Insights

MARKETPLACES: OVERCOMING CHALLENGES AND CAPITALIZING ON TRENDS

Lou Lou Durant

Over the past two years, the world of ecommerce has adapted to fluctuating demand, first spiking in early to mid-2020 due to consumer behavior shifts driven by the pandemic and then declining back to pre-pandemic levels by late 2021 as shopping resumed in physical stores. Brands and consumers alike were forced to navigate digital marketplaces, accelerating the adoption of ecommerce for some demographics.

Amazon continues to be the leader in digital retail, making it imperative that brands develop specific strategies to succeed on the marketplace. Here are a few of our recommendations for Amazon sellers.

Diversify your fulfillment model.

With inventory challenges projected to persist, there are a few key considerations for brands. Ensure sales forecasts align with continued supply chain constraints, but also hedge against potential issues driven by Fulfilled by Amazon (FBA) limitations, such as storage capacities, by investing in alternate order fulfillment methods. Sellers might consider a hybrid model that supplements FBA with dropshipping or Merchant Fulfilled Network (MFN) fulfillment direct from their warehouses or through a third-party logistics provider (3PL).

Maintain a dynamic advertising strategy.

Amazon sponsored product and DSP ads are dynamic so buyers are not directed to a detail page that is out of stock, however sponsored brand ads directing to a brand store are not impacted by inventory levels. Ensure your brand store is updated to feature only products that are buyable by selecting the auto-suppress-when-out-of-stock option for your product grids. If your brand encounters inventory constraints across a majority of your portfolio, stray away from turning off your ad strategy altogether. Instead, pivot to upper funnel marketing tactics that continue to drive brand awareness, taking advantage of unique ad types such as over-the-top (OTT) video ads on TV streaming networks.

Remember, content is king.

Advertising cost-per-click (CPCs) is anticipated to continue climbing (+26% YoY in 2021), which lends to the importance of delivering high-quality content to customers once they are directed to product pages or a brand store.

  • Use professional, high-resolution product imagery.
  • Leverage infographics to educate consumers on product features and benefits.

  • Include lifestyle imagery to illustrate the product in action.

  • Create engaging videos that can be featured in image carousels and A+ content, on brand stores and in sponsored brand ads. Short-form video will be integral to capturing your audience as it rises in popularity through social channels and Amazon places stronger emphasis on video throughout its ecosystem.

Build a comprehensive brand experience.

Amazon is keen on cultivating branded experiences that converge social, content and commerce, indicated by new feature roll outs in 2021 such as the Brand Referral Program and Manage your Customer Engagement email marketing tool, as well as the expansion of Amazon Posts and increased placements of the brand Follow button. We anticipate Amazon will continue to enhance these tools and launch new offerings for brands to engage with their customers in 2022. Connect with your consumers at multiple points in the shopping journey by deploying a variety of tactics, including Amazon Live and Amazon Posts. Take advantage of the Brand Referral Program, which not only increases sellers’ revenues but also can improve organic search ranking on Amazon.

Find cost savings amidst rising prices.

While inflation will inevitably drive up costs of goods, analyze your business to identify other opportunities to reduce expenditures.

  • Conduct a root cause analysis on Amazon chargebacks and correct issues to prevent recurring charges. Violations such as packaging, labeling or prep are often easy to identify and resolve. Other chargebacks such as on-time accuracy, case pack quantities, and ASN accuracy may require a deeper dive and some internal process refinement but these fixes will deliver efficiencies in the long run.

  • Optimize your demand forecasting processes to ensure inventory doesn’t incur long-term storage fees in Amazon FBA.

  • From a logistics perspective, consider sourcing from suppliers that are closer to your market country to eliminate or lower overseas shipping costs.

Sellers will need to continue to be agile and adapt quickly to the ever-evolving Amazon landscape, but an effective strategy will ensure you are set up with the fundamentals for success on the platform. If you have questions about how to navigate specific challenges in your category or need assistance building your Amazon strategy, reach out at digitalcommerce@gorillagroup.com.