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The online share of the overall toy market in Germany was already over 30% in 2018 and revenue from e-commerce grew once again by 12.1% compared with 2017. Amazon plays a special role in the total turnover of a toy manufacturer with its share of over 15% of the market. So how can businesses set up their Amazon management successfully? Through his work with a wide range of manufacturers and wholesalers, Andreas Bork has found that splitting the topic into five areas provides the ideal guide for the reorientation or optimisation of your own Amazon strategy:
1. Sales model: How does Amazon obtain my goods?
Through distributors, direct B2B (vendor), B2C via Marketplace (seller) or a personalised hybrid solution? Developments in the last two years show that the difference between both sales programmes (vendor & seller) are continuing to disappear. Sellers seem to be profiting most from this. As a result, more vendors are moving over to the seller programme completely or are starting to operate the programmes in parallel. There are now even large manufacturers and brands who are deciding from the outset to take the direct approach of selling straight to end consumers through the Marketplace. One reason for this development is that the vendor programme is increasingly developing into a self-service platform, which presents many sellers, especially classic wholesalers or distributors, with new challenges. Another reason is that the Marketplace model offers every seller the ability to control its own sales prices.
2. Choice of products: Which products do I sell through which sales channels?
The product range has to be tailored to the market conditions. There are also different channel-specific conditions that apply to e-commerce and sale via Amazon than there are for brick-and-mortar retailers. This applies not just for low-price products but also for bulky goods which are logistically difficult to manage (e.g. outdoor play equipment or children’s furniture) and display the product-specific shortcomings of e-commerce. On the other hand, online retail provides the opportunity to display the full product range and is an ideal sales channel for expensive, exclusive and limited-edition products. As a result of this, the product range should continually be evaluated against the Marketplace conditions and adjusted as required. In order to increase profitability, the product range should be segmented and, if necessary, refined.
3. Corporate identity & brand building: How are my brand and products presented on Amazon?
Persuasive content helps consumers to make purchasing decisions. If, after clicking on the search result, the user is taken to a highly informative product detail page, it increases the likelihood of conversion and therefore sales revenue. High-quality photos and descriptions are no longer sufficient on their own to successfully make sales on Amazon but are still necessary as a hygiene factor and therefore absolutely must be managed either by the brand owner directly or indirectly via its agent. In addition, it has become possible through A+ Content and Brand Stores to make your own brands and products more emotionally charged and draw the Amazon customers into your own brand world with extra information and images.
4. Marketing: How do I integrate the Amazon marketing tools into my own media mix?
Advertising on Amazon is becoming more and more important for brands and manufacturers because of increasing competition in e-commerce and declining product visibility. The right media strategy is becoming an increasingly important factor for success in Amazon commerce. Amazon already has a range of relevant advertising products made up of managed services and an increasing number of self-service tools, just like users have come to expect from Google and Facebook. With the advertising options on offer, it is possible to deliver the entire sales funnel really well through Amazon alone.
5. Monitoring, analysis & reporting: Is the available data used regularly and consistently to track business goals?
A significant factor for success in Amazon commercial activity is the analysis of activity and the corresponding optimisation measures which build on that. This makes it necessary to start by getting familiar with the relevant figures, the key performance indicators (KPIs), and to ensure that these can be reliably measured. Is all necessary data actually available or is it held by the distributor or seller who sells the products on Amazon? Is there full transparency about the identity of the seller and the price of the products? External analysis tools like Keepa and X-Ray allow this information to be gathered very easily. And how does the end customer react to the products and brands (reviews)? Amazon can be a very important feedback channel and also a direct communication channel with the end customer. The number of positive reviews is also an important lever for product sales. Following on from that, there is the question of whether suitable BI (business intelligence) tools are already available to measure the KPIs which are relevant to the business.
About the author:
Andreas Bork is Head of Global Strategic Consulting & Business Development at Finc3 Commerce GmbH, Europe's leading independent marketplace agency. He is a renowned e-commerce and digital expert with 15 years’ experience as an international executive and has worked for market leaders like Amazon, Bertelsmann & Sony.
The opinions expressed in this article are those of the author and do not necessarily reflect the views of Spielwarenmesse eG.
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