Successful CPG Brand’s
Amazon Strategy
Trends and Best Practices for Succeeding in Amazon’s Competitive Marketplace
Today’s Logistics
●
Session recording and slides will be sent
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Submit questions to our panelists
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Join in on our poll questions throughout
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Resources available as handouts
Persephanie Arellano
Webinar Coordinator
Overview
Solutions
Today’s Speakers
Tony Heuer
Russ Dieringer
Erik Simon
Leo Carrillo III
Marketplace Channel
Analyst
Executive Director,
eCommerce Council
Head of Business
Development &
Marketing
Manager, Amazon
Marketplace Channels
Today’s Agenda
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Latest Updates on the Growth of CPG Online Purchases
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Amazon’s Annual Performance & Grocery Plans for ’19
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Ad Strategies to Improve Your Amazon Organic Rank
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Developing a Customer Lifetime Strategy for CPG Brands
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Proactive Process for CPG Inventory Management
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Benefits of Auto-Repricing & New SKU Creation
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Q&A
POLL QUESTION
IS YOUR CPG BRAND ALREADY SELLING ON
AMAZON?
● Yes
● No
Cleveland Research Company
eCommerce Council
Designed for manufacturers selling into Amazon and other
omnichannel accounts like Walmart and Home Depot
●
“Sharegroup on Steroids”
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143 Members with 98% Renewal Rate
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Proprietary, Forward-Looking Research
Russ Dieringer
●
Annual Summit
Executive Director,
eCommerce Council
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Weekly Roundtables
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1-on-1 Analyst Engagement
rdieringer@cleveland-research.com
Important disclosures may be found in the appendix
What CRC Will Cover
Market Snapshot
Copyright 2017 - Q4 Amazon Virtual Summit
2019 eCommerce
Performance
Benchmark
Q&A
Healthy Consumer
US Market
eCommerce AND Stores Growing
• Healthy economic growth
• Low unemployment rate
• Decade long bull market run
Source: US Census Data
Copyright 2017 - Q4 Amazon Virtual Summit
Amazon Outlook
Forecasting ’19 to Slow
•
•
•
•
Law of Large Numbers
Profit Focus
More competitive market
Potential Disruption from 1P to 3P transition
• Potential Offsets
• Return to top-line growth focus
• Advertising business
• Grocery
• B2B
Source: Company Filings, CRC Estimates
Components Driving Growth
Multifaceted
Business
Amazon’s growth has been driven by
multiple components over the last few
years, helping lead revenue higher and,
importantly, profitability.
Source: CRC Estimates
Copyright 2017 - Q4 Amazon Virtual Summit
Survey Background
SURVEY BACKGROUND
CATEGORIES
hardlines
food & CPG
softlines
other
42.5%
35.4%
5.5%
16.5%
SALES MIX IN 2018
eCommerce1
Amazon2
11.0%
49.3%
Annual Performance Benchmark
●
130+ companies completed the survey in late January 2019
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Mixture of CPG, Food, Hardlines and Softlines companies
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Focused on better understanding growth, profitability, future opportunities
& Amazon program performance
eCOMMERCE BUSINESS SIZE
$1-3M
$3-5M
$5-10M
$10-20M
$20-50M
$50-100M
> $100M
11%
4%
17%
11%
21%
15%
18%
Source: CRC’s eCommerce Performance Benchmark, 2019
1) eCommerce figure is the percentage of total sales
2) Amazon figure is the percentage of total eCommerce sales
What will mix look like tomorrow?
CURRENT & EXPECTED SHIFT OF SALES TO
eCOMMERCE
Source: CRC’s eCommerce Performance Benchmark, 2019
How optimistic are brands for ’19?
eCOMMERCE GROWTH
EXPECTATIONS
Brands saw growth decelerate from 2017 to 2018,
at least partially driven by retailers focusing more
on profitability last year
Source: CRC’s eCommerce Performance Benchmark, 2019
What channels are brands focusing on?
WEBSITES SUPPLIERS SELL THEIR PRODUCT ON
Source: CRC’s eCommerce Performance Benchmark, 2019
Opportunities Beyond Amazon
GROWTH IN 2018
EXPECTED GROWTH IN 2019
WAYFAIR
KROGER
AMAZON
WALMART
TARGET
HOME DEPOT
LOWE’S
Note: The data in this chart refers to the eCommerce portion of these retailers.
Source: CRC’s eCommerce Performance Benchmark, 2019
Brands’ Experience on Amazon Last Year
MUCH BETTER
THAN EXPECTED
Amazon in 2018
• Net 10% saw better than expected
performance
BETTER THAN
EXPECTED
IN LINE WITH
EXPECTATIONS
WORSE THAN
EXPECTED
MUCH WORSE
THAN EXPECTED
Source: CRC’s eCommerce Performance Benchmark, 2019
Copyright 2017 - Q4 Amazon Virtual Summit
• Grocery brands were generally
disappointed due to Fresh lagging,
little integration with Whole Foods,
and difficulties in programs like Pantry
Largest Dollar Growth Opportunity
Percentage sales
may be slowing,
yet absolute dollar
growth remains
the largest on
Amazon…
Source: CRC’s eCommerce Performance Benchmark, 2019
Copyright 2017 - Q4 Amazon Virtual Summit
Profitability Comparison
AMAZON 2019 PROFITABILITY EXPECTATIONS
RELATIVE TO OTHER ETAILERS
Less Profitable
• Delisting items (CRAP)
SIGNIFICANTLY MORE
PROFITABLE
• ASIN suppression
• SIOC requirements
MODESTLY MORE
PROFITABLE
EQUALLY AS
PROFITABLE
MODESTLY LESS
PROFITABLE
SIGNIFICANTLY LESS
PROFITABLE
Source: CRC’s eCommerce Performance Benchmark, 2019
• Increased asks
• AVS program more expensive than SVS
• Private label
• Greater ad spend required
CRaP Impact
% OF ITEMS DELISTED DUE TO
AMAZON’S CRaP METRIC
NONE
< 5%
5 – 9%
% of
Products 10 - 19%
delisted
20 - 29%
30 - 39%
40 - 49%
50% +
Source: CRC’s eCommerce Performance Benchmark, 2019
VENDORS’ EXPECTATIONS OF AMAZON DELISTING
ITEMS IN 2019 VIA THE CRaP METRIC
Same amount of items will be CRaP’d out vs. 2018
Fewer items will be CRaPed out vs. 2018
More items will be CRaPed out vs. 2018
40%
30%
29%
Amazon Program Opportunities
PARTICIPATION,
2018
GROWTH,
2018
Amazon Programs
Varying degrees of success
AMAZON BUSINESS
SUBSCRIBE & SAVE
AMAZON PANTRY
• Amazon Business saw the best growth
• Prime Now saw the biggest step up in
brand participation compared to a
year ago
• Pantry was a bona-fide disaster
PRIME NOW
AMAZON FRESH
Source: CRC’s eCommerce Performance Benchmark, 2019
Copyright 2017 - Q4 Amazon Virtual Summit
Note: Participation refers to the percentage of vendors that
have participated in each program for at least one year.
Growth refers to the 2018 Y/Y percentage growth of programs
vendors participated in for at least one year.
The Year Ahead
Growth & Profitability
Where are the best opportunities
●
Retail market remains healthy
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Amazon remains the largest growth opportunity from a dollars perspective
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CPG brands see additional opportunities with Walmart & Kroger
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Profit focus will remain in ’19 – update your financial plans, focus on fastest
growing Amazon programs, be prepared to spend more on advertising this
year
Appendix: Antitrust Disclosures
It is the policy of Cleveland Research Company to comply fully with the antitrust laws set forth by the United State Federal Government and various state laws. Our research is intended to be utilized as a resource in accordance with those established antitrust laws and regulations. The information transmitted is
intended only for the person or entity to which it is addressed. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the
material from any computer.
Download CRC’s Benchmark Study
Follow the link to download the full copy
of our annual performance benchmark
study:
https://www.clevelandresearch.com/ecom/benchmark/
Russ Dieringer
Executive Director,
eCommerce Council
rdieringer@cleveland-research.com
Copyright 2017 - Q4 Amazon Virtual Summit
POLL QUESTION
WHAT CPG CATEGORY DOES YOUR BRAND
FALL UNDER?
● Grocery
● Supplement
● Beauty & Personal Care
● Home Supply
● Baby
Growth of CPG Online Purchases
●
Online sales made up
90% of the growth
in the CPG industry last year
●
U.S.
digital shoppers are looking for
convenience on ecommerce for everyday items
Source:EMarketer
●
can’t afford to not sell
on Amazon in order stay to relevant
Brands
and competitive in today's marketplace
Positioning on Amazon
● Amazon serves as a revenue
and brand
growing opportunity for CPG brands
● Digital shoppers research
online before purchasing
products
● Positioning your brand on Amazon allows
you to attract customers through your
products details and insight
Enhanced Branding
●
CPG brands selling on Amazon
enhancive
branding options
enables extensive
●
Increase your conversions on
the Amazon Marketplace
Advertising Strategies for CPG Brands
●
70% of all people shop on
the first page listing on
Amazon
● Use Amazon Advertising to
boost your
ranking
organic
Bidding Strategies for CPG Brands
1. Keyword bidding
2. Bidding on product
detail page
3. Brand vs non brand
competitor terms
POLL QUESTION
DO YOU KNOW YOUR BREAK EVEN ACOS?
● Yes
● No
● Maybe
What Is a Good ACOS?
TARGET ACOS
BREAK EVEN ACOS
What’s a Good ACOS?
ACOS < 50% : ADS ARE PROFITABLE
AMZ FEE
25%
COGS
25%
PROFIT
BEFORE
PPC SPEND
50%
ACOS < 25% : HIT YOUR TARGET PROFIT MARGIN
TARGET
BREAK
TARGET
PROFIT
EVEN
ACOS
MARGIN
ACOS
-------------------------------------------------------------------------------------------------------------------
50%
25%
25%
Lifetime Value
New to Brand Metrics for CPG Brands
●
Measures orders & sales of your
products generated from first-time
customers of your brand
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If the shopper has not purchased from
your brand within the 12 month look
back window, the order is considered
new-to-brand
Why is understanding
Lifetime Value
important for CPG Brands
$ubcribe & $ave
Brand Agnostic to Brand Loyalty
Grow Revenues by Generating More
Search Results - Without New
Products
Copyright 2017 - Q4 Amazon Virtual Summit
About
Solid Commerce
A platform that helps eCommerce merchants
manage inventory, listings, shipping & more
on Amazon & 20+ other marketplaces.
●
1st group of integrators to support Seller
Fulfilled Prime
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1st group invited by Amazon to Seller
Central App Store
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Member of Amazon’s Marketplace
Developer Council
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Full ability to sync FBA with non FBA
Warehouses
Dropship
Management
Orders &
Shipping
Management
Automatic
Pricing &
Repricing
Listing Tools
Inventory
Management
Content
Management
In 2018 Solid Commerce Managed:
Gross Merchandise
Volume
Packages
Shipped
Select Customers:
SKUs
Managed
Inventory
Managed
Retailers, Brands &
Manufacturers
Today’s Speakers
Erik Simon
VP, Marketing & Business
Development
The Whole Presentation in 1 Line
You Can Grow Revenues by Generating
More Product Search Results - Without
Any New Products
POLL QUESTION
HAVE YOU EVER USED VIRTUAL KITS &
BUNDLES?
● Yes
● No
POLL QUESTION
DO YOU CURRENTLY USE DROPSHIPERS?
● Yes
● No
Virtual Kits & Bundles
(Creating More From Less)
Wouldn’t it be great if 2 SKUs Created 4 ASINs?
SKU 1
SKU 2
They Can: 1 + 1 = 4
ASIN 1
ASIN 3
ASIN 2
ASIN 4
Virtual Kits & Bundles - Explained
• Product combinations are created only in software
• No physical bundles exist in your warehouse
• Products are stored individually
• Products are combined into kits & bundles at time of sale & shipment
Virtual Kits & Bundles Can Create New “Inventory”
ASIN 1
ASIN 3
ASIN 2
ASIN 4
Virtual kits & bundles = ASIN Alchemy
Virtual kits & bundles
= ASIN Alchemy
Unlike Alchemy, virtual kits &
bundles really creates “ASIN Gold”
ASIN Alchemy Helps You Sell More
• With virtual kits & bundles, 2 SKUs = 4,5,6 or more ASINs
• More ASINs = More Search results from limited product set
• Occupying more search results = more sales
• Virtual kits & bundles can help you sell more
2 Steps to Virtual Kits & Bundles
1. Creation - Configure Product Combinations
2. Real-time Inventory Updates
Step 1: Creating Virtual Kits & Bundles
100 Baseballs in stock
33 Multipacks – Unique ASIN
Inventory software
tells me
75 Bats in stock
75 kits – Unique ASIN
Step 2 = Real-time Inventory Updates
As you sell individual components and virtual multipacks, you need need
inventory software that can provide real-time updates on how many
individual components and multi-packs or now available
Example: Real-time Inventory Updates
Was 33 Multipacks – Now 14
Had 110 Baseballs in
stock - Now Have 42
Inventory software
tells me
Had 75 Bats in stock
- Now Have 28
Was 75 kits – Now 28
Summary: Virtual Kits & Bundles = ASIN Alchemy
• Just as Alchemy was a belief in creating gold….
• Virtual kiting & bundling can create Product Gold by creating multiple
listings without need of actual physical bundles
• Is especially useful when dealing with 100’s or 100’s of SKUs
• In Amazon, works only for merchant fulfilled product, not FBA
Dropship Automation
(Selling what you don’t have)
Common Problem: To Sell What You Don’t Have
• Drop shipping Solves the age-old problem of how to sell products
without investing in inventory
But….
• Drop shipping creates a new problem when selling online
Main Drop Shipping Challenges
• Updating quantities for multiple Products = time consuming
• Maintaining Profit margins for fluctuating costs = difficult & tedious
• Sending orders to suppliers in real-time in time consuming
• Retrieving tracking numbers from drop shippers and returning these
to Amazon in real-time is difficult.
Drop Shipping Without Automation is Not Scalable
Suppliers
Inventory Levels
Store Connections
Orders
Tracking
Inventory Levels
Orders
Tracking
2 Suppliers = 6
Connections with
Amazon Store
Automated Drop Shipping is Highly Scalable
Suppliers
Store Connections
Inventory Levels
Orders
Tracking
Inventory
Software
Inventory Levels
Order
s
Tracking
2 Suppliers = 1
Connection with
Amazon Store
Summary: Automated Drop Shipping Grows Sales
• Speeds inventory quantities
• Automatically updates profit margins for fluctuating cost of goods
• Automates return of tracking information to maintain seller ratings
• Is an inventory multiplier for your Amazon or eCommerce Website
Think of Seller Fulfilled Prime as a Sales Engine
•
Seller Fulfilled Prime is a shipping program. But….
•
As an engine that makes all your self-warehoused inventory Prime
eligible, it is also a sales engine.
•
More Amazon Prime inventory = more Buy Box wins = more sales
Prime is Where the Money Is
Prime Buyers are the Best Buyers
•
Prime subscribers order more times per year
•
Prime subscribers spend more on average, per order
•
Seller Fulfilled Prime gives you access to his audience without the need of FBA
•
Amazon estimates SFP sellers see a 30% - 40% increase in sales
SFP Inventory = More Sales
• If you can fulfill the requirements of SFP, and you are not doing so, you
are leaving money on the table.
• By making all inventory Prime eligible, SFP becomes a sales engine.
• Simply using Seller Fulfilled Prime = More Sales
Quick Recap: Grow Revenues by
Generating More Product Search
Results Without More Products
1. Use virtual kits & bundles to create more Products and
therefore more listings from limited inventory set
2. Grow product catalog via dropship automation
3. Sell more SKUs as Prime via SFP label printing
erik.s@solidcommerce.com
solidcommerce.com/amazon-growth
Q&A
Tony Heuer
Russ Dieringer
Erik Simon
Leo Carrillo III
Marketplace Channel
Analyst
Executive Director,
eCommerce Council
Head of Business
Development &
Marketing
Manager, Amazon
Marketplace Channels
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