The E-commerce Leader

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[00:00:31] Intro: Hey there folks. Welcome back to the e-commerce leader today. We are in the middle of a really important session. I think about Q for planning. Now, even if your big season isn’t Q4, if it’s Q two, so April, may, June or something, if you’re in the gardening space, or even if you don’t have a sort of really big peak season, a few products as sort of more, more steady across the season.
[00:00:52] Then I still think this process of planning for the next quarter, if you haven’t ever done it before, or even if you do, and you want to revise, your process is going to be very, very powerful for you. It’s a sort of a thing where you can say little hinges, swing, big doors there. There’s a few of those in business and planning properly is definitely one of those, frankly, I’m not the best person to talk about this because I’m not a very great planet, although I’m trying to get better looking forwards, but Jason is really.
[00:01:18] Good at this process. And as ever, Jason has a knack of dealing with the complex and making it simple, which is really reassuring and really helpful for those of us who are not just the owner, but the operator, in some cases, the chief cook and bottle washer in our businesses. If that’s you then stay tuned, it’s going to be simple, actionable, but profound stuff.
[00:01:37] So enjoy the show.
[00:01:39] Jason: So step four in our little framework here is a placement strategy.
[00:01:44] And so let me just set the stage for this one a little bit. I, this week, earlier, or I guess yeah, early this week, I guess I’m thinking when we come in, sorry, this earlier this week I was a guest and inventory labs, resonate conference and spoke, for them. And they did a kickoff session and, the team there did a round table with all the presenters and they just ask what, challenges or issues or hot trends.
[00:02:09] And of course it was all Amazon centric. And so many people were talking about how, You know, inventory stock counts are being capped and limited. Amazon is doing very deliberate, exercises to restrict the amount of stock that sellers can send in. And for big sellers, it’s a massive, massive concern.
[00:02:28] I mean, people who have a big inventory, you know, catalog, they they’re very constrained and feeling the pressure from that. And so the experts were talking about that issue and the whole time in the back of my mind, I was just saying to myself, but I didn’t, I didn’t say it vocally, but I just kept saying to myself, omni-channel omni-channel omni-channel so just please tell everyone they should be omni-channel, and cause the, the placement or the channel strategy that you use, is super important.
[00:02:56] So step four in our little framework here is evaluate your channel strategy where you sell and how you use marketplaces and create decisions about the best approach for each platform in light of your goals. For Q4. And so that’s the concise and simple, placement, goal here. The, the, the work to be done is really to think through, again, what’s optimal for your business in terms of these marketplaces.
[00:03:23] And some questions you might ask yourself are, what are the most profitable marketplaces for me to sell on and using include your own Shopify website in that if you want. So the most profitable locations, what’s the most stable drama, free sale location for me, how much inventory should I commit to each sales location?
[00:03:42] And do I have time and energy to try a new sales location during Q4? And if so, what would that be? And how will I go about it? So those questions are sort of kick off the topic. Michael, what are your thoughts on sales channel management and related to Amazon?
[00:03:56] Michael: I was just thinking about you silently mouthing omni-channel other, these Amazon focus sellers.
[00:04:01] And I think you’re right. I think this last 18 months has been a wake up call in two ways for Amazon sellers work. First of all, how big e-commerce can get how quickly. And the second thing is the flip side of that is how the mighty hours in is struggling to, the capacity is not infinite. It is in fact finance and, I don’t think Amazon wants to drive away.
[00:04:22] I don’t think they’re trying to, in some ways, punish or encourage FBA sellers to. You know, to not use the FBA, systems, that’s what are there, the walled gardens sort of competitive advantages. They want you to be in their system? The reason they’re doing it is because they just run out of capacity.
[00:04:38] And I think that isn’t going to change if e-commerce keeps, keeps growing and as Amazon probably invest a bit less in what is mostly a cost center, its entire retail system except for advertising. So if they could get you to advertise and then fulfill yourself, they’re probably going to be quite happy in terms of the profit and loss.
[00:04:55] So I think this is not just a freak moment. It’s just the future. And we have to adjust, as you say, omni-channel is the longer terms, solution, even if you sell them on Amazon, a few things that are relevant, first of all, sales location, kind of boils down to different countries. So gee, how much stock do you send from China to the us or UK or Germany?
[00:05:11] It’s probably a little bit on the later side to be deciding now, but it’s certainly a part of the thing. If you said in Europe, are you going to be pan-European. Registered. So you store stock in Germany, but it sells through to people who buy them France or Spain or whatever that sadly no longer in it, an option for those who sell in the UK.
[00:05:28] And then a more immediate thing is third party DPLs or third-party warehouses versus FBA. It, you really, really, if you don’t have a three PL now is the last second that you should be going out and begging somebody to at least they’d be able to drip feed inventory into FDA, even if you don’t need it yet, because next week or tomorrow, Amazon may change the goalposts as I have been doing almost daily sometimes.
[00:05:49] Yeah. The other thing to think about is that seller fulfilled prime and, you know, building up those metrics is difficult and a bit risky, so I wouldn’t rush to it, but it may make sense if you have really fantastic fulfillment ability. For bulky products, particularly in Q4, but not only. So it is an area in short that you need to educate yourself about find super people.
[00:06:08] If you’re going to do fulfillment yourself, my main hint is this get extremely expert people doing it. Otherwise you can mess your entire Amazon accounts up. So that’s the main sort of warning from me about that.
[00:06:18] Jason: Yeah. Let me mention one other wrinkle in this whole question of placement, and I’d love your thoughts on this.
[00:06:24] And this might be actually a tee up for a whole new episode of the podcast, because this is I think, a deep, well, to, to, to look into, all the experts on that call were focused on, you know, those types of issues related to stock management. That kind of thing. What I said, which was the, the question was what is Amazon doing?
[00:06:42] Where are they going? And what do you see in the future? What I said was Amazon telegraphs, its punches, and it is telling you that omni-channel is its future. When it purchased, hopefully. And then created the Amazon bookstores, which the first one was in U village, which I go to all the time. I’m here local in Seattle.
[00:07:01] And then, the second one I think, or, you know, next near one was in Belle square, which I also go to all the time here in Seattle. And then when they created their, Amazon go stores, which you can walk into and leave without any kind of cashier, those stores are all scaling. And then now Amazon, the rumor is, are you going to start creating, more like a department store and just insider pro tip my buddy, my mentor, Ron said to me that the mall in federal way, Washington, which is about 35 minutes south of Amazon’s headquarters, has a big anchor store that was empty and it’s being remodeled right now.
[00:07:34] And he said, he goes there because the movie theaters there, he said, Jason, when we were walking by it, we were looking at all of their colors of this new store that hasn’t been announced. It’s totally secret. He said it is identity. To Amazon color palette. And he said, it’s a big store. He said, I think it’s going to be one of their new, like, like general merchandise stores, like a big store and have produce and everything.
[00:07:59] And so I guess all that to say, I think when we talk about Amazon being a place to sell the new apex. The ones that sell the highest volume through Amazon system are going to be co located both in the marketplaces digitally, you know, like the traditional e-commerce marketplaces, but also sell through physical stores that Amazon runs.
[00:08:23] Those will become the new APEC sellers on the Amazon system. And they’re doing it. Because they’re competing with Walmart and Walmart is the name of the game when it’s brick and mortar versus e-commerce. And it is a blood feud friends, and Amazon is going to go after this. So anyway, all that to say, I’m really interested in this whole, like tie in to their physical locations.
[00:08:46] What are your thoughts on it?
[00:08:46] Michael: Fascinating insights. I mean, in, in Britain, it’s, it’s the diamonds different for starters, you’re in Seattle and that’s where Washington, you know, where, Amazon’s based. And obviously they’re pushing harder, but here’s the thing about the structure of the density, the population, the size of the place and the con the penetration of e-commerce is very, very different than the UK to USA.
[00:09:03] And we can be fooled by a common language to thinking that it’s all the same, and it really is. Britain is not a mini USA. The e-commerce penetration here is much, much higher as a percentage of retail than it is in us. So that tells me a couple of things. Well, first of all, there, there’s an Amazon go store in London, just down the road from us, which we won’t pass.
[00:09:19] I said to my wife Janell, wow, lots of pop in and get the experience, but it’s not a common thing, but there isn’t the same incentive in, in America. If you want to get a big chunk of retail, you need to get offline. Then you, you know, offline is the new, exciting online. It’s going to be harder work, lower profit margins, but in terms of market share, there’s going to be quite a resistance beyond a certain point to getting everybody online, particularly in the U S I think so that’s the first point.
[00:09:44] And the second thing is to your point, it’s about say the word Walmart, because it feels like really, there’s a lot more interplay and interchange between the companies, for example, the. The first or second iteration of the FA the FCS, their fulfillment centers was greater by basically then pinching Wal-Mart’s head of fulfillment.
[00:10:02] At that point, he was the best in class, but it wasn’t good enough. And they then iterated. So in the end, if you see retail as the market that competing in an e-commerce is one. You bet channel live. You’re like, then actually it makes sense that they’re going to get backends that take the fight to Walmart.
[00:10:19] They just big enough to do it now. So the love of what you make sense makes you know, what you say makes a lot of sense. And I think two things that strike me one is that we need to obsess about where is Amazon going so that we’re in alignment with it as opposed to fighting it. And the second thing is, as you said, but it’s not that hard because it, telegraphs is punches.
[00:10:36] We just need to take the hints, rather than fighting it and assuming they’re out to get at us. Is that what?
[00:10:41] Jason: Yeah, no, totally agree. Just to another wrinkle in the blood feud is that the diapers.com CEO that Amazon acquired. His name is mark Lorre. If you’ve never heard his story about his experience competing against Amazon than working for Amazon, then leaving, and starting jet.com, which is his company that he like his second big company that was acquired by Walmart.
[00:11:05] I am telling you, this is a made for TV drama, and it is crazy. So go check out on how I built this with guy Roz, the episode, diapers.com and jet.com with mark Laurie. It is just a fascinating tell all on how the, the Amazon versus Walmart saga is playing out. So that’s just a pro tip. Okay. So let’s get back to the outline, but I think that’s a fun rabbit trail for people to look at in terms of placement of their items.
[00:11:34] Michael: Excellent. Yeah. So this is the fifth and final step in terms of the overall Q4.
[00:11:39] Jason: Yep. And the fifth step is your promotional strategy. So create a promotional strategy that covers both free and paid, techniques to get maximum, excitement and coverage for your products and promotional strategy. Of course, being free at free activities or free efforts is one thing like social media, like email marketing, those kinds of tools, and then the paid strategies would be, are you selling, or through, advertising and where is that advertising being run?
[00:12:08] So the questions you might ask yourself are, what’s your, what was your best promotional effort? Last Q4 and how can you make it even better? What did you waste time and money? Last Q4. And how do you avoid it this year? Are there new promotional opportunities? You can try this year and what’s your plan for them.
[00:12:28] And are you doing the basics of promotional efforts, including building an email list and sending newsletters weekly, building a text SMS list and sending broadcast texts, spending between eight and 15% of your total revenue on marketing and advertising. Those questions, I think are great prompts. I think they’re going to get you into the mind set of a, what I like to call traffic stacking, which is you take control of the traffic that goes to your listings.
[00:13:01] I don’t care if they’re on Amazon or on your own website, you take control of the traffic that goes to your listings. That means you’re personally responsible. It doesn’t just organically float in Amazon, or be triggered by just advertising an animal. You can stack traffic on top of it. And so a promotional battle plan that you can put together really can make all the difference.
[00:13:24] And of course, this is a virtuous cycle. If you send traffic to your products, Amazon on Amazon and influence the BSRs bestseller rankings, then it’ll get organic sales on the platform, even more effectively because you’ve done that work. So a creative and interesting promotional strategy is key in my mind to an excellent.
[00:13:44] Michael: They sold. It makes a lot of sense. I mean, these are very grown-up things for an Amazon status to be hearing. Cause obviously this is about, you know, having to take charge if your traffic in the broader sense, in the narrow sense, in the broader sense, getting known and liked and getting your brand, you know, engaging with consumers.
[00:14:00] But I would say for people who are very Amazon focused, e-commerce operations is really, it’s probably a bit late in Q4 to be really focusing on building this, but you need to start building your off Amazon brand assets with extreme vigor because, it’s getting harder and harder to communicate directly with Amazon sellers.
[00:14:16] And it’s on the other hand, a fantastic, sort of moat around your business to a degree, not a very thoroughly unpenetrable one, but nevertheless having worth having, and also, it’s just very much a competitive advantage to be able to reach directly to consumers when everyone else has been cut off with this kind of Chinese wall between you and the consumers with Amazon standing in between not letting you even know their names in some cases.
[00:14:37] Yeah. So I would say social media. Website and email capture really important parts of that. And really you’re going to take the fruits of your labor in Q4, or you going to need to focus on it in Q1 two and three more than when you’re dashing around, trying to make sure you’re staying in stock. What I would say is it’s not quite too late, cause it’s a quick ability to get inputs and marketing in place and that relationship building can happen reasonably quickly.
[00:15:00] If you start now in sort of late Q3, you could probably get things in place for November that can help to move the needle. And, just generally, Amazon loves external traffic and to the extent they’re trying to take over retail and compete with Walmart, they want that exposure. They want to capture that market share and it can with the right types of product, be a good sales strategy.
[00:15:22] But I think it sort of adds to the mix rather than is a core thing, because it’s just a bit unpredictable in my experience how well it works. Yup.
[00:15:29] Jason: I love the emphasis here on. You know, creating off Amazon tactics, but of course there are on Amazon tactics as well. So, and, my presentation for the resonate conferences earlier this week was about, live selling QVC style on Amazon and beyond.
[00:15:48] And so, live video selling on Amazon is all the rage. You can do it if you sign up for their influencer program or if you’re brand registered. And in that presentation for resonate conference, I won’t break down exactly how to do the technical components of going live. You can go live as an influencer and you can, you can pitch your products that you have in inventory is an influencer.
[00:16:11] You can just talk about any product. And so that’s one new and maybe, emotionally risky way to move the needle for your products would be, did do. Now, some people will resonate with that and be like, I could crush that other people like, no, that’s not for me. Fair enough. The other of course, tool in your tool belt is, just doing Amazon advertising.
[00:16:33] The 5 cent, ad plan is a well-known, you know, advertising strategy for products on Amazon. You can take that approach. And those are two that are on Amazon specifically. And then off Amazon, you know, you go from there. I would say that the biggest question is what can you do that you understand?
[00:16:53] And how can you execute on it? And don’t get overwhelmed, just prioritize like this Q4, I’m going to, I’m going to do this because I know I can do it well. Or, you know, maybe it’s, maybe it’s a Facebook ads or something like that who knows whatever it is. And I wouldn’t, you know, I wouldn’t.
[00:17:07] Overwhelmed by a list of massive numbers of things. I would just focus on what you can do effectively. I will say that for most Amazon sellers that we begin coaching. When I say, how much money do you spend on marketing and advertising, do the math. And what percentage of that is of your top line revenue, that, that they want to, they want to, first of all, compartmentalize and be like, oh, well just, you know, that’s, you mean not my Amazon sales, you mean just off Amazon sales, I’m like, no, your whole business take your whole business revenue.
[00:17:39] However much that is, let’s just say it’s a million dollars you need to be spending between 80,000 and $150,000 on marketing and advertising. And most Amazon sellers that have scaled on Amazon have never really, metabolized that degree of expense complexity. And it’s sometimes new to them to hear that, but good.
[00:18:00] You know, process good business process has a marketing and advertising budget. That’s somewhere in that range. Eight to 15% consumer packaged good companies can be up to like 20, 22%. So, so you want to think through how do you deploy that much? Most efficiently and without wasting it, what’s the highest and best use of every one of those dollars.
[00:18:19] And so that’s, just some thoughts on the promotional tactics stuff.
[00:18:23] Michael: So life selling, we’ve talked about, I have no personal experience and I don’t know anyone else who’s doing it, which might be either a reason that everyone should look into it. Who’s the right kind of personality for it. It’s certainly not going to be very competitive in the level that most of the tactics are, but I guess the bread and butter for most people is going to be advertising.
[00:18:39] Spend. My main hint is, is I kind of see the opposite of. Sometimes, you know, you get constantly talks about it, where they they’ve probably spent any money on ads. And I’ve got a couple of guys like that, actually, some of the biggest sellers in the mastermind, but quite often, people just throw money at it.
[00:18:53] And I would say, give you going to spend money on ranking debt when it’s cheap. It’s effectively. If you get outside of the Amazon bubble, it’s the market share question. Right? So when a market is smaller, as in outside of Q4, it’s cheaper to rank, you know, taking a percentage of it is to preserve. There are a hundred thousand.
[00:19:08] They have a widget being sold now on Amazon. And you can get 50% of that market. That’s $50,000 worth of sales. If it’s going to be 300,000 a month by December, then that’s not a great time to be trying to get that market share. So I would urge people to try and get their ranking work done, or market share gaining by the end of Q3.
[00:19:26] And don’t be stressing about trying to gain market share in Q4. I would just focus on profits. And then, you know, if you feel like you could have sold more or had a bigger key for then reflect on and January, and that’s a great time to get marks, you know, because it was spent really
[00:19:42] Jason: the main thing. Yeah, no, that’s the point of budgeting.
[00:19:45] That’s the point of saying what, you know, what’s eight to 15% look like if you get to the end of Q4 and you’ve blown all the money you made on advertising, you clearly haven’t thought through it at a time. So, eight to 15% gives you a guy. Yeah. So for forecast your Q4 income or total sales and say, well, I’m not spending any more than 15% on advertising and you let that be your governor.
[00:20:08] If you’re on the, you know, the opposite side of the spectrum. Yeah. Yeah.
[00:20:11] Michael: Which is quite common. I would say the other thing, and you’ll write about planning it ahead of time is probably one of the keys to not going overspending. The other thing to say is thinking of the advertising as a percentage of your top line, if you think about it clearly, which is not rocket science, but if people skip, this is like, if you’re going to raise your prices, your is going to be higher.
[00:20:29] So you can afford to spend a little bit more on advertising without going over your 15% marker. And I think that is something you’ve got to think too, when you’re doing a pro forma or projected accounts, you should think about what happens if we raise our pricing. And what does the ad spend look like in that scenario?
[00:20:44] Okay. Equally, you want to make sure you don’t fix your ad, spend at X and then you’re pricing somewhat a lot lower than you expecting. So as you say, it’s a question of planning and being disciplined, right?
[00:20:54] Jason: One of the pro tip for people who sell on Amazon in particular, and you say to yourself, I don’t have an email list.
[00:20:59] I don’t have any other resources or, or, you know, Amazon ways to, to build energy or enthusiasm, then think about your packaging and think about the opportunity to actually collect email addresses. You can have a very simple landing page set up with who you are, what you do, and have, you know, an info guide to your product or just, you know, FAQ is about your product.
[00:21:23] Don’t violate Amazon’s tos, but understand what the, the rules of the road are for having, references to your own website, on your packaging, or in your materials that you sell and go full in on that. As much as the tos will allow, to make sure that you have resources for your buyers, because they are your buyers too, not just Amazon’s buyers.
[00:21:46] And they use that as a methodology for starting to. For next year where you would say, oh, okay, now I’ve got a stream, a small stream of people opting in to my side or to whatever, because of the sales velocity on Amazon. And again, don’t violate TLS, but think it through and understand what you can do.
[00:22:05] Michael: Okay. The other thing I would say, frankly, if you can violate to us, don’t get caught the 11th commandment, which is perfectly good, but I mean, it’s, it’s violation to you as to send anybody anywhere or farmers. And basically, as I understand this, the primitive summary, this is not as,
[00:22:20] Jason: but on your packaging.
[00:22:21] Of course, every package product has a website or social handle or that kind of thing. So if you’re, if you’re selling a product, most packaging has, you know, some URL, et cetera, et cetera on their packaging, if you’re a private label seller. So you want to think through that, it’s not a tos violation to have who you are on the back of your, you know, flip down board on your.
[00:22:44] Michael: This is true. Yes. As long as you think through. Yeah. Yeah. You just gotta be aware of it, the downside potential for, sending people off farmers in, obviously I would say certainly don’t make an offer. I suppose what I’m saying is, do not make an offer on the packaging. I would definitely put that an insert inside there, you know, for example, sign up with us and, you know, get lifetime warranty activated or something as mild as that could be a bit of a penalty if it’s on the package, but you’re right.
[00:23:06] If it’s, if it’s just a URL, you’ll probably in safe ground, I guess.
[00:23:11] Jason: Yeah.
[00:23:12] Michael: This is good stuff. Really good stuff. Yeah. I like this and very, good strategic thinking insights as well as practical tips. So could you just summarize possibly not all of the questions, but at least the sort of five main sort of areas and maybe highlight a couple of the key questions again.
[00:23:28] Jason: Yep. Step one is get goal clarity for Q4. Ask yourself what worked in the past and create a battle plan for going after your goals. With a clarity. If you have a sentence that says my Q4 goal is to make X amount by selling Y number of products on Z platforms, then you’re clear on your goals. The second step is have product strategy sorted out what’s your most profitable product and how can you sell more of it?
[00:23:57] The third step is pricing strategy. What price can you put on your products? This Q4 for maximum sales success. Step four is placement strategy. What marketplaces or locations should you consider selling on this Q4? And how can you optimize those for maximum profit? And step five is promotional strategy.
[00:24:22] How can you create media, traffic, energy, enthusiasm for your products in whatever marketplace they reside on through paid and free approaches. So there you go. Those are the steps to awesome and lucrative Q4.
[00:24:38] Michael: Amazing really, really like there’s a lot then some great thoughts for all year round. You know, I guess goal planning is for life, not just for Christmas as they say, but it’s certainly very, very important.
[00:24:48] It’s against the Hurly burly of Q4 to go in with a plan it’s really mentally reassuring as well as anything else I think. So this is great stuff. The only other thing I suppose we should say is that particularly in the light of the exciting stuff coming, with our third season, don’t forget to, follow us on whatever platforms you’re on.
[00:25:04] So I guess Spotify, you follow people on Amazon use apple podcasts. You now also follow people, I think. And if you like what you’re hearing, don’t forget to give us the love, share the love with the, give us a rating on apple podcasts as well.
[00:25:16] Jason: Absolutely.
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