In this episode of The eCommerce Growth Series, we chat with Mike Begg from AMZ Advisers on what eCommerce brands need to know about selling on Amazon, including:
- What’s new with Amazon
- How Amazon has changed with the COVID-19 pandemic
- Optimizing product pages to win in Amazon
- Amazon Organic vs. Paid Marketing
- The relationship between Amazon and sellers
- Amazon’s own brands
- The future of Amazon and its competitors
If you have any questions, please feel free to reach out to me at Ron@visiture.com or Mike at Mike@amzadvisers.com.
Ron: Welcome to The eCommerce Growth Series. My name is Ronald Dod, Chief Marketing Officer at Visiture. I’m here today with another episode where I talk to Mike Begg at Amazon Advisers, also AMZ Advisers. Mike started Amazon Advisers with a couple of his friends and have been a great partner of Visiture. I’m really excited to have him on the show today. We discussed a lot of things, mainly about Amazon and what’s new at Amazon, and really focus on the relationship between Amazon, the sellers and the brands, which I feel is really a hot topic right now with so much going on with Amazon and developing their own products, etc.
We spoke about 40 minutes discussing a number of things. He began with how he started the agency with two of his friends and lives full-time in Guadalajara–which I’m sure I got wrong–and has really built a content team out in Guadalajara, which I think was really impressive. We talked about what’s new at Amazon, how things have really changed with COVID-19, from them introducing more essential products and more. We touched on the relationship between sellers and Amazon and how sellers get shut down, how sellers and brands could use the advertising platform to grow and about future tools that Amazon is releasing and how to best use those future tools.
We talked about optimizing product pages to win in Amazon. And he had a blast from the past talking about black hat SEO and how people are using that in Amazon. And finally, we talked about future competitors for Amazon, how Amazon is really making their own brands and how that’s affecting brands selling in their ecosystem. And a little bit about the future of Amazon and eCommerce in general. Enjoy.
All right. Welcome, Mike. Thank you for joining the eCommerce Growth Series. Can you tell us a little bit about yourself?
Mike: Yeah, thank you for having me here, Ron. So, a little bit about myself. My name is Mike Begg. I am one of the cofounders of AMZ Advisers. There are a few other side projects I do. I am from Connecticut, originally. We started this company with three of my friends and, luckily, we’ve been able to grow it. I live in Guadalajara, Mexico and manage our office down here.
Ron: Great! Can you tell us a little bit about Amazon Advisers?
Mike: Sure. AMZ Advisers is a digital marketing agency and we specifically focus on the Amazon platform. So, we help brands and manufacturers grow their sales on Amazon. And not only in the U.S., but in Australia, in Europe, Canada, Mexico–wherever they need help. And we take such an in-depth approach to actually understand their businesses that we end up helping them actually improve their business processes as well as improving their Amazon sales.
Ron: I’m not going to let us skate over that–so, tell me about Guadalajara? Did I say that correctly? Why did you decide on that?
Mike: Yeah, so you almost said it correctly. It’s Guadalajara. So, originally when we were starting this agency–myself and my two other partners–we were kind of on the fence. We weren’t sure how successful it was going to be. So, we ended up moving to Mexico, living in Playa del Carmen and starting the business down there. Then, as we started to grow and as things changed and evolved, we started traveling more seeing other parts of the world. I actually ended up coming to Guadalajara, which is where I met my girlfriend. And then, as we had a need to start hiring people in-house, we realized that we had a great opportunity to hire our content team here in Mexico. And ever since then, I’ve kind of just been here.
Ron: Great! And as someone who’s also co-founded a business, I have a lot of respect for people who co-founded with friends. If you don’t mind me asking, what has that process been like co-founding a company with some of your best friends?
Mike: It’s definitely an interesting process, I’ll say that for sure. No, the good thing is that because we’ve known each other for so long–with one of my partners I’ve known since I was in kindergarten and the other one I’ve known since high school–you know, we’re brutally honest with each other. When we have things that aren’t working, we can be as honest or as mean or as brutal as we need to be with each other. And, at the end of the day, the goal is not to take it personally. It’s to improve on something we’re doing wrong. So, it actually helps us a lot, I think, in our business.
Ron: I’m glad you are able to do it. Obviously, there’s always a lot of challenges with that and you guys are building a really great agency, so that’s exciting here. So, you know, obviously there’s a lot of things going on at Amazon, especially COVID-19. Could you just give us a general update of what’s new and kind of on the Amazon landscape?
Mike: Sure. So, I think when we talk about Amazon, at least since March, things have been changing rapidly. So if you look at search terms, searches for PPE products–like masks, antibacterial gels, all disinfectants, things like that–they have completely taken over as some of the top search terms on the platform. One of the other things that we saw was that a lot of brands that were concerned about COVID-19 and recession and a lot of other economic issues, scaled back on their advertising. So, between those two things, there’s been a lot of opportunities for brands that were either in the PPE categories which didn’t have as much search terms before, which have completely taken off or brands that weren’t able to compete because they couldn’t spend the advertising dollars to keep up with the bigger brands. And now, they’ve been able to take some of the most expensive keywords for, I don’t know, maybe 50 percent cheaper in some cases. So, it’s been a lot of opportunity for brands to come in and start growing their sales on the Amazon platform.
Ron: For those out there who may not know, can you explain a little bit more about what PPE is?
Mike: Sure. So, PPE is essential products that were needed during the COVID-19 outbreak. So, we’re talking about face masks, face shields, the plastic face shields. Maybe you’ve seen people walking around with hospital gowns. Those types of products that are essentially for protecting healthcare workers and individuals from spreading the virus more. So, what I’ve seen, what you’ve seen, is that previously some of the number one search terms on Amazon were let’s say, cheap electronics or phone cases. iPhone cases are always a high search term. And now, those aren’t even in the top 10 anymore and the top 10 products are like Lysol, antibacterial gel, face masks, things like that. I mean, no one’s ever searched for this much or on the internet or around Amazon in general. It’s just because of the demand right now.
Ron: Do you feel that a lot of companies are trying to shift their product offerings and focus on PPE products in your experience?
Mike: I think there are some companies out there that are trying to take advantage of the trend. But at the end of the day, I don’t really know that that’s going to work out for them. I remember reading some story about a guy, I think he was in Tennessee, who went to all the local Walmarts and Targets and ended up spending like $17,000 on antibacterial gel and then tried to sell it online. But Amazon kicked him off because he was price gouging. So, if you’re in it for the wrong reasons, if you don’t have a company and a brand that’s already established in that kind of area or that sector, then I don’t think it really makes sense for a business. I haven’t seen many businesses that are outside of that area try to get into it as, you know, a quick way to make money or something like that.
Ron: Yeah, that’s interesting with Amazon kind of kicking players out. What’s that relationship between Amazon and sellers? Is Amazon almost kind of like the police now or they’re just policing, or are they kind of helpful in helping sellers understand what kind of verticals to target?
Mike: So, Amazon does provide a lot of data into what the search terms are, particularly if you are brand-registered. So, you have the ability to see what people are searching for, what products they’re actually buying, what they’re clicking on. You can see a lot of different things that way. But at the same time, Amazon is also using their own data to build their own brands. So, it’s not that they are so much trying to help sellers to find the best opportunities. It’s more that they’re presenting this data so they can make their own decisions and see what works for them.
I think the relationship between sellers and Amazon in general is always a little bit tenuous. If anyone has been selling on the Amazon platform before, you can get extremely frustrated with how quickly Amazon can shut you down for something that you didn’t even do, like the price gouging. I’ve seen a lot of companies get shut down for their prices going up, not even that much–maybe 30 cents. Is that really price gouging? I don’t know. Maybe that’s dealing with a higher cost of shipping to make their margin back. It doesn’t seem like price gouging. I mean, it’s not two times or three times the price and trying to get the most out of it, but at the same time, Amazon doesn’t care. They have systems that are automated and if you go outside of those systems or outside of those rules, they’re going to take action against you and against your listings.
Ron: Yeah, it’s almost like they kind of have triggers in their system that alert them and they shut it down automatically. That’s crazy to think about because if you’re a business online, your livelihood depends on you shipping these products and if Amazon shuts you down, that has to be really frustrating. What’s the process to get that rectified and fixed?
Mike: There is an appeal process that you can go through, and it’s not exactly clear. It’s like a black box–like you have to reach out to them in an email and then maybe you hear back from them, maybe you don’t hear back from them, maybe they ask for more information, maybe they don’t. Honestly, dealing with that aspect of Amazon is really a pain. So, playing by the rules as much as possible is the best way to go forward. Getting suspended or unsuspended–it can literally be a death knell for some businesses. I mean, we’ve had clients that we’re doing hundreds of thousands of dollars a month on Amazon in sales. Then, all of a sudden, they did something sketchy or illegal or against Amazon’s rules and, all of a sudden, their sales are gone, their account’s done, they can’t get back on Amazon and literally there’s a million dollars in sales or more a year gone for them.
Ron: It’s crazy to think about and I’ve heard similar stories such as that.
Mike: Yeah, it’s ugly. It’s better to play by Amazon’s rules, in our opinion. Anytime you start getting into gray areas or kind of playing fast and loose is when you can really get into trouble with Amazon and that’s when it can come back to bite you.
Ron: Yeah. What would you say are the main things people get shut down for in the first place?
Mike: Some of the things that you can get shut down for are… I mean, there’s a variety of them and they keep changing and Amazon keeps expanding them. For instance, one of the newer ones is that if you’re mentioning competitor brands in your keywords, they can shut down your listing. Other ones are if you’re using another brand’s content, they could shut you down–if you’re selling knockoffs; if you’re selling forgeries; if you’re using other companies’ intellectual property. All of those types of things can get you shut down pretty easily on Amazon. And then, apart from that, trying to manipulate the Amazon search ranking algorithm. So, for a while, a lot of companies were focused on using these product launch services where they were giving away a bunch of inventory at a low price to get reviews and get the sales and all that stuff. And Amazon caught on after a while and they said, “Hey, if you’re doing too much of this, we’re going to take away your ability to do promotions or we’re just going to completely shut you down because you’re trying to manipulate our algorithm and do something illegal.” Well, illegal in their rules.
Yeah, I mean those are just some of the examples, but really there’s a lot of different things you can do to get shut down on the Amazon platform.
Ron: Yeah, that’s hilarious. Black hat SEO is officially back on the Amazon platform.
Mike: Oh yeah, and it’s going strong on Amazon.
Ron: So, yeah, I always wondered about that. You know it’s funny because Amazon is so much like Google back in the day where they have a very unsophisticated advertising system, they have a very unsophisticated search engine. It feels like they’re going down the same kind of rabbit hole that Google’s gone through throughout the years to improve their search engine, to improve their advertising platform, to make it more sophisticated. It is funny seeing all the things that happened in the early 2000s with Google kind of having it out with Amazon.
Mike: Yeah. I mean, you definitely know the search engine side better than I do, but when it comes to advertising on Amazon, there’s constantly been improvements–I mean, we’ve been doing this for six years now. So, in the past six years, you can see how far the types of ads you have, your targeting abilities are and you can also just measure how much competition is increasing within the advertising space on Amazon because you can see the costs going up over time. So, yeah, I think Amazon is always going to struggle to deal with a lot of the black hat/gray hat stuff, but at the same time, brands that are playing by the right rules are going to end up winning in the long-term.
Ron: Yeah, it’s interesting. That’s one thing I really want to talk to you about is advertising. I feel like that’s becoming much more sophisticated and other than display advertising more. What would you say is the biggest growth opportunity you see? Is it really the sellers or do you see brands using Amazon to grow?
Mike: For me, the biggest opportunity there is for brands and what’s happening is that Amazon’s rolling out all these new different ad types like you mentioned to help them manage their entire advertising and sales funnel online. So, if we think of a typical advertising funnel, you have your brand awareness, your consideration, your purchase and then your post-purchase–and Amazon has ads for all of that. So, on the brand awareness, they have their on-platform sponsored brand ads to help your product show up more in search terms. They have off-platform sponsored display ads to help you with retargeting, remarketing. They have programmatic advertising with the DSP platform. So, there’s a lot of different ways that you can get your product in front of people. They pretty much can help you build your entire advertising funnel within their platform or within their different advertising platforms because there’s really two different platforms.
Ron: Is optimizing product pages–is that kind of a thing of the past or are people still spending so much time optimizing their product pages?
Mike: The two things go hand-in-hand for sure. Your ads aren’t going to perform if you have crappy looking product pages. That’s what it comes down to. The SEO aspect of it is still important on Amazon. If you don’t have the search terms or the SEO content in your listing, there’s no way that Amazon is going to start indexing you and ranking you for specific search terms. But at the same time, if you don’t have that content and you don’t have good sales copy within your product listing page, the customers that end up coming to your product page through an ad or even finding you organically are not going to end up purchasing your product.
So, from our perspective, both those are like the two pillars of Amazon. It’s one: Do you have the SEO content in the sales copy to get customers to convert, to get them to find your page and to convert? And then, do you have the advertising piece to actually drive new brand awareness, drive more conversions and help your brand grow over time? Because without advertising on Amazon, your brand’s not going to grow and that’s just what comes down to.
Ron: Yeah, it makes perfect sense and, with that, do you feel brands are becoming almost maybe too reliant on advertising? Do you think brands might get turned off knowing that they have to advertise still in the game of Amazon basically?
Mike: You know, I don’t think that’s the case. It really depends on the company, I guess. Larger companies that have the advertising budgets and maybe were using traditional media, such as print or even TV, are starting to realize that digital is more important now. So, a lot of those budgets have been shifted to platforms like Amazon and particularly the larger companies are using the DSP platform. DSP allows them to target specific customer interests from their purchase history on Amazon and then place the ads on third-party networks or on Amazon-owned pages or even on Amazon–so, whatever they want. And it gets to the point where they’re doing a pretty significant amount of ad spend on these types of ads.
I mean, I believe during Q4–and I’m kind of blanking on the numbers–the minimum ad commitment I think was a million dollars per campaign. So, there’s some significant money being invested there. I don’t think in the long-term other brands are going to be turned off from that. I mean, more and more people are going to continue to shop online. It makes sense to be on the Amazon platform no matter what you’re selling. If you’re not there, how is anyone going to find you? At the same time, if you’re not advertising, how’s anyone going to find you? There are millions of products, so how do you stand out from other people?
So, yeah, maybe they’ll be discouraged that they have to spend a little money on advertising. But at the same time, if you’re trying to grow a real brand and make something that’s going to last, you need to be doing marketing no matter what. So, it’s just your choice of whether you’re going to use Amazon for advertising, Google, social media, influencer marketing, whatever type of platform it is. You still need to be doing marketing. So, at the end of the day, I don’t think it’s that big of an issue for brands to do it.
Ron: Yeah, it is interesting. And getting back to kind of the relationship between Amazon and sellers, obviously, they provide a lot of data around search volume to help you kind of merchandise correctly and try to SEO your products. Are they adopting and releasing any new tools out there for sellers and brands outside of the advertising?
Mike: Yeah. I mean, advertising is definitely where we’re seeing the biggest tools in product development. However, there are certain other aspects of marketing within Amazon. So, one tool that they’ve rolled out is the Amazon Post recently, which is essentially like little social media posts within your product page listing. It’s still pretty new and we’re still kind of testing it to try to get the best results out of it. But, we’ve actually seen that it can drive some pretty fair traffic to your listing through just creating some social media posts essentially.
Other things that they’ve rolled out is–it’s not so much has been rolled out, it’s just that they’ve started to consolidate–the reporting capabilities across the seller central and vendor central platform. So, the brand analytics piece that you now have access to in seller central is very similar to what the vendor central side has for analytics now–where in the past, it was completely different. Vendor central had way more data on customer purchasing behavior, demographics, things like that. They still do have a little bit more. But there’s a lot more consolidation when it comes to the advertising side. So, before where we had two completely different advertising platforms on seller central and vendor central, those are now similar.
So, it seems like Amazon’s kind of, I guess, building a lot of systems that any seller can use, whether they’re familiar with vendor central or seller central, to make it easier for everybody. And with that, they’ll continue to find new opportunities to create new tools and help them manage their Amazon sales and their Amazon account better.
Ron: Yeah, it’ll be really interesting if they ever, you know, tie their social media to Instagram, TikTok or other channels and they allow you to advertise social media posts, too. I mean, one really creative solution that a lot of brands are using is video testimonials from their customers in Instagram ads. So, it would be interesting if you could advertise basically testimonial videos on Amazon.
Mike: Yeah. They’ve actually started rolling out something called sponsored brands plus video. So, it’s a somewhat new ad type. But if you’re familiar with shopping on Amazon, you search a product, you search a search term and there’s usually a banner at the top that’s known as a sponsored brand. So now, they’re allowing you to put video into those. So, if you have that type of video asset, whether it’s either a client testimonial or just a lifestyle video–some type of video content that you can use–you can actually start testing these ads and see how they perform for your specific account and for your products.
Ron: That’s incredible. I think that’s going to be very successful, especially when people are searching for products that they didn’t really know what they’re looking for yet–like you’re not looking for toothpaste or something along those lines. I think that’d be highly successful.
With all the advertising, though, do you feel Amazon is helping merchants out with analytics and more about measuring their advertising campaigns than they have been before?
Mike: So, I think the reporting data that Amazon gives you is pretty general and then you need to really figure out what is important within it. To each company and each brand, they may be looking for different metrics. I mean, impressions might be important to companies that are trying to build brand awareness or product consideration, whereas conversions and ROAS or ACoS (average cost of sale) on Amazon might be more important to other brands. It really depends on what your goals and what your plans are. There is a lot of third-party software out there that can help you analyze the advertising data and make better decisions based on what you’re seeing in the data. I think that’s where you can really get more value from learning from your advertisement data than actually using Amazon’s tools. It’s not that the data is bad, but if you’re not processing it yourself, either in Excel or some other spreadsheet or database or something, it’s difficult for you to really see what’s happening there.
Ron: So, with that, I kind of want to just transition. Obviously, there’s a lot of high-level things going on at Amazon and want to get your thoughts on it. What are the thoughts about breaking up Amazon?
Mike: Well, that is kind of a popular topic going on right now. I mean, a lot of politicians are talking about this, but at the end of the day, it really comes down to, I think, what the benefit is to the end consumer. And not just on the retail side, but also on the business side. A lot of businesses are literally built on AWS. So, all of the data that they’re taking from Amazon, all that’s being processed in AWS. So, the two systems really interrelate and it really helps brands to scale on the Amazon platform.
Whether it comes to should they actually be broken apart or should the businesses be separated, I think there are some things that are probably anti-competitive about Amazon having access to all that data and the way that they use it. However, at the end of the day, the end consumer is really going to be the one that makes noise about it. Politicians can say what they want, but if the end consumer doesn’t really see it as a threat, I think they’ll just be willing to keep accepting it. So, that’s why I don’t think there’s going to be much of a change when it comes to Amazon breaking it up or really any of the antitrust stuff that we’re hearing about now and during election season. I don’t think it’s really a threat that Amazon’s going to be broken up by anyone.
Ron: Yeah, I feel you’ve always had conversations about this with these big brands. And I do feel that Amazon is going to start getting some competition. I just read today that Walmart’s integrating with Shopify now, so Shopify has a plugin that integrates Walmart and Target’s been crushing their revenue goals from an eCommerce standpoint. So, do you see maybe some of these other marketplaces coming and maybe trying to compete with Amazon?
Mike: I think so, but I think they still have a long way to go. So, we do some advertising on the Walmart side, and just as a comparison between the two platforms, Walmart’s advertising is still years–if not decades–behind Amazon’s. They have a long way to go. The self-service side they rolled out earlier this year? Honestly, it’s incredibly frustrating. The ad placements aren’t that great and the actual rules so you can even get your ad to get impressions and you have to follow is kind of a pain.
So, there are a lot of opportunities. I think that integration between Shopify and Walmart will allow more sellers to get onto the Walmart marketplace. But at the same time, part of the reason that Walmart hasn’t dealt with as many of the black hat issues that Amazon has is because they’ve been more selective with the companies that they’ve led onto the platform. So, I think that’s helped from the standpoint of protecting intellectual property and controlling third-party sellers that are on the platform.
I think that’s helped them. One of the interesting things I’ve read and I’ve thought about more recently is whether larger brands can actually get together to create their own type of platform. So, you know, if you had your Coca-Colas partnering with Nestle–all those types of companies getting together to form a food platform where it’s not really owned by any one company, but it’s kind of like a partnership. That’s another interesting idea because it allows a lot of these companies that have (particularly in the grocery space) traditional models of selling to a grocery store and then having the end consumer go there and purchase it, going direct-to-customer is cutting out the middleman. So, we’re increasing our margins. They’re selling it retail now instead of selling it wholesale.
So, I think there’s a lot of opportunities for bigger brands to kind of move in that direction. It’s just going to require a lot of partnerships and a lot of work. But when it comes to other platforms like Walmart and Target, they’re still pretty far behind.
Ron: Yeah, it makes sense. I think Amazon does just have such a huge advantage. They’re just so big now. They can ship products so quickly–I mean, same-day delivery. It is really impressive how they’ve done it. It’ll be interesting seeing Target and Walmart maybe try to come and kick it up on service level and those various things to compete with Amazon.
One thing I want touch base on that we talked a lot about earlier is Amazon creating their own brands because I feel like this is a very hot topic, especially with the Allbirds debacle. And for those who don’t know, Allbirds sells a wooden–sorry, not a wooden–a wool sneaker [laughs] which I love. I have a pair of Allbirds. I love them. But Amazon also has a brand and there’s huge debate where Amazon was advertising in Google for the keyword phrase Allbirds on their branded search in cannibalizing that traffic to their knockoff brand on Amazon. So, what’s your thoughts on this of Amazon creating their own brands and how brands are dealing with this and just adapting to it?
Mike: Yeah, so a lot of brands are concerned about Amazon using their sales data to kind of get into the marketspace, and for good reason. Amazon has over a hundred different private label brands now and they also have the manufacturing capabilities to pretty much roll out any product at any time. One of the problems with Amazon is that you need to give them a lot of access to not only your sales data, but sometimes to get approvals, you need to submit invoices, you need to submit other materials. So, a lot of times they can figure out who your manufacturers are, where you’re getting your product from and then they can reverse engineer the entire process to see whether it’ll actually make money for them.
So, the Allbirds is a good example, but it’s not the first time that Amazon’s come in and just pretty much created a complete knockoff and started selling it and it’s completely destroyed the market share. The difference between the two, and particularly I think Allbirds is a really good example, is that the environmentally friendly practices that Allbirds has is something that Amazon won’t adhere to and they just don’t. And that was one of the things that the Allbirds CEO particularly called them out on is like, “Hey, if you’re going to do this, at least do it the right way and do it in an environmentally sustainable way.” And Amazon has no concerns about that. There’s been issues lately with COVID-19. We’ve heard about issues with warehouses and how they treat their labor forces. There’s also concerns about the environmental impact that Amazon’s one-day shipping is having. And there’s also concerns about Amazon’s manufacturing impact or manufacturing regulations or that they’re following or not following and where they’re manufacturing, whether they’re using cheaper labor to get products done. I mean, at the end of the day, they can pretty much undercut every product on the platform just from the volume that they’re ordering.
So, it’s definitely concerning as a brand and that is probably the area where I would see the antitrust side coming in or like a government intervention coming in more than anything. But yeah, I mean it’s just part of the game selling on Amazon.
Ron: Yeah, it’s just one of those kinds of fearful things. And a lot of technology businesses and eCommerce have the same fear of the platforms, like Shopify or BigCommerce, just trying to create their own technology, especially like MailChimp. MailChimp was a long-time partner with Shopify and Shopify decided just to create their own email marketing. So, I see kind of dissimilar things here now with Amazon. They are getting so big. And with your brands, it’s like you have emerging Walmart, Target and do you start looking at these different marketplaces to sell or do you continue selling on Amazon? It’s going to be funny and interesting to see how this all plays out over the years.
Mike: Yeah, exactly. And it’s not to say that the other platforms might not do the same thing as Amazon at some point. I mean, they just have different business models right now, so they have different overhead. If they’re going away from having retail physical locations, maybe they have more capital to invest in doing a similar type of manufacturing. I mean, Amazon also has specific programs. I think one was called APN, where you would essentially partner with Amazon. You’d help them manufacture the product and then Amazon would have the ability to purchase your company down the road. So, this was another way for Amazon to get more products into the category and it at least provides some upside to the manufacturer or the vendor. But at the end of the day, you’re pretty much selling yourself out in the long-term just to make some money in the short-term with Amazon.
Ron: Yeah, makes sense. And besides getting ripped off from Amazon, what are some other challenges you see for sellers now in navigating and even having a relationship with Amazon?
Mike: So, I think two biggest issues are: number one, the advertising side; number two, the intellectual property side. Now when it comes to the advertising side, like I said before, if you’re not advertising on Amazon, you’re not going to be found. At the same time, it seems to be that if you’re not using a lot of Amazon’s other services, like their FBA service, your visibility on the platform seems to be suppressed. So, your product is harder to find if you’re not using Amazon FBA. That’s just what we’ve seen from experience. So, if you’re going to sell on Amazon, you need to use Amazon services, you need to be advertising, you need to be spending money or your products are just never going to really grow.
The other really big concern for Amazon and for Amazon sellers is intellectual property concerns where a lot of these brands that–you know, they’re mom-and-pop shops or they’re one-person operations–a lot of them are brands that people just decided to start based on the Amazon platform. And they’re not really taking the necessary steps when it comes to intellectual property. So, I’ve heard of cases where they did not have their trademark in China, for example. They had their trademark in the U.S. Because they don’t have their trademark in China, the manufacturer pretty much hijacked their brand and cut them off and started selling the product for themselves in the U.S. or they held them at ransom and then required them to buy it back.
One of the things that Amazon has been very loose with, or it was in the past at least, was who they let onto the platform. And they were just trying to get as many sellers as possible because more sellers, means more products, means more customers coming. It was just a big flywheel and it was seeing a lot of network effects to actually grow their business. But now that’s coming to kind of bite them in the rear end because they’ve got all these sellers. Some of them are Chinese manufacturers that are not following or are knocking off brand name products. They’re doing illegal things on the platform. They’re moving so quick that they can get shut down and open up a new seller account like it’s nothing and start selling products again. Amazon is really struggling to get that under control.
They’ve rolled out a lot of programs such as transparency, which is where you actually get a QR code on your product that you can scan and see where it came from. Other ones are product serialization. They’ve improved brand registry and given you more power to report people who are doing stuff illegally. But we still see examples of brands having issues with IP or having issues with sellers that are knocking off their products. Nike was another one… What’s that sandal company that left the platform? Birkenstock… blanking on their name. I haven’t heard that name in a long time. But, yeah, a lot of these companies have intellectual property concerns with the way that Amazon handles things and that is probably one of the largest areas that sellers need to get comfortable with when dealing with Amazon.
Ron: Yeah, I’ve never heard of them. That’s interesting. I see a lot of sandal brands also selling on Amazon, more probably than ever before. But it’s interesting for them to compete in these highly sought-after spaces. You’re trying to compete for the keyword phrase “Women’s sandals” or “Men’s sandals” or “Men’s beach sandals.” It’s pretty difficult to get in that space.
Mike: Yeah, for sure, and I mean that’s where you see the high advertising costs. Any product, really, you will see high advertising costs if you’re trying to get in for the first time. The sellers who can actually really get in there to Amazon, start stealing market share from other sellers, are the ones who either have good advertising, have a good budget to spend. They know what they’re doing or they are just very nimble and they’re able to find categories that aren’t competitive, get their products manufactured quickly and get on the platform. So, if you are a traditional company, there’s still a lot of opportunity, but the growth is going to be slower if you really don’t know what you’re doing on the advertising side. Otherwise, you’re just going to be wasting money. You’re not going to be growing your market share and your share of voice on Amazon.
So, it really comes down to having an intimate knowledge of what’s going on in the platform and how to maximize your results from the advertising to really be able to take the market share from the existing brands.
Ron: Love it. Love it. All right, I asked everyone this and will ask you, too. What do you see is the future of eCommerce?
Mike: It’s already here and we’re already seeing it. COVID-19 was really where we saw the acceleration of it a lot, and that is grocery shopping on eCommerce and how that’s going to evolve. It was expected to grow I think from–I forgot, it was like $20 billion a year to like $100 billion by 2022–I think those were the numbers, something like that. And because of COVID-19, that timeline’s probably been brought up a lot and I think more and more people are going to be switching over to shopping online for their groceries. There are a ton of different options out there for how you can get your groceries. Amazon itself has two different programs for grocery products. One is Amazon Fresh and the other being Amazon Prime Pantry. I think they just call it Pantry now. But the point is that a lot of brands are moving into that space and a lot of platforms are moving in there to try to capture more of that market share. If people continue to work remotely, they continue to work from home, what’s the point of them leaving and going to the store to do grocery shopping when they can just have everything delivered to them, brought home, and, you know, they can just sit there at the computer and never leave.
So, at the end of the day, when we think of those areas that are convenience pain points or what saved people the most amount of time, grocery shopping can take an hour and if you go more than once a week, you’re losing a couple of hours a week. So, the point is when we think of the future of eCommerce, it’s like what are the most inconvenient things that people are doing right now and then how can that be transferred or fixed through an online platform? I think grocery is a great example of that. Apparel, clothing shopping is getting more popular. Again, it still has some challenges as well–mainly with people with different sizes and things like that. It’ll be really interesting if someone can figure out a way to kind of standardize that because that, I think, is probably the biggest concern among shoppers–things not fitting when they’re buying apparel. But the people who solve those problems are going to be the ones who are getting the most success in the future of eCommerce and those are going to be the categories that are growing the fastest in the future as well.
Ron: Well said. I love it. Well, thank you for being on the show today, Mike.
Mike: Thank you for having me, Ron. I really appreciate it. It’s been great talking with you. I love sharing my experience and knowledge of Amazon and it’s always interesting to see what other people are wondering.
Ron: Thank you for joining the eCommerce Growth Series and a big thank you to Mike Begg at AMZ Advisers. If you have any questions, please feel free to reach out to me at Ron@visiture.com or Mike at Mike@amzadvisers.com. We’ll see you next time.