The Amazon Profitability Death Spiral is the race to the bottom. Whether you are deep on the Death Spiral or just flirting with it, you are not alone.
The Amazon Profitability Death Spiral is a simple series of events for all brands. First, your Amazon ecommerce booms and a bunch of third-party sellers flood Amazon (also true for any other marketplaces).
This high volume of unauthorized sellers creates competition. The unauthorized sellers lower their prices even more to win the Buy Box. Because the Amazon algorithm favors price (customer centric mission), you lose the Buy Box (can happen in a 1P or 3P relationship). Then your brick and mortar starts to price match with Amazon, so your retail profits erode because you are hit with concessions, buy back charges, price match guarantees, and more...
It does not stop there.
Your Amazon profits erode and before you know it all channels are less profitable. And you find yourself at the bottom of the Death Spiral not able to make a profit or as Amazon calls it your product is CRaPed out.
Watch this video to learn more about the Death Spiral
We have talked to many executives who find themselves in the profitability Death Spiral. The results of the Death Spiral are painful and erode brand equity, sales, and profitability. The good news is you can fix this problem in three steps.
Identify the rogue or unauthorized sellers so you can take control of your distribution. This can be manual and very time consuming, but it doesn't have to be this way. Pattern has technology that scans over 4,000 websites and gives brands visibility into those who are not compliant with their prices.
Then, once you have identified the sellers you can quickly see which ones are causing the channel conflict and reach out with a eControl law firm like Vorys. As eControl experts, Vorys will know the laws and regulations to help you stop these sellers from causing pricing issues. Once you are done cleaning your channel, and have a proactive strategy in place using both tech and an eControl firm, you can move to Step 2.
Once you have a clean channel of sellers you can move into the next step, which is creating MAP (Minimum Advertised Price) policies that can be used to enforce sellers on Amazon and all other digital channels. Setting a MAP policy is the strategic next step for a brand to enforce its pricing strategy and identify rule breakers on Amazon and across other marketplaces. When a seller is abiding by MAP, it means they are not dropping their prices, so a product’s price will start to stabilize and protect all your channels, even retail. Through its millions of data points and insights, Pattern helps its brands identify MAP violators who show up to wreak havoc on price and your brand.
To help achieve price stability, it is also important to align your promotional strategy to all channels. Otherwise, the promotions can provide ways for sellers to get your inventory and sell if for less later.
After you have aligned your sellers with an enforceable MAP policy, then you can move into the next step, which is being proactive with enforcement and takedowns.
Pattern has built technology that scrapes thousands of websites and quickly identifies rogue sellers who are breaking MAP. Our Predict software identifies leaky gaps in your distribution, tracks sellers, and monitors historical and real-time pricing across Amazon so you can maintain brand control.
It is important to take a data-driven approach to identify, enforce, and take down sellers who erode your price and profit.
We (Pattern) helps brands do exactly this. You don’t have to feel alone or keep playing whack-a-mole. Having approved and legitimate sellers on Amazon sets omni-channel price parity and enforces your MAP policy, so you can win the Buy Box, increase traffic and conversion, and achieve profitability on Amazon and beyond.
Did You Know: by maintaining brand control on Amazon, you are able to make concentrated investments in content, SEO, customer service, which results in improved ad consistency and performance.
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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.
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.
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.
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)
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.
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.
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.
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.
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.
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.
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.
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.
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.