Multichannel Success Podcast Season 3 Episode 4 - Transcript
Why you need more channels.....or not
David Worby [00:00:08 - 00:00:23]
Today we're talking about channels, multi-channels in the e-commerce sense and I'm delighted that I've got with me David Kohn and Dan from Listable.
David Kohn [00:00:22 - 00:00:22]
Hello.
David Worby [00:00:23 - 00:00:55]
Thanks for joining us, guys, in what I hope will be a useful and informative 20, 30 minutes on the whole notion of the channels that are available to multi-channel businesses. Probably best just to start with a bit of an explainer, a bit of a definition. What do we mean by channels? I think for the purpose of this conversation, we're going to restrict it to four types of channels. Dan, can you just run us through how you categorize those four different channels?
Dan Burnham [00:00:56 - 00:01:57]
Yeah, so hello everybody. My take on the world is specifically around e-commerce, so e-commerce channels, and we break them down into the four areas I mentioned. So the first I think I would tackle would be marketplaces, about 60% of e-commerce is my understanding. Marketplaces include Amazon, eBay, Debenhams, and they are distinguished by where the transaction takes place. So that tends to take place on the marketplace. And that is distinct from comparison shopping sites, which has a similar profile but directs the sale or directs the click back to your own e-commerce site, which has some fairly significant ramifications for for sellers. Affiliates is a similar profile in that you're sending a product feed to an affiliate network and then that is driving clicks back to your website. And then social commerce, which is relatively new and on the rise, where you have transactions taking place on those social networks like TikTok.
David Worby [00:01:57 - 00:03:03]
Excellent. So I think that kind of defines the universe for this conversation. We accept that there's probably some people listening who might have a different view, or they cut it differently, and they put things in different categories. This is purely just so that we can understand the universe for the purpose of this conversation. We're deliberately going to try and avoid first- party, second-party, third-party terms, because it can get quite complicated, not least of which because some of these outlets, some of these channels, some of these marketplaces can operate in multiple types of business model. So let's just keep them to the limitations of their name. Where the transaction occurs is significant, but for the purpose of this conversation, let's just leave it that. Some of them are marketing opportunities, some of them are commercial opportunities, and of course, some of them are both. So before we get into how we think you should consider them, and how they might be relevant to you, what's going on in the market, Dan? What are you seeing? You spend a lot of your time talking about all of these channels individually in quite a lot of detail. So how do you see the market dynamics at the moment?
Dan Burnham [00:03:04 - 00:04:01]
There's a couple of interesting things going on I think. The EU recently ruled that Google was unfairly promoting their own product. So a number of years back Google changed their algorithm which effectively killed off comparison shopping sites in those days. That was kind of my focus. You had Calcure and Shopping.com and Shopzilla and a number of different comparison shopping sites and when you search for a product on Google you got all kinds of results from these different sites. Since they changed their algorithm they effectively went away but they're now coming back I think. Google Shopping obviously has been out there as a comparison shopping engine for some time but marketplaces particularly around Amazon and the advent of sites like Miracle which enable retailers to add a marketplace to their existing website you're seeing they've grabbed a large market share. More recently as I mentioned social networks I think are pushing very hard for that share of e-commerce particularly TikTok in the UK I think it's making a lot of noise and a lot of effort to grab market share.
David Worby [00:04:14 - 00:04:40]
That's interesting, because I think we'll come on a bit later to how we kind of position social in the context of all of the others, but arguably the case that some of our listeners may regard the social channels as a bit closer to home, a bit closer to what they do because they see them as great marketing opportunities already, but are only just beginning to realise that there's a big commercial opportunity there for them as well. Is that the way you see it, David? Yeah, absolutely.
David Kohn [00:04:39 - 00:05:19]
Yeah, absolutely. I think one of the things we'll come on to talk about is the level of control that you can have over your brand and the way it's represented to your customers, and also the level of control that you actually have over the customer relationship itself. And certainly my perception is that the social channels give you more control than perhaps some of the traditional marketplaces like Amazon and eBay where the customer relationship is held by them. So I can see a lot of advantages for retailers who are thinking about growing their sales in using social channels to do that.
David Worby [00:05:19 - 00:05:56]
That's great. That tees us up quite nicely for our first section in this subject, which we've titled, How do I know if these channels are relevant to me? So, in line with our brand title, we're a multi-channel business. We're thinking about developing channels to market. There are a plethora of them out there, as we've already said, and we've defined them in four categories. But, David, how do I know whether these are relevant to me? What considerations should I be going through my brain when deciding to embark upon a journey of discovery here? Well, as with many things...
David Kohn [00:05:54 - 00:06:39]
Well, as with many things, the start point is, what is my strategy? Yeah. If you're a new brand, for example, you may be worried about the customer awareness. You may think that using a third party like an Amazon is a great way of reaching customers relatively cheaply. You may be a brand that's not in a growth phase, but it's in more of a trying to maximise your profitability phase. So I think the start point for this is for so many different topics is, what is my strategy? Am I going for profit? Am I going for growth? Am I going to develop my brand? What am I trying to do as a brand? And then out of that will come, what are the channels that I should be looking to do that through?
David Worby [00:06:39 - 00:07:07]
That sounds great, but if I'm a marketer sat there having to make decisions today about which to spend my time looking at and which not to, and I don't have a strategy, there's no given here, I don't have one, I'm unclear about what my business is trying to do, what would you advise them to do? Because the moment they start looking at it, they're spending energy and effort on doing it, and some commitment is being kind of theoretically made. Can they do that in a vacuum?
David Kohn [00:07:09 - 00:08:06]
Can you do it in a vacuum? No. Look, I think to say I haven't got a strategy, that to me is sort of intrinsically problematic. You've got to have some sort of strategy. So, look, let's face it, a lot of the businesses that hopefully are listening to this podcast will be in a growth phase, and they're desperately asking themselves, what is the best way for me to reach more customers? And that, I think, is the question, is what's the best way that I can cost-effectively sell more of my product to more people? You often see that your growth rate isn't where it needs to be. That's certainly one of the triggers I would be looking at, is am I able to expand through PPC? Am I able to expand my sales through the social marketing channels? If I'm finding I'm not, then I think it's a pretty good indicator that I'm going to have to look at third-party selling channels.
David Worby [00:08:06 - 00:08:11]
Dan, tactical reaction to poor performance or strategic thinking?
Dan Burnham [00:08:13 - 00:08:30]
I think it depends on the position of the business at the time. So mature businesses, I think, are more interested in control of the way that their product is being presented. And very often you'll find that products are on the marketplace when you didn't list them.
David Worby [00:08:30 - 00:08:31]
Thank you.
Dan Burnham [00:08:30 - 00:08:33]
So if you're not there, you don't have any control.
Dan Burnham [00:08:33 - 00:08:47]
I think if you are a new to market brand, then your goals are different. As David said, it's about getting your brand in front of potential customers. For me, it's a numbers game.
Mark Pinkerton [00:08:45 - 00:08:45]
For me.
Dan Burnham [00:08:47 - 00:08:59]
The more potential eyes you have on a listing or on your product or on your brand, the more you're going to end up selling. It's the traditional sales funnel.
David Worby [00:08:59 - 00:09:03]
maybe not with the same marginal profitability, but we'll come to that a little bit later.
David Kohn [00:09:02 - 00:09:47]
And I do think, as Dan says, this question as to how mature you are as a business, the question is also how mature are you and how strong are you as a brand. I think if brand experience is really important to you, you could be a tiny little brand, you may still want to control every aspect of the brand experience, in which case marketplaces may not be for you. But if you're a little more liberal about that, then you should definitely be thinking, even if it's only temporarily, I'm going to go on marketplaces because I can get my brand to more people and then I can work on the experience, whether it's the service experience, the delivery experience, and definitely it gives customers the opportunity to have the product experience.
David Worby [00:09:47 - 00:10:40]
So that would suggest to me that it can be done tactically from the way you described it, and it can be done to change not so much the perception but certainly the awareness of a wider target audience that you're out there and you're doing good things. However, let's just flip this argument around the other way for a second and ask the question, why aren't my own channels enough? Maybe we all started with our own website, our own stores, our own catalogs, our own direct-to-consumer stuff. Why do we need to think about, you know, we do do it I guess in physical retail with concessions and with divided up stores and different kind of business models there, but it's largely seen as the minority of traditional retailing. Why do we see it as relevant here?
David Kohn [00:10:41 - 00:11:33]
I do think there's something, a phrase we've used in this podcast before, but I think when most of us started in e-commerce, the phrase, if you build it, they will come, was largely true. And I think what 99% of us have discovered in the last few years is actually they either won't now come or they've stopped coming. And so I think that the premise that you can do it all yourself, and particularly that you can do it all yourself cost-effectively, is constantly being challenged by lower traffic, by more competition, by the higher cost of customer acquisition. So I think all of these forces are pushing people to look for ways of reaching customers more cost-effectively, and a channel, a third-party channel, may be the way of doing that.
Dan Burnham [00:11:33 - 00:12:04]
I don't think it's wrong to lump all of these third-party channels into a single bucket. I think it's horses for courses. A lot of businesses may use eBay for clearance. They may use Amazon for brand awareness or for sales volume. I think it really depends what your goal is. So the first question that we ask people is, what are your goals? Is it growth? Is it sales? Is it profit? They're not necessarily synonymous. And so you have to be clear on what your goal is first, and then you tailor the channels that you want to go on to those goals.
David Worby [00:12:04 - 00:12:21]
That sounds very strategic. I'm interested in that kind of combination of we're not hitting ourselves, playing tactically, we've got to do something, let's open up another channel, versus the more strategic play, which is we're comfortable with this, we're not comfortable with that. And we can explore that in a bit more detail in a moment.
David Kohn [00:12:21 - 00:13:00]
I do think one of the principles that we're always trying to push in e-commerce is test and learn. And whilst we'll come on to the practicalities of test and learn, I think some of these things you simply don't know until you do them. You'll have a pretty good idea if you can see if your brand, for example, is already on Amazon, you'll have a pretty good idea of how popular it is or isn't. But there are many, many things in this industry where until you do it, you don't really know. I think one of the key things is trying to identify which are the ones you're going to try first.
David Worby [00:13:01 - 00:13:33]
Yeah. I think also, we'll talk in a moment about the domestic versus international challenge. And I think if you think of us sat here in Europe with an appetite for growth, our brand's appetite for growth, lack of awareness about international markets, lack of understanding about how they operate, maybe a lack of understanding about the customers in those markets. These channels offer an opportunity for you to test and learn the appetite for your brand in markets that you don't necessarily understand.
Dan Burnham [00:13:34 - 00:14:12]
I agree with that, no. I think if you are going to be selling on Amazon in Germany and you don't sell anything, does that tell you that there isn't an appetite for your product or is there something else going on? I think one of the problems with marketplaces in particular is the barrier to entry tends to be quite high. There's a lot of infrastructure you need to put in place just to be able to trade on a single marketplace. And so actually our thesis is more about spread betting. If you're going to do it, you put an infrastructure in place that means that you can try another channel very easily or as easily as possible.
David Worby [00:14:12 - 00:15:09]
Which would suggest that whilst strategically you put the infrastructure in, tactically you deploy it, there is a future for businesses to have all of these channels operating at some point in the journey. But before we come to that, I think I just want to explore a bit more how, or rather why, my own channels aren't enough. It might be. Well, it might be. If we go back to David's point about the past and the way we used to think about it and the way we used to develop incrementality by adding it on, what we're seeing, I think, we were talking off air about how certain brands are now taking a more controlled approach to the distribution of their products, particularly through third parties. And in fact, in some sectors, we're now seeing them pull that back quite significantly. So they're kind of returning almost to the way it was before, having had this experience. That's not universal and it's not across all channels. What's the driving point behind that?
Dan Burnham [00:15:10 - 00:15:53]
Well, usually it's margin, I think. Nike is a good case in point where they had a very wide network of sellers of their product and they're trying to take more control, trying to control more of the DTC market. You see that with a lot of mature brands where they're not happy with some aspects rather than they want to have more control. They don't necessarily do anything about it, but a lot of brands are going the other way where they may have a traditional supplier-retailer relationship where they're selling through high street shops or what have you, but they're not selling direct to consumer, but they want to go direct to consumer. They want more control, and so marketplaces is a good way for them to do that.
David Kohn [00:15:53 - 00:16:35]
And I think there is a difference between a manufacturer brand who is used to selling through third parties after all they've always sold through stores that don't have their own name upon them. There's a difference between them and retailer brands. I think it's a more complex question for a retailer brand. I certainly work for what I would like to think of premium retail brands where we really wanted to control the customer experience. And whilst commercially we probably could have sold more if we'd gone through channels, it was a brand decision that we didn't want to sell through most of those channels because we felt it would dilute the brand experience.
David Worby [00:16:35 - 00:16:50]
I suspect there are fewer of them now than there used to be when you and I were doing it, David, a few years ago. I think growth is almost on everybody's agenda and to some extent it's therefore a compromise between brand and growth.
David Kohn [00:16:48 - 00:17:17]
Yes, and I think, again, from my own experience, there was always a massive management concern about brand dilution. But in truth, did it really happen? Incredibly difficult to measure. So it became very subjective. And realistically, if you're hitting a different customer, does it really matter that they may have a slightly different perception than one of your regular or more loyal customers?
Dan Burnham [00:17:17 - 00:17:37]
I think it comes back to margin though. I've worked with a number of sellers who have a distribution network and their resellers are selling an undercutting and they are trying to maintain the market position or the price point of their products and failing because they're selling to retailers who they can't do that.
David Worby [00:17:57 - 00:18:04]
Okay guys I think in a moment we're going to come on to some of the challenges and limitations so at that point we'll just take a small break.
Mark Pinkerton [00:18:06 - 00:18:31]
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David Worby [00:18:45 - 00:18:56]
Welcome back. Just before we jump into challenges and limitations, Dan, do you just want to talk a little bit about how Listable helps businesses with some of the challenges that we've started to talk about and we'll go on to talk about? I think as I...
Dan Burnham [00:18:55 - 00:19:42]
I think as I mentioned, our thesis is about a spread better. So I've seen a number of businesses go onto Amazon, they've spent a lot of time and effort setting up to go onto Amazon, and they don't get the sales that they thought they were going to get, or they go onto another channel and the same thing happens. Often it goes the other way and they exceed their possibilities, but in both cases they then go, well this is great, let's go and look at what else can we do, or this hasn't worked, should we just pack everything in, or can we add something else to try and mitigate our losses. And so our approach is generally try and make it as easy as possible to add channels once you've built that infrastructure, once you've set up to list onto marketplaces, why should it be more difficult to add another one.
David Worby [00:19:42 - 00:20:09]
Excellent. OK, well, that leads us nicely into the second half of this podcast, where we want to talk about some of the challenges that businesses face and how maybe Listable can help them out with that. David, I'd like to come to you first. When we sat down before and started to talk about some of the challenges we felt businesses were going to face in pursuing these channels, the first on, I think, almost everybody's list was the loss of a customer or the loss of data about customers. That's number one on our list for a reason
David Kohn [00:20:11 - 00:21:03]
Yes, absolutely. Again, if you are a brand that wishes to be a good and valuable brand, then you want to manage the experience that your customer has with your brand. And as soon as you start losing that, you start losing the ability to control it. And particularly with data, if you're on Amazon, if you're a new customer, then you're not even going to appear in, you're not going to get your emails, you're not going to get a whole host of marketing that you could otherwise deliver to that customer. Your customer service messaging is different. So the loss of data, as well as the analytical side of it, and the fact that it would give you tremendous information that could power your business, it's dissipating the relationship that you have with the customer. You almost have no relationship other than the delivery of the product.
David Worby [00:21:03 - 00:21:33]
I find that obsession with data fascinating in industries that have been built more recently, for whom returning annual profits to shareholders is arguably less significant than it is in traditional retail, who can't turn the lights on unless they generate some form of return on their investment. And therefore, I think what that leads to is a lack of investment in data by retailers. And as a consequence, if you're not absorbed in and fascinated by the accumulation and use of data, you care less about losing a customer.
David Kohn [00:21:33 - 00:22:03]
Would that be true? Well, certainly as businesses become more digital, it gives you the opportunity to gather and analyse more data. And as we, that can power so many different aspects of your operation. And I know, David, you're incredibly passionate about digital organisations being data-driven. I think if you're not data-driven, you're gonna have problems. You're just guessing most of the time. You've gotta change your business culture.
David Worby [00:22:03 - 00:22:08]
Limitation number two on our list is cannibalization, but Dan, I think you've got a different word for this, haven't you?
Dan Burnham [00:22:08 - 00:22:39]
I'd love to take credit for it, it's not my term, it's channel-bilisation, so there is a concern, a genuine concern that if you're listing your products on third party sites you're taking traffic away from your own sales on your own website and I think that's a valid concern. We have done a lot of investigation and studies and looked at it quite a lot and it's much less prevalent than you might expect. A lot of the time the traffic is incremental but you do need to pay attention because it's not always the case.
David Worby [00:22:40 - 00:22:47]
Why is it that it's less relevant or less prevalent, sorry, than we maybe think? Is that because customers aren't really loyal?
Dan Burnham [00:22:48 - 00:23:24]
Well, I think to David's point about the loss of customer data, I mean, I'm a marketplace specialist and I think marketplaces present a great opportunity, but I also agree that customer data and data in general is key. But I do think that you can acquire customers. The goal really with marketplaces often is to make an initial sale, but then introduce that customer to a brand that they otherwise may not come across. I think there are ways that you can, you know, encourage customers to make repeat purchases through the website once they have bought from a marketplace.
David Worby [00:23:24 - 00:23:25]
Okay.
Dan Burnham [00:23:24 - 00:23:29]
Amazon strive hard to prevent you from doing that, but you can still do it.
David Worby [00:23:25 - 00:23:25]
Amazon. Thank you.
Dan Burnham [00:23:29 - 00:23:41]
And so I think that it's key to sort of consider that, but I think that you have to be careful not to kind of throw the baby out of the bath water and assume.
David Kohn [00:23:39 - 00:24:14]
And I think just to take that point on board, I do think if you are going to trade through marketplaces, and I guess many or most of the people listening to this will be trading through marketplaces, is do whatever you can to try and capture the customer at some point in the future. That has to be a strategy, whether it's via the packaging, whether it's via the way you present the product, whether it's via the communication, albeit limited, that you can have with them. But really, really set out to try and get that customer to shop with you again.
David Worby [00:24:14 - 00:24:52]
I think that's a really good point, and we had a client in the U.S. who lost control of two-thirds of their distribution, but inevitably, their products were still arriving in customers' homes. So, we said, why don't we put a QR code or some identifier on the product that at least you zap it, and now you're back at the home of the brand again. You may have bought it through Amazon, you may have bought it through any variety of third-party solutions, but actually, the moment the product arrives and you start using it, you can have a connection with the home of the original brand. And they did that, and it increased loyalty tremendously.
Dan Burnham [00:24:52 - 00:25:25]
I think there's actually two considerations if you break it down with channelabilisation. The first is lifetime value, I was listening to your excellent conversation about retention on the way here, and so I think that's a genuine concern and you need to take steps to try and mitigate that. But the other is margin loss, and the fact that you're potentially paying more in commission than you would be paying for sales through your own website, and I kind of have issue with that. A lot of brands or a lot of businesses ignore the marketing cost of selling through your own website when they're calculating what the margin is.
David Kohn [00:25:26 - 00:25:54]
And that is for sure, because I think if you look at CPA or even CPC, but if you look at CPA through Google Shopping, for example, you're going to find that that absorbs a significant proportion of your margin in a way that selling through a marketplace, it may be more tangible in a way with a marketplace because there is a commission, but that commission may well be significantly lower than the CPA through many of the channels that you're currently using.
David Worby [00:25:54 - 00:26:16]
Well, we also hear on the kind of cannibalization or channibalization debate is the notion of differential ranging and the ability to differentiate ranges available through different channels and therefore potentially reducing. Do you think that, Dan, is at the heart of why cannibalization is less of an issue than you think it's likely to be? Or do you think there's more opportunity for differential ranging?
Dan Burnham [00:26:16 - 00:26:57]
I think in terms of margin, one of the key points of marketplaces is that they strongly encourage free shipping, which you may not be charging through your website. And so a lot of businesses want to charge extra for the price of the unit on a marketplace than they would through their website because they want to include free shipping to rank better. And I think that that has an effect on where you place your products and what you do. So a lot of businesses may renumber a particular unit and sell the same thing and call it something else on a marketplace in order to get around the fact that the price points are different and customers will find it easy to compare prices from different sites.
David Worby [00:26:54 - 00:26:54]
Yeah.
David Kohn [00:26:57 - 00:27:37]
I think at a simplistic level, I mean, if you go back to many of the retailers who have operated concessions in department stores, now a sadly dying breed, but all of those retailers would have a specific strategy for the specific department store, possibly even for the specific town. You would put a range in that you felt was suitable for that selling channel. And to me, the same is true here. I don't think you want to put your whole range onto Amazon, certainly don't want to put your whole range onto eBay, but you want to pick the range that is most suitable to the customer base that you believe you're accessing through that channel.
Dan Burnham [00:27:38 - 00:27:53]
I'm interested though, I mean Pareto principles apply, right? So if you're listing a subset of your products on a marketplace, you may be missing out on quite a few sales. So you may have other considerations which are driving that,
but if sales is your goal, I would always encourage putting everything on everything.
David Worby [00:27:57 - 00:28:13]
I think it's where that kind of growth objective meets the brand objective and I think if you're trying to thread a neat line between the two, throwing everything on Amazon or throwing everything on a marketplace would seem to be all about growth, less about brand, there's probably a trade-off.
David Kohn [00:28:13 - 00:28:21]
Me personally, obviously clearance, I think it's almost a no-brainer to put clearance onto eBay.
But I'm far more into putting the long tail on, the stuff that's expensive for you to acquire customers to. You're probably looking at the Pareto, you'd probably like the top 10 bestsellers. I'm thinking, with my retail hat on, that's where I get my best efficiencies in PPC, it's where I get my best efficiencies in terms of the way the website works. And I'm fearing, if you like, accessing that to other channels.
Dan Burnham [00:28:47 - 00:28:57]
But if you're struggling to sell those products on your website, why is that going to be any different on Amazon if they're the less desirable products? I mean, it's a volume game, again.
David Kohn [00:28:55 - 00:28:56]
You get, you know, it's a volume.
Mark Pinkerton [00:28:56 - 00:28:58]
You can get them again if you...
Dan Burnham [00:28:57 - 00:29:23]
You may pick up the same percentage of sales, you may get more traffic and therefore some of them will sell, but I think it will just depress your overall sales. And there is an argument that you want to get your sales volume up because most of the metrics that a marketplace measure you on is done on a percentage basis. So if you make 10 sales and one of the orders is defective, that's 10% order defect rate, whereas if you make 100 sales and one of them is defective, that's 1%.
David Worby [00:29:23 - 00:30:16]
I think it all comes back to knowingly engaging with marketplaces to deliver what you want, as opposed to just slavishly doing what they require or tell you or insist has to be done. So it is about what we said at the start, which is kind of defining what your strategy is so that you know at any point whether your engagement with a marketplace is compromising that strategy. I think we also want to just talk in limitations a little bit about one of the big limitations, Dan, which I know you have a passionate belief and view of. That is the infrastructure requirements in order to make marketplaces and other channels efficient. It's quite a challenge for businesses, particularly if they're starting up. Talk a little bit through about the tech challenges, particularly with relation to feeds and also internal skills. What do they need to be able to open up these channels?
Dan Burnham [00:30:16 - 00:31:20]
So I think I would actually start with skills or knowledge. You know, if you want a list on Amazon, the first thing you've got to know is, well, what do Amazon require us to do and what do I need to do and what am I in for? Then following on from that, once you understand, then you can build the infrastructure to support it. So typically marketplaces differ from the other channels because of where the sale takes place, which we touched on. So the sale taking place on a marketplace means that you have to manage your stock much more closely. When you send a feed to Google and somebody clicks through and you say this product is in stock and they click through to your website and you're out of stock, you know, you've lost the cost of a click. If the same thing happens on Amazon, you have a defective order and that can have much more serious ramifications. So you have to have an infrastructure that can very quickly integrate with each channel that you're sending on. One of the main aspects of a listing on a marketplace that takes up most of your time is formatting your listings to the requirements of the channel. So eBay require, for clothing, they have something just over 1,000 attributes for clothing.
David Worby [00:31:20 - 00:31:22]
A thousand attributes.
Dan Burnham [00:31:20 - 00:31:48]
1,000 attributes? Just over 1,000 if you take all clothing categories. Goodness. So the technical requirements and the optimization of your listings can be quite a time-consuming endeavor. And that increases because businesses aren't sitting still. They're adding products all the time. So once you've launched on Amazon your 2,000 products or however many, you move on to eBay, you're still having to manage Amazon because you're adding more products.
David Worby [00:31:48 - 00:32:01]
So that's completely dispelled the myth that this is easy to do, or a passive activity. The way you describe it sounds like a very active activity that might be specific to the individual channels in some cases.
Dan Burnham [00:31:58 - 00:32:07]
Thank you. Well, each channel has its own technical requirements. So yes, it is. It is. But I think that you can automate it.
David Worby [00:32:07 - 00:32:10]
Okay, so automation can be achieved.
Dan Burnham [00:32:07 - 00:32:15]
Okay. So automate. To go back to the spread thing, you know, you may feel like Amazon is an absolutely key channel for us
and you want to spend a lot of time very carefully optimising your titles and you're making sure you've got all the right attributes. And whereas, you know, if you decide you want to list on ePrice in Italy, you may go, well, look, it doesn't really matter. Let's put it out there and then we'll pick up some sales.
David Kohn [00:32:29 - 00:32:47]
And I also think, speaking from personal experience, the requirements of Amazon are so exacting that you have to get it right. So I think that's where having a third party involved, it can accelerate the process if you're getting it right. Get it wrong, it can really come back to bite you.
Dan Burnham [00:32:47 - 00:33:07]
have a 30 day, 30, 40 day grace period where so the way Amazon ranks products is based on their sales history and obviously new products have no sales history and so they give you a kind of 30 day grace period where they measure your performance and slot you into the rankings so it's very key that that initial period is very key that you get it right.
David Worby [00:33:06 - 00:33:39]
That's a very nice segue into our penultimate section, which is really all about how should I move forward. Now, we recognize that people listening to this podcast are in different places, some will have some marketplaces, most will have affiliate campaigns, some will have social, lots of them will have social, but there may be some people out there who haven't got any of it and are just starting out, to David's analogy, of maybe a business that's more about manufacturing and less about retailing. I know you passionately believe, Dan, in a philosophy of crawl, walk, run. In this context, how does that play out? What would you expect to see a brand do in that respect?
Dan Burnham [00:33:39 - 00:34:19]
Crawl or Run is very specifically around making sure that your metrics don't kill your campaign before you've even got started. So as I mentioned, your metrics are largely measured on your ability to deliver and the accuracy of your ads so that you're not generating loads of returns or poor feedback for Amazon's customers. And so Crawl or Run is actually an eBay phrase that is designed to protect you and say, look, try it first, go slowly, make sure all your infrastructure is working, then gradually release the brakes and push everything. Don't push everything onto the channel and then find out that you've got a break in your API connection somewhere.
David Worby [00:34:19 - 00:34:26]
Okay, I mean we've always believed in a test and learn philosophy, as David said earlier, so I guess this is probably an iteration of that.
Dan Burnham [00:34:26 - 00:34:43]
Sort of. Test and learn here, I've seen a lot of businesses do a marketplace quickly and not properly and then conclude that it's never going to work for them and that's not really telling you probably what you think it's telling you. There may be an opportunity there, you may have missed some some key aspect.
David Kohn [00:34:43 - 00:35:13]
And I tend to have a philosophy that says, just because something's easy to do, doesn't mean you should do it. I think sometimes when something is too easy for you to do, you don't give it enough management attention. And I think the one piece of advice I would give anybody here is, is don't just do this and forget about it. If you're serious about growing sales through channel, whether it's Amazon, eBay, or another, just be prepared to give it some management attention. Yeah.
David Worby [00:35:12 - 00:35:43]
Yeah, I mean, you'll get out what you put in, I guess, is the analogy there. Before we move on from the section about how do I go from here, we talked off- air about validating effort. And Dan, you mentioned earlier that there are occasions where you see effort and energy being expended in maybe some traditional campaigns that isn't fully understood in the wider holistic evaluation that people should do. So when we say validate effort here, what do we mean? What should people actually be doing that you see they're not doing?
Dan Burnham [00:35:43 - 00:36:17]
Well, I think it goes back to your original goals. I mean, really, the usual measurement is sales, but that may not be the outcome that you're looking for. If you're selling on Amazon, essentially it's relatively cheap to do. You don't pay anything if you don't sell anything. And so it's quite a useful tool for brand awareness, potentially. If you don't sell anything, your rankings will drop, but there's an argument that just having it out there is worth its weight. So you have to determine what success looks like
David Worby [00:36:18 - 00:36:47]
Fabulous segue into our last section. We're running out of time, so we'll wrap it up pretty quick. But how do we define success here? I think what we've all experienced is definition defined as sales or sometimes maybe profit through a particular channel. And I know we think that's valuable, but it's probably not as valuable, David, as the more holistic view of the impact that this initiative has had on the wider business. Can we just talk a little bit about that?
David Kohn [00:36:47 - 00:37:02]
Yes, again, I think we started by saying, what are your goals? Are your goals simply to drive growth, simply to drive sales, or are they to drive brand awareness, or are they to drive the brand experience?
Dan Burnham [00:36:59 - 00:36:59]
All right.
David Kohn [00:37:02 - 00:37:51]
And I think that this is how you have to judge it. You have to judge it against the objectives that you've set. If it's sales, obviously you've got the sales through the channel, but you've also got to measure the sales through your own channel and see whether there has or hasn't been any cannibalisation. That's a simple measure. It is more difficult to measure changes in brand perception and brand experience. And perhaps that becomes more subjective, but it shouldn't stop you trying to do it. You should certainly be looking to improve the brand experience through whichever channel you're doing it. So again, come back to packaging, come back to communication, come back to inserts, whatever it is, make sure that whatever you're doing is consistent with your brand and how you want it to be perceived.
David Worby [00:37:51 - 00:38:00]
Dan, anything to add on how you see businesses deciding to either put the dust sheets on this initiative or to open it up and expand it into other markets?
Dan Burnham [00:38:00 - 00:38:10]
Expanding into other markets is a separate conversation. I mean, essentially, if you want to trial a new territory, marketplaces can be a relatively cost- effective way to do it.
But again, it's about what you're hoping to get from the endeavour. Mostly, you want the thing to wash its own face. If you've invested a certain amount of money, you want to recoup that money. How you measure that, then, becomes the issue.
David Worby [00:38:24 - 00:38:33]
OK, I think we'll wrap it up there, because we've run out of time indeed, we've gone over. So my thanks to David. Thank you. And to Dan. Thank you very much. And join us again on the next one.
Other similar Episodes in Season 2:
Episode 3 - Understanding headless and Compossable
Episode 2 - Strategy and Planning
Episode 6 - Optimising physical and Digital
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