- “At the end of the day, a manufacturer needs to differentiate on product, not on channel.”– Brian [12:47]
- “Amazon is a very viable channel for manufacturers… they need to be there in a way that brings their differentiation alive.”– Brian [14:05]
- “Your business is going to become harder and harder if you’re a small seller on Amazon, you got an exit opportunity, take it.”– Brian [16:03]
How to Approach Selling on Amazon in 2021
How are you approaching your selling on Amazon strategy? Have you diversified your channels or are you solely relying on Amazon? Diversifying your channels as a business is very important instead of solely depending on Amazon. It is also important to first focus on differentiating the product before diversifying the channels.
In this episode of the Page One Podcast, Luke Peters interviews Brian Beck, eCommerce expert advisor and author of the Billion Dollar B2B Ecommerce book. He has 20+ years of experience in eCommerce and specializes in creating eCommerce strategies worth hundreds of millions to clients.
Listen in to learn the importance of directing outside traffic to your Amazon site rather than your website at the beginning of your marketing campaign. You will also learn why you need to first differentiate your product rather than selling channels.
- How to succeed by expanding your business to multiple channels and not just rely on Amazon.
- How to increase your visibility on your Amazon site by directing traffic from outside Amazon.
- How Amazon is working to get rid of fake reviews’ sites that negatively affect businesses.
- [1:14] Brian’s background in the eCommerce sector for the last 22 years.
- [2:40] How they help businesses grow with Amazon at Enceiba.
- [4:31] How they help well-established brands navigate Amazon fit into their overall picture.
- [7:26] Why most businesses are shifting to 3P selling on Amazon over 1P.
- [10:42] The importance of expanding your retail and distribution channels without solely relying on Amazon.
- [17:47] How to build your positive reviews using Amazon tools and work to remove the bad ones.
- [24:20] The advantages of directing traffic to your Amazon site to kickstart your marketing campaign.
- [29:15] The different software tools that Enceiba has built to help clients navigate Amazon.
- [34:12] Brian narrates how they helped a certain company transform their Amazon image for the better.
Luke Peters: Thanks for joining us on the Page 1 Podcast. I’m your host, Luke Peters, CEO of NewAir Appliances, and in this episode we’re honored to have Brian Beck back again to discuss all things Amazon. We’re going to talk about how to improve your product reviews, how to improve your product road map ideas, other strategies with Amazon, and then we’re even going to hear a specific success story with all the sales growth numbers and probably make us all jealous that we weren’t growing faster on our Amazon account. Before we get started with Brian, though, just quick announcement. You guys have heard this before. If there are any vacation homeowners out there and you really want to help a good cause, check out vetcation.org. What we’re doing is we’re matching up veterans and veteran families who really are in need of a family vacation. We match them up with your vacation home. It’s an awesome thing. I’ve been doing it with my own place, and you won’t regret that you got started there. Again, check it out, vetcation.org. Or you can just contact me and I can share more of the details about it. Awesome. Brian, welcome to the Page 1 Podcast. You were on previously, so thanks again for coming back. Why don’t you just start with a quick introduction?
Brian Beck: Yeah, hey thanks, Luke. I’m thrilled to be here, and that sounds like a cool vacation home thing, by the way.
Luke Peters: Well, thanks.
Brian Beck: Yeah, no worries. Yeah, no. Great to be back, Luke. Thanks for having me. Brian Beck’s my name. Just by the way of brief introduction, I’ve been in the e-comm field for, oh boy, 22 years. This makes me old. Started 1999. Crazy. Most of my career, Luke, was as an operator of businesses. I was the vice president of e-commerce in several companies. Harbor Freight Tools you might know of-
Luke Peters: Oh, yeah.
Brian Beck: … Pacific Sunwear, California, couple of others. I was on the consumer side for a long time, Luke, and in the last few years I’ve been very focused on the companies that are in the B2B segment, helping them to digitally transform and enable e-commerce for their business. I’m the author of a book called Billion Dollar B2B Ecommerce, which is a playbook for manufacturers and distributors in the B2B space. I’m also a managing partner with a company called Enceiba. At Enceiba we enable companies to sell… particularly manufacturers, branded manufacturers… to sell their products on Amazon successfully and capitalize on everything Amazon is doing. That’s me, Luke.
Luke Peters: Awesome. Good introduction, Brian, and I know you work with smaller clients, bigger clients. I think up over a billion dollars. Give us the basic footprint of the company and team members so everybody has… and we’re talking about Enceiba here, right?
Brian Beck: Yeah, talking about Enceiba. Yeah, that’s right. By the way, Enceiba, the name… people always ask me this question, where does it come from? It comes from the ceiba tree… C-E-I-B-A… which is the tallest tree in the Amazon rainforest, right?
Luke Peters: Oh, wow.
Brian Beck: We help our clients stand out in the rainforest. That’s our goal.
Luke Peters: Cool.
Brian Beck: Our footprint, we’re over 20 people now. Everyone is based here in the US, across the United States. Our headquarters is in California currently, although we are one of those companies moving to Arizona [crosstalk 00:03:17]
Luke Peters: Oh, nice.
Brian Beck: Yeah, yeah. Just for a bunch of reasons. Yeah, we’re in the process of doing that. We have folks… today everyone is working remotely, but we have full facilities and we do everything from the content management on Amazon to the advertising management to 1P to 3P shifts, and really a whole lot of things, helping companies to get into Amazon and build their business, so I’m excited to share some case studies with you today as well.
Luke Peters: That is cool, and of course, read between the lines on the move. I’ve been to Arizona quite a bit, though. Are you moving to the Scottsdale area?
Brian Beck: That’s right.
Luke Peters: Yeah, it’s beautiful out there. It’s beautiful. People who don’t know the area, it’s really pretty except for about two or three months of the year. But other than that…
Brian Beck: Why they invented air conditioning.
Luke Peters: That’s true. And we well them, by the way, at NewAir.
Brian Beck: There you go.
Luke Peters: That’s great. And tell me a little bit, when Enceiba works with clients, you’ve got about 20 team members. You guys are experts based in the US, all the team members here. Are you guys actually running the whole Amazon business for your clients? Are you interacting with, say, their Amazon account manager and helping them run it better? How does that look?
Brian Beck: Yeah, great question. Our clients… and I can give you some feeling for this… a lot of them are mid-size, some very large businesses that are… These companies are, a lot of them have products that are well-established in their field and they have brands. They’d be looking to introduce new products into the market through Amazon. But what we do is, we go in and we help them to number one, gain control of Amazon. What happens with a lot of these companies, Luke, is if they haven’t proactively controlled Amazon, Amazon will control them. What I mean by that is, the companies will… resellers or other folks will come in and sell their products. Amazon has become so prominent that product manufacturers really want to make sure they understand what’s happening. Amazon has become a search engine. We’re running the program for these companies, really every aspect of it. We’re helping them almost as an outsourced Amazon department, and we always start with a strategy. What’s the right approach to Amazon for a brand, because there’s different ways to sell on Amazon, there’s different tools you can use. There’s actually multiple approaches you can use to maximize your Amazon presence. You’ve got first-party or vendor central selling. You’ve got third-party or seller-central selling. You can authorize resellers on your product. You can partner with a couple of your retailers or distributors or dealers to sell on Amazon, if you’re worried about channel conflict. We help companies think about all those things. And a lot of our clients, they’ve been in business for 100 or 200 years in some cases. They’re well-established brands in their market, and they sell through a lot of other channel channels, too. They sell through retailers, Home Depot and Lowe’s and big box retailer. They have their own e-commerce. They’re thinking about how Amazon fits into the overall picture, and we help them get through that. Does that make sense?
Luke Peters: It makes total sense, and I know what I’m going to ask you. It’s kind of a loaded question. We can get in more of the detail later because I know there’s a lot of reasons to go 3P or 1P, but right now, off the top of your head, do you know the percentage of your clients that are selling third-party vers first-party, and what is the trend overall? I know there’s a lot of reasons why to do one vers the other, but is there just an overarching reason? Because I see more people going to third-party, Brian. That’s why I’m asking. Even our competitors, and our stuff is big. It’s a pain in the butt to do third-party, just because of the shipping requirements and costs, and it can’t even go FBA. You’ve got to have it distributed 3PL. Just curious what you have and where you’re seeing the market going.
Brian Beck: Well, that’s a great question. Amazon itself is… the trend within Amazon itself is to shift companies over toward 3P. In fact, Bezos talks about it on earnings releases, how much third-party is doing better than first-party in terms of its volumes of things. Amazon itself has, within Amazon there’s a trend and a shift toward third-party. But even outside of Amazon, if you look at… and we do a lot of work with brands that are looking to either introduce hybrid programs, where they’ve sold 1P for many years, and they’ve run across some pain points, which we can go into if you want. And they’re looking at alternatives, and one of the key alternatives there is 3P. Luke, some of these folks… I was on the phone earlier this morning with a company that’s doing $20 million in Amazon 1P revenue right now. This is a big seller, a good-sized seller and a well-recognized brand in their category. Look, they want to move over to 3P because of a whole variety of reasons, and ultimately Amazon wants to keep these brands on their marketplace. Amazon is, to some degree, accommodating that shift, but brands are doing it because they want price control, they want to control the resale, they want to control inventory, they want to be able to quickly introduce new products into Amazon. Now, when you think about where does it not make sense, big bulky products. We work with a very large, $7 billion buildings product manufacturer, Luke, and very well-known in their space, and these guys are enabling distributors on the channel to actually do the fulfillment and actually capture the sale while they control the content, and that’s important because they want to make sure they present the right content on Amazon, while they’re not set up to actually handle the distribution of the product. They’re shipping pallets of roofing material. [crosstalk 00:09:39]
Luke Peters: Yeah, that’s a big one.
Brian Beck: You can’t put that in FBA, right?
Luke Peters: Yep.
Brian Beck: But in general, to answer your question, 20% of our clients have 1P programs, and 80% of them either blended or 3P only programs. In some cases we have fully shifted two, three, $4 million programs from 1P to 3P, and that’s a trend we see happening more and more.
Luke Peters: Yeah, and I’ve seen the same thing. And it’s going to be really interesting now with inflation potentially starting. Now people have pricing power in 3P, so there could be some benefits there as well. Why don’t we move on to another interesting thing? Just in the whole Amazon ecosystem, there’s all these roll-ups happening, with companies like Thrasio. I know you’re helping brands that are really focused on growing their companies, and they’re larger companies, and a lot of these roll-ups are smaller maybe products or small FBA sellers or midsize. But still, what are your thoughts on it, and maybe how are you advising clients on this, if at all?
Brian Beck: Right. It’s a really interesting trend, Luke. In fact, I know one of the founders of one of the roll-up companies is a colleague of mine, so I’m pretty close in terms of what is happening in that market. I mean, look, at the end of the day, at risk of offending my friend, I think this is financial engineering a little bit. And what I mean by that is, you look at these companies like Thrasio, and they’re onto something, which is really interesting. These small sellers don’t have any real scale to their business… by small I mean they’re maybe doing a few million dollars in Amazon sales… and they reach a point where they can’t get any bigger. They run into operational challenges. There’s a need to professionalize the business, so they pick them up at two to three, 4X EBITDA… you know, EBITDA, earnings before interest, taxes, amortization. Thrasio buys these companies, and others like Thrasio, and then they put them into their model and they’re raising money at the 10X multiple. You take a business which they’re buying at two, three, four times EBITDA, and then you put it into a business that suddenly is valued at 10X EBITDA. They get an immediate return on investment, right? And then they professionalize the business. They bring in professional management for merchandising, marketing, operations, sourcing, product development. All that makes sense. But I don’t think this is sustainable. I think these businesses are overvalued, my opinion. I think that it’s very limited because you’re focusing on one channel, Amazon. There’s a lot of risk in focusing only on one channel, and if I look at our client base, these are companies that have been in many channels for many years. Some of them are newer companies that are still in multiple channels. I think, at the end of the day, a manufacturer needs to differentiate on product, not on channel. And I think where these businesses could do well is if Thrasio and others really expand their channel mix, get into other channels like retail, distribution, their own e-commerce, et cetera. Maybe they’re doing that, but end of the day, to me this is near-term financial engineering, and I think you’ll see a couple of these companies succeed, but only if they really pursue the multichannel strategy, and not just rely on Amazon. And this is coming from a guy who’s [crosstalk 00:13:22] Amazon all day long.
Luke Peters: I was going to say… yeah. I was going to say, it’s a very honest comment, but hey. That’s a true comment. I bet your biggest clients, who are diversified and selling to Home Depot or other channels, in-store, Wayfair, whatever. I mean, that’s part of their strategy, is to stay diversified. It’s a very honest but very true comment, though.
Brian Beck: Thanks. Yeah, no. That’s true. Look, at the end of the day, I believe… and this is in my book… product manufacturers need to double down on what they’re best at, and that is product. And what I mean is, that’s what differentiates them. It’s not the channel. The channel is an evolution of what’s happening. It’s becoming more digital. Amazon has grown because of that, and Amazon is a very viable channel for manufacturers. I think they need to be there, but they need to be there in a way that brings their differentiation to life. That’s why I’m more bearish on these roll-ups, because it’s not the product they’re focused on. They’re focused on the channel. I think it’s the wrong place to focus for a brand.
Luke Peters: I think it was a great quote, by the way, that product brands should focus on their products, not the channel. Commonsensical, but no, it’s to the point. Let me pull you back a little bit, though. About a minute or two previous, you said that you think these companies are overvalued. Do you mean the actual brand? Being rolled up at three or four EBITDA when you’re only a million or two or three million, and you’re just selling on Amazon, that that is too rich of a valuation for that type of a business?
Brian Beck: I’m less offended by that as I am by the valuation of the companies that are raising money at, because 10X EBITDA, when you’re really just tying a bunch of non-differentiated brands together, of products together, I think is an overvaluation. Of course, my friend is going to come back and kill me.
Luke Peters: Yeah.
Brian Beck: I’m not going to tell you who he is.
Luke Peters: Debt is free right now, so that’s how they get 10X.
Brian Beck: There you go. That’s right. That’s right. No, that’s a good point, it’s a good point.
Luke Peters: Yeah, that is super… very interesting, but how you say it is exactly how they’re doing it. You’re three or 4X if you’re three or four million, but if you’re a couple billion, well then you’re 10X or you’re even bigger than that, right? And so that’s scale that they add on to it.
Brian Beck: Yeah.
Luke Peters: Yeah. It’s super interesting and it will be interesting to see what happens here. It’s probably good for the smaller brands. Hey, there’s an opportunity for them to exit.
Brian Beck: Yeah, for sure. For sure. I think it’s great for the small brands. They should be selling their businesses. Look, you’re in a business. Right now you have an opportunity to exit. I don’t think that opportunity is going to be there forever. Your business is going to become harder and harder, if you’re a small seller on Amazon. You’ve got almost a billion products on Amazon. These niches are harder and harder to find. I think you’ve got an exit opportunity, take it.
Luke Peters: For sure. And it’s harder just… Well, you’re the expert, but just making a product with some of these brands and the cost of advertising and just getting glances and visits and… Cool. Well that is something for everybody to keep their eye on. I think Thrasio was new to me four months ago. Still, they’re huge, and there’s others out there, like you said, but not everybody has heard about these. Yeah, good. Brian, let’s move on to reviews. Reviews is something that plagues everybody in the sense that… I’ll kick this off by saying, here’s where I see reviews hurting. Number one, you can’t really contact… or at least I’d love to be educated on this… but it’s hard to contact the customers to try to rectify situations now. I think Amazon has made that harder.
Brian Beck: Yes.
Luke Peters: Number two is that there is just undoubtedly fake reviews, especially when companies will come in with a competitive product to one that’s already kicking butt on Amazon. All of a sudden, somehow magically all these negative reviews will show up maybe on your innovative product, and you’re like, “Wait a minute. These can’t be right.” And there’s really not a lot you can do about it. Again, hopefully I’m wrong on that point. Those are things to talk about, but beyond that, just basic review 101, how we can improve reviews. But why don’t we start with the more controversial topics, which were the first I brought up, like fake reviews and inability to contact customers. What are your thoughts on that?
Brian Beck: Yeah, yeah. Wish I had a silver bullet for you here, Luke. This is one of the most challenging issues in Amazon today, and Amazon is working to try to solve it in their own way. Not being able to contact customers, yes, that’s a recent development, and that does make it more difficult. Our approach on this is for our clients, is twofold. One is to be as proactive as you can be with generating your own product reviews, and using Amazon’s program to help you do that, your [inaudible 00:18:24] program, et cetera. And then also make sure wherever you can you’re soliciting positive reviews. I mean, look, at the end of the day, Amazon also gives you tools, as I’m sure you’re aware, to dispute reviews and things like that, if they are fraudulent. It’s overwhelming for Amazon itself, where there’s just so much of this activity happening, and they want to get a handle on it, but the intention is there. I think that you have to do everything you can within Amazon’s ecosystem to work against the reviews that you know are fake. I think you’ve got to do the best you can, use every tool to solicit reviews that are positive. But quite frankly, my point of view is, we will get there… Amazon will get closer to being there over the next couple of years, but it’s going to take them a while. In the meantime, doing your best to solicit positive reviews is really all you can do in this ecosystem. I don’t have a magic bullet for this. We’ve been fortunate with our clients that by working through channels… and the other issue, of course, you didn’t raise is counterfeit products. Sometimes you get counterfeit products in your listing. There’s back-channel ways to solve that. In our case, we go to Amazon… we have a lot of relationships with Amazon… we’re going and working those relationships when these things pop up for our clients, and doing our best to have them resolved behind the scenes, but even with advocates inside Amazon it can be a challenge, because Amazon has a lot of teams, a lot of people, almost a million employees. For your audience, Luke, I wish I could say, “Here’s one thing you can do that will clean it up completely,” but there isn’t a way to do it. It’s a little bit of Whack-a-Mole, where you have to consistently look to build your review content using every tool Amazon gives you, and work within Amazon’s tools to try to remove negative reviews. And what are you seeing for your business, Luke? Has this become an issue for you?
Luke Peters: I think it’s an issue for everybody. I’ve seen a lot of it where… Yeah, because if you compare reviews on Amazon vers other platforms, a lot times they’re lower on Amazon. And you could say, well, I don’t know, Amazon customers are magically more picky. I don’t know. I think every product is going to get negative reviews, but I’m talking about a half star drop compared to other platforms is pretty common to see. And then also the way that the negative reviews are sometimes floated and voted to the top is bothersome. You’re like, “How did it get there? And how did it magically get all these votes?”
Brian Beck: Yeah.
Luke Peters: And the amount of detail that’s sometimes put into the reviews, a little bit skeptical. And they’re hard. You try to dispute them, but like you said, it’s going to a black hole. Yeah, we’re seeing that. And the other thing is, to your point on Vine, we definitely are investing in it. We haven’t done it with every SKU, but I don’t know. Maybe that should become part of a typical product SKU launch. Have you guys gone that far? Because it can get expensive, but it’s a great way to seed your product with reviews.
Brian Beck: Yeah, of course it depends on your price point of your product. It becomes easier or harder. But yes, I think absolutely, we are recommending, at least for products that we’re very bullish about, meaning when we look at… Our typical client has, they might have 200 to, in some cases two, 3000 SKUs they’re bringing into Amazon. We’re looking at the top tier of those, the ones that sell well through other channels, and we’re recommending Vine for those if they’re new to Amazon. And we generally do make it a part at least of the top-tier product, of the strategy to go to market. And yet, it can get expensive, but at the end of the day, as you know, reviews are gold and you want to generate as many as you can. The other things that’s interesting, Luke, I’m seeing is Amazon… we open up a lot of Amazon accounts for our clients as we roll new companies into Amazon, and they’re becoming very strict about the opening process, meaning that they’re now requiring utility bills from people who want to open new accounts. We had one client who shall remain unnamed. We couldn’t get an account open. Why? And they’re a subsidiary of a large global company. Because they couldn’t verify their address. They’re based in China. They couldn’t verify their address in a way that satisfied Amazon. We could not get an Amazon account open. Amazon is making it very… they’re trying to do what they can to eliminate bad actors or folks who may be doing some of that negative review stuff. It’s a big challenge for Amazon, quite frankly, because it challenges their overall credibility in the market, I believe, as these negative reviews become more and more prominent.
Luke Peters: Yep. Yeah. I think that was a good bit of advice, though, for everybody listening. Over here we have formulated a product launch strategy, and it’s just good for the marketing team, right? Everybody is on board. They know exactly what to do, and for the most part, for top products, we’ll use Vine. But yeah, it’s so hard to not use it when you frame it in the reference of how important reviews are in the first place. If you don’t use it, you’re stuck with little or no reviews, and then you’re just having to sell and wait. It’s kind of becoming part of the marketing cost, I guess, on launch.
Brian Beck: Just to add a little bit on to that, Luke, the other thing we’re seeing some of our clients do… Some of your listeners here, if you have multiple channels… say for example you have your own e-commerce, and then you’re also launching on Amazon… one of the things we’re seeing our clients do is to, and we’re encouraging them to test, is to actually send digital marketing traffic into Amazon from outside of Amazon, so from Facebook, Instagram, Google, email. And it sounds crazy when we propose that to a client. “Well, what the heck would I do that for? I don’t make as much money as I do on my own site.” Well, that’s true. However, if you kickstart Amazon… you have to think about Amazon as a search engine, and you need to optimize your search positioning in Amazon to drive revenue. Well, if you’re kickstarting your revenue and your volumes by sending traffic into Amazon, number one, that traffic is going to convert better than it does on your own site. Amazon’s conversion rate is, on average, is 35%. For Prime users, it’s 74%. It’s crazy. You’re more likely to convert, traffic is going to generate sales for you at a good return on investment most likely, and Amazon gives you tools to track it. And you don’t have to do that forever. You do it to kickstart your marketing, kickstart your position on Amazon, then you can back off of it. You do it for three or six months. It’s just a trend I’m seeing, Luke. You think about launch strategies that our clients are employing to really raise their visibility on keywords on Amazon. Does that make sense?
Luke Peters: Oh, yeah. And let me dig into that a little bit. That’s super interesting. Obviously we have a choice to use Amazon’s own platform, AMS or whatever they’re calling it nowadays. Would one use a Facebook or Google or any of the social channels and drive traffic because it’s less expensive in their category than buying traffic on AMS? I mean, is there a particular reason? Or is it even better because it’s a signal from outside coming in, that might help your rating better than using Amazon’s own marketing platform?
Brian Beck: We don’t see it as a cost equation so much as a incremental traffic equation. Really what you’re trying to do is lift your visibility. There’s a lot of things that go into Amazon’s algorithms. Wish I could tell you what those all are, but just like Google they don’t reveal these things.
Luke Peters: Yeah.
Brian Beck: But we do know that things like the number of reviews, the velocity of the product, the amount of attention it’s getting, all those things… your own ratings as a seller… all those things go into your search visibility on Amazon, so when you think about the world of traffic, we’ve got a lot of traffic on Amazon today, but you have traffic that’s not on Amazon today, and a lot of that is going to Google, or if you have your own captive audience on email or through other channels… Facebook, Instagram… that traffic is there and not on Amazon. It’s an incremental way, is the way we look at it, to drive more traffic for a period of time, and to boost your overall presence. Amazon is an ecosystem, in some ways a closed ecosystem, and all these factors work together to give you more visibility. When you’re just using AMS or Amazon Advertising, you’re limiting yourself to Amazon’s traffic itself, which is not… by the way, is a lot of traffic.
Luke Peters: There’s plenty of it.
Brian Beck: Right. But this is an incremental… and again, you were raising that marketing plan question… an incremental way for you to… a tool in your quiver or an arrow in your quiver to fire upon when you’re first launching a new product in Amazon. We just view it as incremental. Does that make sense?
Luke Peters: Yeah, yeah, yeah. I think it’s a great idea. It’s a great option for people to have, especially if they’ve got that good digital marketing acumen or good partner that they’re working with for their own direct-to-consumer. A lot of companies won’t even have a chance at that, so I guess it’s nice because it’s maybe a competitive advantage, because a lot of brands still are not selling direct-to-consumer, so they don’t even have that real ability, they don’t have a partner who’s managing ad spend for them already, so that’s actually kind of another potential advantage for those that do have that ability to be able to do that. Cool. Let’s quickly go over software. Brands that are doing this on their own… maybe they’ve got an account manager, they’re running their Amazon business, they’re using the data that Amazon gives, which is great insight, depending on the platform. I’m more familiar on the vendor side. What should they be using third-party? What do you like? Do you like Jungle Scout or Helium 10 or any of these other products?
Brian Beck: Yeah, great question. In our business we’ve both licensed and we’ve built or own tools to optimize Amazon to look for trends, competitive research, things like that. We’ve used, I think, every tool in the world in-
Luke Peters: I bet.
Brian Beck: … the course of our business. Yeah. And what I do a lot of is the strategy, right? I’m looking at and helping companies research what’s the size of the prize that [inaudible 00:29:43] Amazon and open up a channel there, and what are the keywords and what are the volumes that competitors are doing. In the course of doing that and discovering opportunities, we use a couple different tools. I’d say Helium 10 is one that we use regularly. I like that tool. It has a lot of capabilities. We use it quite a bit for understanding the landscape, understanding estimated revenue, volumes of products, looking at relative competitive position, things like that. We find Helium 10 to be useful. Their Extension is quite useful, that shows… Chrome Extension… it will show you revenue on a specific product, things like that. We’ve worked with and used a number of tools around search, and that’s one of the hardest things to estimate, is the amount of search keywords you get on Amazon. I don’t know of any tools that really do it very accurately, to be honest. If you have some ideas, I’d love to know.
Luke Peters: No. [crosstalk 00:30:46] I’ll just use Google and guess, right? You can kind of use those accounts. I know it’s not going to be the same. There’s a different cohort on Amazon, but you’re absolutely right. You have to do some guesstimate, I guess.
Brian Beck: Yeah. We have some tools we’ve used. We’ve done some internal things. Ultimately, we know that the search volume on Amazon is 3X what it is on Google for products, right? We have a good sense. You can triangulate it to some numbers, and we use some tools that give us some directional estimates, but it’s funny, Luke. I talk to Amazon all the time, several times a week, and sometimes we’ll ask the folks, because they can see their search terms, search volumes. No one else can. And I’ll say, “Hey, I’m seeing this searched on this term.” And they’re like, “Yeah, it’s totally off.”
Luke Peters: Oh, that’s funny.
Brian Beck: “Yeah, you’re totally wrong. It’s nowhere close to that.” Occasionally I get real numbers and I go, “Wow, yeah.” And the thing is, there’s no real correlation, right? Anyway, I think the search volume piece is a little more challenging. There’s a couple of tools that do it, and I think you get directional data, but you have to be careful with it.
Luke Peters: Yeah, yeah. And really, to get the most out of your ad spend, you’ve really got to work with a partner, from my experience. I mean, once you’re spending a certain amount of dollars per month, it’s just totally month working with somebody who’s an expert at it, and they’ve got their own tools. They actually kind of have their own scale, better than what a brand trying to do it themselves would be able to get to, unless the brand itself then got to a certain higher, higher level and then was able to hire in the right team. I don’t know, Brian, would you kind of agree with that?
Brian Beck: I do. Look, at the end of the day, Amazon has become just like Google. I’ve managed Google AdWords campaigns since 1999, whenever they introduced AdWords. It’s a very similar model these days, both from a paid search, and even from an SEO or search engine optimization natural search standpoint, this is a data-intensive business, optimizing for search on Amazon. You need highly technical, data-oriented people and software tools to help you if you’re going to do it at any scale at all. Yeah, it’s a skill set that doesn’t typically reside at, at least the companies we work with. Going outside for that skill set is a good idea. I think probably you could hire it in-house if your program gets big enough, but there’s a lot of folks out there that’ll do it for you with the right tools and technologies, including our company, Enceiba, and that’s one thing that I think a lot of companies will continue to outsource for a long time, just because it’s a very technical skill set.
Luke Peters: Yeah, and it’s really, really hard to hire the highest level of talent and expertise.
Brian Beck: Yeah, for sure.
Luke Peters: A lot of them are already working for agencies, they went and started their own agency. Since it’s a newer business, it’s really hard to find those individuals. Yeah. All good angles there. Brian, why don’t we talk about a story or two here? People always love hearing actual numbers, so I thought it would be kind of fun to go start to finish on a story of a brand that you work with and where they started and how you helped them, what you had to do…
Brian Beck: Yeah.
Luke Peters: Let’s walk through that.
Brian Beck: Yeah, sure. Well, I’ll tell the story of a brand we started working with, gosh, three and a half, four years ago. This company is a high-end… that’s important, because Amazon traditionally has not been known for high-end product, right? A high-end producer of planning books, printed products, stuff that’s used by teachers and busy moms. It’s oriented towards a female consumer, about an $80 million company, well-known brand in their space. Only about 15, maybe 20 years old, and very successful. The woman who founded it was trying to solve some problems for her customer. It was a balance between having something beautiful and inspiring that they could plan their day and life with, with just the organizational aspects of running a family and running a classroom and those sorts of things. This company had its own e-commerce, and they had been selling to Amazon 1P for some time, for a couple of years. Had a lot of challenges 1P. We started with them, as I mentioned, about three and a half years ago, and they didn’t have any control over Amazon. They had a bunch of companies they didn’t know selling their products. They had a 1P business and Amazon kept dropping their retail price and causing channel conflicts, so they were in a world of hurt. Amazon, they get calls from their retailers saying, “This product is being sold below my cost on Amazon. How is this happening?” They were in pain, and this was a company that knew, though, that Amazon was a real channel for them. They just didn’t know how to control it. They didn’t know how to grow it, control it or anything. They didn’t have any internal people really doing it. [crosstalk 00:36:14] Yeah, go ahead.
Luke Peters: And Brian, at that point… this is right before they came to you. They are selling to other channels. Are they selling maybe in-store and online to these other channels? And what portion of their business was Amazon at that point in time?
Brian Beck: Oh, gosh. It was $80 million business. It was less… it was a little on 1%.
Luke Peters: Oh, just a little tiny percentage causing a huge problem.
Brian Beck: Yeah, exactly. Oh, it was about a million dollars, something like that. And the problem was, for them, was that Amazon was extraordinarily visible, meaning that when a new retailer would come to them and say, “Hey, I want to buy your product wholesale and put it in my stores,” they would go on Amazon and say, “Oh, well, you just quoted me… I’m going to buy this from you for this, and I see Amazon has got like a 10% markup here. I can’t make any money on your product. I’m not going to buy your product.” So they were having trouble getting new retailers to open doors for them. They had existing retailers, they sold to retail… and they also sold on their e-commerce site, by the way, still do… and Amazon was just a pain point for them. It was a small percentage of their business that was causing them more pain than it was benefit. They were on the verge of shutting it down completely or figuring out… They wanted to figure out how to capture it, because they knew, they could see competitors on the channel and they knew they were doing volumes on Amazon, just didn’t know how they were doing it, what was involved. That’s where we were when we started with them, and I can keep going, Luke-
Luke Peters: Yeah, no.
Brian Beck: [crosstalk 00:37:53] tell the rest of the story?
Luke Peters: Yeah, no, no. I’d love to hear it. This is a common thing. Everybody’s heard this who’s sold on Amazon 1P. Everybody. I guarantee everybody’s heard this. If they’re selling to Amazon and if they’re selling to someone else, they’ve always gotten those phone calls from the other buyers saying, “Guys, you must be giving Amazon a better price,” or something like that. And then your reply is, “No, Amazon is just losing money on it.” And then it’s back and forth and it’s a big problem. Okay, so about a million dollars, just a very small account. And then, tell us what you guys did. It sounds like you moved them to Seller Central. Beyond that, what was the strategy and how was the growth?
Brian Beck: Yeah. There were a whole slew of things happening there. Number one, we helped them with a strategy, right? We said, “Okay, let’s figure out what’s going on here.” Who are these resellers? Turns out there were dozens of them. They didn’t know who most of them were. And how do you gain control of it? And what is the opportunity if they did? We started by looking first at the opportunity. We determined that there was a sizeable amount of volume they could potentially capture on the channel if they gained control of it. We identified the resellers and again, a lot of these were very, very small opportunistic folks, which is fine, but ultimately they wanted to control their brand and their price, and Amazon itself was the chief violator of their MAP, or minimum advertised price policy. They were the one causing the challenges. We first helped them map it out. Then we engaged to execute a program, and the program was, we’re going to shift them from 1P to 3P. We’re going to help them gain control of the channel with the resale policy, so they put in place an internet retail policy and distribution agreement with their channels. And we helped them… also, their content was pretty awful on Amazon. This is a high-end brand. Luke, these guys are charging $40, $50 for planners and notebooks and things. You can buy a notebook on Amazon for two dollars. This is a differentiated product, right? It’s something very unique and appeals to their customer, and that product story and brand story needs to be represented, so we built out enhanced brand content, storefront. We took their content up very substantially in terms of benefits, descriptions, many photos, videos, and really just enhanced the whole appearance. We made sure everything was Prime-eligible using FBA. We shifted them from 1P to 3P. We launched them now in four international markets on Amazon. They just have had tremendous success. They’re not only getting now significantly more revenue… this year will do about seven million in revenue.
Luke Peters: That’s a big jump.
Brian Beck: [crosstalk 00:40:51] three and a half years. Yeah, from one million to seven, pretty good. And two and a half times operating profit, right?
Luke Peters: Wow.
Brian Beck: That’s also critical. When you think about it, take a $40 planning book, right? They were selling that to Amazon for 20 bucks wholesale price. Today they’re getting the full retail, of course less the commission Amazon takes, but they’re getting significantly higher profit. I’m talking about net net net.
Luke Peters: Yep.
Brian Beck: After advertising, after resourcing, after product cost, after fulfillment cost, FBA and cost of goods, two and a half time more profit at seven times the revenue. They’re thrilled. That’s, I think, one of the best stories of success, but it took getting control of the channel and making some moves to change the selling strategy.
Luke Peters: Well, that’s a good story to end on, and I’m sure it also probably helped their other channels, because they were able to hold their price with their strategy of FBA and on the seller side, but get a lot more exposure. Everybody obviously… like you noted a couple times, Amazon is a huge marketing engine. Yeah, I’m sure they got benefits all the way around for the company. And then just brand image. Like you said, you guys improved the product detail. Yeah. Cool story, Brian. Really appreciate you coming on again. How can listeners learn more about you? And pitch that book again.
Brian Beck: Yeah, sure, Luke. Thank you. Right. Two things to mention there. One, the book. Yeah, absolutely. It’s called Billion Dollar B2B Ecommerce. You put a dotcom at the end to go to the website. And there you can find out more information, click through for a link to go to Amazon to buy it, of course. By the way, Luke, these are printed on demand at Amazon.
Luke Peters: Oh, that is cool.
Brian Beck: [crosstalk 00:42:43] It’s incredible.
Luke Peters: That is cool.
Brian Beck: This is a 400-page book. You order it today, you’ll have it in two to three days, and it’s printed for you. It’s incredible.
Luke Peters: Yeah, that is.
Brian Beck: All over the world, not even in just the US. UK, Asia, all over the world you can buy the book. It’s printed on demand. It’s amazing. That’s one way to reach me. The other way is to reach out to me via email. My Enceiba email is Brian, B-R-I-A-N at Enceiba, E-N-C-E-I-B as in boy-A dotcom. Brian@enceiba.com. Send me a note. I’d love to hear from you, whether it’s about your e-commerce strategy in general or Amazon. Love to talk to you.
Luke Peters: Well, thanks again, Brian. Of course, you guys can find Brian on LinkedIn as well, and we’ll have all this information in the show notes. And also want to thank everybody for listening today. Hope you guys will be back for the next episode.
Brian Beck: Thanks, Luke.
- Website for the book: https://www.billiondollarb2becommerce.com/
- LinkedIn: https://www.linkedin.com/in/ecommerceexpertbeck/
- Email: firstname.lastname@example.org
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