Why You Should Care About Brand Control as an Investor

John LeBaron

June 22, 2020

As an investor for an ecommerce brand, your topline is at the top of your mind. You want your investment to flourish and pay rich dividends, so you may reasonably approach it with a growth-first strategy, funneling in ad dollars and watching sales closely.

While growth is an important focus, there are some negative implications of having a growth-first strategy. Your brand might be losing control online while your back is turned, and without regaining that control, the positives of growth can quickly be negated, wasting your money and harming your brand.

In order to both grow your investment and help your brand thrive, brand control should be on your radar.

It starts with viewing Amazon and ecommerce through the right lens.

Caring about brand control begins with understanding the full impact of Amazon. Scott Chandler, Head of Partnerships at Pattern, said most peoples’ understanding of Amazon is fairly limited, including investors’.

“In their mind, without the full context, Amazon is just analogous to any other sales channel,” Chandler said. “In any other sales channel, they walk in and they’re like, ‘Hey, do you want to buy our product and negotiate on a whole sale price,’ and they’re done. Maybe in some retail cases, they have to negotiate shelf space and a few other things.”

Amazon, in contrast, is a whole different ball game, one with different rules and damaging penalties for slipping up. Unlike other channels, Amazon creates visibility that can shine light on all of your transgressions for your customers and other distributors to see.

“Everyone kind of gets a sense of what your profitability is or if you’re overinflating your margins. Do you cut one deal with one channel and . . . a different deal with another?” Chandler said.

Using Amazon listings and pricing as a reference for the rest of the market, consumers can easily determine if your brand is one they can trust or one they should avoid.

“It’s more than just a sales channel, because it has a spillover effect into all of your other business,” Chandler said.

Lack of brand control hurts brands on and off ecommerce.

When unauthorized sellers list a brand’s product for cheap and erode pricing, and when third-party sellers poorly represent brands with their Amazon listings, it’s a result of little to no control, and it doesn’t just impact the way a brand is perceived across channels, but it hurts a brand’s relationships with other sellers, including brick-and-mortar sellers.

If an investor wants to sell their product through a retailer like Target, but buyers are using Amazon data against them, Target may look at that and lose interest in stocking the product on their shelves, Chandler said. Furthermore, vendors that can’t sell a brand’s product because grey market sellers are undercutting them on price won’t want to work with that brand either.

Another thing lack of brand control can do to you as an investor is render any money you spend on advertising almost worthless. Chandler explains.

“Let’s say I’m an investor and I want to throw money at advertising and try to grow it. Well, it’s kind of like a blind auction behind the scenes of who owns the Buy Box. Who owns the Buy Box is generally whoever has the lowest price, so me as an investor, do I want to throw advertising dollars knowing that that sale would likely get attributed to the person who’s creating my biggest problems? It’s a disincentive to actually advertise and grow, because it’s fueling the flywheel of the problem here.”

Until you remove the problem, get your pricing back to where you want it to be, and regain control, Chandler said, “It’s probably not a good idea to exacerbate the problem with a bunch of ad spend.”

Proper brand control can help you win on ecommerce.

“Proper control allows you to have wins or win across all channels as opposed to winning in one, but having that then hurt you somewhere else,” Chandler said.

Proper brand control on ecommerce can help you demonstrate that you’re clean and your strategy is retailer friendly. It can help you hold on to a couple points of margin in your negotiation and protect your brand from harmful players. It can also help your brand to not only grow but thrive.

One brand in particular that has found big wins after regaining control is Pure Encapsulations, a company that sells dietary supplements. According to Chandler, Pure was selling a supplement product to practitioners solely through doctor’s offices, but soon practitioners stopped buying the product from those offices because it was being sold at a significant discount on Amazon by grey-market distributors. Pure learned that some of the doctors who had been purchasing the product were reselling it without authorization, putting their entire business model at risk.

Pure came to Pattern asking for help cleaning up their account. Within months, Pattern helped Pure remove 215 unauthorized sellers, increase MAP compliance to 98%, and give them the peace of mind to again focus on growth. According to Chandler, they’ll make over $100 million in sales in 2020.

Paying close attention to brand control has particular payoffs for you as an investor while you’re in a partnership with an ecommerce company and on your way out.

“All this rolls up into a nice exit strategy that you can use in your negotiations on evaluation with the company,” Chandler said.

It gives those who follow you a win instead of a mess.

So what can investors do to ensure the brands they invest in have control on Amazon?

Before partnering with a brand, Chandler said investors should evaluate that brand’s Amazon presence to see how much cleanup, if any, will need to be done. You should look at things like how many dollars a brand has, and are they selling directly to Amazon or going through a third-party strategy?

Another thing to look at is a brand’s policies.

“If I were an investor, I think I’d want to review what their MAP policies are. Do they have MAP policies? Do those MAP policies contain ecommerce verbiage and then are they enforcing against it?” Chandler said.

Investors should know if a brand knows which unauthorized sellers are moving their product online and what they’re doing about it. If there are significant control or distribution problems, investors should be proactive and step in.

“I think I would sit down with their executive team and say, ‘How willing are you to cut off a good retail customer who could be creating these problems for you on Amazon?’” Chandler said.

Software like Pattern’s Predict software can help your brand see detailed data about where and how extensive the problem is so they can move forward in preventing it.

To learn more about brand control and strategies to regain it for your brand, contact Pattern through the form 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.