Blog Post - Eric Heller , Dec 11 2018

The dragon (elephant) in the room

The dragon (elephant) in the room

Casper, Anker, SunValley, Zhou Nutrition. These are huge brands on eCommerce sites like Amazon, but what makes a brand a brand? Is it "heritage", as in a tradition of being used in our homes? If so, these brands don't have that. What about high brand recognition scores? Casper may have that, but I asked my wife what Casper sold, and she said "you mean the friendly ghost?" (they may have some more work to do on whatever demographic she's in...!). However, if the answer is size/scale, these brands have that in spades. They often chart hundreds of millions of dollars a year in eCommerce, and count themselves amongst the "Digital Natives", frequently disrupting established brands across entire categories of products.

I had the opportunity last week to travel to Ningbo, China to attend the Amazon Global Selling Conference and meet with many of these brands first-hand. This is the fourth such conference I've attended, and by far the largest. Just four years ago, Amazon had a few thousand attendees. This year, word was that there were nearly 10k people with us in the giant exhibition hall, and 30k attendees live-streaming. Most attendees are manufacturers and contract manufacturers out of Southeast Asia, hoping to copy the success of major players like Anker (a brand that ranks above Haier and ZTE on the WPP BrandZ rating.)

Amazon isn't alone in courting these sellers, nor were they the first. That title likely went to eBay's program from nearly a decade ago, but Amazon added rocket fuel to the concept by putting items in FBA worldwide and offering an A-Z Guarantee to it. This conference though, in two short days, clearly shows us the world is changing. Search for almost anything on Amazon today, and you are likely to see brands you've never heard of competing with traditional brands, even Amazon! In fact, Amazon has announced an Alexa car device, but they are behind a 3P own digital native leader. Anker, who already sells one called the Roav Viva with 994 reviews and a whopping 425 answered questions!

How big is the market? Amazon gave us an idea at the event:

  • Cross Border Trade (CBT) through Amazon is already $60b RMB and climbing (more than $8.5b USD).
  • Last year, China-sourced exports on Amazon grew at a whopping 50%.
  • More than half of all Amazon Business sales now come from 3P.
  • Unlike other countries, China has no challenges retraining entire provinces. next year, they hope to roll out Production for eCommerce training for factories in more than 20 provinces.
  • CBT on Amazon is growing > 50%/year (if you aren't growing this quickly, you run the risk of falling behind.)

So, what are these sellers and manufacturers doing well, and how can traditional brands learn/implement from what they are doing?

Have the Right Team in Place: it's critical to have a dedicated eCommerce team, but what is that comprised of? I was amazed by hoe many teams we met where we were introduced to the Data Analyst who was attending with them. Analysts are often regarded as junior positions on traditional teams, but the data to win is usually right there in front of us.

  • Action:
    • Make sure folks like data analysts and supply chain leads that don't traditionally roll to eCommerce are an integral part of the team. A dotted line often isn't good enough since you are up against brands that have this incorporated into the fabric of their go-to-market team.

Follow the FlyWheel: Amazon has been working off of the Virtuous Cycle/Flywheel since before I got there in 1999. What is striking is that, even in Mandarin, this translates: adding more selection puts more hooks in the water, attracting more customers for your brand. More customers drives more sales and more opportunity for growth.

Rapid Product Iteration: Brand after brand talked about how they create product for eCommerce. They frequently discussed using user generated content (reviews, ratings, questions, and feedback) as guidance for what to produce next. This is crowd-sourced product at its most honed. These manufacturers are mining sentiment and feedback from customers regularly and delivering it back to product development.

  • Action:
    • We highly recommend and frequently employ sentiment analysis for our brand clients. There should be an established path to get this back to not just customer service and content production, but also product development.

Granular Product Management: Products don't win on modern marketplaces at the highest level of categorisation (i.e. "Women's shoes"). They win at the granular levels, such as:

  • Action:
    • Mine and monitor product rankings on key marketplaces. Obsess over conversions and page content on a near daily level and understand what the products in front of yours are doing right/better
    • Monitor negative feedback for products in front of yours and call out where you product is better at those critical points in top-level content

Incidentally, waterproof boots was a microcosm of proof on what is happening in this space. Look at the top level search results. Everyone likely knows Sorel and Columbia, but do you know Dadawen or KINGSHOW?

SEO and Operations First: These companies frequently talked about obsessing over content in every language they operate in. I spoke to a company that is #1 in their category on Amazon US, but they said it keeps them up at night that they aren't proficient at EU languages to ensure their pages there are as good. Does your team do this?

  • Action:
    • Win SEO using best-in-class shelf monitoring and, as The Great One said, go to where the puck is going to be. Don't try to get customers to search for your product the way you want to describe it. Change your description to match what they are looking for.
    • Make sure SEO and in-stock are 100% before worrying about promotional traffic, otherwise you are just "flooring the accelerator with the parking brake on."
    • Make sure you're A+ and cross-referenced products are always current using a key tool. You've worked hard to get traffic to your detail page. Don't waste it by linking to old, outdated product (updating these is dead simple - make sure that's prioritised.)

Of course, dominate SEM and CRM

  • Action:
    • SEM on Amazon is still the Wild West and changes every day. despite what some may tell you, there are no clear front-runner tools out there yet, but there are some good ones. At Wunderman Commerce, we focus on the combination of scale, advanced data analysis, rapid implementation and iteration, and, finally, strong partnership with the client to steal share. Does your agency do this?
    • Make sure that all of your promotions, from AMG/Sponsored Products to AAP and even in-store are executed with cross-selling intention. In eCommerce, where "frequently bought together" remains a top on-page promotion a decade past its launch, you have to always be considering how to drive the halo effect.
    • Don't be fooled by those that call Amazon a "secret garden" or "black box." CRM is not only possible but highly recommended on this platform and leads to a strong affinity with buyers. If you don't have a way to ensure you are utilising warranty programs, newsletter, and downstream promotions, you should.

Finally, and this is most important - while it may seem like eCommerce is everywhere, even the US is still barely at 10% penetration. Coming from markets like EU or APAC, it is clear there is still so much growth in front of us. As Amazon has been saying for more than two decades, it is still, truly, "Day One" for eCommerce.