5 Methods to Strategically Increase Profit Margins on Ecommerce

Pattern Data Science

November 11, 2019

ICYMI, eCommerce sales are booming (and they’re only expected to keep growing). If you’re going to take your fair share of the profit, you have to earn it. At Pattern, we’re experts at helping brands increase their margins and profits without sacrificing quality products and consumer trust in the process. In fact, our partners' revenue grows by an average of 40% in their first year with us.

Here are five things you can do to increase your margins for online sales without cutting corners or spending oodles of money:

1. Drive more traffic to your products

2. Utilize premium content

3. Optimize for Amazon SEO

4. Scale to international marketplaces

5. Control dynamic pricing

Driving more traffic to your products via advertising can help you increase your eCommerce profit margins.

1. Drive more traffic to your products

This first one may seem obvious. If you’re going to increase your sales, you need more people seeing your products. Using advertising and Amazon marketing services to your advantage can help you quickly see a rise in visitors and, ultimately, conversions.

Create an advertising strategy.

Without a solid advertising strategy, buying ads on Google, Facebook, or Amazon is basically just throwing cash to the wind and hoping for the best. 

Either on your own or with a partner like Pattern, identify what customer segments are important and what their behaviors are. 

Then create great targeted product pages that are persuasive, concise, and interesting to the consumer. The more information you have about your consumers' behavior in your arsenal, the better. If consumers feel like you know and understand them, they're more likely to stick around and end up purchasing your product.

Let data change and improve your strategy over time.

Next, use A/B testing to see which ads are working well and which aren’t. The key here is to never settle and realize there's always room to grow. Maybe your customer segment could be more dialed in. Maybe one image works better than another. Test, test, test and then let the data inform your strategy over time!

At Pattern, our advertising team uses our proprietary technology Predict to automatically adjust hundreds of thousands of keyword bids to ensure we’re putting money behind keywords that get our partners the highest returns. We’re able to test which words perform best and then optimize advertising strategies (and bids) from there.

Track your success.

Finally, make sure you have a measuring system in place to ensure you can track each advertising campaign. That way, you’ll be even more prepared as you head into the next one.

Learn more about Amazon Sponsored Products, Sponsored Brads, Display Ads, and more on this post about Amazon AMS.

Enhanced Brand Content on Amazon can help you increase your margins because consumers are more likely to spend more time on your product pages.

2. Utilize premium content

Customers are more likely to purchase products that look legitimate. After all, if one product costs 30 cents and another costs $3, but the images and product descriptions are terrible on the cheap one, consumers are much more likely to choose the latter. 

“Premium content is a big way to improve profits,” said Kevin Lamb, Pattern’s Marketplace Insights Specialist. “You have to look way better than the average listing or you’re not going to sell.”

Use on-site content optimization options.

Most eCommerce sites offer options to improve content offerings. 

For example, Walmart gives each page a content score that guides retailers to make their product pages more effective. They even offer content audits to help retailers sell and show up more on their site.

Amazon’s version is called Enhanced Brand Content (EBC). EBC helps brands create individualized product pages that increase conversion rates and raise profit margins. By using EBC, you can add extra content to your Amazon product page, make it more mobile friendly, and ultimately keep more customers on your page for longer.

Creating a solid Amazon SEO strategy can ensure that your products rank on the first page, helping increase your profit margins by increasing the number of customers looking at your product.

3. Optimize for Amazon SEO

If you’re going to increase your margins, you have to show up on page 1 of Amazon. (Very few customers look beyond the first product page.) 

Know that Amazon SEO is different than Google.

Not all search engines are created equal. Amazon uses the A9 ranking algorithm to decide who shows up first on their product pages, and it’s not at all the same as Google. 

We recommend putting someone on your team (or partnering with someone) who knows the A9 algorithm and all its nuances inside and out. Otherwise, your SEO optimization isn’t going to take you very far.

Get the basics down.

Pattern’s SEO experts recommend optimizing your product titles, backend search terms, and product descriptions first to include keywords related to your product. However, there’s so much more you can do with Amazon SEO. 

Learn more about how to get started with Amazon SEO here.

Expanding your eCommerce offering to include international marketplaces like Tmall and Alibaba can help increase your profit margins exponentially.

4. Scale to international marketplaces

Finally, a key part of increasing your margins on eCommerce is increasing your audience size. If you’re only selling on Amazon or eBay or Walmart, you’re missing out on huge international markets like China, Europe, and beyond.

Analyze whether or not you’re ready to go international.

It’s true, not everyone is ready to sell on marketplaces like Tmall or Alibaba yet. However, you might be more ready than you think. Pattern’s international eCommerce experts can tell you whether your product is ready to enter new markets. 

Creating and enforcing a MAP policy can help you make sure that unauthorized sellers aren't taking away your precious sales (thereby helping you increase your margins).

5. Control dynamic pricing

.Fighting for control over your product pricing may be the most important factor in creating (and maintaining) a high profit margin eCommerce strategy. 

Since sellers on Amazon and other marketplaces are constantly in competition, price erosion can often affect brands and cut deeply into their margins as each seller tries to win the Buy Box.

Create a MAP policy.

A Minimum Advertised Price (MAP) policy can help you create fixed price points for your products among your many sellers. By requiring your sellers to advertise at exactly how much your products are worth, you can save yourself many headaches (and shrinking margins) in the future. 

Our partner brands' legal counsel helps Pattern partners create MAP policies that are thorough and binding.

Enforce your MAP policy.

Sellers aren’t that great at maintaining price parity. However, if you have a MAP policy in place you won’t be left helpless when the inevitable price dropping war ensues. If unauthorized sellers are disrupting your MAP policy, you can work to get them removed, thereby saving your margin. 

We know these four strategies will be helpful for you as you try to improve your eCommerce margins. Learn more about how Pattern can grow your profit margins by reaching out below.

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Sept 27, 2022

Global Ecommerce Weekly News: 27th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon drives renewable energy push with 71 new projects Amazon is planning to add 2.7 gigawatts of clean energy capacity through a couple of new projects as the company attempts to use 100% renewable energy by 2025. The ecommerce business will soon have a total of 329 renewable energy projects, generating 50,000 gigawatt hours of clean energy, which is equivalent to powering 4.6 million US homes every year. [Read more on Reuters](https://www.reuters.com/business/sustainable-business/amazon-drives-renewable-energy-push-with-71-new-projects-2022-09-21/) Amazon launches Prime Early Access Sale Amazon is launching a new 2-day shopping event for its Prime members only, beginning on the 11th of October. Across 15 countries, Prime customers will have access to the shopping event, with thousands of deals on offer globall, ranging from fashion to electronics to essentials. The event has the purpose of giving Prime users the chance to spread the cost of items over the winter months, 6 weeks ahead of Black Friday. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/26/prime-early-access-sale/) --- Other Marketplace News --- Shopify unveils new localisation tool Shopify is launching a new localisation tool, called Translate & Adapt, which works with Shopify Markets to offer localisation for sellers who are looking to expand into new markets. The tool translates a user’s online store into different languages, including product pages and information pages. Merchants are also able to create different shipping terms for each market using the new tool, which allows international expansion and offers a more localised consumer experience, unveiling new potential. [Read more on Ecommerce News](https://ecommercenews.eu/shopify-launches-new-localisation-tool/) Etsy is set to invest hundreds of millions into its marketing platform Etsy CEO claims that the company is on route to spend more than $570 million USD on marketing this year. Even during a time of macroeconomic pressure, inflation and rising interest rates, the company is preparing itself and its sellers for the upcoming holiday season and is focused on retaining interest from buyers. [Read more on Yahoo News](https://uk.news.yahoo.com/etsy-600-million-on-marketing-ceo-154054219.html) --- Other Ecommerce News --- Meta looks to cut costs by 10% in the coming months Meta employees are facing job redundancies as the company plans to cut its costs by 10% over the next few months. Meta reported a 22% YoY increase in costs and expenses, totalling over $20 billion USD. The cuts are expected to come in the form of job redundancies as a result of department reorganisations rather than formal layoffs. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/22/meta-to-slash-costs-by-10-over-coming-months/) DHL teams up with Quadient to offer smart locker deliveries in the UK DHL and tech company, Quadient, have partnered to offer smart lockers parcel pick-up throughout the UK. The new contactless, secure locker stations will give recipients more choice and flexibility to receive their parcels at a time and location best suited to them. The partnership plans to install 500 locker stations across the country by the end of 2022. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/21/dhl-partners-with-quadient-to-offer-smart-locker-delivery/) The online fashion market is set to be worth nearly $170 billion USD in 2025 The European online fashion retail market is set to grow 50% by 2025, with an online turnover of $170 billion USD, which is 33% of the retail branch’s total. Cross-border marketplaces prove to be the largest drivers of this growth, with online websites and apps like Vinted largely pushing the market’s online growth. Zalando recently became the largest cross-border fashion retailer/marketplace, responsible for 11.7% of the online market’s share. [Read more on Ecommerce News](https://ecommercenews.eu/online-fashion-market-worth-e175-billion-in-2025/)
Sept 26, 2022

Top 5 Ways to Prepare for Peak with Google Ads

Peak season is almost upon us and with all signs pointing to it starting earlier than ever, with Christmas gifting searches now ramping up in August and September, it’s time to start preparing for peak. In this article, we’re sharing our top five tips for planning and preparing for peak season with Google Ads and the strategies required to get your Paid Search ready so you can drive success over this crucial period.

1. Go Early

In 2021, gifting search terms started increasing in popularity in August. The general trend is that people are looking, researching and weighing their options early, so it’s best to start your Paid activity early to ensure that you’re capturing that early research traffic. This will help drive revenue alongside aiding those consumers who are in their research phase.

From 2020 to 2021, spend during Cyber Week actually only rose 2% but in the weeks leading up to it, it increased by 16%. However, Cyber Week is still the biggest period during the latter half of the year, accounting for 23% of all online spend by consumers over peak. Being prepared and starting early will help you to maximise your time during this period.

2. Get Ready for Privacy Changes

 According to Google, 48% of global consumers have stopped buying or using a service due to privacy concerns. Privacy is front of mind when consumers are shopping online and we know that Google is phasing out 3rd party cookies in 2023. This is going to make it much harder to track users online and it’s something that brands need to think about this now – waiting isn’t an option.

From a Google Ads point of view, you want to ensure you have set up the Google Ads tag across your site and have enabled ‘Enhanced Conversions’, which ensures all conversions are tracked and allows you to monitor other actions such as ‘Add to Cart.’ This is relatively easy to set up, especially if you use ‘Google Tag Manager’.

It’s also vitally important that you build up your first-party data during this time as this is data you own and it can be used when targeting consumers that have provided your brand with their email address. Pattern’s own experience shows that by segmenting and using first-party data, you can see a 10% improvement in revenue and ROI.

3. Ensure Consumers Can Discover your Brand

A full-funnel approach is now more important than ever as consumers become more discerning and have more choices than ever of where to shop.

Pattern has seen success with Google Ads’ ‘Discovery Campaigns’ (image-based ads that appear on Google platforms such as Gmail and the Google app), which have driven success both from a traffic and revenue perspective.

The performance of these campaigns is significantly enhanced by adopting a segmented and nuanced approach to first-party data and incorporating these into your campaigns. Other options for a full-funnel approach include YouTube and testing bidding on keywords that are more representative of the research phase. (e.g. ‘best baby clothes’ for a baby clothes brand)

4. Get Moving with Performance Max

Earlier this year, Google announced that they were moving away from Smart Shopping and launched Performance Max. This is a new campaign type that incorporates features and placements from Smart Shopping but expands them onto other platforms such as Gmail but also alternative creative options, such as images and videos.

Since Google has already started automatically upgrading Smart Shopping campaigns to Performance Max, expect to see some fluctuations in the first 2 weeks following the switch over but results generally seem positive. We recommend upgrading sooner rather than later to limit any potential impact to peak period.

5. Flight Budgets Accordingly

Peak period will be even more competitive than in 2021 and you’ll need your budgets to support this period, we recommend boosting budgets in October to start capturing that early peak traffic. As we enter November and the Cyber Period, start early and make sure you are capturing those consumers looking for early bargains, ensuring you are being nimble in your optimisations and reacting to the data that you are seeing.

Overall, peak period is vital to help drive your sales and by preparing early, you will see strong results and drive success for your brand. If you want to discuss how your brand can navigate this next peak period, contact us to discuss your options with our performance team now.

Sept 20, 2022

4 Ecommerce Marketplace Consultant Must-Haves

Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces. 

Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.

So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.

Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products. 

What is an Ecommerce Consultant?

An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.

An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.

Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.

1. Brand Obsession/Specialization/Passion

At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services. 

2. Proven Results

It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.

3. Wide Range of Marketplace Expertise

It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.

4. Network of Resources

The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.

Achieve Your Ecommerce Goals With Pattern

Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces. 

With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.

Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.