The past year has seen many changes in the world of ecommerce.
Aggregators are rolling up Amazon seller’s businesses left and right. Compliance rules are evolving and frustrating sellers daily.
And maybe worst of all, dirty sellers are undermining everyone, making it hard to stay the course.
During Teikametrics’ recent Ecommerce Powerhouse Roundtable, we invited a group of eight ecommerce experts to offer their insights, advice, and encouragement to keep going.
COVID has forced ecommerce businesses to become more flexible
Ecommerce businesses learned a lot of tough lessons from COVID-19 and 2020 in general.
Things like ‘always have a contingency plan’ and ‘stay flexible’ are ones that come to mind.
Leah McHugh from Seller Performance Solutions thinks that COVID’s biggest lesson was to do your due diligence.
“I always say that the biggest and most important thing is due diligence in whatever it is that you’re doing, whether it’s selling your business, buying a business, starting to sell a new product, even hiring somebody, you need to do due diligence because ultimately it’s your business and you’re the one that’s on the hook when things go wrong,” Leah said.
If you don’t have all of the information before making big business decisions, you may end up failing before you get started.
Stress test your supply chains
Rachel Johnson Greer of Cascadia Seller Solutions said the most important lesson was the stress testing of supply chains.
She had many clients who faced supply issues where certain international ports were closed and nothing could be shipped out.
On the manufacturing side, in places like California, there were shutdowns because of a lack of workers.
“There’s just a lot of challenges with supply chain last year, where it’s not just your own businesses,” Rachel said.
“The challenge is not just that Amazon struggled, it’s that your own suppliers are struggling. So one of the things we used to do at Amazon is do multi-supplier strategies for pretty much anything that was a critical product.”
Rachel said that making sure that you can source your product from multiple locations can save your business when there is an interruption from one source.
The importance of IP
IP protection is a growing area of concern for sellers.
Yael Cabilly of Cabilly & Co and Fortunet said that sellers are looking to innovate more and protect their products.
“So while in the past, most of the sellers took a product that already existed, and it changes a little, and then sold it,” Yael said. “Now I see some innovation and then IP, I mean, if you create a product that’s unique, you want to protect it.”
This could also position them well for selling their business.
Buyers are saying that they won’t buy a business that doesn’t have a trademark or one that is infringing a patent.
“When you speak to buyers, the first thing they say, one of the things they say is that IP raises the valuation of your business,” Yael said.
Amazon sellers are in high demand for larger businesses looking to consolidate them. The market in 2020 alone was in the billions of dollars.
Compliance is the foundation to weathering unforeseen events
COVID introduced many unexpected hurdles for ecommerce companies. One way to make sure you’re able to withstand future uncertainty is to make sure you’re following the rules.
Melissa Simonson of Empowery Ecommerce Collective said staying compliant protects you from extra risk.
“My point here is even if you’re doing everything the right way, even if you have all of your T’s crossed and your I’s dotted, things can happen that throw things totally out of whack,” Melissa said.
“And so if you don’t have things fully in compliance, if you don’t have liability insurance, you don’t have, you know, all kinds of stuff that could go wrong, then that is the one thing that will tip your business over the side, because you have to also factor in the craziness of the whole world.”
Focus on having a strong business, not just a strong product, and you’ll fare well even during stressful times.
The frenzy to buy FBA businesses
Amazon FBA created tens of thousands of successful businesses this past year, many of which were bought by larger companies, and that trend will likely continue.
Michal Baumwald Oron of Fortunet believes the opportunity for buyers and sellers is still huge.
The downside is that individual sellers are now competing with larger companies.
“On the other side, we see financial people, different entrepreneurs that’s come with deep pockets and understand that instead of building a brand one by one, they can just roll up as many brands as they want with all the money that they have, then manage them all together and create a much larger business that enjoys the economy of scale and with that they can develop differentiated technology and other business differentiators,” Michal said.
“So this creates, this changes, maybe the dynamic of the competition in the market, because before this enormous trend, the solo, the single Amazon seller, would have competed with other sellers like himself sitting at home with the pajamas and managing their businesses,” she said.
Tips for smooth seller sailing
Cynthia Stine of eGrowth Partners said when Amazon sellers are planning to sell their business, they need to have a plan for telling Amazon what they’re doing in a timely way. If the transaction isn’t done properly you could end up with a huge mess.
“It’s also useful to think ahead about how to transition the business owner and how and what you’re going to tell Amazon about it, because it could really matter,” Cynthia said.
“And you may think, oh, well, I’ve sold my business. I’m out of it. It’s their problem now. Well, that’s not really true either because again, if you really do want to go off and start another business again, you definitely need to do it the Amazon way, because otherwise you won’t be able to do it.”
Sellers should also look into their buyers to make sure they’re associating with someone who will run the account in the best way.
If you end up with a shady buyer, your account could suffer and it will impact your ability to start new businesses.
Using Amazon to build awareness
Carina McLeod eCommerce Nurse said not all brands are heading to Amazon with the aim to sell as soon as they’re profitable.
Some see it as a way to build their brand and eventually have a physical store.
“So we’re seeing a lot of that these days with brands as in Amazon is that phase one, and this is either getting into just bricks and mortar, or it might be an international brand wanting to hit the UK market,” Carina said.
The opposite is also happening with brick and mortar brands that want to expand into ecommerce.
“When there’s these more established brands realizing from last year 2020 with COVID, that they probably should have thought about their Amazon strategy or online strategy earlier and so there’s a lot of these bricks and mortar brands now that are realizing that they need to up their game in the online world,” she said.
Brands are trying to strengthen their market share as a whole.
The key for all ecommerce businesses is to plan based on what your goals are.
Promotion and growth plans will look different if you’re looking to sell in a year or two versus looking to build a brand you can pass down to your kids.
Dirty sellers and bad tactics
Some sellers are doing shady things to get their competitors’ listings taken down.
Dirty seller tactics range from leaving bad reviews to replacing product images with hardcore porn. People also create multiple accounts to sell the same thing at different prices.
“A lot of it seems to have actually gone full circle where they used to be getting a little bit more creative and using Facebook chatbots to like, try to get around the rules,” Leah said. “And now they’re just going back to just incentivizing reviews directly, which is absolutely against terms of service, but it seems like a lot of people have maybe forgotten that.”
People are also coming up with faster and easier ways to abuse their competition – like putting in keywords that make it look like your product is a pesticide or make it look like your product is a prescription-only drug.
“One we saw the other day, which I actually was sort of impressed by the cleverness of, they made the parent of a product an app and apps are only purchasable on the mobile site. So then none of the child products were purchasable on the regular website,” said Leah.
From the simple to the complex, dirty tactics have become a major problem for ecommerce businesses.
Fighting back against bad actors
Some sellers are filing lawsuits against bad actors, especially involving IP issues like copyright and trademark infringement.
This can be effective, but can also be used as a weapon.
“Amazon kind of trusts you, you filed a complaint that you declare that it’s infringing and they’re removing,” Yael said. “We’ve had clients that have been removed for trademark infringement and when we saw the complaint, the trademark number was their trademark.
“So someone just used their trademark number and said, I’m the owner.”
Melissa said there will always be an endless source of obstacles for sellers and the service providers working with them.
“Like there’s going to be enough of us attacking each other in different places,” Melissa said. “There’s going to be Amazon not necessarily working in our favor. There’s hijackers and a lot of problems that can face us.”
The most effective thing that software companies and service providers can do for honest sellers is to band together.
“I think it’s much more important to have the ability to come together and have a voice where we can then reach out,” Melissa said. “That’s, my main takeaway from all of this remains the same, it’s that we try and bring everyone together to have one voice so that we can advocate on your behalf.”
The benefit of product compliance documents
The new rule is a welcome one, though it also comes with new frustrations.
Amazon is using bots to review documents, which can cause products to be taken down for tiny mistakes like an extra open tab, but overall it’s a positive change.
“If you have all your ducks in a row, if you have all your paperwork in a row, it’s finally going to make it harder and more expensive for all those people who are doing the things that you guys have been talking about,” Rachel said. “If you have to get a third party produced COA for every single item for each brand that you sell, then it’s not going to be so easy to sell four or five different brands of the same item.”
“It definitely increases the cost of doing business this way and forces people to start doing things the right way, which is what I’ve been saying for a while.”
International markets are ripe for expansion
Many buyers looking at Amazon sellers will see their presence in international markets as a benefit to working with a brand.
“International expansion is definitely a great way to basically expand your customer reach and Amazon makes that really easy for sellers,” Carina said.
Sellers who haven’t moved into international markets shouldn’t panic though. Buyers could also see that as a way to grow the brand and increase profit after a sale.
Another growth area for any seller though is to use video in your ads.
“I think video is really becoming something really key,” Carina said. “We can see with sponsored brands, advertising has gone into video and really we’re not, you’re seeing some players, but it’s about getting that competitive edge.”
Following the rules is key to growth
Not only do sellers who stay compliant weather storms more easily and look good to buyers, but they also get benefits from Amazon.
“We always say in our house that compliance is the foundation for growth, which is, you know, very boring, but it is true that if you have your ducks in a row, if you’re doing things the Amazon way, you will actually be in a better position,” Cynthia said.
Clients like to argue about that, but some of the largest and best companies on Amazon are fully compliant.
“What you don’t realize until you get to that level is that there’s real benefits to being a favored seller on Amazon,” Cynthia said.
“And it is a virtuous cycle that starts to perpetuate itself. So you get invited to new programs, you get to be beta tested on things. If you’re standing is excellent with Amazon, something that might be a suspension for someone else is rewarding for you.”
Make rule-following a priority and move ahead of your competition.
And of course, while Amazon may be the biggest platform available, ecommerce businesses have options. Those concerned about bad actors or regulatory requirements can and should choose which platforms suit them best.
As our featured experts said: figure out your own goals, and then chart your course.