ChannelAdvisor Connect kicked off today with David Spitz covering the latest industry trends.
ChannelAdvisor Connect has been following a number of themes for many years – China, Amazon, Logistics, Brands, Mobile and Data. But this year there is a new theme which is rising in importance.
China, says David, is increasingly prominent as Chinese sellers adopt western platforms. Amazon is now the largest online retailers in the US and, largely because of Amazon’s operation Logistics is increasingly important. Brands are starting to go direct to the consumer which will squeeze out some retailers in the middle and mobile is where it’s all happening. Data is key to win but a new factor is regulation which is increasingly impacting ecommerce and will be one of the primary forces shaping the industry for the next couple of years.
There appears to be a trend that is anti technology driven by fake news and data breaches. Today when you’re one click away from information and products it’s changes the way your live you life so it’s no surprise that legislators start looking closely at how tech firms behave.
David traces regulation back to 1969 with IBM and then in 1992 Microsoft where the US pursued anti-trust suits to stop the businesses bundling products. The anti-trust period for both IBM and Microsoft was a real distraction for both companies with Microsoft totally missing out on the mobile era. Anti-trust distractions took up all their time and suits tend to grind on for years (decades).
If we look at history, David says this could impact the giants of tech today such as Apple taking a 30% cut from their App Store and insisting that’s where all apps are purchased from.
We’re starting to see anti-trust avoidance already, for example Amazon dropping their long standing Price Parity policy in the US. Amazon private Label ads on brand’s product pages are also being scaled back as is general Amazon Private Label products across the marketplace.
Google and Facebook are also facing more political pressure than ever before and the irony is that today Microsoft are largely escaping attention as legislators examine others.
GDPR again has changed how companies handle people’s data, even beyond the EU for companies which trade within the EU.
David predicts that for the next decade large companies are likely to twist and turn in their efforts to avoid the spotlight of regulatory investigation and that could open the path for new start ups to overtake them.
Advertising on Marktplaces
Amazon’s growth has slowed considerably even through it accounts for more than 50% of US online commerce and a third in the UK. The growth slowdown is likely to be quite simply their scale and penetration doesn’t leave much room for exponential growth, at least in the west. Amazon are likely to continue turning to other revenue streams such as Amazon Advertising.
ChannelAdvisor see huge performance differences between businesses that use Amazon Advertising compared to those that don’t so if you’re not already using it it’s time to do so – either Amazon Sponsored Products or Amazon Sponsored Brands will get you above the fold on just about any Amazon search page. If you’re not advertising someone else probably is and you’re products will be below theirs and below the fold.
This isn’t just happening on Amazon, eBay are also starting to grow their advertising products with eBay Promoted Listings. It’s relatively new compared to Amazon but shows that businesses need to get to grips with advertising.
David suggests that marketplace sellers should get to grips with marketplace advertising now while there is less competition and prices are lower. By building marketplace advertising into your DNA it will be baked into all your processes and by the time your competition catches up and starts experimenting with advertising you’ll be an expert and they’ll be forced to pay higher prices until they learn the best ad optimising strategies.
Amazon Private Labels
Amazon Private Labels get a lot of attention but in reality they account for less than 1% of all sales on the marketplaces. Aside from a few key categories they probably get more attention but in reality are less of a threat than competitors.
Amazon are lessening their reliance on national postal services and third parties. They have noted in their latest SEC filing that they intend to compete with carriers and whilst the carriers dismiss Amazon as competition saying it would be too expensive to compete, Amazon are already building their network and have a long history of investing for the long term.
A couple of months ago there was a fair amount of panic when Amazon stopped buying direct from Vendors and told them to go direct through Seller Central as a marketplace seller. Previously 1p and 3p sales on Amazon were considered two different groups of suppliers but they’re not all considered as ‘selling partners’.
If brands aren’t doing sufficient volume it’s likely that soon Amazon will force you to sell as a reseller, but this is an opportunity for brands with greater control of how their products are displayed but a challenge as they’ll need assistance to manage their sales as third party sellers.