16 minute read
Etopia
The Evolution of Amazon
and the Challenges it Faces and Poses Today
Over the past decade, the internet has advanced into the desired medium for marketing, advertising, and purchasing of products, goods, and services; e-Commerce has grown to rival traditional shopping in many ways. The retail landscape has evolved dramatically, accelerated by COVID-19, which has thrust us into virtual cocoons and intensified our reliance on digital infrastructure and delivery services.
Etopia’s Managing Director, Asha Bhalsod
Preceded by tech giants like Amazon, who joined the space in 1995, and later Google and Paypal who launched their e-Commerce initiatives in 1998, the overall journey of online shopping is far from finished. COVID-19 has been quite impactful in the e-Commerce realm. Pre-COVID, Amazon was treated like a 2nd tier account. However, Amazon is not just another sales account. It’s a formidable marketplace with extensive marketing power. Brands should treat it as a Tier 1 account, and your e-Commerce strategy should reflect that.
COVID highlighted how many businesses were not set up correctly on Amazon and how brands did not fully capitalise on all the benefits this marketplace offers. Those brands with an entrenched Amazon mindset were able to meet the demand of a customer base desperate to get first-hand access to staple products. And they have their 2019/2020 profit margins to show for it!
Post-COVID, it has become evident how an Amazon mindset will lead to a sustainable, robust business with them, driving profitability for both the brand and Amazon. So, what does all of this mean for e-Commerce and Amazon? Simply that brands will have to remain in tune with the impact Amazon has on the e-Commerce landscape and embrace this marketplace as a Tier 1 account. It doesn’t make sense to expect success on Amazon when your e-Commerce strategy does not line up with the landscape changes.
The Q1 period is always stressful. There is no way of getting around the Amazon reviews and vendor agreement negotiations. Amazon will always push for accruals and allowances in addition to the cost of the goods sold on Amazon. Always remember that your revised agreement is not a list of demands, but a negotiation that you can impact. Go in prepared and find the compromise that benefits both parties.
Brands must advertise to stand out in a competitive market. More product views than ever are coming from paid placements on Amazon. When you pay-to-play, you need to optimise every penny spent. And Amazon PPC is not a short-term strategy. A long-term approach will win more clicks and sales from other retailers, boosting your organic placements to boot.
Amazon’s advertising business has become the number 3 player in digital advertising and has grown larger than YouTube’s advertising business! They also make more money than Microsoft, Twitter, and Snapchat combined on advertising. Advertising generated $31.2 billion last year and about the same annual revenue as their Prime and subscription services this year. Amazon advertising is certainly a force to be reckoned with and needs more consideration from a business perspective.
Any winning Amazon strategy should focus on listing optimisation. You cannot increase ad spend, run promotions and still expect your listings to convert well. One of the most important levers you can pull to boost sales and increase organic rankings is by creating clear titles and brilliant bullet points to educate, persuade and convert your audience. Think about your holistic approach. Do you have a trader mentality by just selling products? Or are you building a brand on Amazon by capitalising on all its marketing capabilities? Brand Stores offer brands the opportunity to showcase their extensive range of products in a cohesive and personalised way. Brands have more control over how to present products to customers and the type of information published. A+ content allows you to showcase the value of your products by incorporating multimedia content to make your product page more attractive to customers.
Don’t forget that Amazon account managers have different skills than national or key account managers. You will have to recruit differently for Amazon. Alternatively, you can appoint an agency as an extension of your in-house team, working in parallel with your brand to achieve your Amazon goal. And it’s no secret that forecasting has
been turned on its head. The importance of keeping Amazon in stock has changed the business forecasting process forever! Make sure that you have a data analyst in your team to keep track of the trends.
If you want to enjoy the best of both the Vendor and Seller Central worlds, then following the Hybrid Model will be the best for your brand. You will have a variety of options available to you, both practically, and strategically. However, you have to meet the criteria of being a vendor on Amazon, and you also need to manage a Seller Central account full time.
Amazon has changed its policies around packaging requirements for shipping and has become quite relentless around metrics like dimension and weight. They are enforcing specific rules around packaging dimensions which not all products fit into. For optimal planning purposes, brands will not have the luxury of buying in bulk and sending unlimited stock to Amazon. Brands will have to become creative and at the same time, make sure they create packaging that makes commercial sense otherwise, they will be losing economies of scale. They also have to consider the environmental impact of their lines. Where is the trade-off?
The question of whether brands should distribute on Amazon ultimately comes down to whether the platform can provide incremental sales without eating into their bottom lines. There’s little question that Amazon can drive volume, but brands have to be careful to ensure that volume doesn’t come at the cost of customer loyalty.
The competition is struggling to keep up with Amazon. This year, Amazon will pocket more than $400 billion from the US’ roughly $1 trillion in e-Commerce sales. The retail giant will also rake in more than five times the digital sales of its closest rival, Walmart Inc., and see those sales grow by 14.6%, faster than the overall US e-Commerce market, which will expand by 14.1%.
The prediction is that 60% of businesses will be entirely e-Commerce led by 2025. To be part of this movement, brands need to become cautious about where to focus their time, energy, and money to keep up with the broader e-Commerce landscape.
Looking forward, just like the pandemic has transformed how we do business and relate to our sales environment differently, brands need to transform their internal structures and mobilise a dedicated team with an almost unwavering commitment to e-Commerce and Amazon. Traditional marketing like TV, PR, etc. should not be completely replaced, however, a transformed approach should be taken. When you have an Amazon mindset, you are instinctively going to push your marketing teams to allocate budget to Amazon Advertising, as well as your other sales initiatives. It’s all about balance. You need to decide how you would like to tip the Amazon scales in your favour!
The competition in the market is tough, and if your product and brand do not stand out on Amazon, you will lose. Post pandemic, developing a winning all-encompassing e-Commerce strategy, which allows you to pull the correct levers in marketing, operations, and sales are of utmost importance. Strategy evaluation has to be ongoing. It cannot just be done once! And this is where Etopia Consultancy comes into play. We will develop, implement, fine-tune and pivot your Amazon strategy based on your goals so that you can remain ahead of the competition, and aligned with evolving Amazon landscape.
To book a consultation or learn more about Etopia, contact Asha on asha@etopiaconsultancy.com.
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Visitors can look forward to a 5x hall bonanza!
Following the announcement that Harrogate International Nursery Fair – which takes place from 16th to 18th October 2022 – had already used up its initial space allocation; the organiser today announces recent expansion plans are already attracting more brands to confirm.
Adrian Sneyd, show organiser, explains: “It was amazing to be able to fill our original space so early and we were very keen to be able to continue to grow the show to bring more opportunities for buyers to see numerous new brands and products. The ability to now expand into the new Kings Suite Hall is already attracting further brands to book and more enquires are coming in daily.
“The Kings Suite plans have been available for a very short time, but already we have Cosatto and Tutti Bambini taking large stands with many other enquiries in the pipeline, including international brands. The extra space offers flexible stand sizes to suit all needs and will be very familiar to visitors as an area that we have used in recent years.”
If you manufacturer or supply baby products to the trade – Harrogate International Nursery Fair is a must attend event. If you would like to exhibit, visit www.nurseryfair.com and complete the online booking form with your requirements and Adrian will get back to you as soon as possible. If you are a Baby Products Association member, don’t forget to mention this as you will be offered a preferential rate.
Birthday celebrations at Baby & Co
A family-run baby shop, Baby & Co celebrate their 40th birthday and business is booming as royals and celebrities drive surging sales of ‘designer’ nursery gear.
Baby & Co is best known for its shop in Keynsham, Somerset, which has been a fixture in the town since 1982.
But that is only part of the story and with them stating they are one of the country’s top ten independent nursery retailers with a fast-growing online operation run out of a warehouse in Nailsea catering for the 680,000 babies born in the UK each year.
The business was founded by Ian Mills, 75, and his wife Clare, 69, in 1982 as Keynsham Pram and Cycle Centre before changing the name to the snappier Buggies and Bikes in the 1990s, with them dropping the sales of bikes 20 years ago with the focus now on selling high quality mid-range and upmarket prams and nursery products, with the business rebranding to Baby & Co.
Their son Jeff Mills, 46, joined as a director in 2002 and all three run the business together with Ian overseeing the shop as managing director, Clare taking care of the book-keeping and buying and Jeff running the online operation.
Expectant parents are spending up to £2,000 on prams, car seats and other nursery items as celebrities with young children such as Hollywood stars Bradley Cooper and Anne Hathaway and model Rosie Huntington-Whiteley and new royal parents such as the Duke and Duchess of Cambridge and Prince Harry and Meghan Markle fuel demand for more expensive ‘designer’ nursery gear.
The most expensive pram and travel systems at Baby & Co can cost as much
as £1,700 with fashion brands such as Fendi, Dior and Versace developing nursery ranges to capitalise on the boom for upmarket products.
Jeff Mills, 44, said: “It is wonderful to be celebrating 40 years. Some of our customers are the grandchildren of the parents who first came to the shop when we opened.
“The nursery industry has changed so much and become much more fashion based over the last 20 years.
“Celebrities and royals have all fuelled demand for more expensive brands. A high profile new mum such as the Duchess of Cambridge will be seen out using a brand such as Bugaboo and we will get lots of orders for the same product off the back of that exposure.
“Before prams were seen as a functional product and parents would just need to know about practical issues such as how heavy it was. Now they see a celebrity pushing a particular fashion brand of pram and say: ‘I want that, too.”
With prams and pushchairs often seen as ‘trophy’ items, Jeff adds: “Prams are seen as a luxury product by a lot of expectant parents and they want to be seen pushing a ‘cool’ pram when the baby is born. That works for us because we have always sold premium products and a lot of our stockists will keep their designer gear exclusive to respected independents such as us, so parents cannot buy some of the more expensive items on online only retailers.
“The other trend is towards suppliers using more sustainable fabrics. There is a lot of talk in the industry about the environmental impact of nursery products. I see this becoming a more important factor over the coming years.”
Ian and Clare still live in Keynsham and Jeff went to the now closed Bath Hill Primary School and Wellsway
Secondary in the town. Jeff lives in Wiltshire with his wife Joanne, 44, a freelance marketeer, and their son Freddie, aged 10. Jeff was a toddler when the shop first opened and he worked in fashion after studying business at university in Luton before joining the family business.
When the shop first opened, there were six independent nursery shops in the Bristol region including famous local names such as Hurwoods in Old Market Street in the city centre and Hardings in Bedminster. Now, possibly, only Baby & Co remains of the independents and the only national retailer competing in the baby market is John Lewis in Bristol after the 2019 closure of Mothercare which had three branches in Bristol in busier times. Most competition for Baby & Co comes from online giants which is why the company has been so keen to build its online operation.
The key to the explosion in online sales was bringing in Bristol-based back office software specialists Brightpearl, which transformed their online operation.
Before introducing the system, online orders were still being inputted manually, taking two full-time staff around 70 hours a week. Jeff explained: “When things were quiet, we could just about keep up with the manual tasks. But when orders spiked, such as after Black Friday, we would have to spend days working late just to key in the sales data from one day. It was crazy, and totally unsustainable.” The Brightpearl team had the whole system up and running in just over a month. Jeff said: “Now, thanks to Brightpearl, most of our workflows are automated and everything is synced so that we can get a real-time overview of the business at any time. It means we’re able to take a very hands-off approach to everything from managing inventory to order fulfillment.
“Brightpearl is also committed to constantly adding new cutting-edge retail functions, which was important to us because we don’t want to continually have to invest in new systems. We want a system that can grow as we do, so it suits our business today and in five or 10 years’ time.”
Jeff said that Baby & Co had thrived while giants such as Mothercare had failed by following the company motto of being ‘adorable and affordable.’ He said: “Margins have always been fairly tight in the nursery sector and big stores such as Mothercare were spending a lot of money on bricks and mortar stores when the industry was moving online.
“The national chains were all based in big sheds out of town and people starting a new family wanted an experience that was more intimate and local.
“I still work in the shop every Saturday so I can interact with our customers and see what products they like and don’t like. If I was stuck in an office all the time, I wouldn’t get those kind of insights.”
As a business, Jeff has kept in line with all trends, with the main factor being the move to online platforms. “We have always been looking to adapt and were one of the first independents to start trading online more than 20 years ago when I joined the company.” Adding “I took the website that mum and dad first set up and made sure we were always ahead of the game online.”
Despite facing supply chain issues and rising prices, Baby & Co is confident about continued growth and delivering on its reputation for providing a personalised shopping experience for parents-to-be in Keynsham, Bristol, and beyond.
Jeff added: “We’re excited about the future. And although there’s lots of uncertainty in retail right now, we are confident we have the business in a good shape for the next 40 years.”
