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.
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.
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 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.
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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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.
If you’re interested in expanding your brand internationally, you’re probably familiar with Tmall. Tmall is Asia-Pacific’s (APAC) largest marketplace, and indisputably the biggest ecommerce powerhouse in the world. It represents a huge opportunity for many brands, but entering the space is also a big challenge to take on.
At Pattern, we recommend brands looking to enter international markets should first focus on dialing in their domestic presence. Once you’re satisfied that your brand is well-represented and optimized locally, you’re ready to think about tackling new regions, like APAC, and launching on marketplaces like Tmall. Our top advice for entering Tmall is to understand and strategize around its three most important metrics: service, delivery, and content.
Service, delivery, and content ratings are the three elements that make up Tmall’s Detailed Seller Rating (DSR) score. Each component is scored on a scale of 1-5 that is displayed publicly on your brand’s Tmall flagship store page. This is meant to help consumers decide whether or not to purchase your products.
DSR scores are important because they’re highly influential in driving conversions—customers see DSRs as a way to quickly understand if a brand is trustworthy and worth buying from. They also matter quite a bit to Tmall itself—they monitor these scores and will take action to close flagship stores with low scores.
Let’s go over each element of the DSR score and some steps you’ll need to take to achieve high ratings.
Service is a huge ecommerce component in APAC marketplaces. In most other regions, product listings are static, and consumers use content and reviews to make a decision about what to purchase. On Tmall, consumers want to interact with your brand and test its validity before buying—each transaction takes at least one human interaction to convert.
So, to get a great service rating, you’ll need to have a large, established customer service team dedicated to Tmall sales that can offer real, human touchpoints and very fast response times. To get an idea of the speed your agents should be capable of producing, in our Tmall benchmarking exercise, 92.5% of brands’ customer service agents replied to queries via live chat within 30 seconds, 5% replied within one minute and the remaining 2.5% of brands took longer than a minute. So, look for a Trade Partner (TP) that has enough resources to compete with those numbers, support your sales, and maintain a good DSR score.
Another thing you’ll really want to focus on is a high-quality delivery experience for consumers. As in other regions around the world, Tmall consumers have high expectations for their delivery experience. In our Chinese consumer polling report that targeted consumers buying from Tmall Global, we found that 6% expected same-day delivery, 15% expected next-day delivery, and 46% expected 2-5 day delivery.They want to receive their products fast and they want the products to be undamaged and pristine upon arrival.
So, to achieve a high score for your delivery capabilities, we highly recommend partnering with a TP or ecommerce accelerator like Pattern (which serves as a TP) who has the ability to facilitate your distribution. Make sure your TP has the right infrastructure in place to support high-quality logistics experiences for all of your consumers—they should have an established, well-oiled delivery process in place and the capability to fluidly add you to their current fulfillment system.
As in every digital marketplace, content is a huge component of the decision-making process for consumers on Tmall—they can’t touch your product with their hands or see it in person before buying, so it’s important they’re empowered to make a good decision on whether or not to purchase based on the videos, images, and copy.
The goal is to make all of the content and relevant information on your flagship site easily-accessible—consumers should be able to visit your page and make a decision about whether or not to buy without navigating to a new site/page and taking their conversions with them. Images with text and extensive product details are a great way to do this, as well as making sure your service team can speak to all aspects of your product with any consumers (via text or chat).
As the world’s foremost brand partner for ecommerce acceleration, Pattern truly understands the significance of international expansion. With regional offices around the world, Pattern knows how to successfully launch and grow brands on Tmall and other marketplaces, with the data, insights, and marketplace intelligence to build the metrics that matter.
It’s important to have a fantastic brand presence, a knowledgeable guide, and a clear go-forward strategy for your best chance at success. With our in-country resources, expert teams, and extensive experience in growing brands around the globe, Pattern can help you get there.
Set up a call to get your international expansion strategy in motion.