Amazon has added almost as much yearly apparel revenue ($27.8 billion) as the $29.6 billion in sales that the department stores have lost.”– Morgan Stanley

Amazon Apparel Brands

ECOMMERCE TIMELINE

“We're promised instant catalog shopping—just point and click for great deals. We'll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obsolete.

So how come my local mall does more business in an afternoon than the entire Internet handles in a month? Even if there were a trustworthy way to send money over the Internet—which there isn't—the network is missing a most essential ingredient of capitalism: salespeople.”

-Clifford Stoll, Newsweek 1995

“

» Limited product selection

» Security concerns

» Logistics cost and timing

» Price vs. retail

» Salespeople vs. convenience

Obstacles of eCommerce

eCommerce Timeline

Overcoming Limited Selection

Overcoming Security Concerns

Overcoming Logistics

Overcoming Price vs. Retail

WHAT MILLENIALS BUY ON AMAZON

» Apparel (30 million clothing items available)

» Media (top category for Prime users)

» Electronics

» Groceries (thanks to quick delivery)

Basically, Everything

Millennials on Amazon

SELLING ON AMAZON

Sell to Amazon 1P / Vendor Central Sell first-party, wholesale, directly to Amazon Retail, using the Vendor Central interface.

Sell yourself 3P / Seller Central Sell third-party to consumers through the Amazon marketplace, using the Seller Central interface.

Sell Thru Seller(s)

SELLING DIRECT VS. 3P

DUAL PORTAL STRATEGY

» Amazon buys your products, sells them at “appropriate” prices, and pays you back

» Invite-only, generally for larger manufacturers and well-known brands

» Cons: inflexible pricing, no access to customer data

» No control over customer service

» Slower payments from Amazon to you

Amazon Vendor Central

» Allows third-party sellers to list products on Amazon

» Option to use Fulfilled by Amazon (FBA) to access Prime shipping

» Can be used by anyone

» Sellers retain full control of product listings and pricing

» Better choice for most retailers

Amazon Seller Central

BEST PRACTICES LISTINGS

Best practices for product titles

Titles should include 4 elements

» Variant / Color

» Size / Quantity

» Keywords (what the product actually is)

» Titles are limited to 200 characters

• Capitalize first letter of each word • Spell out measurements (“feet” is better than “ft”) • Numbers should be numerals (“5” is better than “five”) • Don’t use ampersands—spell out “and” instead

Product Titles

Amazon Best Practices

Best practices for product images

» Image must match product in size, color, etc

» Product must be recognizable

» Image must be a photo, not a drawing

» Image must be taken at a flattering angle, focused, and well-lit

» Product must occupy at least 80% of image area

» Entire product should be in image

» Background should be simple and clean to keep focus on product

Product Images


Best Practices for Product Descriptions

» Buyers compare product listings to choose what to buy

» Information you offer helps them make their decision

» Find Amazon ASIN (Amazon’s Standard Identification Number)

» Write a full, rich description that includes both basic and detailed info

» Include title, image, brand, condition, key features, size, materials, etc

» Ensure you meet Amazon’s category-specific requirements

» Add product image—this is a must

Product Descriptions


Best practices for bullet points

» Testing shows well-crafted bullet points increase sales

» Relay key product features & important info

» Great for people who are scanning quickly

» Maintain consistent order for all products

» Begin each sentence with capital letter

» Write bullets in fragments and don’t punctuate

» Do not include promotional or pricing info

Bullet Points


Best practices for pricing

WINNERS

LOSERS

» Research competition as you develop compelling price point

» Take shipping costs into account—this is the main reason shoppers abandon carts

» Offer free shipping to increase sales

» Clearly communicate shipping policy and delivery times

Pricing


wiser.com

repriceit.com

appeagle.com

» Good reviews can push on-the-fence buyer into a purchase

» 79% of consumers trust reviews as much as personal recommendations

» 73% of consumers say positive reviews make them trust a business more

» Ask friends, family & loyal customers for Amazon reviews

» Send follow up emails after a purchase asking for feedback

» Request reviews via newsletters and social media

» Offer discounts or giveaways for honest reviews

» It’s against the rules to request 5 star reviews

Good reviews are key

Amazon Product Reviews

AMAZON PITFALLS

PITFALL 1 PRICE PARITY

Your selling agreement with Amazon includes a price parity clause, which states that the price you set for items on your Amazon store – including shipping and any discounts – is required to meet or be lower than your price on other online sales channels.

Because Amazon is diligent about monitoring and enforcing price parity, you need to be mindful of pricing, especially when selling on multiple marketplaces.

PITFALL 2 LURING CUSTOMERS

If your item description contains website URLs or your business/seller name – in text, on graphics or even on photo watermarks – Amazon is apt to take action.

Other marketplaces may not be as strict about these names or links, so pay close attention to your listing to ensure you aren’t giving shoppers a reason to click away from Amazon.

PITFALL 3 PRODUCT DETAILS

Selling a popular item? Don’t save steps by copying another seller’s listing information; Amazon is on the lookout for this kind of activity.

Feel free to compare your data with that of other sellers of the particular item, but don’t duplicate their pages.

PITFALL 4 CUSTOMER FEEDBACK

Product reviews are important selling tools, but you need to ensure the info shoppers leave on Amazon about your items is truthful and appropriate.

It’s fine to solicit feedback and include links to your review page, but end your involvement there. Don’t ask customers to delete negative reviews, offer compensation for reviews, or review your own store or products.

PITFALL 5 NO STICKERSIf you’ve chosen to take advantage of the benefits of FBA – which can include eligibility for Amazon Prime shipping and Amazon’s customer service guarantee – don’t risk that partnership by stocking anything but correctly identified and stickered products.

You must accurately label each item so Amazon’s fulfillment system can correctly identify the product within its system. In other words, don’t spam FBA with commingled inventory.

PITFALL 6 CUSTOMER COMMUNICATIONAmazon states that sellers must communicate with customers by email only, even if your personal store and other marketplaces are amenable to other methods.

Make sure you respond to emails promptly and accurately convey Amazon’s shipping timeframes to your customers.

WINNING THE BUY BOX!

Winning the Buy Box

» Fulfillment Method - (FBA, Prime Self Fulfilled, etc) » Landed Price » Seller Rating » Shipping Time » Feedback Score » Order Defect Rate » Late Shipment Rate » On-Time Delivery » Customer Response Time » Tracked Delivery Rate » Feedback Count » Refund Rate » Inventory Dept » Cancellation Rate

Amazon Buy Box Recipe (Algorithm)

3 cups 2 cups 2 cups 2 cups 2 cups

1/2 cups 1/2 cups 1/2 cups 1/2 cups 1/2 cups

1 tbs 1 tbs 1 tbs 1 tbs

ADVERTISING ON AMAZON

» People look on Google - People buy on Amazon

» More Sales = More Momentum = More Sales

» Highest average ROI we have ever seen

» Use Google/Social Ads to direct people to your Amazon store

» Use Amazon ads to advertise products directly on Amazon

» Only pay when someone clicks your ad

» Optimized ad performance with keywords, budgets, etc.

» Use metrics to monitor success and ROI

Advertising

RETAILERS VS AMAZON

» Company XYZ products are selling well on Amazon through 3P

» Amazon reaches out to Company XYZ to sell direct

» Amazon matches low price or beats low price to sell more units

» Amazon blames low prices on leaks in distribution at the brand level

» Prices stay low until brand controls distribution (tough to do)

» Retailers become showrooms for Amazon

What is happening?

» Target brands with Amazon strategies in place

» Look at prices on Amazon when considering a new brand

» Exclusivity to SKUs?

» Create your own brand

» Put pressure on brands to figure Amazon out

Can’t beat ‘em? Join ‘em. If the brand has no Amazon strategy, and you can compete on Amazon after all the fees. Just start selling yourself MF/FBA.

Retail Strategy

» Determine your Amazon strategy (brand or retail) NOW

» Disruption can unearth new opportunities

» Keep your friends close. Keep your frenemies closer.

» Keep your eyes peeled - Amazon wants to sell everything

» Go with the flow - Start swimming or you’ll sink like a stone

Key Takeaways

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Amazon And You: How to Maximize the Partnership

Marketing