As Amazon continues to disrupt the retail world, what should brands do to not only survive but also thrive?
Five hundred fifty ecommerce professionals discussed this question and a host of others at the Cleveland Research Company’s Ecommerce Forum on September 19.
Hosted by Cleveland Research Company, the forum was held two blocks from Amazon’s headquarters. And while Amazon remained the primary focus of the day, the dozen breakout sessions explored various aspects of the fast-changing ecommerce landscape such as analytics, direct-to-consumer, and hybrid selling models.
Here are my three top takeaways from the daylong event.
1. Amazon Domination Will Continue
Russ Dieringer, Executive Director of Ecommerce, kicked off the daylong conference with a reminder that ecommerce growth will continue to accelerate.
“Now is the time to double down on your focus, energy, and investments around dot-com,” Dieringer told attendees.
While eCommerce currently accounts for 12% of consumer retail spend, that number will double over the next few years, said David Spitz, CEO of ChannelAdvisor.
In addition, Spitz predicted that in the next five years Amazon will drive 80% of ecommerce growth in the United States.
2. View Amazon as a Marketing Platform
Amazon’s importance to the US ecommerce landscape was a recurring theme throughout the day. In particular, speakers emphasized Amazon’s unique role in product discovery. Even if consumers are ultimately buying products elsewhere, they’re discovering them on Amazon, making it a key marketing platform.
ChannelAdvisor’s Spitz noted he’s seen many companies reallocating anywhere between 10 and 30 percent of their ad spends to Amazon’s pay-per-click Amazon Marketing Services (AMS).
“You’d be crazy not to stand up and shout your name when consumers are looking for your products,” Spitz said, noting that on many Amazon search results pages, 90% of the above-the-fold area is taken up by sponsored listings.
Yet only about 20% of Cleveland Research Company attendees said they were using AMS. That low adoption rate surprised Dieringer, who said he would’ve guessed 8 out of 10 companies would be using the service.
“If you don’t have an AMS strategy, you don’t have an Amazon strategy,” Dieringer noted.
That was also the view of content26 President Mark White. In his breakout session, White encouraged attendees to create long-term value on Amazon by creating a strategic link between successful keywords and content. The goal should be to create keyword-optimized product pages that showcase the best of your product and continue providing organic search results long after a paid campaign ends.
“For a short-term play, you can drive a lot of traffic without touching content,” White said. “But you’re walking away from really good data that can give you long-term benefits.”
Rob Gonzalez, co-founder of Salsify, also encouraged attendees to pay attention to details around Amazon content. Specifics matter in a way many people don’t appreciate, Gonzalez said.
There are small tweaks brands can make to content that will improve Amazon discoverability and conversion.
“You can’t control conversion rates all that much,” Gonzalez said. “Focus on things you can control. You can affect content completeness. You can improve content quality.”
3. Amazon Is Brand Agnostic
While Amazon wants brands to succeed on their platform, brands should also see the retailer as a potential competitor.
There’s a good chance that in the near future, Amazon will launch a private label product that directly competes with your Amazon best-seller. In addition, ChannelAdvisor CEO David Spitz said his company is tracking 65 private labels, most of them in apparel. Furthermore, Spitz said he expects that in the next five years, 20% of Amazon sales will come from private label volume.
Not only that, but brands should continue to expect significant price competition from Chinese sellers. Spitz noted that the number of Chinese sellers on Amazon has grown from 30,000 in 2014 to more than 200,000 today.
Spitz, Dieringer and other speakers encouraged attendees to consider alternative approaches to eCommerce and interacting with Amazon. On Amazon, this could mean taking a “hybrid” approach whereby brands act as both wholesalers (1P vendors) and sellers (3P). The hybrid approach can provide additional brand and price control, Dieringer noted.
He also encouraged attendees to think about direct-to-consumer options.
Takeaway: Double Down on Ecommerce
At his keynote address, Cleveland Research’s Russ Dieringer encouraged manufacturers to “double down” on ecommerce. With the opportunities and challenges facing brands on Amazon, it’s imperative that brands come up with smart strategies for getting their products discovered.