The ecommerce playing field has changed dramatically in just the past year. To get to the bottom of what ecommerce businesses need to know, Teikametrics hosted a roundtable event featuring industry experts with specialties in Amazon compliance, law, growth, advocacy, brand building, brand reputation, and more.
Liz Downing, Teikametrics’ Ecommerce Marketing Manager, hosted eight women from industry-leading companies to share their expertise. The panel broke down the issues facing Ecommerce businesses today including the impacts of COVID, the frenzy to buy Amazon FBA businesses, Amazon’s complex regulations, and opportunities for Ecommerce growth on Amazon and beyond.
The panel includes:
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06:23 – The importance of due diligence
Each member of the roundtable offered their insight on the impacts of COVID and the things they’ve learned. Leah McHugh drove home the fact that researching everything before you make a big business decision is key.
“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. So you need to know what is happening, who’s working for you, what it is that you should be doing before you get started. Otherwise it’s going to be a fairly short-term strategy, whether you like it or not.”
09:16 – Stress testing supply chains
Rachel Johnson Greer said figuring out how to keep your supply chain intact in the face of obstacles and cultivating multiple strategies was the biggest COVID lesson.
“I think the biggest thing for me was kind of stress testing supply chains. I found it really interesting how people were thinking a lot about what they could do and about their own process if FBA didn’t work. And then only people didn’t think of that either, but even if you did have a 3PL lined up and so on, I had multiple clients where they’re like, yeah, so this top selling product that you just asked me about, well, they just closed the ports in Italy again, so I can’t get anything shipped out and I don’t know when I’m going to get them shipped out. So I guess that one, we’ll just have to do something with later. Or if the person was producing in California, multiple times, there were shutdowns in California where everyone was like, well, I can’t really hire anyone new because I don’t feel comfortable hiring anyone new and putting my existing employees at risk. So we’re going to reduce production by 20%. There’s just a lot of challenges with supply chain last year, where it’s not just your own businesses. 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. So making sure that we could source from multiple locations, if we could source from multiple countries, we tried to, but just kind of trying to stress test your supply chain. Like how can you make it to where one supplier isn’t going to wreck your business.”
11:06 – IP is becoming more important
Yael Cabilly said that sellers are looking to innovate more and protect their products.
“I think that the legal part and especially the IP part is becoming more and more important. A buyer will never buy a brand that’s not registered as a trademark and a buyer won’t buy a brand that’s infringing a patent. So while in the past it was your own business for yourself, today a lot of brands are building it to sell, and these become more important – compliance, trademark IP. I also see an interesting move to kind of innovation and protection. So while in the past, most of the sellers took a product that already existed, and it changes a little and then sold it. Now I see some innovation and then IP. I mean, if you create a product that’s unique, you want to protect it. You want to have patents and closing that with exits. 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. So I’m seeing a move there. More and more products, more innovative, and towards a sale or not towards a sale, but for yourself and seeing more enforcement.”
14:27 – Compliance is the foundation to weathering unforeseen events
Melissa Simonson said sometimes you do everything right and things still go wrong, but if there is any part of your business that’s not in line, that’s a risk.
“I think of some of the sellers that I talked to last year, I had one who she did everything the right way. Like she was so on it. She was thinking ahead, she went with us to China to source a product while she was there. She got things done with the seller. She had a prototype, she sent it off to be built. And when she got back, she didn’t have too long to wait before she actually had stuff shipping into Amazon. So she did things, right. She was preparing for a specific holiday. She did lightning deals and supported her whole launch for this product and then we had COVID and Amazon canceled Easter. So her product was dead from the start. And so I think 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. 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. So I think compliance is my big takeaway that you really need to have all your ducks in a row and make sure that you’re building a business. This is not just a product that you’re tossing up online to sell, you run a business, you need to start the way you want to finish.”
18:42 – The frenzy to buy FBA businesses
Michal Baumwald Oron explained that Amazon FBA (Fulfillment by Amazon) created tens of thousands of successful businesses this past year, many of which were bought by larger companies. That trend will likely continue.
“There is a growing industry, highly successful, and very scattered, very diversified. With that looking forward, it is obvious that the Ecommerce has not penetrated fully into the markets. So the Ecommerce itself will keep on penetrating and Amazon is leading this trend. Taking all of this, it is obvious that the opportunity is huge. 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. 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. Then today, such highly skilful sellers, this is the highly skillful community, they find themselves competing with more and more large companies.”
23:54 – What mistakes companies are making
Cynthia Stine said that there’s the Amazon way, and then there’s the way that sellers want to do it. She says when Amazon sellers are planning to sell their business, they need to have a plan for telling Amazon and transitioning to the new owners so that the transaction is done properly.
“When you are in a situation like I was talking about, where you have someone who’s planning on doing roll ups, that’s their business model. They definitely need to do it right, because otherwise you will have the biggest, hairiest mess you have ever seen. And I know because I’ve had to unwind somebody’s big, hairy messes. So when you’re planning, you want to sell your business and you’re thinking, okay, I need to trademark my intellectual property. I need to harden my supply line. You know, you’re thinking all the things you need to do. 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. 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. And it’s just these things that people just need to think through early that will save them a lot of pain down the road.”
29:40 – Using Amazon for building awareness
Carina McLeod 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 even transition to brick-and-mortar stores.
“We’re finding actually more businesses we work with are either using Amazon as a launch pad for their brand with the idea that they want to expand. So it’s not about scaling up in order to solely focus on selling the business, it’s more about, okay, I’m going to use Amazon as a platform to create that awareness, grow a brand that then enables me to open up doors to bricks and mortar. 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. For example, we’re also seeing the reverse of that. So we’re seeing that 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.”
44:06 – Dirty seller tactics and rule-breaking
Leah McHugh explained how dirty sellers are returning to old tactics to abuse competition with fake reviews, upvotes on those reviews, and coming up with newer, faster ways to attack competing brands.
“We’ve been seeing a lot of reviews of these cases for years now. I wouldn’t say there’s a huge uptake in that one kind necessarily. I think what’s most surprising to me with that is that people are still doing it. 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. 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. In terms of abusing each other, I think there are actually easier ways that sellers have learned to take out a competitor besides reviews and a lot faster ways. 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. I’ve actually been keeping that one to myself for a while. Now that we’ve seen it enough times that I think it’s out there, but yeah, so I mean, there’s people to review these, but we’re seeing a lot more complex ways of attacking each other.”
46:37 – Sellers are fighting back against bad actors
Yael Cabilly said some sellers are filing lawsuits against competitors, especially involving IP issues.
“They’re filing lawsuits and on the legal side too there are false complaints and tricks like that. What we’ve seen in the last year. We’re trying to speak with Amazon about that. Everybody’s trying, going back to IP filing complaints, we see clients filing complaints against others especially for trademarks and copyrights. So you get a complaint for infringing a copyright. You have no idea what’s the work, what it’s based on. It just says copyright. It’s extremely easy to do it. I try not to publish it and advertise it so much. But Amazon kind of trusts you, you filed a complaint that you declare that it’s infringing and they’re removing, 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. So I’m filing and they removed the listing using their trademarks.”
50:04 – People need to stick together
Melissa said people in the community working with sellers need to band together to advocate for sellers when it comes to new rules and policies.
“Certainly Amazon will give you the kick in the butt you need sometimes to get your wheels moving, but I think again, that’s why it’s so important that we stick together. Like there’s going to be enough of us attacking each other in different places. There’s going to be Amazon not necessarily working in our favor. There’s hijackers and a lot of problems that can face us. I think it’s much more important than to have the ability to come together and have a voice where we can then reach out. 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.”
52:15 – Amazon is finally requiring product compliance documents
Rachel said this has led to some headaches: because bots are reviewing documents, this can cause products to be taken down for tiny mistakes. But overall, it’s a positive change.
“On the positive side, those who stick with it, and those who work through the process of getting the lab created COAs, the certificates of analysis that are being required for supplements and skincare, those who make sure that they have the correct CPC, the children’s product certificate or the GCCS. 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. Right? 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. If you have to make sure that your product is safety tested and you have four different blenders. Now you have a $1,500 test for four different blenders. So 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.”
1:01:42 – International expansion is an area for growth
Carina said expanding to new markets as well as adding video to your ads and promotions are big areas for growth.
“I think there are a couple of opportunities, international expansion definitely one of them. Unfortunately, Brexit has, it’s slightly been a bit of a pain point for many businesses and delayed things and so forth with getting stock into the UK, with just putting that real divide between the EU and the UK from a European fulfillment network perspective. International expansion is definitely a great way to basically expand your customer reach and Amazon makes that really easy for sellers.I think another real golden opportunity that I would mention as well is video. I think video is really becoming something really key. 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.”
1:03:24 – QR Codes for increasing followers
Rachel sees QR codes as an area for growth because it’s a way to increase your follower count and connect with your customers directly because followers can get push notifications.
“The thing that I thought was super interesting about last year, just in terms of changing people’s attitudes about ecommerce and how they interact with online sales channels is actually QR codes. I think most of us have had that experience of going to a restaurant in the middle of COVID and you don’t get a paper menu anymore. You get a little laminated thing on a stick that has a QR code on it. And pretty much everyone figured out within a month or two that their phone already had that app. You just have to open it. And then it goes to the URL and most people didn’t even realize that their phone even had that or what it was for, what it did. And so now basically COVID has trained an entire generation of people who had no idea what QR codes were, what they were for, what they would do. And now you can actually put those onto an insert onto a package and do something with it. Now, the biggest problem that I’ve seen with the QR code funnels is that most people keep using them to get reviews. And that is a very bad, stupid idea. Don’t do that. The thing that we use the QR codes for is to try to increase followers on Amazon. So some of you may be able to see this on some of the brands that you work with, but there’s now follow buttons on your posts, on your storefront, and when you go live through Amazon lives. So you can get people to follow you in a variety of ways.”
1:12:17 – Following the rules is key to growth
Cynthia said that there are numerous benefits offered to sellers who are compliant and are highly rated.
“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. And I have clients who argue this with me all the time, and I tell them some of the best, largest and best performing companies on the platform are fully compliant and focused on compliance. Because not only do they not want to get suspended, nobody wants to get suspended, but what you don’t realize until you get to that level is that there’s real benefits to being a favored seller on Amazon. 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. And you know, things like that, there are a lot of real benefits to sellers if they follow the rules and they make it a priority.”
1:20:45 – People are leaving Amazon over bad actors
Cynthia said Amazon doesn’t do enough to resolve issues and complaints and people end up leaving.
“The only thing Amazon will reliably respond to is like a subpoena. And so if you’re not at the point where you’re doing a lawsuit or TRO or something like that, it’s hard to get Amazon to pay attention and there’s channels you go through and that you report and it’s just like, it just goes into a black hole and it’s really frustrating. Nothing happens to the bad actor. And, you know, after you go down and play a couple of times, you think, I think I’ll start my own website, or get out of ecommerce altogether. I mean, I’ve had clients do that. They went back to teaching or another one, one guy got into politics, things like that. I mean, they just gave up and that’s what makes me so angry about these dirty seller tricks is they’re not harmless. They are destroying good sellers, good brands, and honest actors. And I just don’t see Amazon taking enough steps.”
1:23:54 – Amazon doesn’t necessarily offer better revenue
Carina said people are starting their own retail sites because it’s not just the bad actors, it’s also profitability. If you have a premium product and competitors introduce a similar product with a much lower price, then you’re undercut.
“It’s down to profitability because there are, it’s that race to the bottom almost. You’re trying to introduce a premium product, somebody then brings on something pretty similar, drops the price dramatically. Do you then try and compete with these sellers or, and some businesses are then just sort of pulling back and then investing more in building a website, just getting a website with Shopify and focusing on Instagram and focusing on Facebook and driving ads to their stores. You know, we’re seeing a lot of activity where, even myself as a customer, I see some products appear in Facebook, Instagram and think, wow, what are these? They’re not even on Amazon. Some businesses are completely against going there. Now, of course, you’re losing out to a huge amount of customers on Amazon, but at the end of the day, it then comes down to a question of, is it about revenue or is it about margin? Because sometimes some businesses end up generating more margin off of Amazon, maybe less revenue.”