Smiles For Success
Leveraging Amazon to Drive Online Sales
It's a popular nostrum that the COVID-19 pandemic provided the accelerant that enabled the explosion in e-commerce sales that continues unextinguished to this day. Cautious consumers under remain-in-place orders stayed away from brick-and-mortar retail outlets in droves, the story goes, and turned to the convenience of the internet as a shopping and purchasing alternative, turning the conventional point-of-sale business model on its head.
There's much truth to the narrative, but in reality, e-commerce sales were already booming before the outbreak of COVID, and have continued to grow exponentially since then, with global sales of some $5.7 trillion in 2022, according to e-commerce giant Shopify. That figure is forecast to top $7.5 trillion in 2025 and $8 trillion in 2026, so the "new normal" of online retailing presents a vast and potential lucrative revenue stream for manufacturers and retailers.
But there are right and wrong ways of conducting e-commerce, and it's not as cut-and-dried as simply setting up an Amazon account, paying a seller's fee, and creating a few product listings—though that can get you started. A recent SEMA Education seminar, "How to Optimize Amazon," took a deeper dive into the subject, with a review of some of the pitfalls companies face when working with Amazon to build their brands and sell their products. Moderated by Vanessa Ruminski, president of SupplyKick, an Indiana-based Amazon wholesaler and consulting firm with specialty-equipment clients that include Dometic, Mothers, Eagle Lights and Lock 'Er Down, the session reviewed several challenges aspiring Amazon sellers may encounter, along with recommended best practices to best take advantage of Amazon's massive customer reach.
Ruminski began by stressing the importance of maintaining a strong presence on Amazon. For starters:
- 75% of online product searches begin on Amazon.
- 76% of shoppers on Amazon are brand loyal.
- Additionally, 40% of U.S. e-commerce sales are spent on Amazon.
Often, however, companies that sell on Amazon may wonder if they're not fully optimizing the power and scale of the site to drive greater brand awareness and consumer loyalty in addition to sales.
At this point, Ruminski paused to review the top five issues that companies may face when addressing these perceived (and often real) shortcomings. These can potentially include:
- Selling directly to Amazon via Vendor Central. It sounds simple and straightforward—Amazon sends you regular purchase orders, you ship the product, and Amazon handles the rest. But in truth, it's not always so simple.
One potential drawback is flexibility in pricing. "You may want to increase pricing from, say, $60 to $100, and your Amazon rep might answer, 'No, we're going to price it at $60.' So sometimes it's not easy to leverage these types of conversations to your advantage," Ruminski notes.
There is also the issue of chargebacks. "There can be a lot of these," Ruminski continues, "and while the reasonings vary, it really all comes down to lack of ownership and control." The solution? Ruminski recommends upgrading your Amazon account.
"If you have an Amazon first-party Vendor Central relationship and you want to make a change, switching to three-peer [3P] Seller Central is really the way to go. You can still leverage Prime shipping, you can use FBA [Fulfillment by Amazon], and you can still team up with a single, third-party seller."
- Unauthorized Amazon sellers or too many sellers. Ruminski cautions against conflating online sales with traditional brick-and-mortar retail, reminding companies that they follow distinctly different business models. "We all know when selling to brick-and-mortar, more sellers in the old-school way of thinking equals more sales.
"The issue is, if you're doing that to your Amazon business, you're taking one sale and you're fragmenting it among many, many sellers. So you're not doing any more business—you're doing the same amount. But by spreading it out over a larger group of people, you may incur higher shipping costs on those B2B orders that you're sending."
Too many sellers can also translate into price inconsistencies, which can inhibit sales and damage your brand.
How to mitigate this problem? Ruminski suggests "ways such as Amazon Brand Registry, consolidating sellers, consistent monitoring, controlling your distribution and registering your brand."
- Inaccurate forecasting and inventory flow. "Say someone wants to purchase your product and it's not there. It's money on the table you can't access, and it drives you crazy," she says. Conversely, "you have so much product, you don't know what to do with it. Then you're incurring fees. Then you're looking at yourself and asking, 'Should I drop the price?'"
Analyzing and optimizing Amazon logistics should be done on a daily basis, if possible, and investing in either inventory optimization software and/or dedicated employees to monitor inventory is advisable. "In general, the concept of 'set it and forget it' doesn't exist on Amazon."
- Overspending on Amazon advertising. "Amazon is 'pay-to-play' and advertising is a must," Ruminski notes. The platform offers numerous channels for advertising, but how to navigate these varied platforms to maximize your brand's Amazon presence? To Ruminski, the key is to identify what your advertising objective is at any given time in the business cycle and let that be the determining factor in your decision-making. She also advises constant monitoring and revising of advertising strategies as your business's needs evolve throughout the cycle.
- Lack of brand presence and building trust. Many brands don't succeed on Amazon because they haven't established a brand presence—one that builds a connection with the consumer and converts them at a higher rate than their competitors. The way to overcome this obstacle, Ruminski advises, is by creating a narrative—an online brand identity that tells a story about your products, which builds interest in your brand, and which facilitates a more convenient shopping experience. Tools to deploy to that end can include keywords, targeted messaging, video and photography, setting up an Amazon Storefront or a combination thereof. "[Content] needs to be well designed," she says in closing. A customer is looking for transparency and trust, and you only have seconds to get them
"It's all about that journey of the customer and making sure that you are consistent and that you're really focused on success," Ruminski says.
››› Key Performance Indicators should be checked daily, with advertising strategies adjusted accordingly to meet shifts in consumer preferences. As a rule, "set it and forget it" doesn't work with Amazon.
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