Get up to date with this week's ecommerce headlines from around the globe.
Amazon opens first physical clothing store with tech-enabled fitting rooms
Amazon has opened its debut Amazon Style store in Los Angeles, where customers can enjoy a personalised shopping experience. The store allows shoppers to use an app to scan items they want to purchase, and provides them with a choice to have the items sent to a fitting room or straight to the checkout counter, where they can pay with Amazon’s palm recognition service. The touchscreen panels in the fitting rooms allow the user to browse other options and even purchase them digitally.
Amazon shareholders reject 15 motions on worker rights and environment
Investors presented 15 resolutions to positively influence Amazon’s environmental impact and treatment of workers, and Amazon shareholders voted to reject all resolutions that were brought forward. Amazon’s board argued in its proxy statement that it has already acted to address the underlying concerns of the proposals that were put forward.
Amazon and Walmart have empty shelves and excess staff
Following a period of accelerated growth during the pandemic, when shoppers were purchasing more online, online retailers are now seeing a slow of business. Two of the largest ecommerce giants, Amazon and Walmart, have been unsuccessful in anticipating staffing and warehousing needs, experiencing reduced productivity and higher costs.
Ebay Ads research finds shoppers turning towards second-hand items
The cost of living crisis is pushing consumers to shop for second-hand items. A survey of 1000 consumers found that 30% are putting more thought into their purchases, and buying a higher amount of second-hand items in an effort to save money. Between the rising cost of living and a growing desire to shop sustainably, the move towards ‘pre-owned’ has been rising consistently year-on-year.
Klarna switches focus to short-term profitability
After cutting 10% of its staff amid a ‘likely recession’, buy now pay later giant, Klarna, has decided to change its strategy. Rising prices, shifts in consumer sentiments and the ongoing war in Ukraine has resulted in the company needing to raise capital. Klarna’s CEO has mentioned that the company will change the weighting of its investments, focusing more on short-term profitability instead of long-term new, potential investments.
Alibaba, Tencent and JD.com have all posted their slowest revenue growth
Chinese tech giants, Alibaba, Tencent and JD.com, have all seen their slowest revenue growth to date. Beijing’s tech crackdown and a recent Covid resurgence with stay-home orders in China has disrupted supply chains and logistics, creating challenges for efficiency and growth.
Alibaba exceeds analysts’ expectations as its stock rallied by 15%
Chinese tech giant, Alibaba, continues to grow despite facing recent challenges. Meanwhile, the company’s main competitor, Singapore-based Shopee has grown by 94% in the same period. Assuming Alibaba is on track to achieve 5-10% growth this year, Shopee has the opportunity to beat the Chinese giant’s stable by 15-30%.
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Developing your ecommerce strategy for digital marketplaces like Amazon, Walmart, Tmall, and Alibaba gets complicated fast—there’s a lot to think about, including marketplace SEO, product photography, advertising tactics, disjointed sellers, distribution logistics, managing ratings and reviews, and more. It can be overwhelming for brands, especially those with small teams, to know which behaviors to optimize for for the highest gains in profitability.
The good news? Revenue performance all comes down to data. Pattern was built on a data science approach to ecommerce success. We find the patterns that drive profitability, then apply them to boost our brand partners’ revenue on ecommerce channels.
And a key pattern we follow for all brands on digital marketplaces is the ecommerce equation: revenue = traffic x conversions x price x availability. As brands zero in on these four pieces of the equation, they can simplify and focus their efforts to reach truly profitable ecommerce growth.
The first part of the equation is traffic—you need to get people to see your listings if you want to generate sales. There are two ways to drive traffic to your products: through organic search and paid search. Striking the right balance between both for your brands is crucial to driving enough of the right traffic to your products, ultimately increasing your ecommerce revenue.
Knowing this, Pattern provides the resources and technology needed to drive traffic to your product listings. Our brand management team, advertising specialists, and SEO technicians work in harmony to create a unified strategy to boost your brand’s organic profile and balance that with a paid advertising approach that works for your brand and listings.
Using this method, we took Feetures socks from ranking on longer-tail terms like “no show athletic socks black” to driving traffic on parent keywords like “no show socks.”
Getting customers to your product listing is only half the battle. Once on your listing, you need customers to convert. Conversion is key to the ecommerce equation because it leads to real product purchases and revenue. Traffic without conversion leads to more time and ad spend without the ROI.
Optimizing your images, product description, bulleted details, customer reviews, and buy box performance is key to successful conversion. If you’re going to spend time and effort driving traffic, you should make sure customers can easily and clearly find what they’re looking for when they arrive at your listing.
While your imagery and descriptions are important, you also need to build customer trust to drive conversions. Studies show that your customer service efforts matter too—84% of people trust online reviews as much as friends, making strong reviews an important factor of conversion on marketplaces.
The good news is as you provide a quality product and a great marketplace experience, you’ll build brand equity, increasing your customer loyalty. Then, as your reputation, reviews, and traffic grow positively, marketplace algorithms will recognize your popularity and improve your rank accordingly. Rank drives both traffic and conversions, helping you to optimize your performance further. As your brand equity grows, your conversions will continue to grow with it.
While setting a strategic price is an important step in your ecommerce strategy, it takes more than that to truly control your price on marketplaces.
Without proper control and with wide distribution, your product could end up in the hands of disjointed sellers who lower your marketplace price to sell their inventory and make quick profits. With one seller lowering price online, other authorized sellers and retail partners are forced to lower their price to compete, creating price erosion and sending your brand down the profitability death spiral.
This Death Spiral damages brand equity, hurts conversions, and can lead to Buy Box Suppression on Amazon, hindering traffic as well. And as prices get lower and lower, your profit margin withers away, decreasing your overall revenue.
Using our data-driven insights and Pattern’s eControl partner Vorys, we help brands implement narrow distribution, identify and take-down unauthorized sellers, eliminate price erosion, and control their price online. Focusing on price control, Pattern helped LifeSeasons, a premium supplement company, take back 91% control of the Buy Box on Amazon.
The last piece of the ecommerce equation is availability. It makes sense to think of availability as a contributing factor in conversion, but we felt that it’s important enough to call out on its own—you can fully optimize your traffic, conversion, and price, but without availability, you can’t grow revenue for your brand.
A lack of availability leads to stock outs, losing conversions to competitors, losing possession of the buy box, poor customer reviews, a decrease in traffic…the list goes on. The best-performing brands on ecommerce digital marketplaces optimize their availability with high-end technology, optimize their cash on hand, and inventory time on hand to keep the ecommerce equation powered and optimized in their favor.
Pattern is committed to solving the ecommerce equation. We partner with brands to provide the expertise, resources, and technology needed to drive traffic, create content that converts, protect price, maintain availability, and ultimately accelerate ecommerce revenue and profitable growth.
Interested in improving the results of your ecommerce equation? Schedule a call.