The Case for Share of Voice
Strong Supply Chains in Amazon’s Building Sets Category
I suppose it makes sense that brands in the building sets category on Amazon know how to construct an effective supply chain. Lego, K’NEX, Learning Resources, Melissa & Doug and VTech all have outstanding supply chain scores due to their ability to fulfill demand and ward off loss of the buy box to 3Ps. Spin Master is the sole supply chain laggard. No brand is dominating in terms of share of voice, though Lego is putting a lot of pressure on the other brands with heavy advertising.
This BrandIQ Quadrant benchmarks brand performance by the critical disciplines of supply chain operations and marketing. Who is best able to both drive and fulfill demand on Amazon in this category? The metric that underpins marketing is Share of Voice (how often your brand appears in organic or paid search results), and for operations it’s revenue leakage (how well are you able to avoid losing sales because shoppers are unable to buy your product because it’s unavailable, lost buy box to 3Ps, etc.). Given Amazon’s ever-increasing complexity and speed, mastering both is not simple.
The vast majority of brands in the building sets category placed in the Niche Performers quadrant. In all fairness, several brands could very well qualify for the High IQ Brands category. It’s just simply the nature of the category that no brands are capturing more than 8% share of voice. It’s a thinly concentrated market, which represents an opportunity for a brand to dominate in terms of their share of voice.
Having said that, Lego is pouring significant investment into advertising and has secured 24% paid share of voice. We’ve only seen that level with Brother (printers), Newell (writing), and Quaker Oats (cereal). The other brands in the quadrant are all below 1% share of paid voice. That’s pretty much binary.
A bit concerning for Lego is they are #2 to K’NEX for organic share of voice. Typically a strong ad presence can be translated into higher sales volumes, so long as reviews are strong and product availability is as well. We’d have to look more closely to better understand the dynamic here.
VTech is the only brand in the quadrant who is at risk with regards to supply chain. They are losing about 5% of revenue due to loss of the buy box and product availability issues. Lego, Learning Resources and Melissa & Doug all have less than 1% revenue leakage due to availability issues. While K’NEX is is less than 3%. All very strong. On loss of the buy box to 3Ps, Lego came in at just under 6% while the other brands are all under 2%
Only one Laggard. Spin Master is losing almost 47% of revenue due to availability issues. Ouch! At the same time, it’s holding off the 3Ps quite effectively and losing less than 3% of revenue. At least their mission is clear!
For share of voice it appears they are not advertising at all, though they do register at a little over 2% for organic share of voice, which isn’t bad for this widely distributed category.
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Our data was drawn from an automated, daily analysis of top keywords in the Amazon building sets category over a one-year period. Our method focused on 1P brands and their associated SKUs. Marketing performance was determined by analyzing Share of Voice which essentially divides how many times a brand appears in search results, by the total available slots in the search results. Our system looked at both organic and paid ads for the top keywords discovered for the printers and accessories category on Amazon. Our system focused on page 1 search results and the product page for each SKU. Each appearance of the brand in organic search and paid ad slots was given equal weighting. Revenue Leakage was determined by an algorithm that analyzes inventory availability of the SKUs on the product page and translates that into estimated revenue missed for each brand due to things like a SKU being Currently Unavailable, Inventory Encumbrance, Item Under Review, a 3P seller taking the buy box, etc.