How Does Amazon Fit Into Your Total Retail Business?
Learning the ins and outs of selling on Amazon to grow an eCommerce business can feel intimidating. Every sales channel has its challenges and Amazon is no exception to that rule. That said, Amazon does receive ~50-60% of all shopping searches, making it a necessary piece of your eCommerce business. We also know that customers are walking into physical stores and then searching on the Amazon app for either customer reviews, additional questions, or pricing questions. This creates a need for brands to focus on developing their brand on Amazon, no matter their size or structure. The variable is how much they want to invest in making it a key sales channel.
Harvest Group has clients with different priorities when it comes to Amazon: there are some clients that want Amazon to merely be a branding play and then others that have Amazon being the key driver of their overall sales. Different strategies lend themselves to different priorities on the platform.
Why is it Important to Include Amazon in Your Brand’s Omnichannel Portfolio?
Customers are getting increasingly comfortable with shopping across different channels (e.g., brick & mortar, DTC, Amazon, and other retailer apps). COVID accelerated this need for customers to find products, increasing digital literacy and often requiring them to shop all different types of online platforms. As a brand owner, you want to meet your customers where they already are, increasing the importance of having a strong omnichannel approach to sales.
Amazon is a key piece for online sales, accounting for ~55% of all product searches (reference). Customers navigating to Amazon have a high intent to purchase, allowing the brand to capture customers (whether current or potential new customers) and drive business growth.
Brands that avoid Amazon altogether might see an initial increase in sales on other sales channels as customers seek to find the product. However, those customers prefer convenience over the long-term, where Amazon is the clear winner, and you risk sales eventually tapering back to your Amazon competitors.
How Harvest Group is Serving Clients at Amazon:
Amazon Fresh as a platform operates differently than the Amazon.com marketplace. In its current state, it is a 1P-only business with no 3P competition, so it operates similarly to brick-and-mortar retail. Additionally, the supply chain requirements are complex and demanding. Harvest Group is prepared to help clients develop a supply chain that meets both their needs and Amazon’s. Finally, investment opportunities on Fresh differ significantly, and developing an effective strategy that meets budgets and delivers against ROI can be confusing. We are here to help our clients understand their promotional and strategic opportunities, so they can develop an approach that meets their needs.
1P, 3P, and Hybrid Management
Harvest helps clients who sell 1P (Vendor Central), 3P (Seller Central) or even a hybrid of both. Each platform has different metrics, operational capabilities, visibility within Amazon, pricing capabilities, and levers offered to grow the business. These differences often lead to different strategies and actions. Harvest’s Amazon team has extensive experience when it comes to managing 1P and 3P brands.
Amazon Advertising + DSP, not just PPC
Harvest is at the forefront of all things Amazon Advertising. Whether it is getting access to beta programs, developing, and analyzing sophisticated A/B tests, partnering with Advertising Account Executives to build custom dashboards, or simply running the most efficient spend to drive your business. We are always testing and learning to ensure we deliver the best results for our clients.
Amazon Marketing Cloud (DSP)
AMC (Amazon Marketing Cloud) is a new closed beta that provides brands with in-depth marketing analytics that can inform both Advertising and Business strategy. The data is accessible through SQL queries. Amazon provides users with standard canned queries they can pull from to get basic insights. Harvest has a dedicated BI team that is focused on delivering additional value for clients and has leveraged AMC to drive insights for clients that go beyond the canned queries and dive deep into the data via customized queries and analyses.
Inventory Management Support
Supply chain issues can make or break a business and that is only amplified on Amazon. A common saying in the Amazon ecosystem is “Rule #1: Stay in stock. Rule #2: Focus on #1”. Amazon prioritizes products that have consistent in-stock and that can provide a consistent customer experience. Staying in stock, especially during variable demand and supply chain hiccups, is one of the largest challenges. Harvest has a core focus on running efficient operations required to run a strong eCommerce business. We have multiple forecasting tools, chargeback maintenance processes, IPI management strategies, and demand elasticity calculators that allow us to streamline operations and minimize the risk of going out of stock.
4 Harvest Group Amazon Client Case Studies
Operations/Growth Case Study
A client had aggressive growth goals but did not have the inventory space and forecasting capabilities to either remain in stock or have a healthy supply chain pipeline. Harvest partnered with the brand’s operation team to develop a stronger and more efficient forecasting method and worked with the business to actively improve their IPI score, optimize their catalog, and build a strategy to improve their buy box percentage. These actions lead to a 600% growth on key items, 47% overall business increase in the first four weeks of onboarding with Harvest, 238% YoY YTD increase, and a 5x inventory storage availability at Amazon warehouses.
Market Share Case Study
A client set a goal to grow 35% YoY (year on year) in a highly competitive and saturated market. The client also wanted to capture market share, with a goal of capturing the #1 best seller rank in their category. Harvest partnered with the brand to run a series of advertising, variation, and content tests and strategies. Additionally, we launched two new products through a hybrid inventory model and born-to-run program. After 6 months, the two product launches achieved the #1 product in their subcategory and the brand saw a 9% increase in ROAS (Return on Ad Spend), 10% increase in conversion, 29% increase in new-to-brand sales. All of this culminated in 55% YoY growth (vs. 14% YoY growth prior to Harvest joining), substantially higher than the stated goal of 35%.
AMC/Beta Case Study
A client was invited to participate as a ‘closed-beta customer’ for a new Advertising initiative, Amazon Marketing Cloud. Amazon provided the client with access to the program, but limited guidance on how to derive value from it. Harvest partnered with the brand and devoted business intelligence and analytics team members to develop a comprehensive understanding of the program. The team developed a series of case studies and queries that allowed the client to get a better understanding of their customer purchase journey, including top items driving New to Brand customers, how users are affected by DSP vs Sponsored Product ads, and understanding trade-up/trade-down behaviors for repeat purchasers.
Operations Case Study
Due to a lack of minute attention to the FBA fulfillment program, a client was unable to send in more than 7,000 units of inventory across a diverse product line, limiting the business’ growth and operational efficiency. Harvest jumped into the catalog and operations to make sure the business unlocked its full growth potential. The Harvest team monitored the brand’s IPI score daily, held weekly inventory forecasting meetings with the operations teams, and optimized the advertising strategies. Over the first 12 months of the partnership, Harvest Group increased the brand’s storage limit by 10x, reinstated 100+ detail pages, solved 20+ stranded inventory issues, and drastically improved their IPI score. Additionally, the brand saw a 36% increase in week-over-week sales and an increase of 146% year over year after 60 days of partnering.