September 13, 2024 • 49 mins
Join Jamie Roller, Marketplaces Director at Dr Squatch, as she talks Gordon and Ger through the trials and tribulations of marketplaces.
Find out why she's the Amazon Queen, as she explains how to tame the intricacies of the world's biggest online marketplace and keep winning the Buy Box.
Jamie also discusses balancing Amazon with other marketplaces, how to fight competitors selling your actual products for less on Amazon, and why now is the time to be looking seriously at TikTok Shop.
Enter the world of 1P, 3P, FBA, FBM and Amazon Ads with Jamie—and learn how to survive and thrive in the online jungle that is Amazon.
In short, Jamie provides a foundation course in selling through Amazon—drawing on years of daily, practical experience gained at the sharp-end of the platform. With Amazon.ie rising up over the horizon, this is a must-listen episode for Irish retailers.
But beware. Even Jamie is looking beyond Amazon...
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
This is Functional & Fabulous, the omnichannel podcast where we unbox tales of online retail and digital transformation.
In this episode, we ask the burning question about Amazon...
A drag queen name based on Amazon.
Gordon makes an outrageous statement...
There are other marketplaces than Amazon available.
(00:24):
Ger gives the hard facts...
You know, I'm only using figures here that I'm making up.
Gordon provides the hard answers...
I wish I knew the answer.
And our guest speaks some hard truths...
I'm painting a blue picture perhaps.
But one question and one answer stand out above all others...
A lot of people who are listening will be thinking, is it worth it?
(00:47):
Is it worth it?
It's such a good question. It's something I ask myself every morning when I wake up.
I think the answer to that is going to be disappointing...
This episode of Functional & Fabulous is brought to you with pride by StudioForty9, retail ecommerce experts, omnichannel growth consultants and cut-through performance marketing specialists.
(01:10):
StudioForty9, where your digital retail success is built.
Welcome to another episode of Functional & Fabulous.
Today, we have the pleasure of hosting Jamie Roller, the Marketplaces Director at Dr. Squatch, joining us from Cape Town, South Africa.
With over a decade of experience in global strategy, consulting and high-growth ecommerce companies, Jamie leads the Marketplaces team at Dr. Squatch, one of the most dynamic brands in the consumer goods space.
(01:36):
Jamie's expertise in growth strategy, particularly within marketplaces like Amazon, has been instrumental in driving Dr. Squatch's growth.
And under her leadership, the team have been navigating the complexities and demands, and balancing the various marketplaces that Dr. Squatch works with, including Amazon in multiple jurisdictions, Walmart, Target and TikTok Shop.
(01:57):
Jamie, Amazon and marketplaces, always a super topical thing to talk about.
We're delighted to have you here to shine some light into the murky corners of the marketplaces world.
Welcome.
Thanks, guys.
That was such a great intro.
I'm so excited to be here today and to chat to you.
Welcome to the podcast.
Thrilled to have you as a guest.
And we've got loads of questions that we are just going to start firing straight into if we can.
(02:23):
Let's do it.
So marketplaces as part of an omnichannel mix and Dr. Squatch being an omnichannel brand, how do marketplaces kind of fit in with Dr. Squatch's channel mix?
It's a very interesting question, and it's something that's evolved over the course of our history as a brand.
(02:47):
We were founded in 2013 and we started as a DTC-first brand, and we had a lot of success building our business DTC first.
We were very successful in our paid media and growth marketing online.
And then Amazon kind of came alongside that for us.
(03:08):
And it became a natural offshoot of what we were doing online for DTC.
There's an obvious halo effect when you're advertising on Meta, when you're advertising on Google.
Customers naturally will go to Amazon and search for your brand.
So it makes sense for you to be there.
But we've evolved at Dr. Squatch.
We've evolved into a different era for the brand.
(03:28):
And I think over the last few years, we've expanded very rapidly in retail and bricks and mortar retail and to Walmart stores, Target stores, et cetera.
And I think that's seen a huge shift for us as a brand and how we think about how we present ourselves in an omnichannel way.
And now Amazon plays a different role.
(03:50):
So for us, it's really like the convenience channel for customers.
So customers want to be able to discover our brand in a Walmart.
And then maybe they're sitting at home on a Sunday night and they think, hey, I need some more soap.
So they might go to Amazon and we also want to be available there.
(04:10):
So it's evolved from the place where maybe a customer searches for your product because they see an ad to actually a place where we want to be able to deliver that product to the customer for convenience sake.
And actually, just like it fills the gaps between anywhere else in the customer's experience.
So I think we really want to make sure we're available wherever the customer shops and deliver that customer that kind of ultimate convenience.
(04:34):
That's great.
I think we probably want to give a bit of background in that we're about to get an Amazon.ie launch here in Ireland.
And we probably want to demystify some of the terminology that kind of jumps around so that we can give, like, a baseline understanding.
So you'll hear people talk about 1P, 3P, FBA, FBM.
(04:57):
And you can see people will either glaze over, either with boredom or confusion.
I like to think it's confusion when I talk about it.
But could you give us a little bit of insight into, like, how Amazon kind of trading is structured?
It is.
I mean, it is super confusing and can be, like, I often do forget how confusing it is if you haven't been on the marketplace.
(05:19):
So basically, Amazon has two models of selling.
They've got 1P first party and 3P third party.
1P is, basically Amazon purchases from you as a wholesaler.
You sell your products to Amazon and then they have full control over when they stock your products, how they price your products, where they sell your products, et cetera.
(05:43):
You have control over your product merchandising and your advertising, but essentially you give up all control over where your products are stocked.
There are benefits to that model and the benefits are that those products are ranked higher in Amazon algorithm and that Amazon preferentially places those products in front of customers.
(06:08):
The other model is 3P or third party selling on Amazon or what Amazon calls FBA or seller or being a seller versus 1P, which is what Amazon calls vendor.
3P is when you get your product set up on Amazon, you set up the listings and the creative.
You can send inventory into Amazon, but you still own that inventory.
(06:32):
You control pricing, you control your ads, you control everything.
You own the listings, you own the inventory.
And that is the fundamental distinction is the ownership of who owns the products and the listings and the inventory.
And there are various pros and cons between each of those, but that is the basic model.
For example, at Dr. Squatch, we are a 3P vendor.
(06:53):
We choose to own our own listings, our own inventory and manage our own pricing.
There are other brands that will choose to go 1P.
A lot of the big like Unilevers and P&Gs are 1P vendors.
Yeah, there are various ways to, various pros and cons for each.
Yeah, and I guess that the Unilevers and the P&Gs are very comfortable with that model because they have that, effectively vendor relationship with most of their retailers.
(07:18):
They're not really huge direct businesses.
But being a 3P vendor then on Amazon must give you some greater control over brand, particularly then from a pricing perspective.
But I'm guessing that you probably have other brand protection challenges on a marketplace, like, could say, for example, if I bought Dr. Squatch product wholesale, could I go onto Amazon and sell that?
(07:47):
Yep, absolutely.
And we have had, at Dr. Squatch, we have had a number of challenges from a brand protection standpoint.
And it's from exactly that.
So historically, we've priced our products at Amazon slightly above our other channels for a couple of reasons.
The main reason being that Amazon costs, Amazon fees are very high.
(08:09):
On average, you pay around, for example, in a beauty product, you pay 15% to Amazon just for a referral fee and around 15% for fulfillment fees to get the product to a customer.
That ends up being a lot.
And so in order to make a decent margin, we decided to price our products up a bit.
And we only sell bundles on Amazon.
We don't sell our single bars of soap.
(08:29):
We sell soap at Dr. Squatch.
We don't sell single bars.
We sell bundles of products.
So what we were doing is we were selling a bundle of products.
We were pricing it slightly higher than B2C, but then what customers were doing is they were going to a B2C store, buying products in bulk with coupons or discounts or promos, and then reselling it on Amazon.
And then what happens is we lose what Amazon calls the Buy Box.
(08:53):
So essentially, we've got all this inventory sitting at Amazon.
We can't sell it because someone else is selling it at a lower price and we lose all of those sales.
And it's a terrible experience for the customer.
It ends up just being lower sales overall and customers don't get the products in front of them because it's not a good experience.
So absolutely, like, brand protection issues are a huge, huge issue for a lot of brands on 3B.
(09:17):
What kind of steps do you take to fix those as they come up?
Because the Amazon opportunity is absolutely massive, and it's worth taking part in and there's definite upsides to it.
So it's worth fixing these kind of problems.
What sort of action do you need to then take?
I mean, just to the greater point, like, yes, Amazon is a huge opportunity and it's something that the longer we as a brand, the longer we spend on Amazon, the longer we sell on Amazon, the bigger we believe the opportunity is.
(09:51):
However, most of the work that I put in and the strategy that we put together as a team has a very fundamental underpinning on this brand protection, sustainability protection aspect of it, de-risking the channel because it is such a nuanced and difficult channel to operate on in terms of protecting your brand, brands getting shut down, et cetera.
(10:16):
There are a lot of aspects of it.
So, I mean, when you think of something like this where a reseller can sell on your brand and you lose the Buy Box, it's very nuanced and you kind of, like, there are a lot of, you know, you can work with a lot of agency partners who will sell you a one-and-done solution to it.
(10:38):
But what I found is you have to, it's good to have those partners and those playbooks to deal with, like, what do we do when our Buy Box gets taken?
But you actually have to kind of build your own playbooks to deal with it on a case-by-case basis.
So for example, like what we did when we started getting these Buy Box issues was we actually started working with a vendor, an agency, a reseller agency who actually had a PI on their team, a private investigator, and helped us investigate the actual, like, who these sellers were, where they were coming from?
(11:11):
And then we had to figure out, like, how do we get these specific sellers shut down?
Because it wasn't just a matter of what these agencies normally do, which was, like, send them cease-and-desist letters.
No, like we actually had to link them to our wholesale accounts and get them shut down directly because or else, like, they would just carry on selling.
So you do have to be prepared for, like, rolling up your sleeves and getting dirty because it is pretty nuanced.
(11:39):
I think that's one of the things that we've seen with respect to Amazon.
It is a channel that you have to be incredibly proactive on.
But just to go back to the primer bit, because I do think that that's worth just completing.
We talked about the 1P and 3P and then when you're 3P, you have FBA, FBM and you've been talking a little bit about the Buy Box.
(12:01):
Would you mind, just for the audience members who don't know a lot about Amazon yet, explaining the difference between FBA, FBM, why you might want to go one or the other, and then just touch on the Buy Box and winning the Buy Box and owning the Buy Box and what that means?
Yeah, absolutely.
I mean, these are kind of critical terminologies when you are an Amazon seller and a lot of things you'll figure out pretty quickly.
(12:28):
But once you become an Amazon seller, that's 3P as opposed to a vendor, which is 1P, you'll have to make the decision, do I want to sell FBA or FBM?
FBA is Fulfilled by Amazon.
FBA is Fulfilled by Merchants.
So when you're selling FBA, it means you send your inventory into Amazon.
(12:48):
Amazon will then fulfill it.
To Prime customers, they'll fulfill it within two days if it's a Prime customer or whatever the specifications are.
But essentially, like, your inventory is at Amazon's warehouses.
That is what FBA means versus FBM, Fulfilled by Merchant, which is when you fulfill your own orders at whatever lead time you specify.
(13:14):
The two big distinctions, at least how I see it with those two types of selling is essentially the conversion rate.
It comes down to conversion rate because imagine you're shopping on Amazon and you see a product that says, 'Available tomorrow with Prime.'
You're much more likely to purchase that product, click through that product, add to cart, et cetera,
(13:37):
if it's available tomorrow, than you are with a product that says, available by June the 20th or whenever, like, 10 days from now.
And so what we found certainly is that FBM products, and of course, like Dr. Squatch, we sell soap...
It's very much a convenience product...
(13:58):
You buy today, you want it tomorrow.
But we found that FBM has 50% lower conversion rates than FBA typically.
So it's definitely something to consider.
However, there are benefits to going on FBM.
For example, if you sell something like carpets, you don't want to stock them at FBA centres because it's hellishly expensive.
(14:22):
People don't expect to get a carpet the next day.
So there's no risk in you just setting it up FBM and shipping it when a customer buys it.
That's totally fine.
You have to weigh up the pros and cons for each, but there are two different selling models.
And you can also juggle both.
So for example, when we're thinking of testing out a new bundle structure, we often launch it FBM first to see if it actually gets some traction.
(14:50):
And if we start to see some orders coming in and they're, like, relatively good versus some other products, then we'll switch to FBA, send inventory into Amazon, and then go from there.
But we often use both interchangeably.
And I imagine that you have to send quite a lot of inventory into Amazon for FBA, particularly for a territory like the US.
(15:12):
Yeah.
And I think that makes me think of the number one rule in Amazon that I always say.
One of my bosses taught me this when I first started on Amazon, which was never go out of stock in Amazon.
I think that's the most important rule because when you're stocking your products on Amazon, yes, if you're FBA, you want to send products into Amazon.
(15:36):
And at Dr. Squash, we send hundreds of thousands of units into Amazon every year.
The thing with Amazon is that the algorithm will pick up when you're out of stock and it will slow down your sales.
But the problem is that even when you get back into stock, if you've been out of stock, you're not just going to pick up the next day and ramp up.
(15:58):
You will have a very long, long, long lead time into getting ramped back up.
So you need to make sure you're kind of always in stock.
And that's actually a big supply chain hurdle.
Yeah.
Don't lose momentum, I guess, is the message.
Yeah.
I think Ger was going to ask a question...
Yeah, well, I was just wondering, just to conclude the Buy Box piece.
I don't know if you were going to go into that, but I mean, there's so much going on in here.
(16:20):
There's a lot to consider.
There's definitely a lot to get right.
But let's talk about the Buy Box.
What the Buy Box is, is when you go into Amazon and you see the yellow button that says add to cart, that is the Buy Box.
So right underneath the Buy Box, you'll see it says they're sold by Amazon or the brand name.
(16:42):
And then it says ships from whoever.
Whoever you see under the Buy Box is who is winning the Buy Box.
So for example, if I look on Dr. Squatch's pages on Amazon.com now, most of them will say sold by Dr. Squatch, ships from Amazon.com.
What that means is that it's our inventory.
(17:05):
Us as the brand, Dr. Squatch is selling it.
And it's shipped from Amazon.com.
If it was a 1P product, it would say sold by Amazon, ships from Amazon.
And likewise, if it was an FBM product, it would say sold by Dr. Squatch, ships from Dr. Squatch.
If you lose that Buy Box to a reseller, it will say sold by X, ships from X.
(17:33):
And that is when essentially, like, when you see that, that means that that Buy Box is being won by someone else.
And it's essentially being lost by whoever else was on that Buy Box.
And that is where we had problems before is because it's a listing that we've set up.
But now another seller has latched onto it.
And they are now winning the Buy Box, so to speak.
(17:55):
And the thing to understand on Amazon is that once you set up a listing, you don't own that listing.
Amazon owns that listing.
So anyone in the world essentially can latch onto that listing and start selling their products as a seller.
So Crocs, if you want to sell a pair of Crocs, you can go on, list yourself as a seller and list against Crocs products and sell Crocs if you want.
(18:21):
And then you can take up their Buy Box, so to speak, as long as you have the lowest price.
And inventory available...
Which is something I'd imagine a lot of people when they're starting to get into Amazon may not be aware of, but it is a horrifying...
There is a horrifying realisation moment, I'd imagine, when all of a sudden your stock is sitting there, you've managed to restock, you've replenished, you're waiting for the orders to roll in and wait a minute, no, you don't have the Buy Box anymore.
(18:48):
Somebody else is taking control of the hosepipe.
How do you get it back?
Are there things that you can proactively do?
Or is it just a case of make sure not to lose it in the first place?
The simple answer is the way to get it back is to lower your price.
The number one factor that lets you win Buy Box is having the lowest price.
(19:10):
The longer answer is, I mean, what we often do is we just simply wait for the other sellers to sell out their inventory.
Also, remember that the Buy Box is regional.
So for example, I mean, the United States is massive.
The Buy Box is, like, it's not going to show the same for every customer across the United States.
(19:33):
So if you're in Pennsylvania and there's inventory near you, but there's not inventory near you for the same seller in Los Angeles, it's not that... two customers in those places aren't going to see the same person winning the Buy Box.
So what you can do is just wait until that seller sells out, kind of try to make sure that their source of inventory gets shut off and just allow them to sell out.
(19:57):
If you're really desperate to earn the Buy Box, just drop your price.
Unfortunately, there's not that much else you can do because Amazon, remember that Amazon wants to give the lowest price to customers.
So they will do whatever they can.
If it means creating a bidding war between sellers to let them win the Buy Box, then that's what they'll do.
(20:18):
Yeah, I think it's, if my understanding is correct, it's probably also worth flagging that Amazon is very much a data-driven and process-driven organisation.
So there's little room for nuance.
So you can't be calling your account manager and having a chat with them like you might with a wholesale customer.
(20:42):
That's very different.
It's very binary with Amazon.
You're either meeting the criteria or not.
Oh, yeah.
That's if you're lucky enough to have an account manager.
At Dr. Squatch, we have an account manager in the UK and the EU, but we've never had an account manager for the US.
(21:05):
In fact, I don't know of anyone who has a quote-unquote free account manager for the US.
Basically, if you're a seller on Amazon in the US, you have to figure things out yourself unless you want to pay for one of their hellishly expensive account manager plus people.
But otherwise, you just get stuck in customer service and you have to go through the rigmarole.
(21:29):
So there's no one you can just get on the phone with.
And even if you do, you have to just go through a process.
And oftentimes, candidly, a lot of the processes seem crazy and seem pretty broken.
And I think as we're talking through this, like, Amazon is starting to sound like really quite a challenging space to be in.
(21:53):
And I guess a lot of people who are listening will be thinking, is it worth it?
Because this sounds like a really, really tough place to be.
And from your experience, have you, what are the benefits that you've found from being able to successfully negotiate 1P, 3P, FBA, FBM, winning the Buy Box, getting your inventory into the right place?
(22:22):
Keeping your markets open...
Keeping your markets open and then successfully advertise...
We actually haven't touched on Amazon advertising yet.
That's still to come.
But, like, is it worth it?
Is it worth it?
It's such a good question.
It's something I ask myself every morning when I wake up.
(22:45):
No, I mean, I'm painting a bleak picture perhaps, but like a lot of my job is thinking through these risks.
Having said that though, I am so bullish and so passionate about Amazon because I really believe it is such a valuable market.
And I'll tell you why.
(23:05):
It is this captured audience.
I'm sure a lot of people listening to this can relate to, like, you want to buy a gift for someone or you need to restock your kitchen or you need to get a new, I don't know, monitor or something.
You just go onto Amazon and you purchase it.
Like, it is such a valuable platform because you've got such a captive audience.
(23:27):
Not being there is so... you're leaving money on the table.
And building on that, as a brand who's advertising on other channels, there are customers who are seeing your ads who are not clicking on those ads and going to your GDC site or going to other platforms, but they are going away from those ads and going to Amazon and searching for your brand.
(23:50):
You're losing those customers if you're not on Amazon.
We have seen at Dr. Squatch literally an eight-figure halo effect from doing zero, like, not even pushing ads off Amazon to Amazon.
We built a massive business just because people look for our brand on Amazon because we advertise for it digitally off Amazon.
(24:11):
And so just to call that out, basically what you're saying is you're advertising on Meta, you're advertising maybe in TikTok or occasionally PPC and people are seeing those ads and they're going on Amazon to find your product.
And I've definitely done that.
I always, in particular, look at Amazon for reviews.
(24:34):
I want to hear what people say about the product.
And because I probably wrongly or incorrectly think that the Amazon reviews are going to be a bit less biased.
And that's a whole other topic, we won't even get into that one.
But so what you're saying is you're seeing this eight-figure halo effect from advertising on other platforms, but seeing the results and the conversion in Amazon.
(24:56):
Correct, correct.
Which I think is a really, I mean, is really important...
Yep.
I mean, you just look at, like, Dr. Squatch's branded search on Amazon in the US.
We have such... at one point, searches for Dr. Squatch soap were higher than searches for the biggest category term, which was bar soap, which is just insane and higher for any other brand.
(25:22):
And that is because all of that money that we were spending on Meta that was driving to DTC was creating this huge amount of awareness for us on Amazon.
And that was before we were putting a lot of focus on Amazon.
It was just a complete halo effect.
So I think what I take from that is if you're not at least active on the platform, at least putting your products there, you're losing out on a huge amount of goodwill that your customers could be giving you because they want to buy your brand there and it's not available.
(25:59):
So like the very least that you could do is just put your brand in Amazon and capture that awareness and that intent from the customers that are looking for your brand.
Yeah, I think that's key because that then leads into the question of Amazon Ads and how you make sure that your listing is in front of the customer when they're searching for your brand and how you intervene into that, into that, I suppose, discovery flow for customers.
(26:36):
And we probably will run out of time if we start going into the minutiae on Amazon Ads.
But that's also something that people are going to have to consider.
And I'm sure you have to consider in your role on a daily basis.
Yeah, Amazon Ads.
So I think the important thing to know about Amazon Ads, at least how I think about it, is that firstly, Amazon and all of the other retail, the online retailers are following suit, but like Amazon has expanded their ad inventory so much over the last few years that if you search for something, most of the first page is sponsored product placement.
(27:23):
So in other words, if you are not advertising your product, even on your branded listing, your branded, for example, if I don't advertise for Dr. Squatch for the term Dr. Squatch at all, most of the first page is going to be taken up by other brands.
So you really need to think carefully about where you're putting your brand in a sponsored way, because if you don't do it, someone else is going to take up those spaces, even if you are organically ranked very well.
(27:56):
Secondly, think about how Amazon Ads perform compared to CPAs on other channels.
As of today, the cost-per-click and the cost-per-acquisition for most keywords and for most ads on Amazon is lower, at least tends to be lower than it would be if you were acquiring a customer on Meta.
(28:19):
So if you think about, like, your,
and that's true for most brands,
if you, most brands that I've spoken to at least,
if you think about, like, where it makes sense
to spend your money, it does make sense to,
you know, if you are, say Dr. Squatch,
and you are advertising for bar soap or men's soap,
it does make sense to spend money
(28:41):
on some of those paid search ads under bar soap or men's soap,
because not only will you be getting those customers
that are searching for bar soap and men's soap,
but you'll be doing it at a lower cost than you would be
had you tried to acquire them on Meta or Google.
So quite broad.
So you've got brand defense advertising and then you've got customer acquisition advertising and general brand advertising.
(29:05):
And we could probably talk for, I'd say we could probably do an entire season on just Amazon before even getting onto other marketplaces, because there are other marketplaces than Amazon available.
Are there? Tell us more.
What other marketplaces are there?
(29:27):
Obviously there are other marketplaces.
Which ones is Dr. Squatch interested in and what are you seeing in those marketplaces, Jamie?
Yeah, it's a great question and something I think about fairly frequently.
The question of, like, which marketplaces should we be playing in?
(29:47):
And I think, so today we are available on Walmart.com, again, both as a 1P and a 3P seller.
We are on Target in the US.
We're on Target as a, again, 1P, 3P seller.
We're in a lot of other retailer sites, Kroger, etc.
And we're also on TikTok Shop.
(30:08):
We also have Buy with Prime.
Apart from that, we've not expanded too much online.
And that's mainly for the reason that, like, actually mainly because my leadership team had told me that I need to keep my focus on Amazon, even though I want to kind of expand to all of these other marketplaces.
I think it's a good point that... like, Amazon is such a massive channel.
(30:34):
And every moment I spend away from Amazon is a huge opportunity cost.
So while I am always asking myself, like, shouldn't we be expanding onto this, like, Shein and FlipShop and all of these new marketplaces?
(30:54):
And I have them on a long list of backlogs.
Ultimately, like, when I sit down at my desk every morning, I'm like, yes, but if I don't spend time on Amazon.com today or Amazon.eu today then it's a massive opportunity cost.
So we've purposefully kept our list of marketplaces small today with a long backlog of things that we'd like to eventually try out when we ever get time.
(31:16):
And just to extend that question a little bit.
So obviously, you've just expressed that very clearly.
If you're spending time away from Amazon, there's an opportunity cost.
So what is the benefit then of spending time on a Walmart or a Target or a TikTok Shop or any of the other ones?
Well, there are a few.
(31:37):
And the way that I see it is this, really, is we don't know what the future is going to look like in five or 10 years.
And when I close my eyes and think hard about what the ecommerce landscape is going to look like in 10 years, I find it very hard to believe that there's 100% probability that Amazon's going to be as big as it is today and that there's not going to be someone else that's also as big.
(32:05):
So I think I want to set up Dr. Squatch for success wherever we can.
And I want to make sure that we're fully set up in the other channels that are going to be those big channels in a few years.
And so I think it's important to at least start dipping our toes in those channels.
There are other reasons too.
Walmart is very heavily pushing digital penetration as one of their company-wide business goals.
(32:29):
And so it's important to think of it not just like, well, where could be big, but also if we want to be big at Walmart, we have to also be big on Walmart.com.
And so we need to make sure, as part of the omnichannel business, we need to lean in there.
Yeah, so I guess, and just to clarify for those who don't know the Dr. Squatch business, so you have a large wholesale business where you're selling into retailers and they're distributing on your behalf.
(33:00):
You have a large DTC business where you're selling direct from your own website.
And then you have a very large as well, marketplaces business, which is substantially Amazon, I guess.
So what you're saying is, if you want to keep friends with Walmart and Target and you want them to treat you nicely, we'll say, from a retail perspective, you should, or it's wise to also use their marketplaces?
(33:26):
Is that part of it?
Or is it, like, that they're cheaper?
Like, I mean, obviously, they don't get as many eyeballs, presumably, but they still get a lot.
Is it cheaper for you to sell there?
The truth is that if you're playing in Walmart, for example, Walmart, and it's not just Walmart, it's a lot of retailers these days, I can think of many, many retailers that I've worked with and that I know of, and that people that I know working with now, where they are very, like, one of the top five, all of their... one of their top five agenda items is digital penetration.
(34:03):
And so if you want to play nicely with these retailers, you have to show them that you're also supporting them digitally and on their online stores.
So whether or not it's cheaper, and they often do try to make it cheaper, but whether or not it's cheaper, you have to show that you're supporting their digital agendas.
I was going to say, I think it's part of having a balanced distribution strategy.
(34:25):
So the Walmart audience may be slightly different to the Amazon audience, maybe slightly different to the Target audience and the Kroger audience and so on and so on.
So if you want to reach everybody, you're going to have to be in all of those places.
And speaking of reaching everybody, with an eye on the clock, just a kind of a last note, last but not least, to TikTok Shop.
(34:48):
How are you finding that?
I mean, we're very eager to see TikTok Shop launch in Ireland.
We don't have it yet.
It's in the UK, obviously it's in the US.
We're watching with some fascination.
There's an enormous overlap between the people who buy on TikTok Shop and people who are also Amazon shoppers.
Something like 97% overlap, as I understand it.
(35:10):
But yeah, what's your take on TikTok Shop, Jamie?
Yeah, I think it's a...
I have enormous excitement around the potential of TikTok Shop.
We have dipped our toes into it.
We've tried a bunch of different tactics in terms of merchandising and advertising on the channel.
(35:35):
We've not really found anything that's doubling our business and getting us to that.
I think the most I've heard brands make on the channel is, like, $150,000 a day.
We're certainly nowhere near that.
I'm still super hopeful that we just need to continue trying things.
And usually, like, in my experience, usually when you just keep trying things on a high-opportunity channel, you'll eventually find one that sticks.
(35:57):
I think the good news with TikTok Shop is that there's a lot of white space.
So there aren't a lot of brands who are really leaning in.
So if you can get in early and start throwing things against the wall, I'm hopeful that there are things that are going to stick.
So I think the things that seem to be working now are affiliates, are getting the right merchandising slash funding slash pricing structure for your brand.
(36:26):
But I think you do need to be prepared to spend X percent of time on it and really have a testing strategy that works.
And I will say, I don't think we've...
We're not in that six-figure-a-day range yet, but I'm hopeful that we'll get there.
It's such an interesting channel, in a way, TikTok.
It's very...
When I think of TikTok sometimes, I think it is that very experimental, somewhat chaotic, how do we wrap TikTok in a strategy, you know, and make it, like, tame it with our strategy.
(37:02):
And I'm not 100% sure anybody has managed that yet.
But it seems like a very strong opportunity as well.
Yeah, I'm excited by it.
Well, Jamie, it's been an absolute pleasure speaking with you.
It's very, very clear that you're wrestling.
You're in the middle.
You're right in the middle of the game, kicking for the goals.
(37:24):
So it's great to have that chat and get the benefit of your experience, especially as we face into our own, let's say, Amazon opportunities for the future in Ireland.
It's lovely to have that, you know, the benefit of the experience and thanks very much for sharing so generously with us here today.
Yeah, thank you.
Thank you so much, Jamie, for sharing that insight and helping my understanding, Ger's understanding, and hopefully everybody who's listening's understanding.
(37:51):
Thank you so much.
It's been such a pleasure to talk to you today.
I had so much fun.
Thank you.
That was great.
That was illuminating and educational.
Very clear, Jamie is right in the thick of things at the moment.
And I don't think you get more or better than that in terms of experience and practice.
(38:12):
What did you think, Amazon?
Amazon? What did you think, Amazon?
I said Amazon so much in the last...
What did you think?
Is that my new name now?
That's your new name.
If you had a drag queen name based on Amazon.
Amazon-in Grace...
I'm not even going to attempt to go there.
Go on anyway.
Okay.
So, I totally lost my train of thought.
(38:35):
Look, we've got an Amazon 101 there, and I think what was super interesting was it actually sounds like it's really, really difficult to manage this channel.
It's not like plug-and-play.
But then you've got to offset that against the huge opportunity.
(38:56):
It's a little bit like having a shop in the busiest high street of the city.
Yeah, yeah, yeah.
You're paying enormous rent.
You have a huge footfall.
You've got to be immediately turned on for customer service and the opportunity, et cetera.
Stock in place, everything ready to roll as soon as you're dropped into it.
(39:16):
I remember a good few years ago, we had a client who went on Amazon and came off it within about, I'd say even two weeks or something.
They were a manufacturer, so they had the product manufacturer...
They were manufacturing the product themselves.
But Amazon, it was so incredibly busy, they couldn't manufacture fast enough.
And they kept on running, going out of stock.
(39:38):
And Amazon kept on sending them, you know, get your stuff sorted out, guys, kind of emails.
And eventually they decided to pull out of Amazon because they couldn't keep up with the demand.
Which is actually quite astounding when you think about any business, to have that level of demand become a problem.
Yeah.
I think what it's telling us is that it's a very, very viable part of a broad channel mix.
(40:07):
And what Jamie did allude to there is that Amazon sits alongside their DTC business.
Yep.
It sits alongside their retail and wholesale business.
There are other marketplaces they trade on.
It sounds like what I thought was a really interesting comment was around every second she spends away from Amazon has a huge opportunity cost.
(40:32):
But you still have to have one eye on the future.
And if I think about the theme of the season, which is having that strategic clarity...
Jingle Roger, please.
Yeah.
Insert jingle, now.
If I think about some of the things that have been coming through throughout this particular season on who we've spoken to, having strategic clarity around your distribution strategy is also incredibly important.
(41:02):
And I would be concerned about hedging Amazon against other marketplaces.
And what I mean about that is I wouldn't want to be 100% dependent on one marketplace.
I'd like to see balance across that channel mix.
I think Jamie's point there, though, was, you know, how do you really hedge against the marketplace that is the number one, the biggest, et cetera, et cetera?
(41:33):
I mean, like, you can't realistically hedge your bets against something that might be delivering...
Now, I'm only using figures here that I'm making up, but they could be delivering 95% of your marketplace's business.
Yeah, therein lies the challenge...
So is it just a case of keeping your eye on the ball and having your fingers in the other pies and making sure you have something going on in the other marketplaces?
(41:54):
I wish I knew the answer to that question.
Because then I...
Why don't you, Gordon?
Why don't I?
Because I'm not telepathic and not that visionary.
If you think about the amount of overhead in managing a channel like Amazon, you can imagine that that level of overhead would be multiplied.
So maybe other marketplaces aren't quite as complex to manage or aren't quite as sophisticated to manage, but you've got that cost of managing.
(42:21):
You maybe need 10 or 20 other marketplaces to be performing well to offset the value of the largest marketplace that you have.
And have you got the systems?
Have you got the capability?
Have you got the resource?
The innovation?
Another theme of the season.
(42:41):
Have you got all of that capability available to you to be able to do that?
Or do you just make the decision to focus on one particular marketplace and really excel there?
I think it's a very interesting balance that brands will need to strike.
(43:03):
And one of the things that we then didn't discuss is how does this work if you're a multi-brand retailer?
I think the answer to that is going to be disappointing.
How does it work if you're a multi-brand retailer?
I don't see how multi-brand retailers will really be able to play in the space because there is the commission that you've got to pay to Amazon.
(43:29):
And then, you know...
Probably their distribution agreements with their various brand partners.
Yeah.
So I'm not 100% sure.
But the one thing I did hear is if you are a brand and if you have a product that you're going to market with yourself, you are leaving money on the table if you're not on Amazon and in multiple ways.
(43:50):
Number one, that halo effect that you get from advertising on other platforms and having your brand on Amazon.
I can totally understand that.
I mean, that's intuitively common sense.
I do it.
I see an ad for something, I'll go on YouTube to look up a review.
I might go on Amazon to look up a review.
So if as a brand you're advertising on another platform and you're not selling on Amazon, you're feeding somebody else.
(44:15):
Because somebody else who might be selling your brand on Amazon and taking advantage of the halo effect that you would otherwise be taking advantage of.
So you're leaving money on the table in that respect, and also this whole idea that other people might be selling your brand or your products, or very, very, very similar ones on Amazon and you're not getting the benefit of it. So...
I once heard Amazon described, and I thought it was a really, really great description of it, as a data problem.
(44:44):
So if you view Amazon as one giant data problem and you've got buyers and sellers, supply and demand, and there's constantly people, organisations, could be individuals, could be corporations, who are constantly looking for opportunity.
(45:06):
And if they find something that is being searched and there is no direct product match for that, then there is an opportunity there.
And wherever there is an opportunity, someone will come and fill that gap and exploit that opportunity.
And if that's chaining your brand through the grey market and obtaining it through a different wholesale channel and jumping in there, they will get into that space.
(45:36):
And I suppose that's basically what a marketplace is.
But even as Jamie mentioned, you know, they had that issue where they were selling their own products slightly more expensive on Amazon and they had people going direct to their website, buying the product with, let's say, a coupon and then selling it on Amazon slightly cheaper than their own.
(45:58):
You see this loads.
It's called product arbitrage.
And if you pop into YouTube, Amazon product arbitrage, there'll be people who go around and they go around to, like, Tesco and to Boots...
I've seen this.
I got kind of, I got into one of my YouTube rabbit holes, and they go in and they find products and then they'll look for that product that's been discounted.
(46:19):
They'll look at the pricing of it and the demand patterns for Amazon.
They'll buy it off the supermarket shelf and they'll sell it themselves.
And there's people constantly doing that.
And I suppose, you know, that's true kind of free market behaviour.
Absolutely, yeah.
I think so that we had that whole question about the challenges of Amazon.
(46:41):
I think there are plenty and also it is quite refreshing and I suppose not unexpected, but definitely refreshing to hear how bullish Jamie also is at the same time.
So she's in the thick of it.
She's getting gray hairs.
She's waking up in the morning wondering, is it all worth it?
But at the end of the day, she decides it is because the opportunity is enormous and they have to be there.
(47:03):
Yeah, I think that's the big learn for me today is, yes, it's hard work.
Yes, it's difficult.
But yes, it's really, really worth doing.
Mm hmm.
And also interesting, I suppose, from the point of view of a brand that has grown so fast, I think only about 10, 11-years-old now, grown incredibly fast, grew through the wholesale model, grew through DTC, but also very, very important piece is the marketplaces.
(47:33):
And it feels like, I think very, very clear, you can't ignore marketplaces.
We have the marketplaces coming to Ireland.
I've definitely worked with brands in the past who wouldn't, who refused to go on Amazon.
That feels like it's a mistake.
It feels like you need to just buckle down.
Yeah, you'd have to have really, really strong logic not to do that.
(47:59):
But I suppose the way I would think about that is if I was a brand and there was a huge shopping centre that was about to open, that was guaranteed to be full of customers, I would probably want to have a shop in there.
And on that note, Roger, we will owe Jamie a jingle.
We made a promise, I don't think you heard, but on your behalf, we promised a jingle to Jamie.
(48:24):
I think it will be something that rhymes with the Amazon Queen, maybe something of that nature.
Jamie Roller, the Amazon Queen.
Gordon, it's been a pleasure as always.
We'll sign off and leave it there.
Thank you very much.
And thanks for listening, everybody.
Thanks, Ger. See you, everybody.
You've been listening to Functional & Fabulous, with Ger Keohane and Gordon Newman. If you'd like to know more about the podcast, or about StudioForty9 and Omnichannel Stories, please go to functionalandfabulous.ie. the Our sound engineer was Elaine Smith, and the show was produced by Roger Overall.
This is Functional & Fabulous, the omnichannel podcast where we unbox tales of online retail and digital transformation.
In this episode, we ask the burning question about Amazon...
A drag queen name based on Amazon.
Gordon makes an outrageous statement...
There are other marketplaces than Amazon available.
(00:24):
Ger gives the hard facts...
You know, I'm only using figures here that I'm making up.
Gordon provides the hard answers...
I wish I knew the answer.
And our guest speaks some hard truths...
I'm painting a blue picture perhaps.
But one question and one answer stand out above all others...
A lot of people who are listening will be thinking, is it worth it?
(00:47):
Is it worth it?
It's such a good question. It's something I ask myself every morning when I wake up.
I think the answer to that is going to be disappointing...
This episode of Functional & Fabulous is brought to you with pride by StudioForty9, retail ecommerce experts, omnichannel growth consultants and cut-through performance marketing specialists.
(01:10):
StudioForty9, where your digital retail success is built.
Welcome to another episode of Functional & Fabulous.
Today, we have the pleasure of hosting Jamie Roller, the Marketplaces Director at Dr. Squatch, joining us from Cape Town, South Africa.
With over a decade of experience in global strategy, consulting and high-growth ecommerce companies, Jamie leads the Marketplaces team at Dr. Squatch, one of the most dynamic brands in the consumer goods space.
(01:36):
Jamie's expertise in growth strategy, particularly within marketplaces like Amazon, has been instrumental in driving Dr. Squatch's growth.
And under her leadership, the team have been navigating the complexities and demands, and balancing the various marketplaces that Dr. Squatch works with, including Amazon in multiple jurisdictions, Walmart, Target and TikTok Shop.
(01:57):
Jamie, Amazon and marketplaces, always a super topical thing to talk about.
We're delighted to have you here to shine some light into the murky corners of the marketplaces world.
Welcome.
Thanks, guys.
That was such a great intro.
I'm so excited to be here today and to chat to you.
Welcome to the podcast.
Thrilled to have you as a guest.
And we've got loads of questions that we are just going to start firing straight into if we can.
(02:23):
Let's do it.
So marketplaces as part of an omnichannel mix and Dr. Squatch being an omnichannel brand, how do marketplaces kind of fit in with Dr. Squatch's channel mix?
It's a very interesting question, and it's something that's evolved over the course of our history as a brand.
(02:47):
We were founded in 2013 and we started as a DTC-first brand, and we had a lot of success building our business DTC first.
We were very successful in our paid media and growth marketing online.
And then Amazon kind of came alongside that for us.
(03:08):
And it became a natural offshoot of what we were doing online for DTC.
There's an obvious halo effect when you're advertising on Meta, when you're advertising on Google.
Customers naturally will go to Amazon and search for your brand.
So it makes sense for you to be there.
But we've evolved at Dr. Squatch.
We've evolved into a different era for the brand.
(03:28):
And I think over the last few years, we've expanded very rapidly in retail and bricks and mortar retail and to Walmart stores, Target stores, et cetera.
And I think that's seen a huge shift for us as a brand and how we think about how we present ourselves in an omnichannel way.
And now Amazon plays a different role.
(03:50):
So for us, it's really like the convenience channel for customers.
So customers want to be able to discover our brand in a Walmart.
And then maybe they're sitting at home on a Sunday night and they think, hey, I need some more soap.
So they might go to Amazon and we also want to be available there.
(04:10):
So it's evolved from the place where maybe a customer searches for your product because they see an ad to actually a place where we want to be able to deliver that product to the customer for convenience sake.
And actually, just like it fills the gaps between anywhere else in the customer's experience.
So I think we really want to make sure we're available wherever the customer shops and deliver that customer that kind of ultimate convenience.
(04:34):
That's great.
I think we probably want to give a bit of background in that we're about to get an Amazon.ie launch here in Ireland.
And we probably want to demystify some of the terminology that kind of jumps around so that we can give, like, a baseline understanding.
So you'll hear people talk about 1P, 3P, FBA, FBM.
(04:57):
And you can see people will either glaze over, either with boredom or confusion.
I like to think it's confusion when I talk about it.
But could you give us a little bit of insight into, like, how Amazon kind of trading is structured?
It is.
I mean, it is super confusing and can be, like, I often do forget how confusing it is if you haven't been on the marketplace.
(05:19):
So basically, Amazon has two models of selling.
They've got 1P first party and 3P third party.
1P is, basically Amazon purchases from you as a wholesaler.
You sell your products to Amazon and then they have full control over when they stock your products, how they price your products, where they sell your products, et cetera.
(05:43):
You have control over your product merchandising and your advertising, but essentially you give up all control over where your products are stocked.
There are benefits to that model and the benefits are that those products are ranked higher in Amazon algorithm and that Amazon preferentially places those products in front of customers.
(06:08):
The other model is 3P or third party selling on Amazon or what Amazon calls FBA or seller or being a seller versus 1P, which is what Amazon calls vendor.
3P is when you get your product set up on Amazon, you set up the listings and the creative.
You can send inventory into Amazon, but you still own that inventory.
(06:32):
You control pricing, you control your ads, you control everything.
You own the listings, you own the inventory.
And that is the fundamental distinction is the ownership of who owns the products and the listings and the inventory.
And there are various pros and cons between each of those, but that is the basic model.
For example, at Dr. Squatch, we are a 3P vendor.
(06:53):
We choose to own our own listings, our own inventory and manage our own pricing.
There are other brands that will choose to go 1P.
A lot of the big like Unilevers and P&Gs are 1P vendors.
Yeah, there are various ways to, various pros and cons for each.
Yeah, and I guess that the Unilevers and the P&Gs are very comfortable with that model because they have that, effectively vendor relationship with most of their retailers.
(07:18):
They're not really huge direct businesses.
But being a 3P vendor then on Amazon must give you some greater control over brand, particularly then from a pricing perspective.
But I'm guessing that you probably have other brand protection challenges on a marketplace, like, could say, for example, if I bought Dr. Squatch product wholesale, could I go onto Amazon and sell that?
(07:47):
Yep, absolutely.
And we have had, at Dr. Squatch, we have had a number of challenges from a brand protection standpoint.
And it's from exactly that.
So historically, we've priced our products at Amazon slightly above our other channels for a couple of reasons.
The main reason being that Amazon costs, Amazon fees are very high.
(08:09):
On average, you pay around, for example, in a beauty product, you pay 15% to Amazon just for a referral fee and around 15% for fulfillment fees to get the product to a customer.
That ends up being a lot.
And so in order to make a decent margin, we decided to price our products up a bit.
And we only sell bundles on Amazon.
We don't sell our single bars of soap.
(08:29):
We sell soap at Dr. Squatch.
We don't sell single bars.
We sell bundles of products.
So what we were doing is we were selling a bundle of products.
We were pricing it slightly higher than B2C, but then what customers were doing is they were going to a B2C store, buying products in bulk with coupons or discounts or promos, and then reselling it on Amazon.
And then what happens is we lose what Amazon calls the Buy Box.
(08:53):
So essentially, we've got all this inventory sitting at Amazon.
We can't sell it because someone else is selling it at a lower price and we lose all of those sales.
And it's a terrible experience for the customer.
It ends up just being lower sales overall and customers don't get the products in front of them because it's not a good experience.
So absolutely, like, brand protection issues are a huge, huge issue for a lot of brands on 3B.
(09:17):
What kind of steps do you take to fix those as they come up?
Because the Amazon opportunity is absolutely massive, and it's worth taking part in and there's definite upsides to it.
So it's worth fixing these kind of problems.
What sort of action do you need to then take?
I mean, just to the greater point, like, yes, Amazon is a huge opportunity and it's something that the longer we as a brand, the longer we spend on Amazon, the longer we sell on Amazon, the bigger we believe the opportunity is.
(09:51):
However, most of the work that I put in and the strategy that we put together as a team has a very fundamental underpinning on this brand protection, sustainability protection aspect of it, de-risking the channel because it is such a nuanced and difficult channel to operate on in terms of protecting your brand, brands getting shut down, et cetera.
(10:16):
There are a lot of aspects of it.
So, I mean, when you think of something like this where a reseller can sell on your brand and you lose the Buy Box, it's very nuanced and you kind of, like, there are a lot of, you know, you can work with a lot of agency partners who will sell you a one-and-done solution to it.
(10:38):
But what I found is you have to, it's good to have those partners and those playbooks to deal with, like, what do we do when our Buy Box gets taken?
But you actually have to kind of build your own playbooks to deal with it on a case-by-case basis.
So for example, like what we did when we started getting these Buy Box issues was we actually started working with a vendor, an agency, a reseller agency who actually had a PI on their team, a private investigator, and helped us investigate the actual, like, who these sellers were, where they were coming from?
(11:11):
And then we had to figure out, like, how do we get these specific sellers shut down?
Because it wasn't just a matter of what these agencies normally do, which was, like, send them cease-and-desist letters.
No, like we actually had to link them to our wholesale accounts and get them shut down directly because or else, like, they would just carry on selling.
So you do have to be prepared for, like, rolling up your sleeves and getting dirty because it is pretty nuanced.
(11:39):
I think that's one of the things that we've seen with respect to Amazon.
It is a channel that you have to be incredibly proactive on.
But just to go back to the primer bit, because I do think that that's worth just completing.
We talked about the 1P and 3P and then when you're 3P, you have FBA, FBM and you've been talking a little bit about the Buy Box.
(12:01):
Would you mind, just for the audience members who don't know a lot about Amazon yet, explaining the difference between FBA, FBM, why you might want to go one or the other, and then just touch on the Buy Box and winning the Buy Box and owning the Buy Box and what that means?
Yeah, absolutely.
I mean, these are kind of critical terminologies when you are an Amazon seller and a lot of things you'll figure out pretty quickly.
(12:28):
But once you become an Amazon seller, that's 3P as opposed to a vendor, which is 1P, you'll have to make the decision, do I want to sell FBA or FBM?
FBA is Fulfilled by Amazon.
FBA is Fulfilled by Merchants.
So when you're selling FBA, it means you send your inventory into Amazon.
(12:48):
Amazon will then fulfill it.
To Prime customers, they'll fulfill it within two days if it's a Prime customer or whatever the specifications are.
But essentially, like, your inventory is at Amazon's warehouses.
That is what FBA means versus FBM, Fulfilled by Merchant, which is when you fulfill your own orders at whatever lead time you specify.
(13:14):
The two big distinctions, at least how I see it with those two types of selling is essentially the conversion rate.
It comes down to conversion rate because imagine you're shopping on Amazon and you see a product that says, 'Available tomorrow with Prime.'
You're much more likely to purchase that product, click through that product, add to cart, et cetera,
(13:37):
if it's available tomorrow, than you are with a product that says, available by June the 20th or whenever, like, 10 days from now.
And so what we found certainly is that FBM products, and of course, like Dr. Squatch, we sell soap...
It's very much a convenience product...
(13:58):
You buy today, you want it tomorrow.
But we found that FBM has 50% lower conversion rates than FBA typically.
So it's definitely something to consider.
However, there are benefits to going on FBM.
For example, if you sell something like carpets, you don't want to stock them at FBA centres because it's hellishly expensive.
(14:22):
People don't expect to get a carpet the next day.
So there's no risk in you just setting it up FBM and shipping it when a customer buys it.
That's totally fine.
You have to weigh up the pros and cons for each, but there are two different selling models.
And you can also juggle both.
So for example, when we're thinking of testing out a new bundle structure, we often launch it FBM first to see if it actually gets some traction.
(14:50):
And if we start to see some orders coming in and they're, like, relatively good versus some other products, then we'll switch to FBA, send inventory into Amazon, and then go from there.
But we often use both interchangeably.
And I imagine that you have to send quite a lot of inventory into Amazon for FBA, particularly for a territory like the US.
(15:12):
Yeah.
And I think that makes me think of the number one rule in Amazon that I always say.
One of my bosses taught me this when I first started on Amazon, which was never go out of stock in Amazon.
I think that's the most important rule because when you're stocking your products on Amazon, yes, if you're FBA, you want to send products into Amazon.
(15:36):
And at Dr. Squash, we send hundreds of thousands of units into Amazon every year.
The thing with Amazon is that the algorithm will pick up when you're out of stock and it will slow down your sales.
But the problem is that even when you get back into stock, if you've been out of stock, you're not just going to pick up the next day and ramp up.
(15:58):
You will have a very long, long, long lead time into getting ramped back up.
So you need to make sure you're kind of always in stock.
And that's actually a big supply chain hurdle.
Yeah.
Don't lose momentum, I guess, is the message.
Yeah.
I think Ger was going to ask a question...
Yeah, well, I was just wondering, just to conclude the Buy Box piece.
I don't know if you were going to go into that, but I mean, there's so much going on in here.
(16:20):
There's a lot to consider.
There's definitely a lot to get right.
But let's talk about the Buy Box.
What the Buy Box is, is when you go into Amazon and you see the yellow button that says add to cart, that is the Buy Box.
So right underneath the Buy Box, you'll see it says they're sold by Amazon or the brand name.
(16:42):
And then it says ships from whoever.
Whoever you see under the Buy Box is who is winning the Buy Box.
So for example, if I look on Dr. Squatch's pages on Amazon.com now, most of them will say sold by Dr. Squatch, ships from Amazon.com.
What that means is that it's our inventory.
(17:05):
Us as the brand, Dr. Squatch is selling it.
And it's shipped from Amazon.com.
If it was a 1P product, it would say sold by Amazon, ships from Amazon.
And likewise, if it was an FBM product, it would say sold by Dr. Squatch, ships from Dr. Squatch.
If you lose that Buy Box to a reseller, it will say sold by X, ships from X.
(17:33):
And that is when essentially, like, when you see that, that means that that Buy Box is being won by someone else.
And it's essentially being lost by whoever else was on that Buy Box.
And that is where we had problems before is because it's a listing that we've set up.
But now another seller has latched onto it.
And they are now winning the Buy Box, so to speak.
(17:55):
And the thing to understand on Amazon is that once you set up a listing, you don't own that listing.
Amazon owns that listing.
So anyone in the world essentially can latch onto that listing and start selling their products as a seller.
So Crocs, if you want to sell a pair of Crocs, you can go on, list yourself as a seller and list against Crocs products and sell Crocs if you want.
(18:21):
And then you can take up their Buy Box, so to speak, as long as you have the lowest price.
And inventory available...
Which is something I'd imagine a lot of people when they're starting to get into Amazon may not be aware of, but it is a horrifying...
There is a horrifying realisation moment, I'd imagine, when all of a sudden your stock is sitting there, you've managed to restock, you've replenished, you're waiting for the orders to roll in and wait a minute, no, you don't have the Buy Box anymore.
(18:48):
Somebody else is taking control of the hosepipe.
How do you get it back?
Are there things that you can proactively do?
Or is it just a case of make sure not to lose it in the first place?
The simple answer is the way to get it back is to lower your price.
The number one factor that lets you win Buy Box is having the lowest price.
(19:10):
The longer answer is, I mean, what we often do is we just simply wait for the other sellers to sell out their inventory.
Also, remember that the Buy Box is regional.
So for example, I mean, the United States is massive.
The Buy Box is, like, it's not going to show the same for every customer across the United States.
(19:33):
So if you're in Pennsylvania and there's inventory near you, but there's not inventory near you for the same seller in Los Angeles, it's not that... two customers in those places aren't going to see the same person winning the Buy Box.
So what you can do is just wait until that seller sells out, kind of try to make sure that their source of inventory gets shut off and just allow them to sell out.
(19:57):
If you're really desperate to earn the Buy Box, just drop your price.
Unfortunately, there's not that much else you can do because Amazon, remember that Amazon wants to give the lowest price to customers.
So they will do whatever they can.
If it means creating a bidding war between sellers to let them win the Buy Box, then that's what they'll do.
(20:18):
Yeah, I think it's, if my understanding is correct, it's probably also worth flagging that Amazon is very much a data-driven and process-driven organisation.
So there's little room for nuance.
So you can't be calling your account manager and having a chat with them like you might with a wholesale customer.
(20:42):
That's very different.
It's very binary with Amazon.
You're either meeting the criteria or not.
Oh, yeah.
That's if you're lucky enough to have an account manager.
At Dr. Squatch, we have an account manager in the UK and the EU, but we've never had an account manager for the US.
(21:05):
In fact, I don't know of anyone who has a quote-unquote free account manager for the US.
Basically, if you're a seller on Amazon in the US, you have to figure things out yourself unless you want to pay for one of their hellishly expensive account manager plus people.
But otherwise, you just get stuck in customer service and you have to go through the rigmarole.
(21:29):
So there's no one you can just get on the phone with.
And even if you do, you have to just go through a process.
And oftentimes, candidly, a lot of the processes seem crazy and seem pretty broken.
And I think as we're talking through this, like, Amazon is starting to sound like really quite a challenging space to be in.
(21:53):
And I guess a lot of people who are listening will be thinking, is it worth it?
Because this sounds like a really, really tough place to be.
And from your experience, have you, what are the benefits that you've found from being able to successfully negotiate 1P, 3P, FBA, FBM, winning the Buy Box, getting your inventory into the right place?
(22:22):
Keeping your markets open...
Keeping your markets open and then successfully advertise...
We actually haven't touched on Amazon advertising yet.
That's still to come.
But, like, is it worth it?
Is it worth it?
It's such a good question.
It's something I ask myself every morning when I wake up.
(22:45):
No, I mean, I'm painting a bleak picture perhaps, but like a lot of my job is thinking through these risks.
Having said that though, I am so bullish and so passionate about Amazon because I really believe it is such a valuable market.
And I'll tell you why.
(23:05):
It is this captured audience.
I'm sure a lot of people listening to this can relate to, like, you want to buy a gift for someone or you need to restock your kitchen or you need to get a new, I don't know, monitor or something.
You just go onto Amazon and you purchase it.
Like, it is such a valuable platform because you've got such a captive audience.
(23:27):
Not being there is so... you're leaving money on the table.
And building on that, as a brand who's advertising on other channels, there are customers who are seeing your ads who are not clicking on those ads and going to your GDC site or going to other platforms, but they are going away from those ads and going to Amazon and searching for your brand.
(23:50):
You're losing those customers if you're not on Amazon.
We have seen at Dr. Squatch literally an eight-figure halo effect from doing zero, like, not even pushing ads off Amazon to Amazon.
We built a massive business just because people look for our brand on Amazon because we advertise for it digitally off Amazon.
(24:11):
And so just to call that out, basically what you're saying is you're advertising on Meta, you're advertising maybe in TikTok or occasionally PPC and people are seeing those ads and they're going on Amazon to find your product.
And I've definitely done that.
I always, in particular, look at Amazon for reviews.
(24:34):
I want to hear what people say about the product.
And because I probably wrongly or incorrectly think that the Amazon reviews are going to be a bit less biased.
And that's a whole other topic, we won't even get into that one.
But so what you're saying is you're seeing this eight-figure halo effect from advertising on other platforms, but seeing the results and the conversion in Amazon.
(24:56):
Correct, correct.
Which I think is a really, I mean, is really important...
Yep.
I mean, you just look at, like, Dr. Squatch's branded search on Amazon in the US.
We have such... at one point, searches for Dr. Squatch soap were higher than searches for the biggest category term, which was bar soap, which is just insane and higher for any other brand.
(25:22):
And that is because all of that money that we were spending on Meta that was driving to DTC was creating this huge amount of awareness for us on Amazon.
And that was before we were putting a lot of focus on Amazon.
It was just a complete halo effect.
So I think what I take from that is if you're not at least active on the platform, at least putting your products there, you're losing out on a huge amount of goodwill that your customers could be giving you because they want to buy your brand there and it's not available.
(25:59):
So like the very least that you could do is just put your brand in Amazon and capture that awareness and that intent from the customers that are looking for your brand.
Yeah, I think that's key because that then leads into the question of Amazon Ads and how you make sure that your listing is in front of the customer when they're searching for your brand and how you intervene into that, into that, I suppose, discovery flow for customers.
(26:36):
And we probably will run out of time if we start going into the minutiae on Amazon Ads.
But that's also something that people are going to have to consider.
And I'm sure you have to consider in your role on a daily basis.
Yeah, Amazon Ads.
So I think the important thing to know about Amazon Ads, at least how I think about it, is that firstly, Amazon and all of the other retail, the online retailers are following suit, but like Amazon has expanded their ad inventory so much over the last few years that if you search for something, most of the first page is sponsored product placement.
(27:23):
So in other words, if you are not advertising your product, even on your branded listing, your branded, for example, if I don't advertise for Dr. Squatch for the term Dr. Squatch at all, most of the first page is going to be taken up by other brands.
So you really need to think carefully about where you're putting your brand in a sponsored way, because if you don't do it, someone else is going to take up those spaces, even if you are organically ranked very well.
(27:56):
Secondly, think about how Amazon Ads perform compared to CPAs on other channels.
As of today, the cost-per-click and the cost-per-acquisition for most keywords and for most ads on Amazon is lower, at least tends to be lower than it would be if you were acquiring a customer on Meta.
(28:19):
So if you think about, like, your,
and that's true for most brands,
if you, most brands that I've spoken to at least,
if you think about, like, where it makes sense
to spend your money, it does make sense to,
you know, if you are, say Dr. Squatch,
and you are advertising for bar soap or men's soap,
it does make sense to spend money
(28:41):
on some of those paid search ads under bar soap or men's soap,
because not only will you be getting those customers
that are searching for bar soap and men's soap,
but you'll be doing it at a lower cost than you would be
had you tried to acquire them on Meta or Google.
So quite broad.
So you've got brand defense advertising and then you've got customer acquisition advertising and general brand advertising.
(29:05):
And we could probably talk for, I'd say we could probably do an entire season on just Amazon before even getting onto other marketplaces, because there are other marketplaces than Amazon available.
Are there? Tell us more.
What other marketplaces are there?
(29:27):
Obviously there are other marketplaces.
Which ones is Dr. Squatch interested in and what are you seeing in those marketplaces, Jamie?
Yeah, it's a great question and something I think about fairly frequently.
The question of, like, which marketplaces should we be playing in?
(29:47):
And I think, so today we are available on Walmart.com, again, both as a 1P and a 3P seller.
We are on Target in the US.
We're on Target as a, again, 1P, 3P seller.
We're in a lot of other retailer sites, Kroger, etc.
And we're also on TikTok Shop.
(30:08):
We also have Buy with Prime.
Apart from that, we've not expanded too much online.
And that's mainly for the reason that, like, actually mainly because my leadership team had told me that I need to keep my focus on Amazon, even though I want to kind of expand to all of these other marketplaces.
I think it's a good point that... like, Amazon is such a massive channel.
(30:34):
And every moment I spend away from Amazon is a huge opportunity cost.
So while I am always asking myself, like, shouldn't we be expanding onto this, like, Shein and FlipShop and all of these new marketplaces?
(30:54):
And I have them on a long list of backlogs.
Ultimately, like, when I sit down at my desk every morning, I'm like, yes, but if I don't spend time on Amazon.com today or Amazon.eu today then it's a massive opportunity cost.
So we've purposefully kept our list of marketplaces small today with a long backlog of things that we'd like to eventually try out when we ever get time.
(31:16):
And just to extend that question a little bit.
So obviously, you've just expressed that very clearly.
If you're spending time away from Amazon, there's an opportunity cost.
So what is the benefit then of spending time on a Walmart or a Target or a TikTok Shop or any of the other ones?
Well, there are a few.
(31:37):
And the way that I see it is this, really, is we don't know what the future is going to look like in five or 10 years.
And when I close my eyes and think hard about what the ecommerce landscape is going to look like in 10 years, I find it very hard to believe that there's 100% probability that Amazon's going to be as big as it is today and that there's not going to be someone else that's also as big.
(32:05):
So I think I want to set up Dr. Squatch for success wherever we can.
And I want to make sure that we're fully set up in the other channels that are going to be those big channels in a few years.
And so I think it's important to at least start dipping our toes in those channels.
There are other reasons too.
Walmart is very heavily pushing digital penetration as one of their company-wide business goals.
(32:29):
And so it's important to think of it not just like, well, where could be big, but also if we want to be big at Walmart, we have to also be big on Walmart.com.
And so we need to make sure, as part of the omnichannel business, we need to lean in there.
Yeah, so I guess, and just to clarify for those who don't know the Dr. Squatch business, so you have a large wholesale business where you're selling into retailers and they're distributing on your behalf.
(33:00):
You have a large DTC business where you're selling direct from your own website.
And then you have a very large as well, marketplaces business, which is substantially Amazon, I guess.
So what you're saying is, if you want to keep friends with Walmart and Target and you want them to treat you nicely, we'll say, from a retail perspective, you should, or it's wise to also use their marketplaces?
(33:26):
Is that part of it?
Or is it, like, that they're cheaper?
Like, I mean, obviously, they don't get as many eyeballs, presumably, but they still get a lot.
Is it cheaper for you to sell there?
The truth is that if you're playing in Walmart, for example, Walmart, and it's not just Walmart, it's a lot of retailers these days, I can think of many, many retailers that I've worked with and that I know of, and that people that I know working with now, where they are very, like, one of the top five, all of their... one of their top five agenda items is digital penetration.
(34:03):
And so if you want to play nicely with these retailers, you have to show them that you're also supporting them digitally and on their online stores.
So whether or not it's cheaper, and they often do try to make it cheaper, but whether or not it's cheaper, you have to show that you're supporting their digital agendas.
I was going to say, I think it's part of having a balanced distribution strategy.
(34:25):
So the Walmart audience may be slightly different to the Amazon audience, maybe slightly different to the Target audience and the Kroger audience and so on and so on.
So if you want to reach everybody, you're going to have to be in all of those places.
And speaking of reaching everybody, with an eye on the clock, just a kind of a last note, last but not least, to TikTok Shop.
(34:48):
How are you finding that?
I mean, we're very eager to see TikTok Shop launch in Ireland.
We don't have it yet.
It's in the UK, obviously it's in the US.
We're watching with some fascination.
There's an enormous overlap between the people who buy on TikTok Shop and people who are also Amazon shoppers.
Something like 97% overlap, as I understand it.
(35:10):
But yeah, what's your take on TikTok Shop, Jamie?
Yeah, I think it's a...
I have enormous excitement around the potential of TikTok Shop.
We have dipped our toes into it.
We've tried a bunch of different tactics in terms of merchandising and advertising on the channel.
(35:35):
We've not really found anything that's doubling our business and getting us to that.
I think the most I've heard brands make on the channel is, like, $150,000 a day.
We're certainly nowhere near that.
I'm still super hopeful that we just need to continue trying things.
And usually, like, in my experience, usually when you just keep trying things on a high-opportunity channel, you'll eventually find one that sticks.
(35:57):
I think the good news with TikTok Shop is that there's a lot of white space.
So there aren't a lot of brands who are really leaning in.
So if you can get in early and start throwing things against the wall, I'm hopeful that there are things that are going to stick.
So I think the things that seem to be working now are affiliates, are getting the right merchandising slash funding slash pricing structure for your brand.
(36:26):
But I think you do need to be prepared to spend X percent of time on it and really have a testing strategy that works.
And I will say, I don't think we've...
We're not in that six-figure-a-day range yet, but I'm hopeful that we'll get there.
It's such an interesting channel, in a way, TikTok.
It's very...
When I think of TikTok sometimes, I think it is that very experimental, somewhat chaotic, how do we wrap TikTok in a strategy, you know, and make it, like, tame it with our strategy.
(37:02):
And I'm not 100% sure anybody has managed that yet.
But it seems like a very strong opportunity as well.
Yeah, I'm excited by it.
Well, Jamie, it's been an absolute pleasure speaking with you.
It's very, very clear that you're wrestling.
You're in the middle.
You're right in the middle of the game, kicking for the goals.
(37:24):
So it's great to have that chat and get the benefit of your experience, especially as we face into our own, let's say, Amazon opportunities for the future in Ireland.
It's lovely to have that, you know, the benefit of the experience and thanks very much for sharing so generously with us here today.
Yeah, thank you.
Thank you so much, Jamie, for sharing that insight and helping my understanding, Ger's understanding, and hopefully everybody who's listening's understanding.
(37:51):
Thank you so much.
It's been such a pleasure to talk to you today.
I had so much fun.
Thank you.
That was great.
That was illuminating and educational.
Very clear, Jamie is right in the thick of things at the moment.
And I don't think you get more or better than that in terms of experience and practice.
(38:12):
What did you think, Amazon?
Amazon? What did you think, Amazon?
I said Amazon so much in the last...
What did you think?
Is that my new name now?
That's your new name.
If you had a drag queen name based on Amazon.
Amazon-in Grace...
I'm not even going to attempt to go there.
Go on anyway.
Okay.
So, I totally lost my train of thought.
(38:35):
Look, we've got an Amazon 101 there, and I think what was super interesting was it actually sounds like it's really, really difficult to manage this channel.
It's not like plug-and-play.
But then you've got to offset that against the huge opportunity.
(38:56):
It's a little bit like having a shop in the busiest high street of the city.
Yeah, yeah, yeah.
You're paying enormous rent.
You have a huge footfall.
You've got to be immediately turned on for customer service and the opportunity, et cetera.
Stock in place, everything ready to roll as soon as you're dropped into it.
(39:16):
I remember a good few years ago, we had a client who went on Amazon and came off it within about, I'd say even two weeks or something.
They were a manufacturer, so they had the product manufacturer...
They were manufacturing the product themselves.
But Amazon, it was so incredibly busy, they couldn't manufacture fast enough.
And they kept on running, going out of stock.
(39:38):
And Amazon kept on sending them, you know, get your stuff sorted out, guys, kind of emails.
And eventually they decided to pull out of Amazon because they couldn't keep up with the demand.
Which is actually quite astounding when you think about any business, to have that level of demand become a problem.
Yeah.
I think what it's telling us is that it's a very, very viable part of a broad channel mix.
(40:07):
And what Jamie did allude to there is that Amazon sits alongside their DTC business.
Yep.
It sits alongside their retail and wholesale business.
There are other marketplaces they trade on.
It sounds like what I thought was a really interesting comment was around every second she spends away from Amazon has a huge opportunity cost.
(40:32):
But you still have to have one eye on the future.
And if I think about the theme of the season, which is having that strategic clarity...
Jingle Roger, please.
Yeah.
Insert jingle, now.
If I think about some of the things that have been coming through throughout this particular season on who we've spoken to, having strategic clarity around your distribution strategy is also incredibly important.
(41:02):
And I would be concerned about hedging Amazon against other marketplaces.
And what I mean about that is I wouldn't want to be 100% dependent on one marketplace.
I'd like to see balance across that channel mix.
I think Jamie's point there, though, was, you know, how do you really hedge against the marketplace that is the number one, the biggest, et cetera, et cetera?
(41:33):
I mean, like, you can't realistically hedge your bets against something that might be delivering...
Now, I'm only using figures here that I'm making up, but they could be delivering 95% of your marketplace's business.
Yeah, therein lies the challenge...
So is it just a case of keeping your eye on the ball and having your fingers in the other pies and making sure you have something going on in the other marketplaces?
(41:54):
I wish I knew the answer to that question.
Because then I...
Why don't you, Gordon?
Why don't I?
Because I'm not telepathic and not that visionary.
If you think about the amount of overhead in managing a channel like Amazon, you can imagine that that level of overhead would be multiplied.
So maybe other marketplaces aren't quite as complex to manage or aren't quite as sophisticated to manage, but you've got that cost of managing.
(42:21):
You maybe need 10 or 20 other marketplaces to be performing well to offset the value of the largest marketplace that you have.
And have you got the systems?
Have you got the capability?
Have you got the resource?
The innovation?
Another theme of the season.
(42:41):
Have you got all of that capability available to you to be able to do that?
Or do you just make the decision to focus on one particular marketplace and really excel there?
I think it's a very interesting balance that brands will need to strike.
(43:03):
And one of the things that we then didn't discuss is how does this work if you're a multi-brand retailer?
I think the answer to that is going to be disappointing.
How does it work if you're a multi-brand retailer?
I don't see how multi-brand retailers will really be able to play in the space because there is the commission that you've got to pay to Amazon.
(43:29):
And then, you know...
Probably their distribution agreements with their various brand partners.
Yeah.
So I'm not 100% sure.
But the one thing I did hear is if you are a brand and if you have a product that you're going to market with yourself, you are leaving money on the table if you're not on Amazon and in multiple ways.
(43:50):
Number one, that halo effect that you get from advertising on other platforms and having your brand on Amazon.
I can totally understand that.
I mean, that's intuitively common sense.
I do it.
I see an ad for something, I'll go on YouTube to look up a review.
I might go on Amazon to look up a review.
So if as a brand you're advertising on another platform and you're not selling on Amazon, you're feeding somebody else.
(44:15):
Because somebody else who might be selling your brand on Amazon and taking advantage of the halo effect that you would otherwise be taking advantage of.
So you're leaving money on the table in that respect, and also this whole idea that other people might be selling your brand or your products, or very, very, very similar ones on Amazon and you're not getting the benefit of it. So...
I once heard Amazon described, and I thought it was a really, really great description of it, as a data problem.
(44:44):
So if you view Amazon as one giant data problem and you've got buyers and sellers, supply and demand, and there's constantly people, organisations, could be individuals, could be corporations, who are constantly looking for opportunity.
(45:06):
And if they find something that is being searched and there is no direct product match for that, then there is an opportunity there.
And wherever there is an opportunity, someone will come and fill that gap and exploit that opportunity.
And if that's chaining your brand through the grey market and obtaining it through a different wholesale channel and jumping in there, they will get into that space.
(45:36):
And I suppose that's basically what a marketplace is.
But even as Jamie mentioned, you know, they had that issue where they were selling their own products slightly more expensive on Amazon and they had people going direct to their website, buying the product with, let's say, a coupon and then selling it on Amazon slightly cheaper than their own.
(45:58):
You see this loads.
It's called product arbitrage.
And if you pop into YouTube, Amazon product arbitrage, there'll be people who go around and they go around to, like, Tesco and to Boots...
I've seen this.
I got kind of, I got into one of my YouTube rabbit holes, and they go in and they find products and then they'll look for that product that's been discounted.
(46:19):
They'll look at the pricing of it and the demand patterns for Amazon.
They'll buy it off the supermarket shelf and they'll sell it themselves.
And there's people constantly doing that.
And I suppose, you know, that's true kind of free market behaviour.
Absolutely, yeah.
I think so that we had that whole question about the challenges of Amazon.
(46:41):
I think there are plenty and also it is quite refreshing and I suppose not unexpected, but definitely refreshing to hear how bullish Jamie also is at the same time.
So she's in the thick of it.
She's getting gray hairs.
She's waking up in the morning wondering, is it all worth it?
But at the end of the day, she decides it is because the opportunity is enormous and they have to be there.
(47:03):
Yeah, I think that's the big learn for me today is, yes, it's hard work.
Yes, it's difficult.
But yes, it's really, really worth doing.
Mm hmm.
And also interesting, I suppose, from the point of view of a brand that has grown so fast, I think only about 10, 11-years-old now, grown incredibly fast, grew through the wholesale model, grew through DTC, but also very, very important piece is the marketplaces.
(47:33):
And it feels like, I think very, very clear, you can't ignore marketplaces.
We have the marketplaces coming to Ireland.
I've definitely worked with brands in the past who wouldn't, who refused to go on Amazon.
That feels like it's a mistake.
It feels like you need to just buckle down.
Yeah, you'd have to have really, really strong logic not to do that.
(47:59):
But I suppose the way I would think about that is if I was a brand and there was a huge shopping centre that was about to open, that was guaranteed to be full of customers, I would probably want to have a shop in there.
And on that note, Roger, we will owe Jamie a jingle.
We made a promise, I don't think you heard, but on your behalf, we promised a jingle to Jamie.
(48:24):
I think it will be something that rhymes with the Amazon Queen, maybe something of that nature.
Jamie Roller, the Amazon Queen.
Gordon, it's been a pleasure as always.
We'll sign off and leave it there.
Thank you very much.
And thanks for listening, everybody.
Thanks, Ger. See you, everybody.
You've been listening to Functional & Fabulous, with Ger Keohane and Gordon Newman. If you'd like to know more about the podcast, or about StudioForty9 and Omnichannel Stories, please go to functionalandfabulous.ie. the Our sound engineer was Elaine Smith, and the show was produced by Roger Overall.
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