It’s been very exciting for me to watch the impact of e-commerce on consumer sales. E-commerce isn’t just one more market where brands can sell as they’ve always done in the world of brick-and-mortar stores. To succeed, brands must make some fundamental shifts in how they compete for shelf space and exposure.
In this article and subsequent posts, I want to talk about what those necessary shifts are, and to make my points more concrete, I’m going to use Amazon as my example. Although there are other e-commerce markets out there, Amazon, in my view, sets the pattern for e-commerce sales. If you understand that pattern and take those lessons to heart, your chances of succeeding in the e-commerce marketplace will be good.
The Way It Was
First, what was the world like before Amazon? In the pre-Amazon world, brands sold their products to brick-and-mortar retailers. Those brands dealt with the retailers. The emphasis was on finding shelf space for brands, and negotiations for shelf space happened face to face. There was a personal relationship between brands and retailers. On the other hand, there was no relationship between brands and consumers.
The Way It Is: E-Commerce
Amazon appeared on the scene, and it flipped everything around. Amazon helps consumers buy products. With Amazon, consumer behavior controls the shelf instead of the relationship between a brand and a retailer.
How does Amazon analyze consumer behavior? All of Amazon’s decisions are based on data and the algorithms that process that data. Brands often don’t have personal relationships with Amazon. Winning on Amazon means beating out your competitors for shelf space and exposure, such as “winning” the buy box, and that can only happen if you make the Amazon algorithms work to your advantage.
So, contrary to what you’ve learned from all our years selling to brick-and-mortar stores, in the e-commerce world, it’s all about consumers and the data they generate. The question is: How can you succeed in this new world? The answer, in a nutshell, is automation. Let me expand on that.
Win With Automation And Machine Learning
By automation, I certainly mean the ability to use software to handle the myriad decisions required to win on Amazon. But I also mean machine learning, which gives you insight into your data and provides effective recommendations. I think it’s essential that both automation and machine learning are part of a single, comprehensive platform that’s available to all stakeholders involved in the success of your e-commerce initiative: sales, marketing and operations (supply chain) teams.
You need automation because nothing is static on Amazon. Its algorithms constantly evaluate consumer data and make decisions in real time. In an e-commerce world, instead of gaining a customer over lunch, you can lose the buy box at lunch. For example, suppose you’re a brand with 400 ASINs, each with variables that change an average of 30 times a day, 7 days a week (this is a realistic example, taken from a customer). My back-of-the-envelope calculations tells me that a team of 10 people would have to work 12 hours a day, five days a week, with each team member making two decisions a second, to stay on top of what’s happening. That’s simply not possible. Automation, on the other hand, lets you react instantaneously.
Machine learning gives you the power to be proactive instead of reactive because it analyzes hundreds of variables and provides recommendations that will keep you ahead of the Amazon algorithms. There are many ways that machine learning helps sales, marketing and operations teams make smart decisions. Just a couple of examples are anticipating out-of-stock-situations and identifying products that can’t realize a profit.
My next point, the need for a single, comprehensive software platform, is more about empowering your teams to be successful. If sales has one set of tools and is looking at its own dataset, while marketing and operations are also off in their own worlds, success is hard to achieve. Give everyone a single source of truth and a common language. It’s much easier to focus on a company’s overall business goals if everyone can share perspectives, communicate and collaborate.
The Joys Of Automation
Finally, I want to address the emotions that surround the word automation. Many people find that word to be frightening. They see themselves as being ruled by their robotic overlords, with no autonomy or creativity. In my experience, the truth is quite the opposite. Automation relieves people from the thousands of mundane, repetitive tasks they face daily. It gives teams the time to plan and innovate and lets them feel like they’re ahead of the game instead of constantly playing catch up. Automation and machine learning are the way to succeed in the world of e-commerce.
Below are a few tips to get started on your automation efforts, which dig into in deeper detail in my next few posts:
1. As a first step, get a thorough assessment of your automation capabilities.
2. Don’t boil the ocean; rather, take one brand or one category, and deploy it.
3. Iterate on the initiative, and give it at least three months.
4. Use the success to get organizational buy-in, and then write your long-term blueprint. Take a page from the playbook of high-performing brands that have mastered e-commerce.
If you liked this article, drop me a note and stay tuned for future posts in my series. I’ll be digging deeper into the topic of automation, specifically e-commerce revenue automation, and sharing best practices from customers I’ve had the privilege of working with over the years.