Should I sell on Amazon?

This week I’m speaking at the iMedia Commerce Summit on Advanced Amazon Strategies. I’m running through key ideas that could help push up your Amazon sales. However, I’m skipping the bigger question (I’m assuming most retailers have decided): Should I sell on Amazon?

 

This question typically isn’t easy. And the answer can be very different based on the company and the brand. But there are some questions that I believe all companies can ask to help determine whether you should be there or not.

 

1) Are you selling branded goods? Amazon is a demand fulfillment business. People don’t shop on Amazon, they buy. So to drive any type of reasonable sales, you have to be selling something that people search for on Amazon. Typically this means branded goods. If you’re reselling popular products, there’s a way to sell them on Amazon. If you have proprietary items that need to be sold, there’s no point; you won’t get enough volume to make it worthwhile.

 

2) Is Amazon buying your items directly from the manufacturers? If so, I would skip Amazon. They will own the buy box as long as they have inventory. You can only when when Amazon is out of stock and they are pretty good at not running out. Definitely don’t send inventory to FBA if Amazon is buying direct. It will just sit there.

 

3) How much does gross margin percent matter to your company? Amazon is about volume. If you’re selling product that gets search volume, you will have competition on Amazon. And you’ll have to price manage. So you’ll lose gross margin percentage in exchange for gross margin dollars. If the percentage matters, it will cause problems.

 

Selling to Amazon is not brand-building. Amazon customers are not your customers; they are connected to Amazon and have little future value to you. Typically they rarely realize who they are buying from. The only reason to sell on Amazon is to increase profit dollars.

 

Selling to Costco was always considered a brand-negative move, but with large volume potential. I feel like Amazon is the same. It’s purely a move for sales that long-term is likely to push your prices down. But if Amazon is already carrying your product, it’s worth trying to capture some of the profits. Just be careful with private label goods.

 

How Does Gmail’s New Promotions Inbox Change Email?

Google is slowing rolling out the new Promotions inbox to those who have requested it; I still haven’t heard of anyone getting the new inbox who did not request it. In case you haven’t seen it, this is what mine looks like.

Gmail Promotions Inbox
My Gmail Promotions Inbox

This is an interesting and drastic change to what we know as email. And I believe it changes the game (again) for email marketers. One stat you need to track: what percentage of my email file uses Gmail. At this point, Gmail is the only email service even attempting to be innovative. And their innovations tend to roll email marketers.

The promotions box that came out last year limited your access to customers. It essentially quarantined promos to a separate box that only gets looked at when customers are shopping. And no one (believe me: *no one*) moved your corporate promotional email to their main inbox no matter how many times you sent that email asking. But I actually think this change is bigger for email marketing.

At the surface you can clearly see that images win again. It becomes much more important to have a captivating key image in your email than to have a good subject line. Subject lines are relegated to the small type at the bottom. And that’s literally the last thing you look at. But it’s more than that. I think there are few key changes here.

First, font sizes have to go up. Way up. One main idea, expressed clearly and quickly to capture attention. Design matters. Note the Scoutmob example here – extremely well done. If you pack a paragraph of copy into your main email image, it will be unreadable.

Second, your Google+ account has to be verified. In this example only American Airlines and Scoutmob have verified their Google+ accounts. That’s why they have a nice logo in the box on the right, rather than a weird grey letter.

Third, those with compelling imagery win. This is a small section of a big inbox. Your image has to capture attention quick and hold it long enough for your key copy idea to get through. Your main image also has to be one solid image, not broken into a hundred slices.

Fourth, metrics have to change. Open rates have been used since the start of spam to measure subject line efficacy. Clearly now this is wrong. Open rates are now determined by the key idea of the email; essentially we used to use click-through rates to tell us if the content works. Now opens and clicks are judgments on the key idea and creative execution of the main image. Your brand name is larger than your subject line.

Note that several of the key spaces are blank in my inbox. Technically you need to define the main image of your email using this spec. If you don’t, Google attempts to guess at which image is the most important. As you can see, they suck at this. It takes very little time to define it; go do that now. Verify your Google+ account now as well.

Finally, if you aren’t doing photography specifically for email, I think it’s time to start testing. The new email is all about images, so the quality of your images is likely to determine open and click-through rates.  And this will help all your emails, not just Gmail accounts.

This is a way for Google to monetize the promotions page within email. Now the promos are almost unrecognizable in your inbox. Definitely a win for the big G. And maybe an opportunity in terms of marketing to current non-subscribers. Time to test; the new ad is much, much better than the old yellow faux email ad they used to serve up.

Anything I’m missing?

 

** Side note: Animated gifs don’t work. Really too bad from a marketing perspective ….

The Rise of the Artist

We live in fantastic times. And things are changing at a fantastically fast clip. We’re able to build, pivot, scale and fail in business much faster than prior generations. And there’s no indication that this increasing rate of change will slow.

Viewing the world as an ecommerce retailer, I see a few trends that have the ability to completely change our world and how we live. The first is the trend towards design and art. This trend has been a long time coming, but is now impacting everything from inexpensive, fashion-forward apparel (something almost impossible ten years ago) to our home thermostat. Consumers now expect almost everything to look as good as it functions, no matter the price. Apple perfectly captured this trend and likely exacerbated it by raising the bar.

Combine that trend with the rise of 3D printing. We’re in the very early stages of this, but the move towards it is accelerating. You can now buy a home 3D printer at Office Depot.  And even it has an attractive, modern design. 3D printing opens the door to a massive change in consumer shopping habits. And I believe it will signify the rise of the artist or creative creator.

Currently we rely on manufacturers to design and create product. A designer gets hired (and paid) by a manufacturer to create a great design, which the manufacturer then produces and sells to retailers. We trust retailers to curate an assortment and stock the merchandise for when we have a need. We used to expect a retailer to have one type of our desired products available, now we expect a full selection at a discounted price.

When 3D printing becomes commonplace, we will no longer need the retailer. And a designer will no longer need the manufacturer. With the rise of the internet, a designer can offer his designs directly to end users.  These end users can purchase and create the items as they need them. This completely disintermediates the entire process. Great designers essentially become retailers and consumers become manufacturers.

I think there are other interesting questions in here as well: Designers (theoretically) have less overhead than manufacturers and retailers, driving down the cost of items. Over time, with unlimited designs available at lower prices, abundance removes any value we currently associate with an item. Unlimited customization means unlimited creativity and the ability to change designs or styles frequently. So the value of something like a couch is reduced to the cost of printing out another one.

Initially this only impacts simple products; current 3D printers can’t do anything as complicated as your iPhone. And home 3D printers are unlikely to do big objects (sofa or chair) in the early days. So this will start with cups, coasters, etc and work its way up towards increasing complexity.

This will bring additional drastic change to our world, particularly change for those bringing products to market. And I think it gives additional power to designers and creatives, who don’t have to rely on old paradigms. Perhaps retailers become more like marketplaces that curate the best of various designs. But that doesn’t sound like business model with good margins.

Facebook as a Customer Service App

What value does your company get from your Facebook presence?

It’s not sales. Rarely does anyone exceed 1% of sales through their entire social presence. Facebook isn’t consistently the biggest producer of those small dollars despite its size. And the elephant of social media sites continues to lower the value of a fan to almost nothing by minimizing your organic exposure. We’ve been busting our tail for years to gather fans or followers or likes believing that they would ultimately turn into sales – like email addresses do. Unfortunately, it’s just not working that way.

When someone is on Facebook, they aren’t shopping. Let me say that again. *When someone is on a Facebook, they aren’t shopping*. They are pretending to be important to impress their friends from high school. Oh, and playing mind-numbing games.

I actually see a divide coming in terms of how marketers, particularly ecommerce marketers, approach social media. Paid Facebook advertising is becoming more like targeted branding. It’s very tough to measure the value accurately. And it’s very hard to get a positive ROI on these ads (unless you inflate the value of engagement or a “like”). On top of that, you may be getting fake or foreign “engagement” on your targeted US Facebook banner ads. https://www.youtube.com/watch?v=oVfHeWTKjag

The non-paid piece of our social media work is essentially disappearing from feeds. Your presence really only matters when a customer decides to seek you out on Facebook. And customers are typically only doing that for one reason: they are pissed.

Facebook is becoming more of a customer service or support tool where you try to save customers who had a bad experience. Getting this correct is a key part of utilizing Facebook well. Yes, there are still a handful of fervent missionary customers who like every post you stick up there and comment on a handful. So we’ll always have to post content on a regular basis (seems like most are just pulling email and blog content into Facebook), but I think it’s wrong to think of your Facebook presence as a strategic opportunity. Or a growth play. Facebook is a required customer service tool that you can choose to advertise on or not.

Other social media sites, like Pinterest for example, are different and may work long term as a top-of-the-funnel advertising presence that actually drives new customers to you. Facebook will not.

Data is Changing Us

One thing that isn’t discussed enough is data. Data is changing a lot about what we expect and what we are willing to accept. The internet, in particular, is generating massive amounts of data on a continuous basis; take a look at this live infographic  estimating how much information is being generated right now. It’s amazing (note: I have no idea whether there is much statistical reliability to these numbers, but I think the direction is correct).

The one thing not discussed is that data is enabling better design, better products, and better performance of those products. As data has been used to augment, our expectations of new offerings have gone up. Companies like Amazon use data in very effective ways to raise the bar across industries. Mary Meeker suggested in her analysis  that very little of the data created on a daily basis is currently being mined to improve our products. I think that’s the big opportunity of the next 10 years. How can data dramatically improve your products (or your marketing) if you were able to deeply use and understand it? And where do you have an advantage because of data?

It’s a way to rebuild the competitive advantage that was dwindled away in recent years.