The ecommerce industry has experienced unprecedented growth over the past few years, driven by the COVID-19 pandemic. As businesses have scrambled to adapt to this new reality, they have also faced a range of challenges, from supply chain disruptions to new competition. To stay ahead of the curve, successful ecommerce businesses have had to be nimble and proactive in finding ways to gain internal buy-in, scale into new geographies, and overcome other obstacles.
In this Q&A, Tim Campbell, Director of Industry Insights at CommerceIQ, speaks with Mike Buckland, our very own Account Director, to learn how thriving ecommerce businesses have navigated these challenges and identify key factors for success that all brands should keep in mind.
Tim Campbell: You hear about the pain points of brands every day. What are their top concerns in ecommerce?
Mike Buckland: One of the top concerns for brands is the acquisition and retention of ecommerce talent, which is highly in demand particularly in the CPG space.
Another concern is cost-cutting in anticipation of potential recessionary fears. To optimize their advertising budget, brands are now emphasizing media incrementality. Brands that I would call “category aware” and “competition aware” are more focused on winning shares profitably, while keeping an eye on their competitors and growing at the same pace as the category.
The evolution of ecommerce has also brought forth different journeys for brands to take, with earlier adopters trying to apply traditional methods to ecommerce, while more advanced brands are focused on staying ahead of their competition.
TC: What are some concrete steps that account managers can actually take to get internal buy-in at their company to invest more in ecommerce?
MB: The first step is to educate executives who didn’t grow up in ecommerce. Encourage them to think of their own personal shopping lives. I think a lot of brands are now also realizing that ecommerce is table stakes in terms of brand recognition and brand equity, regardless of where people actually end up purchasing your item. The second step is to identify an executive sponsor who understands ecommerce and can help secure investment for scaling. Without investment, it’s going to be a frustrating environment and can result in lost share and poor performance.
TC: Once you have internal buy-in and you’re moving along this ecommerce maturity curve, what are things you should focus on first?
MB: There are two main aspects to focus on: what customers see and what they don’t see. For what customers see, ensure that your product is available for purchase, that your content is correct and optimized with the proper title, images, video, ratings, and reviews, and that you’re relevant on search terms. On the other hand, for what customers can’t see, it’s important to focus on supply chain efficiency, such as ensuring ample stock availability, avoiding out-of-stock situations, and complying with retailers’ rules for labeling and shipping products. If you’re not doing these things correctly, they might impact your profitability and contribute to some leaders’ belief that ecommerce is an unprofitable channel.
TC: For the more mature brands, what are the most important areas to track that you should never lose sight of?
MB: It’s important to track which inputs drive which outputs such as sales, profitability, and market share. Other important areas to focus on include availability, content score, share of search, relevance, brand equity, and consumer experience. These are all inputs that you can’t ultimately control, but you can influence based on your actions, especially how you’re using trade and advertising dollars to generate traffic and conversion to your pages.
TC: What are the key things to keep in mind when you’re tracking competition within your category? How can you get the most out of tracking category trends?
MB: Many people ask this question: Am I growing as fast as the category? It’s a consistent focus for many because you might be growing at 30%, but if the category is growing at 35%, you’re still losing share. You can also learn from competitors and identify areas where you can improve your own business. Tracking category trends can also reveal new competitors and future product expansion opportunities. Businesses should keep in mind that competitors can come from anywhere in ecommerce and should focus on understanding the broader category to stay ahead.
TC: What is the best way of getting a full picture of the market?
MB: More evolved brands in their ecommerce journey have come to the recognition that you cannot do this manually since manual efforts are virtually impossible to scale. Newer brands are also realizing this and moving away from remedial and siloed tasks such as keeping track of data in a spreadsheet. More brands recognize the importance of having one version of truth that can help them get actionable insights and understand the direction that the organization is taking.
TC: Going back to the idea of gaining internal buy-in, if you’re at the beginning of that ecommerce maturity curve, how specifically do you go about educating the decision makers?
MB: There are statistics proving that Amazon is the starting point for product searches, even if the actual purchase is made elsewhere. That is an eyeopener for a lot of people. There are also data points about what your competitors are doing that can be referenced when you’re inspiring your own executives to understand how ecommerce is clearly growing. CommerceIQ has a variety of assets to continually educate the industry, and LinkedIn and the Amazon Vendor Central groups on LinkedIn share news of what other brands are doing or asking. It’s easy to see what your competitors are focused on and where your brand is in that journey if you know where to look.
TC: Let’s say you are mature, at least in the US market. What do you need to keep in mind when you’re scaling in a new geography?
MB: When scaling in a new geography, it’s important not to assume that the US playbook will work the same way. But it’s also important to emphasize experience, even if it’s from the US, as it can help streamline the process of getting live quickly in other parts of the world.
TC: How do brands think about retail media investment and where are they going with it?
MB: Right now, retail media is all about incrementality, which refers to determining how much of the sale attributed to advertising would not have occurred otherwise. However, one of the big themes for 2023 is full funnel attribution. I believe this is driven by the Amazon Marketing Cloud (AMC), which introduced metrics that brands didn’t always view, such as repeat purchase rate, new-to-brand by geography, in-store visits, and hourly data. It’s interesting because you can take the lessons that you get from AMC over to other channels such as Walmart or Target.
TC: Has the recession actually arrived? Are brands still preparing for it or do you feel that they’re over it?
MB: Both Wall Street Journal and USA Today have basically released an article that said for about the last nine months, everyone’s been saying the recession is “six months away,” and I think that sentiment is absolutely recognized by many brands. There is a lot of fear among brands, especially in non-essential categories, and they are consolidating costs and vendors to be as efficient as possible to weather the storm. This fear is driven by the unique environment created by the COVID-19 pandemic and the uncertain economic situation. Although the unemployment rate is low and there are plenty of jobs, the economy is in a stall point, and Americans are still spending. Brands are therefore still preparing for a possible recession.
TC: Any final words of advice that you’d like to share for brands out there?
MB: Brands need to have a proactive and aggressive ecommerce presence as the world is clearly heading towards an ecommerce dominated future. Rather than ignoring the momentum of ecommerce, they can gain a profitable share by getting on board and outpacing their competitors in this direction.
TC: What are some examples of these scorecard providers?
MB: CommerceIQ is one of the scorecard providers that has publicly available information on key factors for winning online, particularly on Amazon. Other companies offer similar services, but it all depends on the specific focus of the brand, such as monitoring ratings and reviews or tracking overall performance on a particular channel.
Want to learn more? Check it out here: https://blogs.commerceiq.ai/conversations-on-rem-with-mike-buckland
