The London Economic speaks to e-commerce expert James Pitts-Drake, founder of Optimizon Amazon Agency, a company employing over 50 Amazon Consultants and marketplace experts about what the future holds for e-commerce during another tricky trading period.
The future of e-commerce
The way we shop has transformed wildly during the past decade. To survive, it has been essential for existing retailers to be highly adaptable.
Whilst those slow to adapt have fallen by the wayside, dynamic new retail businesses have sprung up to replace them and thrive.
Inevitable changes in online shopping habits were fast-forwarded by the Covid 19 pandemic, forcing people to stay inside, and shop from home.
The retail landscape is not predicted to settle down anytime soon, in fact we are living through unprecedented levels of uncertainty, so what does the future hold and how can retail businesses prepare for the next 5-10 years?
E-commerce expert James Pitts-Drake shares his insights into selling on marketplaces, and where he predicts the smart money will be in 2023 and beyond.
Leader of the Amazon Consultants
Nice to meet you, James. Let’s jump straight in, shall we? What is the future of e-commerce, and where should business owners invest their time?
Ha! Straight into the deep end!
It is quite clear that the future of retail, particularly ecommerce, is in online marketplaces.
The days of retailers building their own online stores and investing huge sums into driving direct traffic and sales are over. There is still a place for it in some niche sectors, but shoppers are flocking to marketplaces where they get great service, fast delivery, and have a wider choice of products. That’s where brands should invest.
Like everything online, we are seeing consolidation of traffic towards marketplaces operating at scale. In other words, a small number of platforms are monopolising online shopping traffic.
Amazon, eBay and Wayfair are just a few of the marketplaces that most households will recognise. As such, they attract eyewatering amounts of traffic.
It is this mega-traffic that has made retailers alter their way of thinking when it comes to online marketplaces. They say ‘why are we trying to bring shoppers to our platform, when we can go to where the shoppers are?’
Amazon is clearly the biggest marketplace on the planet. Are you saying that brands should focus on becoming more visible on Amazon?
Currently, Amazon is certainly the place to be. Being visible in this marketplace requires investment and specialist skills, but the rewards are certainly worth it due to the sheer number of shoppers on the platform – all of them with purchasing intent.
However, niche platforms are emerging all the time. Many of them are now large enough to attract significant traffic, but with a specialist focus. Take B&Q’s diy.com marketplace for instance.
It is possible to sell on multiple platforms at once, and brands may find extremely relevant shopping traffic on alternative marketplaces. When selling on multiple marketplaces, it is even possible to fulfill all orders from one source, such as Amazon.
Also, don’t make the mistake of overlooking eBay, which also attracts huge amounts of traffic, and is investing heavily in closing the gap on Amazon.
Succeeding on Marketplaces
How can businesses succeed on marketplaces such as Amazon?
As you can imagine, succeeding on the largest marketplace on the planet has become increasingly specialised. For instance, at Optimizon, we have specialist teams working within every part of Amazon selling. We employ creative experts, language experts, SEO specialists, technical specialists, a DSP team, and so on.
Believe me when I tell you that succeeding on Amazon is worthwhile. But it takes investment, strategy, and specialist skills to reap the huge rewards.
Smaller businesses may benefit from looking at emerging marketplaces that are specifically aligned with their product or industry. Alternative marketplaces such as eBay, OnBuy or Wayfair, whilst boasting lower traffic figures, may offer better returns.
My advice for any business selling on a marketplace, particularly Amazon, is to treat it like your own website. There are tools available to brand owners that allow you to deliver an exceptional brand experience. The days of throwing up listings with basic descriptions and stock images are long gone. Your business will reap the rewards from taking your listings and creatives seriously.
Why does Optimizon only work with big brands, when anyone can sell on Amazon and other marketplaces?
We work with all sizes of business, but most of our clients tend to be big brands.
As mentioned, succeeding on Amazon is extremely worthwhile. It’s the biggest shopfront in the world. But understandably it has become very specialised. As such, it takes investment and a comprehensive strategy to achieve success. Amazon’s infamous ‘flywheel’ approach means that the more you improve and invest in your Amazon business, the more you will be rewarded by Amazon. Big brands understand this and subsequently bring in Optmizon instead of trying to recruit several different experts.
When it comes to Amazon, large and demanding brands can be easier to work with as they understand the scale of investment and specialist skills required. Smaller businesses can sometimes underestimate the costs of selling on Amazon. But, if they have realistic expectations, Optimizon has helped some small brands achieve enormous success.
You mention ‘the costs of selling on Amazon.’ Some businesses complain about high Amazon fees. What do you say to that?
Of course, there is a cost of sale associated with any purchase, and that is no different for Amazon. On the face of it, Amazon fees can seem quite large when you factor in all fees, particularly if you are using Amazon’s fulfillment service, FBA (which we would recommend for most clients).
However, Amazon is very efficient, with huge economies of scale. Sometimes businesses do not compare the true cost of sale if they market, sell and fulfil products via their own channels. In fact, I would challenge any business to deliver what Amazon does for the same fees.
OK, we have spoken about Amazon. For businesses planning for the future, which other emerging or established marketplaces would you bet on in 2023 and beyond?
I have mentioned OnBuy, Wayfair and DIY.com. I think we will see some growth and consolidation in these marketplaces. There are gigantic marketplaces such as Taobao in China and Shopee in Southeast Asia, that will not be familiar to most shoppers here. It will be interesting to see if they make any moves to expand globally, although we know that the shopping experience is quite different in Asian markets.
However, what I’m most intrigued by is the completely new types of marketplaces set to come online in 2023. For example, we are likely to see big publishers launching their own marketplaces. Imagine looking at products in your favourite publication, and then being able to purchase the product right there and then, at the click of a button.
Any marketplace that can consolidate a product type or appeal to a niche market could see growth. But, we are all aware that economic conditions are likely to be less favourable in 2023, so if I were investing in any emerging marketplaces, I’d look towards deep discounters. Overstock in the US, and CDiscount in France could see growth as shoppers seek lower priced alternatives.
eBay has traditionally been viewed as a bargain-hunters paradise, which could result in a solid trading performance in economically difficult times. eBay has also launched its own fulfilment service to try and keep pace with Amazon. This should attract more big brands to the marketplace, so I foresee growth in that area.
Amazon Consultants helping brands to succeed during a Recession
That brings us on nicely. I was going to ask you about the difficult trading conditions expected in 2023. What would be your advice to marketplace sellers during a recession?
Almost all businesses are feeling the pinch. It’s not surprising that marketing budget is often the first casualty. However, our advice, where possible, would be to hang in there. Not only will your marketing budget go further as demand falls in the online paid advertising space, but now is the time you can establish your brand whilst others are absent from the ad space.
It is important to tailor your product listings to appeal in the market conditions. If it is a higher quality product, communicate the fact that it will last longer, making it an economical investment. If the product will save you money, demonstrate exactly how it will do that.
For more luxury items, marketing can hinge on the fact that people still want to treat themselves now and again. Angles to explore could run along the lines of ‘You deserve a treat’ or ‘if you are going to buy one Christmas present this year…’.
I realise it’s easy to tell businesses to be bold when it is someone else’s money, but one thing we do know is that marketplaces, particularly Amazon, reward effort, investment, and exceptional customer experience.
Our data team has also been compiling a lot of research demonstrating how stronger businesses emerge from recessions if they can afford to continue investing in marketing.
So, in a nutshell. Try not to cut marketing budgets. You can make savings elsewhere, such as eliminating vendor chargebacks, or outsourcing your fulfilment operations to Amazon’s FBA service.
If your business is facing challenges, please feel free to reach out to our team of Amazon consultants. I’m confident that we can help any marketplace vendor optimise their account and succeed.
Accessing the Optimizon Knowledge Base
Many thanks for your time James, I know you are a busy person. How can people reach you if they want to get in touch?
It is my pleasure!
Anyone wishing to get in touch with our team of Amazon consultants can visit the Optimizon website, which has various ways to contact us. You can also access our Knowledge Base, where you will find all sorts of free and useful information.