Third-Party Warehousing

Amazon and Beyond: Creating a Multichannel Strategy

Today let’s start off with what may be an uncomfortable question. How flexible is your long-term eCommerce strategy? In other words, have you created a system that is designed to adapt easily to an online multichannel marketplace where change is relentless, and the future can be unforgiving to those that fail to adjust quickly and efficiently? If you’re not sure, now is the time to take a quick inventory of areas to keep on your radar as you move forward, in addition, we’ll provide an opportunity for you to explore these subjects in greater detail.

Facing the 49 Percent Gorilla: Taming Amazon

To no one’s surprise, a recent study revealed that Amazon now accounts for 49 percent of online retail sales and 5 percent of all retail sales. In other words, if you are not currently selling on Amazon it’s time to ask yourself if the status quo is a viable strategy? Perhaps your eCommerce team is already stretched to the limit and you’re not sure if you have the capacity to manage an Amazon storefront, create a keyword strategy, adjust to the Amazon reporting systems, or simply manage costs within the Amazon ecosystem. Regardless of what’s been holding you back, it’s time to take a serious look at the risks of an Amazon-less future. And if you are selling on Amazon, now is no time to rest on your laurels. The behemoth in Seattle looks to be driving at least two major changes into its business model and the impacts will be profound to sellers.

First, consider Amazon’s increasing focus on generating revenue via ad sales. Not surprisingly, Amazon has realized it holds a distinct advantage over both Google and Facebook in its ability to provide its seller’s ad space at the actual point-of-sale. The result? Sellers can create ad campaigns on Amazon that highlight their product at the precise moment that sales decisions are being made. The risks to those without an effective Amazon ad strategy? A costly implementation that results in low ROI, or worse, having a product that can’t be easily found by your customers.

The second change is a strategy that is pushing more of Amazon sellers to Seller Central. Now instead of reacting to an Amazon PO, sellers own their inventory – which requires the development of systems to manage inventory costs, create SKU level forecasts, analyze and adjust to new fee structures, evaluate fulfillment options, and take a larger role in customer service. Gone is the “black-box” implementation of Vendor Central where Amazon buys and sells your product. Now you’re in charge, and for many companies that are looking to a multichannel eCommerce approach, that can be very good news.

The Other 51 Percent

Whether by design or not, Amazon is creating an eCommerce marketplace that will benefit companies that have already begun selling in other channels, these are the companies that will be more comfortable moving into the less defined Amazon Seller Central marketplace given their experience in the “wilds” of the other 51 percent of the eCommerce world.

And on the other end of the spectrum – the Amazon sellers that are being pushed to Seller Central? They, perhaps serendipitously, will be in a much better place competitively, to move into other channels once they’ve cut their teeth in the world of Seller Central.

The bottom line, the stars are aligning for companies that are able to create a holistic eCommerce strategy that “plays” across all their eCommerce channels. So, the question becomes, how does a company navigate and manage the process of developing a multichannel strategy?

Getting Started:

Step 1: Making Sure Your Brand is Consistent Across Channels

At one time companies were concerned that eCommerce might degrade their brand – the opposite has been proven to be true — an online store can actually enhance your brand, but to do that a company needs to focus on developing a consistent, high-value online presence that aligns with their brand equity. A quick inventory of things to consider:

  • Does your online footprint, across channels, provide consistent, high-quality visuals and messaging across all your channels? Any company that takes a piecemeal approach to their storefront’s risks confusing their customers as well as harming their brand.
  • Are the visuals and content adding value? Are you utilizing 360-degree photos and video that explicitly demonstrate the value of your product over that of your competitors? Does your copy “solve” the shopper’s problem and generate a call to action? Remember, the right information, at the right time, is a powerful way to create a significant competitive advantage.

 Step 2: Identify Customer Expectations

You might know what channels you want to be in, and how you’d like your products delivered, but do you know what your customers want now and in the future? In the age of Amazon, the fulfillment expectations of consumers continue to rise. Case in point — do you have a clear understanding of what the impact of Amazon Prime one-day and same-day delivery will have on your customers’ fulfillment expectations? An adaptable eCommerce strategy involves building and maintaining an in-depth profile of your key customers. With a profile, you are in a far better position to build a multichannel fulfillment model that meets, or exceeds your customer’s expectations.

 Step 3: Benchmark Your Competition

Do you want some free ideas on building a more effective eCommerce strategy, or maybe you want to avoid creating your own eCommerce dumpster fire? Take the time to benchmark your competition to identify best practices, potential opportunities, and threats to your business. And while you’re at it? Talk to your suppliers, business networks, and keep-up with your trade publications – remember it’s always easier to get CEO buy-in when you’re able to show how your strategy aligns with accepted best-practices.

Step 4: Key Areas to Address

At this point in the process, you should have a good handle on customer expectations as well as identified key eCommerce channels for moving forward. Let’s take a look at some key areas to consider as you build out your strategy:

  • Development of key performance indicators (KPI): If you’re selling over multi-channels it’s important that you develop a measurement/reporting system that provides the KPIs you need to monitor all your channels. A case in point, while Amazon offers a range of performance metrics to its sellers, you may need to consider a third-party software solution to create comparable metrics to more efficiently manage all of your online channels.
  • Develop and review fulfillment partnerships: Demand for shorter ship times are likely to require a regular review of your warehousing strategy. Continually ask yourself – is your company’s fulfillment model currently aligned to create the most efficient fulfillment/freight solution to meet changing customer needs?
  • Develop advertising/keyword strategies: There’s no point in having products online if your customers can’t easily find them. The initial temptation for some companies is to invest in keywords and advertising programs without clear goals in mind. Given the differences in how people search for products on Amazon versus other platforms, you’ll need a good handle on how to use each platform to maximize your results. In regard to Amazon, a few places to start to get a better handle on what might work is to identify what auto-complete phrases Amazon is using for products in your category. Also, consider taking the time to mine the metadata from your competitor’s top listings.
  • Identify the right partners to help you move forward. One of the keys to developing an effective eCommerce strategy is to make sure you have all your bases covered. At any point in the process, you may want to bring in an outside agency to take an inventory of what you need in terms of internal processes as well as consult on the services you should consider outsourcing. They’ve already been there and have seen what works — it only makes sense to take the time to see what value an outside agency can bring to your multichannel eCommerce efforts.

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