“Amazon is a discovery platform, right. So, if you do have a good product, that product is getting good reviews, you’re optimizing price, you're getting good assets and even if the product has some unique selling points in the marketplace, you can compete even if you're a little bit later to the game. The Amazon algorithm allows those good products to be visible to the consumer.”

Intro:
Welcome to the Agile Digital Transformation podcast, where we explore different aspects of digital transformation and digital experience with your host Tim Butara, content and community manager at Agiledrop.

Tim Butara: Hello everyone, thanks for tuning in. I’m joined today by Nick Christensen, Head of SEO and Analytics at Threepipe Reply. Nick is also the managing partner of their specialist Amazon team Emergent and in this episode, he's going to tell us more about exactly this. So, how and why they've created this team, main specificities of the Amazon platform and the impact of Covid on the brands that are selling on Amazon. Welcome Nick, it's great to have you here on the show. Anything you want to add or should we just jump straight to the questions?

Nick Christensen: Well just to add, Tim, thank you for having me on the show itself. I think your introduction was fine, let's get into the questions.

Tim Butara: Awesome. So, can you start off by telling me, why did you at Threepipe create this specialist Amazon team? And also, was this an initiative that started before 2020 or was it a kind of response to the pandemic and the lockdowns and the digitalization?

Nick Christensen: We actually started it about two and a half years ago, almost three years ago. So, prior to the pandemic. But just to give that question some context, as a performance agency, retail and e-commerce was a big part of what we were doing and a big proportion of the business and the clients and that we were servicing. So, I guess it just made a lot of sense. There's a lot of good agencies out there and it is so important to continue to refine your services, but also to innovate and develop new services. At the time, we were seeing a lot of stats coming out there showing that there are more consumers actually going on to Amazon to find and purchase products than there were going to Google. So, that was quite a big shift at the time, but in addition to that also, we had a lot of our clients that were asking these questions, what about Amazon? What can we do about Amazon? And we had a little bit of knowledge on the platform and having some general advertising principles and background, we can maneuver around it but we didn't have the expertise in the area to really push it as a key area of growth for us. 

But I mean, those are probably the main two reasons and then everything that we're seeing around there was supporting it and then we made it a huge priority for us and around Amazon, around data, around analytics as well and then we set up a specialist team. The reason we set up is because we wanted to really understand and grow our presence on the platform as quickly as we could. We created some dedicated resources, we hired people, we spent a lot of time doing R&D and beyond then it's gone really well for us. I think we're working with almost 20-25 different clients now, across the UK, Europe and the US across a lot of different verticals and across toys and games, consumer electronics, across health, personal care and in groceries as well. So, it's definitely been a good move for us and definitely a very interesting move for us.

Tim Butara: Yeah, it definitely sounds like a very awesome and the right move. Especially, considering what came afterwards, after you'd already planned everything, you created the team. You kind of went with this future ready, future-proof solution to a problem that wasn't even there when you set out on your journey. So yeah, that's really cool.

Nick Christensen: Yeah definitely, I mean I think when you look back, one of the big things with a lot of our clients was that they were scared of Amazon. Because one of the reasons is, they didn't really understand it. They couldn't really measure it, with Amazon's data it's on the Amazon platform and it's quite difficult, especially in e-commerce, where you want to have a singular customer review. You want to be able to match back that customer, they buy from you on your website or if they go into Amazon and kind of build that full picture. So, at the time there were some challenges. There was definitely some convincing to do in a lot of the areas that was around proof of concepts and kind of justifying that this is the direction to go.

Tim Butara: But I suspect that your clients-- when 2020 and Covid hit, your clients were very thankful to you for that move.

Nick Christensen: Yes, definitely everybody. Everybody I think benefited on Amazon for moving. Obviously, some categories benefited more than others.

Tim Butara: Okay, but what is so special about Amazon? How does it compare to similar e-commerce or marketing platforms?

Nick Christensen: I mean I guess probably two areas; I think from a technology perspective, I would say that there are a lot of different targeting options that you can't use in a lot of the other retail platforms. But also, on the technology front, it's probably the platform isn't as sophisticated as some of the more mature platforms such as AdWords or Facebook, but to put a protective or give some examples; on Amazon you can actually target your competitor’s products. So, you can actually say, I’m selling product A, my competitor selling product B and that product is very similar to mine and I know that that product has a lot of sales because it has a large number of reviews, it’s got a best seller rank. I can probably estimate how much traffic that listing is getting and in my advertising incorporate a strategy and focus on competitor products across similar products, products people tend to buy together as well. So, it's very product-driven obviously, you can still do the keyword targeting, audience targeting that is similar to other platforms but, right down to the product targeting and that's really interesting on Amazon, we see a lot of really good results from doing that.

Tim Butara: What about the personalization that Amazon offers, I’ve had a few conversation about this and it's been pointed out to me several times that people are really impressed and satisfied with how Amazon handles personalized recommendations. So, any thoughts on that?

Nick Christensen: Yeah, I mean look I think the way that we see Amazon is, it's not so much a search engine but it's a product discovery engine, right? Amazon has an abundance of data that no other platform has around what consumers actually do, what they actually want. When you search for something on Amazon, you may not necessarily get the product you're searching for but, you may get a product you're more likely to buy than the product you're searching for. Which is why that personalization comes in and they have all this data that allows them to be able to serve those different types of products. Obviously, as brands or agencies or even smaller sellers, it's really important to understand how that algorithm works and how you optimize it towards that algorithm with your products, understanding how consumers are searching, what they're likely to buy and look at the data behind. So, I think it's definitely very interesting how they've made it that discovery platform, and it also means that just because you're not a large brand, it doesn't mean that you can't compete with the large brands if you do understand how the algorithm works and how you can optimize your products and your stores.

Tim Butara: That’s a very good point actually, and that's my next point exactly, namely - is the pandemic having a different impact on brands that are predominantly selling on Amazon to other brands? Or what’s the situation like here?

Nick Christensen: Well, in terms of brands selling to other brands... I mean look, in terms of the pandemic, it’s brought a lot more consumers onto the platform. I read some stats on Forbes that over the pandemic it’s 60 % more consumers on Amazon, you had I think about, even more than that I think 63-64 % more stock on Amazon. So, pretty much I think almost all categories have grown and benefited but some categories have benefited more. So, if you look at the categories that solve the problem of working from home during the pandemic; the fitness, the focus beauty, personal care, sanitization products, all these things are doing really well. Whereas you look at some of the categories such as fashion, where I don't remember the last time, I wore a pair of jeans, it's probably been a few months. Those categories have not done as well as those real Covid-specific categories. And I guess where the challenge comes in with that increase in stock on Amazon is we definitely know that some brands have suffered and some of the brands we worked with are getting stock to Amazon's warehouses because with the finite amount of availability in the warehouse spaces, Amazon are going to prioritize the categories that consumers are more interested in at the time. So, I think with the increased consumers, there's definitely benefit all around but some categories have grown more and some suffer a little bit with how much stock they can get to Amazon's warehouse, or if they have a direct relationship with Amazon, how much stock Amazon actually orders across these categories. So, let's say plus and minus there.

Tim Butara: So, some of the problems are not actually digital problems but they're physical problems.

Nick Christensen: Physical problems, and I know Amazon invested pretty heavily and it's probably why we think they're going to continue to grow in their infrastructure and their distribution. They put I think four billion dollars over the pandemic to increase that, so they can scale even more.

Tim Butara: And on the digital side, I suspect that this newfound abundance of competition, I mean yeah, I just said it there it's competition I hope, for the more established brands, or is being established on Amazon already such a huge advantage that newcomers don't affect it that much?

Nick Christensen: I think there's something like 5 million sellers now on Amazon, so there is a lot of competition. But as I mentioned before, Amazon is a discovery platform, right. So, if you do have a good product, that product is getting good reviews, you’re optimizing price, you're getting good assets and even if the product has some unique selling points in the marketplace, you can compete even if you're a little bit later to the game. The Amazon algorithm allows those good products to be visible to the consumer. Yes, it's going to be more competitive and we do expect that across most of our clients we're working with, that increased competition will have an impact on some of the metrics that we're seeing or likely increase our CPC. So, it'll likely reduce, a little bit, our conversion rates with the level of competition but I think that's something that we have expected. We know that more and more people are getting on Amazon as it is growing and they're making it easier, they're making it a better brand experience as well.

Tim Butara: Yeah so, we're actually back to, you know, the main advantage is knowing how these things work and being able to basically leverage the stuff that you know about the algorithms and the platforms and how they work.

Nick Christensen: Yeah exactly, and also knowing about what consumers are in the market to buy. What are the top selling products? And if you are developing products or you already have a brand and develop products, like it's so important to just look across those categories. Amazon is the best seller rank and that's pretty much ranked from one to a hundred which are the top 100 products at any one time and you can start to look at any potential trends that you can develop or if your products already have it there, there's an option to capitalize on that too.

Tim Butara: Okay yeah, that makes a lot of sense. Now, I want to expand our topic a little bit and since we're likely to be seeing more and more tools that support digital marketing initiative, you know now with Covid and in the post-Covid future, I mean obviously we're seeing and will continue to be seeing a lot of these supporting software for marketers but, would you say that this digitalization that came with Covid is the only reason that kind of contributed to this? Or I mean, we've been seeing it before, right? It's not completely brand new and what factors are there that are contributing to this?

Nick Christensen: Yeah, I mean I don't think it's primarily down to Covid. I think if you look at Amazon, it probably applies outside of Amazon too, that over the last few years in marketing, we have a lot more data to work with and we're able to be a lot more sophisticated with the activity we run, how we measure it, but also, with the additional data and sophistication, it's going to take more resources and more time to manage that effectively and also, it will lead to more opportunities for human error really as the activity gets more sophisticated. So, the software does come into, depending which one we look at, it comes in to solve a lot of those problems around efficiency and there's definitely a lot of stuff around machine learning that allows us to just be smarter, right? You know, spend less time on the manual labor across the activity and do more of the smart stuff than the thinking work that will actually move the dial.

So, I think it's probably not just Amazon, it’s everything in general in marketing that. But on Amazon, I guess it becomes even more important, because if you think about it, there's five million sellers on there, right? And most of these sellers that they're not big businesses, they can't afford to work with consultants or agencies that have to do it themselves. So, taking a software off the shelf that costs I don't know a couple of hundred pounds a month and for example it can help them at least get started on the platform and see some results on there. Obviously, as you start to grow and get larger, the software on its own, it's not going to help you find high level of success and then that's when I guess you seem to get in some expertise there but I think it has been there on Amazon it's probably even more important just because of the level and the number of sellers on there.

Tim Butara: Yeah, this is a very good point about data. And since we've been talking about how we're seeing even more competition, more customers and more sellers, more brands selling on Amazon, the amount of this data will only increase. So yeah, it definitely makes sense that we'll be needing more and more technologies that basically support marketing efforts.

Nick Christensen: Yeah, exactly. Because you have more data, it's harder to manage.

Tim Butara: Yeah, exactly. Okay, now I want to shift our focus actually from the platform to the customer itself using the platform and my next question for you Nick is, what's special about an Amazon shopper? Do they have the same habits and needs of somebody who buys mostly through local or smaller sites, or are there extra considerations for marketers that are trying to reach their customers on Amazon?

Nick Christensen: Well, I mean, I’ve seen some data on this about what are the top reasons why consumers shop on Amazon, and I think by the top three are; fast delivery, the availability of products, so the choice they have on the platform, just the convenience of shopping on the platform, right. So, I think Amazon, it’s just easy. It's easy to shop on Amazon, whatever you're looking for, you can get it quickly, you can get it the same day in instances and the service is really good. Whereas if there's something you don't like, you can generally return it. I know that in the UK, I think something like a 25 % of Brits actually have a Prime subscription now. Which means, they do have access to free delivery and that's very interesting because of how dominant they are in the space and how they're pretty much the first place consumers go to either buy a product or to research a product before they buy it somewhere else.

So, they're big and they have all this information. I mean I’m not sure how frequent shoppers shop at some of the smaller local stores, but I know, yeah, on Amazon, when they go into the Amazon platform, they have a really strong intent to buy, and that's one of the things that we also see when we look at some of the advertising data. Some of the brands we work with where you see the conversion rates are, you know, it's not uncommon for them to be 10 to 15 times what you see on your own website. So, the Amazon customer, when they go into the platform, they’re pretty much ready to buy a product, and they have not yet decided which product they want, but they are ready to make that purchase.

Tim Butara: It probably even happens that they get product information on the company's website, and then when they want to make a purchase they just go to Amazon and make the purchase there.

Nick Christensen: Yes, I mean it is price comparison and social proof. I think that’s probably one of the areas that Amazon has more than most of the other sites. So, they can do the research on the products they want, check the reviews on Amazon, compare the price because Amazon's algorithm actually matches the pricing across other marketplaces. They've got this concept around the buy box which for any given product on Amazon, you can have multiple sellers. So, you and I can buy the same product listed on Amazon if you price it a little bit lower than I do and I guess your history is a little bit better than mine then you'll likely win that buy box. So, when somebody clicks on the buy button it will come from you.

So, I think it's quite interesting on Amazon. But also, on Amazon, you can be a seller, you can sell as a third party, which means; you sign up to Amazon, you list your products, you can ship it yourself to Amazon's warehouse or you can have a direct relationship with Amazon which it's called a vendor. At that stage if you’re a vendor, you lose control of your pricing. That goes back to Amazon's algorithm, which will always try to find the best price in the market looking at other marketplaces which is why people, as you say, they do their research, they go onto Amazon and more likely than not, they will get the best price on Amazon provided that there's a seller on there.

Tim Butara: That sounds super meticulous and streamlined and very cool.

Nick Christensen: They’re very good at that; there's other marketplaces that are looking at similar types of things I’ve seen, but I think they're probably one of the first ones that have that level of sophistication. So, it's always a competition.

Tim Butara: Yeah, but they're the trendsetters, right? And it wouldn't make sense for other brands not to take inspiration from what works. Especially, if it works so well for Amazon obviously.

Nick Christensen: Yeah, but I guess it's good for the consumer because they are getting their products on Amazon, the best price. It's good for Amazon because they're getting the consumers, obviously. For brands, their margins are squeezed a little bit but they're able to get scale, so some benefits across the board.

Tim Butara: Hey, and what's the mobile optimization situation with Amazon?

Nick Christensen: Well, I mean Amazon is pretty optimized for mobile. I think on the mobile apps they serve slightly different pages based on mobile experiences. So, I think when you look at the page, you'll see the bullet points are generally below the fold images or up above the fold. So, it's they're continually optimizing the mobile experience. Unfortunately, on the Amazon platform, we aren't able to get a huge amount of mobile versus desktop data at the moment. I’m sure that will come as they progress and continue to develop their platform.

Tim Butara: Oh yeah, and I just remembered another thing that's really cool. I mean I haven't experienced this myself but, I think that Amazon Prime also offers, like, if you get an Amazon prime subscription you also get a free Twitch subscription each month, right?

Nick Christensen: Yes.

Tim Butara: I mean it's a small benefit. But for somebody who's a regular Twitch user, that can be a major selling point actually. 

Nick Christensen: I mean, Amazon bought Twitch a while back and they're kind of starting to share a little bit of data between the two platforms, which will be interesting from one of the areas that we're looking at as well to be able to target Amazon consumers on Twitch.

Tim Butara: It really seems like Amazon has this multifaceted user and customer experience that really just proves to be the right thing for both sellers and customers. And I think I’ve noticed that you formed Emergent in about May of last year. Am I right here?

Nick Christensen: No, it was over I think it was about two and a half years ago, let's see, October 2018. I think that's when we started building and doing the research, building department. I think probably about four or five months after there, we went out to market for clients with the different services that we developed. We developed a lot of our own software as well at the time because, when we were looking and doing the R&D, we realized that, hey, actually there's a lot of stuff that we can do to be more efficient in this area because we also have a data science team in-house that builds our technology. So, it took us a few months to build it up, plan it out and then realistically I’d say, about in say, April 2020, we started with our smaller proof of concepts with some of our existing things.

Tim Butara: Okay, so that's when actually things started really rolling and snowballing. 

Nick Christensen: Yeah.

Tim Butara: Okay. So basically, this has been going on full force for about a year now. So, I’m sure you have some really unique and deep insights and experience thanks to managing this team for the better part of a year now. So, what kind of brand strategies and selling models have you seen, have kind of the biggest impact in this time?

Nick Christensen: Well, I think when you talk about brand strategies, right, I think we can have definitely seen a shift over the last couple of years. I know when we were speaking of brands in the beginning where we set this up, it was still a platform where they didn't really want to do it. It wasn't a platform they wanted to be involved in with any significant proportion of their marketing and budgets. I think a lot of brands on Amazon are more of, it's price and promotions and they didn't want to get involved in pricing and promotions at the time. But over the last few years, Amazon have actually developed that quite a bit.

So, they developed the brand store, developed the ability for you to customize your product page with A+ content. They've also developed a lot of their advertising features with video ads, just to make it a better experience on a platform beyond just comparing prices on products. And we're also seeing that in line with that, a lot of the different categories the top selling products aren't the cheapest products in certain categories such as beauty, for example, the higher priced products actually sell better than the cheaper products.

So, I think there's definitely been a shift. Both in terms of the perception of the platform, for the brands in terms of what they want to dedicate towards it, what you're able to do on the platform to support those brands and now we're actually talking to the brands. The same brands that we're talking to a couple of years ago are investing really heavily in the platform, and they're seeing is actually we can grow the brand on there, we can develop better assets, we can develop a better store experience on there, better storefront, we can do different messaging and they kind of do really well across some of the different key events as well. So, it's definitely been a mental shift that I can see over the last couple of years towards kind of taking the platform seriously just because of the scale but also because of I suppose the consumers onto the platform now. And that was the first part of the answer. The second part is the selling models.

Tim Butara: Yeah, okay cool.

Nick Christensen: I think I touched on probably that-- yeah, well there's two different selling models on the platform Amazon, right? Where there's a seller central, then there's vendor central. Seller central is, you control everything, you control your price, you control all your promotions, you control your shipping, whether you ship yourself or whether you ship to Amazon's warehouse and let them do your fulfillment. The other model is vendor central where traditionally, that was the model where the larger brands would use Amazon because, it was an easier model where you have an agreement with Amazon, they will issue POs and order the amount of stock they feel that they can sell over the next few months.

What we're seeing now more around those different selling models, is there's actually certain brands that were vendors that have direct relations with Amazon that are looking to have more control on what they sell on Amazon, how much stock they store, and also more control on their pricing. So, there's been a little bit of shift there too towards larger brands looking at utilizing the seller model as opposed to having that direct relationship with Amazon, which I think is quite interesting. So, I think on one hand you have scale, on the other hand you have less scale but you have a bit more control over your margins of which products you choose, which products you launch onto the platform.

Tim Butara: Yeah, that's a very interesting point as you said. It's like you would kind of initially assume that bigger brands would tend more towards being vendors than actual sellers themselves. So, this is a very important point that you brought up here.

Nick Christensen: Yeah, I mean it is important like, as a consumer you probably don't see so much all the stuff that goes behind there who's actually selling these different products between vendors and sellers but I think what's important, even if you're a seller and if you ship to Amazon's warehouse, you still get the Prime badge and you still are able to get the products that you sell delivered really quickly. So, I mean there's pros and cons of both models and for sure, I think it's just finding the right one for different brands that are selling on the plan.

Tim Butara: Yeah, and this may not be as interesting and relevant for customers, but it can be a very valuable piece of info for any potential Amazon sellers or people who are listening right now to the podcast and want to get on Amazon, want to start leveraging the platform for their e-commerce. So, maybe as a kind of final question before we wrap up the call, do you have any words of advice to these kinds of listeners, people who maybe don't know how to make the best use of Amazon yet?

Nick Christensen: I think start with researching. Before you sell me the platform, there's definitely some categories that are very competitive. I know there's some software out there that helps to determine where there are potential product niches, but also there's already information you can take directly off the platform to see what's doing well. I mean if you look at any category on Amazon, you can see how many products are listed in those categories, you can see who the top sellers are, you can see where they're pricing their products on the platform, you can see some of the key features of each of those products, right? So, based on a lot of that information, you can look at the reviews as well to see what is the consumer experience with these products, what are they liking, what they don't like, but having that piece of understanding about what could potentially sell on the platform is really important before you just jump head first into Amazon, put your products up and then may potentially I guess cost a bit and not make a huge amount of profit on there. 

So, doing the research looking at the best seller rank, looking at the price, looking at what's already selling and then getting on the platform. And then once you're on the platform, it's really important to use Amazon's advertising to help kick-start the products that you're selling and because the organic will come after the Amazon's algorithm looks at the traffic to your products, right. And so, it's important you get the traffic there and once it's listed to build some momentum and then if your product is good and you're getting sales, you're getting positive reviews and you'll do pretty well on the platform.

Tim Butara: Those are definitely some key points right there in the closing Nick, thank you. I hope our listeners will find it valuable. I hope your words of advice will help somebody get new reach on the platform or start a business. So yeah, before we wrap up the call, if our listeners want to reach out to you or to learn more about you, what's the best way for them to reach you?

Nick Christensen: I think drop me an email. I mean my email address is n.christensen@reply.com. So yeah, if there's any listeners out there that would like more information or are keen to engage, then drop me a line.

Tim Butara: Awesome, I’ll also include your email in the information section for the podcast. This has been an awesome conversation Nick; it's been very insightful and very topical as we said in the beginning. So, very glad I got this opportunity to speak with you about it. And to our listeners, that's all for this episode, have a great day everyone and stay safe.

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