Millions of new customers await you on marketplaces. Adding marketplaces to your multi-channel strategy means a bigger audience and possibly new, exciting geographies for your products. What exactly are “marketplaces?” For this article, I define marketplaces as a type of e-commerce site where product information is provided by multiple third parties, whereas transactions are processed by the marketplace operator. Examples of marketplaces around the world are Amazon, Ebay, FlipKart, and Alibaba. I will focus this particular article on Amazon only because it is the easiest to understand for the intended audience of domestic sports nutrition CPG brands.
For many sports nutrition CPG brands, the complicated marketplaces business of optimizing tens or hundreds of product listings, managing orders and overseeing speedy fulfillment can drain resources from big-picture strategy and channel expansion. This generally leaves the leadership and upper management frustrated and left to focus instead on more traditional specialty retail and traditional e-commerce sites. The frustration usually leaves huge opportunities for brand development and revenue on the table.
In their most recent earnings report, Amazon had revenues of almost $30B in 2016Q1 earnings, which was a 30% year over year growth. The business (and channel as a whole) has been growing at an extreme pace. If you have attended a recent Arnold Sports Festival or Mr. Olympia you probably saw Amazon as the title sponsor so it means they are “all-in” this this category. CPG sports nutrition brands can no longer turn their back on this behemoth. Below, I will go into some basic topics to help you “win” on the marketplaces channel.
Learn the Basics
- If selling third party on Amazon in the health/personal care product category you will pay a 15% seller fee to Amazon (this is likely much cheaper than the 25%+ you are giving to distribution or retail partners)
- You can sell directly to Amazon but your pricing strategy would be similar to a traditional e-commerce sites. There are some obvious benefits to this model but it would have to be considered by the brand as their payment terms are also usually extended to net-90. Here is a great chart below on the differences:
Benefits & Disadvantages Sell on Amazon Sell to Amazon Exposure Leverage 85 million unique monthly visitors to get more people to your online store. Same Amazon Brand Listing on the Marketplace allows sellers to capitalize on Amazon’s branding. Same Fulfillment Depending on whether you use FBA, you may need to handle fulfillment. Amazon handles all fulfillment, pricing and logistics for product sales. Overstock NA Amazon can decide they overstocked and return items. Shipping 3rd Party sellers can choose to use Amazon fulfillment through FBA, or ship products using FBM. Vendor pays shipping and does not get the UPS rates that you can get through FBA shipping. Payment FBA payments take 2 weeks. Amazon doesn’t pay vendors for items for 90 days.
- You can have Amazon handle all your fulfillment (Fulfillment by Amazon aka FBA) but for a variety of fees (Here is a link)
- Reviews (verified purchases) are still a great way to get brand and product equity on the marketplaces channel
- Subscribe and Save, coupons, and special event promotions work great on the marketplaces channel if you have knocked the basics out of the park already and ready for the influx of eyes on your product pages
Your Amazon Product Page is NOT only for Conversion of Sales
- Think of your product page as a brand marketing tool because many consumers look at Amazon pages as a primary form of research and comparison shopping.
- Make sure all the content on the page is 100% correct. You’d be surprised at how many brands use different copy to describe the product on Amazon compared to their own website or other channel. This is the way consumers are going to find your product. Make sure you are using search engine optimization best practices (SEO).
- Use enhanced or media rich content on your product pages. A consumable CPG product is extremely difficult to sell on the web because consumers have a hard time trusting basic product or marketing language. The more useful information the better and things like videos, reviews, comparison charts, etc. will be worth its weight in gold.
Look into using Amazon Marketing Services (AMS)
- AMS is their search marketing tool. More and more people are starting to jump on the bandwagon and use it and I have found it to be extremely effective. It is also very cost-efficient because it’s a cost-per-click (CPC) model. You’ll likely get tens of thousands to millions of impressions, and it’s relatively inexpensive as you bid on keywords.
Understand how to use the data given by Amazon
- Amazon Retail Analytics (ARA) and ARA Premium are available to brands that sell on the marketplace. I have found that these are though a challenge to get a grasp of at first. There are also third-party technologies that will help organize and provide additional analytics.
- Amazon is constantly changing its algorithms so the best strategy is to make sure to use a “Build-Measure-Learn” approach