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 20, 2022

Global Ecommerce Weekly News: 20th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to raise pay and add extra work benefits for delivery drivers Following the rise in fuel prices and protests by Amazon workers, the ecommerce giant is raising its delivery drivers’ pay and adding more work benefits. Amazon has mentioned that it will be investing $450 million into rate increases along with an education program and a Delivery Service Partners program. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/amazon-to-raise-delivery-drivers-pay-and-add-more-work-benefits/) Amazon announces it will give away shipping software to merchants at no cost Amazon has recently announced that it will be giving ecommerce merchants free software to manage shopper orders on and off its platform as it extends its reach. The ecommerce giant will be ending monthly costs for sellers using Veeqo, a shipping software it recently acquired and instead offer to them a new, free shipping software. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/amazon-to-give-away-shipping-software-to-merchants/) --- Other Marketplace News --- Walmart unveils new virtual fitting rooms In an effort to drive clothing sales, Walmart has launched virtual fitting rooms while competitors reduce spending amid the cost of living crisis. The virtual try-on tool can be used by Walmart customers to virtually measure the clothing items and see how the products would look on them. Shoppers will now be able to see how over 270,000 clothing items on Walmart’s ecommerce site would look on their bodies. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/walmart-launches-virtual-fitting-rooms-to-drive-clothing-sales/?utmsource=Retail+Gazette+Subscribers&utmcampaign=2da7f0f8f8-EMAILCAMPAIGN202209150742&utmmedium=email&utmterm=0d23e2768b6-2da7f0f8f8-61040615) THG slashes sales and profit expectations The Hut Group has slashed its forecasts for 2022 as rising interest rates, inflation and energy costs take a toll on consumers. Previously, THG estimated its sales growth to be between 22-25% but after a recent evaluation, has lowered this prediction to between 10-15%. Initial predictions did not take into account the negative effects of ceasing sales in Russia and Ukraine along with the impact that the cost-of-living has had on consumer spending. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/thg-slashes-forecast-as-cost-of-living-crisis-hits-consumers-wallets/) --- Other Ecommerce News --- DHL and Post Office team up to provide click and collect services Through a partnership between delivery company, DHL and Post Office, a new click and collect service is to be tested at Post Offices before rolling out to over 1000 branches across the UK. Online shoppers will now have the option of choosing their local Post Office as a collection point, and DHL will fulfil the delivery aspect, opening up networks for both parties. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/post-office-partners-with-dhl-express-to-provide-click-and-collect-services/) US consumer watchdog plans to further regulate the BNPL sector The US Consumer Financial Protection Bureau (CFPB) has raised concerns regarding the collection of consumer data and the fast-growing nature of the BNPL sector, which includes companies such as Affirm and Klarna. The CFPB is worried that these companies could be negatively impacting consumers’ financial health and aims to put better regulations in place to ensure consumers are safe and empowered. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/us-consumer-watchdog-to-start-regulating-bnpl-sector/) Japanese ecommerce market estimated to grow by 6.9% in 2022 The ecommerce market in Japan, largely dominated by domestic online retailers including Reakuten and Mercari, is set to reach $194.3 billion USD in 2022, after seeing an annual compound growth rate of 5.2% between 2018 and 2021. This makes Japan the fourth leading ecommerce market globally, following China, the US, and the UK. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/13/japan-ecommerce-market-to-grow-by-6-9-in-2022/) Ecommerce brands are spending more on TikTok ads TikTok may soon be surpassing Facebook and Google as the most lucrative advertising channel, with ecommerce brands spending 60% more on TikTok ads in Q2. Facebook is still ahead as the top choice for ecommerce advertisers but only grew by 5.6% from Q1, while Google grew 20.5% in Q2, and Snap declined 10.8% in Q2. [Read more on SearchEngineLand](https://searchengineland.com/ecommerce-brands-spent-60-more-on-tiktok-ads-in-q2-387876)
Sept 20, 2022

4 Ecommerce 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.

Sept 15, 2022

The 3 Tmall Metrics That Every Brand Needs to Know

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.

What is Tmall’s Detailed Seller Rating (DSR)?

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.

Why DSR Determines Success on Tmall

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.

DSR Score Elements

1. Service

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.

2. Delivery

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.

3. Content

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).

Expand Internationally With Pattern

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.