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E-Commerce

The Need to Break Silo’s

Broken silos in the countryside

Amazon Vendor Pressures Due to Silos

Amazon customers go to Amazon.com to purchase products they need based on the need for replenishment or an unexpected need. These customers are not remotely aware of the pressure brands and vendors face to ensure they can receive their purchases on the same day or the next day. Many vendors do not understand Amazon’s pressures on businesses until it’s too late. Invisible inefficiencies become large blockers and potential operating challenges that can kill businesses.

At Equity Commerce we have noticed time and again how structural challenges inside organizations/businesses lead to business pressures that inherently impact the performance of the business. A simple situation such as, in what department is the e-commerce team found in? Is it inside marketing, operations, or the sales department. While this may seem trivial the lack of empowerment by the business of the e-commerce team ensures that its not being communicated with during brand negotiations with retailers and marketplaces. In an omnichannel world, retailers are building marketplaces and increasingly want inventory for the online and retail channel. If the -commerce team is in the dark, this leads to chaos and missed opportunities. 

Another pressure point is access to data. Can businesses and brands access all of their data easily to be able to create a 360 degree picture? We see data held inside agencies, agencies reading reports and driving meetings with brands without brands being able to make sense of performance.

 

The Holistic Solution

It may seem to all be doom and gloom but the solution is that silos need to be broken. It may sound easy but we have seen on countless occasions if the process is not driven by top management or the process is sponsored by C-level executives it leads to regression to past behaviors. 

Many vendors do not understand that by breaking down the silos between departments and staff will in the long run lead to success in all channels. Retailers want to have products on shelves that are available at similar prices at various stores and having channel control over online sales will lead to better margins and profitability. 

Vendors who want to succeed and understand the importance  of data, analytics and total alignment can get in touch. Let’s get started – reach out to us today.  

 

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E-Commerce

When Should Amazon Vendors Do Audits?

Amazon vendor adits

How often should Amazon vendors audit their businesses?

In every business year there are times when the business can take a breath and reflect on what has happened operationally, analytically inside and outside of the business. Amazon vendors have the opportunity to use the end of quarter four (the week after Christmas) and the early parts of the new business year to audit the business. What should vendors do to better understand the performance of their business?

 

Vendors collect the evidence

In order for an audit to be successful a brand or Amazon vendor should collect all of its data to be able to create a picture/dashboards to understand business performance. Data sources such as Amazon Vendor Central data, social media data, direct-to-customer website sales data, and advertising metrics should be collated in order to understand what happened inside the business. Alternatively business can also use their reporting software to visualize the annual data in order for reports to be created.

Additionally vendors should also audit the various vendors/agencies that are used to perform tasks. Comparing the contract value against performance should also be done to enable discussions/negotiations with these vendors in the following year. At Equity Commerce far too often we see brands and Amazon vendors who are not receiving the return on investment from their vendors  in relations to the fees paid for services rendered. 

Audits should be used as another opportunity to note learnings from a particular event (Prime Day),  post mortems from advertising campaigns that should be shared company wide. Audits will also indicate previously unseen costs or issues that should be noted and prioritized to not occur in the new year.

 

Keep Amazon Honest

Amazon vendors should also create a playbook or process to audit Amazon’s performace by asking for monthly or quarterly meetings to ensure that suucess can be achived. Amazon vendors should also audit their Amazon fees, charge backs to ensure that they are not being incorrectly being billed.

We’d very much like to hear about your marketplace pain points and serve as your guide on the audit journey. Let’s get started – reach out to us today.  

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E-Commerce

Top 3 Amazon Vendor Negotiation Tips

negotiation

As of mid-April 2023, most Amazon 1P vendor brands are either attending Amazon Vendor Negotiations (AVN) also known as Joint Business Plans (JBP), or in the initial stages of working with their vendor manager to create a business plan for 1P sales for the next 12 months. 

Here are a few tips designed to help vendors prepare for AVNs.

1. Download your sales and operations data from Vendor Central.

Brands should already have this habit, but in prep for AVNs go to Vendor Central, download the agreement, and prepare notes on the core elements of the latest agreement. Pay special attention to allowances (marketing and freight), terms (base and payment), incentives (volume), and pay-to-play programs.

2. Know your true 1P costs.

Ensure you and your team have a thorough understanding of costs – both on and off of Amazon. Calculate all the costs related to selling via 1P. What are your PPM (Pure Product Margin), Net PPM, and Operating Margin? Same for your off-of-Amazon costs.

PPM (Pure Product Margin) – This is based on the wholesale prices Amazon pays for your items in 1P purchase orders. PPM reveals the ratio of net profits to revenue.

Net PPM – This factors in all the operational costs that it takes to operate on Amazon’s platform such as labor costs of your Amazon team (or agency), logistics, and purchase order processing. 

Operating Margin – Net PPM plus other costs that Amazon charges brands for not ensuring that the relevant products are available to consumers. < Proposed: This is the operating income minus all operating expenses including variable costs for production, wages, and raw materials

3. Ask the right questions.

When you can speak with your vendor manager – ask the right questions. Ask for details on how marketing development funds (MDF) were used at an ASIN level. Which ASINs were used during promotions and marketing events, and how did this impact customer impression numbers and of course, sales?

The Amazon Vendor Negotiation (AVN) process is potentially stressful but if you plan accordingly, and prepare scenarios and questions that are both relevant and attainable, you can help to ensure that the entire AVN process is beneficial to your brand. 

This can be a complicated process full of moving parts, so take the time to prepare to ensure that your team is adequately informed and ready to interact in a meaningful way with your Amazon vendor manager. 

If you agree, disagree, or would like to debate any of this, please reach out to Equity Commerce today.  We look forward to hearing from you. 

 

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Buy With Prime E-Commerce

How Amazon Buy With Prime Helps Shopify Brands Grow Their Business

Brands on Shopify understand the importance of bolstering their revenue by selling through Amazon. One good way to do that is to take advantage of Buy with Prime, a valuable payment solution designed to support Shopify store owners seeking growth opportunities.

Shopify merchants who use Buy with Prime can access a wider audience, streamline transactions, and improve overall customer satisfaction. In this guide, we’ll discuss how Shopify brands can leverage Amazon’s Buy with Prime program, and the tools it offers that can help brands grow their online business.

Amazon Buy With Prime vs Shopify: 5 Things You Should Know

If you’re a Shopify brand that is thinking of leveraging Buy with Prime to boost profits, there are a few things you should know first.

1. Early Adopters Have the Advantage

Brands that have built e-commerce businesses via Fulfillment by Amazon (FBA) have an early adopter advantage over brands with no marketplace DNA.

These businesses know how to leverage data and insights to create “hero” products that generate a large percentage of overall revenues from Amazon. These brands have a prominent structure and business philosophy advantage over Shopify-only brands with little or no marketplace understanding.

For marketplace-native brands to thoroughly leverage the inherent power of Buy with Prime (BwP) they must be willing to partner with an agency to enable Amazon Advertising. This partner agency advertising access requirement combined with the fact that these brands are already familiar with the arsenal of Amazon tools – such as Seller Central, Brand Registry, and programs like Vine – is one more reason to consider integration with Buy with Prime immediately. You’re already there, or at least very close!

2. It’s Easier for Brands With an Existing Shopify Website

Current Amazon marketplace-only brands and sellers should immediately (starting today!) actively maintain or launch a consumer-facing website run via Shopify software to diversify, expand and mitigate risk from their Amazon account(s). If you’ve been in the Amazon game for a while, you know all about the dreaded impacts of arbitrary Amazon ASIN and/or account suspensions.

These can happen overnight and without warning. Amazon-native sellers and brands can now use Buy with Prime to leverage their DTC sites and advertise directly to Amazon Prime members (now more than 200 million worldwide) without using “traditional” digital marketing solutions controlled by Meta and Google.

At launch, it’s safe to say your DTC site will likely deliver smaller or more modest revenue returns when compared to current marketplace businesses. But we think it’s prudent to spread resources across other platforms. This is not just a safety plan or a hedge, a DTC presence also provides brands with a long-term opportunity to grow, and at scale.

3. Shopify Brands Have a Shipping Advantage With Amazon Buy With Prime

We hear this question all the time: “What 3PL do you suggest?” It’s evident that smaller brands (from a logistics perspective) have always struggled to compete with Amazon. Thanks to Buy with Prime, you can offer customers the same two-day shipping and easy returns.

Instead of a perpetual third-party logistics quest, you can centralize and solve this headache with a single solution. This solves multiple challenges, and Buy with Prime also enables brands to hand off one of the hardest parts of e-commerce – logistics – to Amazon. And let’s be clear, Amazon has unparalleled, world-class logistics, returns, and payment systems.

 

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4. Use a Tactical Approach for Amazon Buy With Prime for Shopify

Understanding how products perform by season and by quarter is another indicator that a brand should consider the Buy with Prime program. A tactical BwP approach enables product sales segmentation and a path for how products can be utilized to grow away from the Amazon marketplace.

In addition, an acute understanding of the potential for cannibalization with products sold via Buy with Prime should be an essential consideration for brands. In other words, keep your top sellers in Seller Central, and build out your product catalog and brand portfolio with Buy with Prime.

5. Brands on Shopify Should Use Amazon Buy With Prime to Become More Independent

As noted earlier, one of the primary nightmares that haunt Shopify brands is the real fear that on any given day, Amazon might suspend a listing (also known as a suppressed ASIN) or even an entire account with little or no recourse.

We encourage marketplace-native brands – like those on Shopify – to understand that embracing Buy with Prime is not only a tactic to ingratiate their brand with Amazon but also a massive opportunity to grow businesses away from Amazon’s site using Amazon advertising.

It’s a bit counterintuitive, but again the holy grail here is Amazon’s huge audience of Prime members and access to Amazon’s bona fide full-funnel advertising solution.

Looking to Implement Amazon Buy with Prime for Your Shopify Brand? Get Expert Help

Enrolling and then integrating Amazon Pay and Buy with Prime code (primarily javascript) to your brand’s Shopify website may seem like a chore – but understand that you can leverage a full-service e-commerce agency to manage this integration support and coding. As a result, in less than two weeks on average, we’ll help you to gain access to the online world’s most highly valuable customers (Prime members).

Buy with Prime is not a magic silver bullet intended to “fix” a poorly run marketplace-native brand. First, build your brand’s foundation, and when you’ve reached a threshold of $500,000 to $1 million in annual revenue (these amounts are loose guidelines that can and will vary by category of course) you’re likely in a great position to unleash the power of Buy with Prime to accelerate growth.

We’d very much like to hear about your marketplace pain points and serve as your guide on this journey. We can tell you about Shopify case studies involving Buy with Prime to help guide you on the right path. So let’s get started – reach out to us today.

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