Key Benefits and Considerations of a Hybrid Sales Strategy on Amazon

Jul 26, 2021 1:00 PM2:00 PM EST

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Key Discussion Takeaways

Are you looking to leverage your brand with Amazon? As a seller, knowing your options and navigating a digital space can be difficult.

The digital marketing world is changing, and deciding to create your own Seller Central on Amazon comes with its risks. Leveraging strategies from a brand perspective and increasing your retail through a third-party seller can improve sales and provide better shipping times. So, how do you create your selling space and execute a hybrid strategy?

In this virtual event, Aaron Conant sits down with Nicole Reich, Co-founder and Vice President of Marketing and Sales at Retail Bloom. They discuss the competitive Amazon landscape of hybrid platforms, creating a streamlined marketing and advertising strategy, and key items to budget and grow your brand registry.

Here’s a glimpse of what you’ll learn:

 

  • Nicole Reich talks about the hybrid model and price matching on Amazon
  • Why is mapping beneficial from a profitability standpoint?
  • How Amazon follows the profitability margins of vendors
  • Seller Central: some of the key risks when setting up your own vending account
  • Nicole discusses changing from a dropship vendor to a seller account
  • How to leverage a third-party seller from a product perspective
  • The correlation between shipping times and conversion
  • How to make the most of your Amazon advertisements
  • The importance of budgeting for map monitoring software
  • Why an FBA reimbursement tool is a no-brainer
  • How to repurpose employees to support both platforms
  • Nicole shares a successful case study
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Event Partners

Retail Bloom

Retail Bloom is an eCommerce marketplace agency that specializes in helping brands that already have an Amazon presence to increase their sales through a wide variety of services.

Connect with Retail Bloom

Guest Speaker

Aaron Conant LinkedIn

Co-Founder & Managing Director at BWG Connect

Aaron Conant is Co-Founder and Chief Digital Strategist at BWG Connect, a networking and knowledge sharing group of thousands of brands who collectively grow their digital knowledge base and collaborate on partner selection. Speaking 1x1 with over 1200 brands a year and hosting over 250 in-person and virtual events, he has a real time pulse on the newest trends, strategies and partners shaping growth in the digital space.

Nicole Reich LinkedIn

Co-founder and VP of Sales and Marketing at Retail Bloom

Nicole Reich is the Co-founder and Vice President of Sales and Marketing at Retail Bloom, an eCommerce marketplace agency that specializes in increasing profitability for brands with an established online market presence. Nicole, along with Retail Bloom, strives to guide eCommerce success by working closely with manufacturers and partners and offers a full-service array of marketing solutions.

Event Moderator

Aaron Conant LinkedIn

Co-Founder & Managing Director at BWG Connect

Aaron Conant is Co-Founder and Chief Digital Strategist at BWG Connect, a networking and knowledge sharing group of thousands of brands who collectively grow their digital knowledge base and collaborate on partner selection. Speaking 1x1 with over 1200 brands a year and hosting over 250 in-person and virtual events, he has a real time pulse on the newest trends, strategies and partners shaping growth in the digital space.

Nicole Reich LinkedIn

Co-founder and VP of Sales and Marketing at Retail Bloom

Nicole Reich is the Co-founder and Vice President of Sales and Marketing at Retail Bloom, an eCommerce marketplace agency that specializes in increasing profitability for brands with an established online market presence. Nicole, along with Retail Bloom, strives to guide eCommerce success by working closely with manufacturers and partners and offers a full-service array of marketing solutions.

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Discussion Transcription

Aaron Conant 0:18

Happy Monday everybody. My name is Aaron Conant. I'm the Co Founder and Managing Director here at BWG Connect where a giant networking and knowledge sharing group who does exactly that we network and now I share together as a group of brands to stay on top of the newest trends, strategies, pain points, different topics that are shaping the digital digital ecosystem as a whole. I talked with 30 to 40 brands a week to stay on top of those, it's where we get the topics for our calls, we'd love to have a conversation with anybody on the line today. Just shoot me an email Aaron aaron@bwgconnect.com we'd love to set aside some time just to chat. And also we might have some upcoming events. We're turning back on the in person events, we'd love to see you in person. If you're in Chicago, or New York or any of the tier one cities, shoot me an email, we can let you know what our upcoming events there are, we'd love to you know, get back to rubbing elbows and meeting people in person again, a couple of housekeeping items as we get started. At any point in time. If you have a question, you drop into the question section there you can drop into the chat or you can always email me Aaron aaron@bwgconnect.com And that includes like you know, for the email an hour after the call, tomorrow, next week, you have any questions in a digital space, you need any connections whatsoever, don't ever hesitate to reach out. The other thing is we're starting three to four minutes after the hour and just a heads up, we're gonna we're gonna wrap this up with three to four minutes to go on the hour as well want to make sure you have plenty of time to get on to your next meeting without being late. With that, we're gonna go ahead and kick it off. You know, this, you know, the hybrid sales strategy on Amazon. It's been a topic for a while, I think a lot more brands in the conversation I've been having have been reaching out for a call kind of a session on this from throughout the network. And I think a lot of that is just due to all the rapid changes taking place within Amazon. You know, some related to the pandemic some not. But overall eCommerce profitability. What's it look like? Is it worth going to a hybrid? What route? Do I just do it with crap out items? Do I deal with everything. And it's just it's a complicated space. So we got some great friends, great partners of the network over at Retail Bloom. incredibly unique here because they manage both one P and three p accounts and hybrid accounts, but also manage their own business on Amazon as well. So have a really keen look at what you know, what does it take to win on Amazon has a very interesting perspective around profitability and what it takes to be profitable as a whole. And so, you know, Nicole, thanks for being on the line today. I'll kick it over to you. If you want to do an intro on yourself and Retail Bloom, that would be awesome. Yeah, and then we can kind of jump into the content as a whole. So I'm good.

Nicole Reich 3:07

Awesome. Thanks, Aaron. Hi, everyone. Thank you for having me today. I'm, as Aaron mentioned, I'm Nicole Reich, one of the co founders at Retail Bloom. As he mentioned, we specialize in helping our brands with whichever Amazon or marketplace strategy is best for them. So high level like he said, we manage one p vendor accounts, seller accounts, we have our own Seller Central account that we do wholesale or revenue share models on that way and then, specifically for today's conversation are very well versed in hybrid strategies, both from an execution and consulting capacity. I'm personally very excited to dig into this hybrid conversation today. Because for one, we've heard lots of interest in it as brands are making Amazon a bigger long term priority and want to learn about how to stay profitable. And too we've seen several recent changes, like I'm talking in the last two weeks that have made brands, once again asked if I go hybrid, what does this mean for my one p account? And what are the risks. So looking forward to digging into the conversation with Aaron. As for an agenda today, I have three key topics, the first one doing a bit of a deep dive on the most common questions we get surrounding the hybrid strategy, and what you should consider the second we're going to walk through a pricing example of what it would look like if you were to partner with a three p seller versus launching your own seller account. And then lastly, we'll finish up with a brand case study from one of the brands who has successfully implemented the strategy and is now running it through us with our support. So before I get into hybrid strategy, questions and considerations, I actually just want to pull the audience and ask why are you interested in the hybrid strategy model today. And hopefully Aaron is going to share his screen in a second and you should see, I believe five responses. And if you could just take those to help me frame the rest of the conversation today. That'd be super helpful.

Aaron Conant 5:01

So Hey, everybody, I just launched the poll, if you want to, you know, do a kind of response there. As you see it, that would be awesome. And then just a reminder along the way, you'll have questions across the board, don't hesitate to reach out, just drop into the question section the chat, or email them to me, Aaron, aaron@bwgconnect.com. So we'll just give this another I don't know, looks like we've got almost half the people have voted so far, which is pretty good. As we see this slow down.

This is kind of funny.

So we'll just give this about 10 more seconds. And then we'll we'll kind of take a look at it.

About the

Alright, it's been a minute, we'll just go ahead and close this one. So show poll results to all attendees.

Aaron Conant 6:14

So

Aaron Conant 6:16

yeah, so here's the kind of anonymized data here. Are you interested in the hybrid strategy model? So, Nicole, I'm sure you can see this, too.

Nicole Reich 6:26

I mean, it's awesome. So thank you guys all for providing feedback. I actually, I asked this question a little bit, because I figured that the first two answers as it relates to profitability or crap out skews, or map pricing would be a hot topic. And if I can take over back on the slides, I actually want to touch on that point first, as we think about consideration. So hopefully, Aaron, when you stop sharing, I can switch back to my screen. Yeah. There you go. Awesome. Alright, so the first what you should be seeing right here is one question that I would like you to ask yourself, as you get into what it looks like why you would want to do hybrid, because it really has helped us on the three piece side get an understanding from the brand of what their big challenges are. So I would like you to ask yourself, Am I considering a hybrid strategy due to price squeezing from Amazon? Which IE right crap out, skews? Map violations? chargebacks? The Press by box? And if you are doing that? And if that answer is yes. Are they asking for this additional discount for retail price matching purposes? And I know maybe for a lot of you, maybe this is review, but I want to start with the basics just one more time, just so we're all on the same page? What is this price matching problem? And why is it such a big deal? And why is it super important for hybrid approach if you're looking to explore it, so price matching, as an example, what this is this, you know, you see this 12 pack of ice, it's sold on Amazon right now for 1056. From one p, if you look back to Google Shopping, the reason that they are at 1056 is because of this website, if this website were to go away, chances are this product, this price on Amazon would probably go up, which is the definition of kind of what we consider price matching on Amazon. Typically, we don't see them with Amazon leading the price, a race to the bottom, but we always see them following another third party seller. So this should probably be review. The point the the part of it that probably isn't review is how this relates to switching to a hybrid. So we hear from a lot of brands that say, Hey, you know, Amazon keeps breaking price, they're doing chargebacks, I'm just gonna go to a seller central account so that I can control the price. And what I'd like to be clear about is switching to a seller account doesn't fix your price matching problems, because if Amazon doesn't drop the price, they do force third party sellers, whether that be you or a third party seller like us to still sit stay competitive. And the way that they do that is through suppress by box. So instead of seeing the 1056 here, what the customer sees, is just see all buying options. And in this scenario, the reason why that this is so detrimental to the brand and to sales is that when a product goes to suppressed, organic ranking drops, you are unable to advertise on the product. And basically overnight, this becomes one of your worst sellers in the category, which in this example is usually an Amazon's choice. So I just wanted to throw that out there is that if you are looking at a hybrid model because you don't want to address your pricing at retail problems, it is not going to be a good fix for you and from a profitability standpoint. It also doesn't look good. So one of the things that I've outlined here is pricing as it relates to one piece. versus your own seller account versus working with a third party seller. So working from the left to the right on the one piece side. In this example, the retail is at 1056. Let's assume that the brand is selling this product to Amazon for $6 a case, they have their typical Co Op budget of maybe 22%. So the brand's net sales are about 468 a unit. That's pretty typical. I mean, obviously, I haven't included any of the advertising or the overhead expenses. But just from a margin perspective, at the skill level, this

is what it looks like. Let's say that that didn't work for the brand. So they wanted to launch their own seller account. At that point, you would keep that 1056. Because if not, you'd have that suppressed buy box, and the and the brand would get paid after the product is sold. And in that scenario, Amazon would take their 15% referral fee. And then to get prime, they probably leverage FBA, and that would cost them $9 an order. And you can see here what the brand's net would be. So in this specific scenario, if they said, Hey, I want to switch to Seller Central, because I think it's going to be more profitable. Depending on the pricing on the wholesale side, that isn't the case, they would actually see a net loss. And if they wanted to leverage a third party seller even looks worse, because the seller is going to buy it for a negotiated price, maybe $6, maybe even $5, right, but that seller still has to pay the referral fee and the FBA fee. So at that point, you're going to have a very hard time, from a seller perspective, finding a partnership that's going to be long term profitable. So this is one of the first things when we're helping brands understand or providing consulting services on the hybrid strategy. We always do this simple exercise to show them. Yes, you can do Seller Central, yes, it helps you dictate price, but only to one, only two to a point, right. So what are the options, and what I've given you today are three band aids, and then at the end, kind of that best case scenario, and I want to go through these through specifically. So the first band aid approach that we see brands doing is creating exclusive Amazon skews or variation. So they say, you know, I see Amazon constantly matching Walmart Bed Bath and Beyond target. But you know, Best Buy calm, well, I'm just going to create exclusive variations just for Amazon, whether that be three p or one P and hopefully that helps all my price matching. And what we have seen lately, especially in the last couple of months is that, yes, sometimes it works. But a lot of times it doesn't because we now see Amazon matching based on UPC title pictures. If you're doing bundles, they're basically taking the total price divided by the number of units in that order. And you're still getting those price matching issues. So if this is your backup today, or you're thinking it was going to be your backup, just know that this is definitely a band aid approach and may get riskier as Amazon enforces price more. The second one I've talked about several, you know a couple times already is to launch your own seller account for b2c margins. And what I would say from a consideration standpoint is that, yes, Sometimes it works, sometimes it doesn't. But it also requires full organization support from your warehouse, from marketing from your sales team, and from your operations team to run that seller account. And, and we'll get into that a little bit more detail in a little bit. The third bandaid that we see is that they may be they leverage a three p wholesale or revenue share through us or another party like us. And from a consideration standpoint, that works short term. But as we all know advertising costs are going up on Amazon, shipping costs are going up fulfillment costs are going up. So eventually, if we are seeing these price matching problems today, and we're trying to back into it for a short term solution, we are going to see that margin deterioration, you know, 1218 months from now. So I wanted to end this slide of the number one option, and I'm sure you've probably all heard it is that it is getting even more important to make sure that you have a map in reseller policy across all channels and understand that this is a long term project and it requires ongoing support. But it is still the best way from all perspectives to to have that healthy profitability on Amazon, as well as other website websites. So with that, Aaron I want to take a couple of seconds just to see if you have any questions or if you've gotten any questions before I move on to the next slide.

Aaron Conant 14:59

Yeah A couple, just a reminder, if you will have questions, drop them in the Questions tab there or a chat or you can keep emailing them to me Aaron aaron@bwgconnect.com And maybe we're going to get into this. But you know, the questions are around, you know, you know, staffing up if I'm going to a third party, you know, I mean, you kind of have it highlighted here. And you mentioned we'll probably get to it. So maybe we'll hold down on this, what is staffing look like? Could it go to a hybrid? Other things that that are coming in? Right? Well, what about, you know, is there any reduction in marketing options, buying reviews or participation in it? And so maybe we're going to get to all of those. But if not, they we can tackle some of them? How would you like to handle it? Everybody keeps sending in questions to the Questions tab or emailing them to me.

Nicole Reich 15:44

Yeah, absolutely. So I'll actually address both of those in the next couple of slides. So if I don't, maybe we can circle back, but I'm pretty sure I got an answer already built in. So thank you.

Aaron Conant 15:53

Perfect. Yep. Cool. So

Nicole Reich 15:54

let's stick on this one map policy. And I don't want to get into how to create those. Let's just assume that you end up going down this map journey, everything's good to go, Well, why is it so beneficial from a profitability standpoint, so I'm switching up the product here, when I built this out the Bucs that just won the NBA Finals. So that is my example for using a basketball today. But I wanted to show you the impact of consistent pricing or potentially increasing the retail and what that means from a third party seller perspective. So in this example, you know, let's say that we wanted to partner with and one we wanted to buy products from them be their third party seller, what that would look like is that 1799, maybe we buy the product at $8, we pay that referral fee for 269. And then we have our FBA fees at 568. So from our perspective, from a third party seller, on a sale for 1799, for this product, our net sales are $1.62 per unit. If the brand wants to do that themselves, it would be a similar scenario, you know, you would just take out this and you'd put in your own cogs, your cost of goods sold. So I put this in here, because if if we are able to increase the price right across the board, add $2 to the mat price, and have the same fees from the FBA because those are fixed, our referral fee increases slightly. But on the bottom point of this is that that extra $2 almost goes directly down to the bottom line. And this is why math from a three perspective, if you're launching your own seller account, or if you're legit leveraging a third party seller on your behalf, this is why math is so beneficial because it basically puts $2 more in our pocket to invest in advertising to pay more for the product to provide better shipping times or long term profitability when it comes to inbound shipping and all the other costs that are increasing on Amazon. This is a hopefully a pretty simple way to show you the importance of how beneficial it is to have a good map policy and enforce it across all platforms. Because without having that map policy as a third party seller or your own seller account, you're still going to see that suppressed by box. So this is from a numbers perspective, hopefully a good example of what it would look like once you have gone through that process

Aaron Conant 18:23

is a question comes in will Amazon follow map on the vendor side? You know, they won't adhere to it. Right. But they will. I mean, Amazon does want to make money. But they also don't want. You know, they want to also have the lowest price at any point in time. Right? So

Nicole Reich 18:41

yep, so we're actually profitability obviously has been come a much bigger deal for Amazon on the one piece side than it had in in several years past. Right. So when they're opening up new vendor accounts, they have their profitability margins that they have to hit, which then leads them to the price discounts that they're requesting from the brand. But what I would say is that, it depends, we've seen some brands where they really do adhere to map, they're doing a much better job than they had in the past. In other scenarios, we've been able to get, for example, Walmart to bring up their price. And then Amazon follows and as long as Walmart doesn't break again, we haven't had any issues. So I do feel a little bit more optimistic about their adherence to map policies today than I did maybe even two years ago. But it's not like they're going to come out and say that they're going to do that for you. It's still not in any of their policies that they're gonna follow that.

Aaron Conant 19:38

Alright, awesome. So another question comes in. What do you say to a brand who has crapped out items? Do they take those to a third party seller account? So basically, they go FBA or do they discontinue the items?

Nicole Reich 19:53

So my question to them would be, why are they crapping out? Are they crapping out because of Amazon matching? Other sites, right? And this and that one scenario that I just sent you? Or are they crapping out because you haven't approved because they're requesting a price decrease, right get to that core, because if it's crapping out due to the retail price, you were going to have the exact same struggles on the three p side as you are having on the one p side. If they are crapping out for other reasons outside of retail price, then that would be a good opportunity to explore the three p option and see a model like this where you're able to increase that bottom line by going three P.

Aaron Conant 20:34

Awesome. No, I love it. No, it's great. Because that's right. He will say hey, this I Amazon's price matching this item. That's the reason it's crappy down, it's not profitable, they're not really going to raise the price if there's a lower one out there. So they're going to take it to a third party site thinking they can charge, you know, $12 more, but they're not going to get the buy box, right? It's going to go to a third party is selling for less. And even if they did because they price it lower. Now they're not actually fixing the problem. So then you get into supply chain, right? Where's your product going? Who who can who's buying it so cheap and reselling it? So right and then is plugging that hole right through a map policy and an authorized reseller an authorized reseller policy?

Nicole Reich 21:17

Absolutely. Aaron great summary. I guess what I would say is that it is the brand's responsibility to to set the expectations as it relates to retail pricing. I know that many years ago, right, that it was always in the power the retailers, they set the pricing brands with kind of step back and say no, not our deal. Whatever you sell it for is up to you. And unfortunately, that's just not the case anymore. Awesome. Cool. Okay, the other question that we get around hybrid strategies is that, you know, hey, I have a great business on the one piece side, for whatever reason not related to map pricing, or retail pricing, I want to have a hybrid strategy. And I would do that, but I am pretty concerned about my vendor managers. backlash, right. So I want to talk about this specifically, because this has been coming up more in the last two to three weeks than we have seen probably in the last year. And what I would say is a couple of things. One, it's ever evolving, I am doing a disservice to you, if I say, you know, this is how it is and nothing will ever change. That would be completely inaccurate. We are seeing this change on a daily basis. So the the risks that you have of setting up your own Seller Central as we see them today. The first one is that we've seen brands try to land launch the Seller Central account and just won't get approved. Like they they go through the process of an application process and it just gets denied. Sometimes we see brands launch their own Seller Central account, they're alive, everything's great. But then when they want to ship products into FBA, they can't. So basically, that's Amazon's way of saying you can't have your own seller account. Or if you can, I'm going to make it very hard for you to compete. The third thing that we're seeing is more recent now than it has been in the past is this screenshot on the right about how if a brand has a one p relationship, they are not letting new upcs and acent being created for that brand in a cellar account. So what they are telling sellers, whether it be their own brand Seller Central account, or maybe a three p account is that, you know, hey, Amazon, Amazon says we already have a vendor relationship with this brand. And we want to source those products directly from the brand. And you can't create the UPC. So this has been one of the big concerns that's come up in the last couple of weeks that I would be curious if anyone else on the call, who already has a hybrid strategy has been has seen. There's some ways that we're getting around it. But I do want to bring it up. And what we would recommend if you are seeing any of these things, or are worried about your vendor manager coming back to you with some negative feedback is that don't hide it from your vendor manager. I know that that is a little different than maybe what you've heard in the past. But we've actually had some really good recent conversations with vendor managers to say, Hey, this is why we're in this scenario, we're doing this seller account because we need backup when it comes to fulfillment, right? Maybe a brand says I love this one p relationship. But I already know based on your forecasting, you're going to stock out in q4. And I want to make sure that there's enough inventory for the customers during the holiday season. Or maybe you're saying that, you know everything works really well for these core products, but you're not going to give me the pricing that I want on the seller on these skews and I'd like to leverage a seller account for those purposes. So we actually have seen some good conversations. I'm not gonna say that it's, you know, that's what you're gonna see see, but be open to the fact that the vendor Manager understands that this is going on, and that sometimes it's better just to be upfront than going behind their back. The other thing I would say is that, you know, if you decide to open up your own seller account, and it doesn't work plan for a three p backup through a retailer, right? So let's say that you understand long term, you want your own Seller Central account, but FBA, you're not able to ship units into FBA, well, there's probably a customer of yours that is already on Amazon or has a seller account and you can leverage that account so that they can just link to the existing acent. And then worst case scenario, know that you may have the pressure from Amazon so much on the seller central account that they're going to force you to go back to one P.

Aaron Conant 25:47

So the interesting thing is from the, you know, the brands today, that I'm talking to you on a weekly basis is that it just completely lines up with what you're saying that there's, there's no true policy within Amazon right now, based on size of company, right? It used to be, hey, if you're above eight to 10 million, you shouldn't, you're not going to be able to get away with it. I know brands doing significantly more than that, who did launch a third party? Well, hybrid strategy, and it's, you know, it worked smaller brands who are growing fast, who were told no, there's no clear direction, you know, across the board, I guess just you have to try it and figure it out. But I do agree with you, if you're not they will find out, I guess is the other side. You know, I've had companies that said, Hey, they set up an internet and internet company that's, you know, wholly owned subsidiary of that sits separate, it's a different LLC, and set up, you know, they tried to separate it as far from the parent company as possible. And then set up an LLC that way and try to open up a three p account under a strange name, Amazon finds it almost every single time 99.9%. And then you've got an irritated vendor manager. You might as well play the odds. And just before you waste time, effort, money, right step one, you know, I would talk to you, Nicole to see if it's worth doing it or not. And then step two, approach the vendor manager to see if you know, if they'll actually let me do it. Yeah. So I mean, are you seeing that same inconsistency across the board as well? Like, there's no, like, it'd be great if somebody issued a note inside Amazon, and we're able to get it, see what their policy is?

Nicole Reich 27:30

Yes, it would it would be it would be great. Probably not likely. But yeah, I think what I'm seeing is that if you are a leader in the category, so you know, Aaron, you mentioned maybe if you're doing more than eight to 10 million, you're not going to be able to make it work or anything below that. I don't necessarily think it's tied to $1 amount as much as it's tied to your position as a brand, against competitors in that category on Amazon. So let's just say that, you know, you're in a category that isn't very large, but you're the number one player on the one p platform, so you're an important vendor for them, chances are even it doesn't matter the dollar amount that you're doing, they're going to be pretty upset if you try to go three P. So I would maybe use that as some, I guess details as you're looking to consider the backlash from vendor manager.

Aaron Conant 28:21

Yeah. Awesome. So another question that comes in, has anyone successfully flipped a one p dropship? To a seller account?

Nicole Reich 28:30

Yeah, yes. So that is actually one of the examples I'm going to be using, as our case study are the brands that we work with actually did that exact same thing. So I will speak to that I would be interested in why they have dropship, versus just bringing orders in directly and owning it. Most of the time we see it's because they're large, LTL items, and that's why they're dropship. So if you'd like to set up a call after this, be happy to share some thoughts on that.

Aaron Conant 28:54

Yeah, I'm pretty sure that's where it's at. Yeah, so we can connect you afterwards you kind of do. And, Michelle, if you want to talk to you know, any of the other brands that we know of just you know, ping me afterwards, more than happy to connect you.

Nicole Reich 29:07

Cool. Okay, so moving on. The other thing, the other piece of this presentation, I want to talk a little bit about what it would look like of launching your own seller account versus going with a third party seller. So let's assume for purposes of this next piece, we're already through the map policies where we already understand the profitability we already know that we want to have certain skews in one P and certain skews in three P. Now we're just trying to decide do it from a brand perspective, do we do it on our own? Or do we leverage a third party seller so I have this little chart that oddly enough, Aaron in one of our first calls probably two years ago we went through, but I feel like it's probably more relevant today than it had been in the past. But I wanted to outline some of the considerations of having your own account which we call to P for Retail Bloom versus leveraging a three p Seller Central A retailer may be a customer of yours. So just maybe review but wanted to point out a couple of things. So from a flow product perspective, if you launch your own seller account, you are selling to the end consumer, right? If you leverage a third party seller, you are selling to a customer, they are buying inventory from you or they are receiving on consignment through a revenue share on a model, and they are selling on behalf of the brand. So what it looks like from a consumer visibility is a lot of times it says shipped by Amazon because you're leveraging FBA and sold by brand. Then if you're working with a third party seller ships by Amazon and sold by a three piece seller, we get a lot of questions here from brands that say, Well, I think that if, from a consumer standpoint, if it says my brand name or a third party seller name, there's not a consumer confidence in that and they're not going to buy. Maybe early on, I will tell you that I think 53% of sales on Amazon today are coming from third party sellers. So we do not believe that having it be shipped by the brand name or third party seller really hurts consumer confidence. The next point is prime status. So we get a lot of questions of, you know, do convert those conversion drop if I'm not prime? And the answer to that is nine times out of 10. Yes, if you are going to go to the seller central side know that Fulfillment by merchant or providing shipping that is not today or not free is going to significantly impact conversion. So you have to be prime. I know for bigger items, maybe LTL. The customer is used to maybe shipping windows that are longer or larger. But for the most part we've seen conversion rates plummet when they are Fulfillment by merchant. And a good example of that is when we go the opposite way Fulfillment by merchant to prime we see conversion rates go anywhere from 2% fbm all the way up to 20% 25% FBA so if you're going to go with the seller central route, make sure that you are going to be prime This one's pretty easy to understand right? If you're using FBA Fulfillment by Amazon know that you still own that inventory. It is up to you to replenish if you send in 100 units and 50 units sell, no one's going to be placing an order to tell you to send in another 50 units, you're going to need experience or people on your team to send in more units to FBA. If you're working with a third party seller most of the time, those retailers have inventory replan teams on their side that places in purchase orders with you. Fulfillment by merchant we already talked about. And then two other big pieces that stand out. So ownership of sales tax when we are working with brands that are trying to figure out whether they open up their own account or leverage the third party seller sales tax is always a big one. marketplace facilitator tax means that Amazon is is collecting and paying out taxes. And that's happening in a lot of the states. But there are still several states where it's up to the seller to remit and pay our taxes. So just know that if you were going to open up your own seller account, sales tax is probably on the checklist of things that you're going to have to manage or figure out. If you're going through a Seller Central third party seller, they can do it for you. And then lastly, customer service perspective. A lot of the b2b brands are not used to answering end consumer questions or Hey, where's my order? Or can I get a return? So this is usually have another big standout point that we want to help our brands understand that you're going to have to open up your customer service team to b2c communications, unless, again, you leverage a third party seller to do it for you.

Cool content advertising consideration. So these are really detailed things that we're seeing over the last couple of weeks. If you are exploring a hybrid option, please make sure that you are still using your vendor central as your source of truth. A lot of times what we find is that brands want to launch certain UPC or skews in a seller account. Yes, they can be sold there. But what we find for just accurate content, being able to get things live, it's most beneficial when you're still building those skews within vendor Central and then just marking them on available. So if you're having problems launching that skews in seller accounts or in three p accounts know that it's probably because you have a one p account open and you should probably start there with building out your content. When you are making the transition leverage your original Amazon advertising account, so sometimes we find brands want to do sponsored product ads with three p sellers. Yes, that works. But in order to keep that cost per click low, we recommend that the brand is the one that is has control of those campaigns, you don't have to restart them, you can tweak them. A lot of the times, we still want to make sure that the brand has complete control over the spend in sales. And if there are Co Op budgets with the third party sellers leverage that outside of the ad campaigns. Third one would be considered three p sellers for Co Op advertising budgets, which I just explained, right. So let's say sometimes a third party seller will invest certain Co Op advertising dollars back into the brand, that is great. But make sure that that those campaigns are leveraged by someone on your end or through an agency. So it's an outside party that is basically managing all the ad efforts for all the third party sellers on the platform. And then this is a big point that we are seeing even recently is that keep your Brand Registry account linked to your vendor account, don't try to connect it to other seller accounts or your new seller account. We are seeing a lot of issues when that Brand Registry account is linked to multiple accounts. It's affecting the content, it's affecting some sellers ability to sell. This is kind of I would say definitely within the last two months, this has become a much bigger issue than it had in the past. So just if you are going through this right now, and you're having problems with content advertising, getting skews live, make sure you do some cleanup on your Brand Registry account and make sure it's only linked to that vendor central account. So brand Seller Central software considerations. So and this answers your question about you know, let's say I want to make my own Seller Central account, what type of resources do I need, so you need people and you need software software perspective.

Sorry about that software

perspective on the seller central side, you're going to need some type of software to connect your earpiece system to the seller account. This will allow inventory to flow through this will allow sales orders sales information to come through. The second thing, this speaks to the beginning part of the deck about math enforcement and monitoring. Please, even if you don't do hybrid, even if it's just one PII, this should be a huge piece of your goals for even the last part of this year, or your budgets for next year is to get in my mat monitoring software and enforcement tool that basically shows you all of your pricing across all channels. And then if someone does break map, it automatically reaches out to them to say, Hey, here's our map violation. Map policy. We see you violated on this, this website.

Aaron Conant 37:40

Yeah, really quick. If anybody needs like recommendations there, just shoot me an email. Anytime Aaron aaron@bwgconnect.com. You know, we have enough brands and network recommending we can point you in the right direction really quickly. There's 101 of these people out there. But there's only a few that work really well. So I'm more than happy to help people find, you know, both the software, but also if you need to set up a map policy. Those are important as well. So anyway, just shoot me a note and we'll get it.

Nicole Reich 38:11

Cool. Let's say that you don't have there's some skill sets that you don't have mapped. Maybe it's a discount line that you have a repricing software, if you're never going to implement a map strategy for those skews is going to be really important. And what it's going to do is a very similar thing to what Amazon does, it looks at all the pricing on Amazon and on other sites. And then it retraces you either up or down so that you went by box. So again, I would say that this is a band aid approach. But if you aren't going to do a map policy, you're going to need a reprice err to stay competitive. Instead of manually updating price based on what the buy box price is. into all the product information management tool, I've talked about this a lot, that basically keeps all of your products, all of your product information in one place. And then you're able to use that tool to link it out to different platforms. So it would link to your vendor central account, it would link to your seller central account as well as any other marketplaces that you have. Walmart BestBuy target, Aaron, again, if you don't have recommendations for that one, I definitely do. So we'd be happy to help you out there. And then lastly, an FBA reimbursement tool. This is a big, big sticking point that comes up when we're doing consulting projects with brands is that brands don't recognize that when you send inventory into FBA, sometimes products get lost and they are lost so often that there are dozens of software companies or service providers out there that help you chase down lost inventory and get reimbursed for that inventory. So typically, they only charge a percentage of what they get reimbursed for me for you. So it's really a no-brainer, but I would say that early on. If you're doing FBA something you definitely want to look into some other options. To have would be an advertising software tool. This is regardless of three P's Seller Central, you can also leverage these on the one p side helps automate those campaigns use AI some of them do, but also just really helps you consolidate the information for your campaigns and make decisions a little bit easier than it is in their own UI. And then this one is a really important one, too, is your organic keyword market share and product tracking tools. So another question we get all the time is, if I go from one p two, three p, what should I expect? In a, from a sales perspective or a market share? Does it fall off? Does it improve? How long does it take? I would say that a lot of that depends on the inventory that Amazon has, or Roques, the inventory that rogue sellers have. But if you want to show an ROI from a complete brand perspective, and not just your account, there are tools out there that can help you show your market share versus competitors, and give you some estimates of estimates of what your total brand is doing on the platform versus others. So if you have any questions on that, we'd be happy to talk about it. But this has been really helpful when helping certain employees within a brand, build a case, to go to leadership to say, Hey, this is why this is important. And this is what we should expect from ROI perspective.

Aaron Conant 41:17

You know, I love it. Um, you know, just from the standpoint of everybody thinks that they can just flip it over and start rolling. It's gonna be easy. You know, not that it's super, incredibly complicated or hard, but you need the right tools along the way. So this is awesome.

Nicole Reich 41:32

Cool. And then before I flip over the brand case study, I don't I want to address the resources from employee perspectives, because I don't have a specific slide on that. But I think it's worth mentioning, a lot of times we find is that the team that you have built out internally to supporting one p business is great for purchase orders, line reviews, that initial order with a vendor manager, a plus pages and content. But those employees don't always have the experience on the seller side. So I want to point that out that it's not that you can't repurpose those employees to support both platforms. But recognize that this whole repricing suppress buy box becomes really real, when you have this great one p business and all of a sudden it completely falls off for those skews that you turn on to Seller Central. So a lot of times we find is that the teams internally need some training on the buy box and the importance of it right. They need some training on how to do FBA, replenishment. They need training on performance metrics, going into the seller account daily and making sure that you're hitting your shipment rates, your quality rates, so I can talk about those a little bit. But I would say outside of like running the accounts, the content, the advertising, building out the skews, all of that is pretty similar. So we're able to help our brands that have that team internally, train them up to then support the seller central account. But please don't make the assumption that they're just going to figure it out on their own because it is a little a little different and does take some adjusting.

Okay, a brand case study, I wanted to talk about what we've seen, hopefully this answers the question early on of what does it look like when we do this the right way. So using Howard Miller as an example, they are the number one clock brand, I believe in the world and one of our key partners on Amazon. And we have partnered them partner with them in August of 2019 to implement a hybrid strategy. So in that scenario, from day one, we picked up all of their small parcel items and leverage FBA. So at the time, in August 2019, they had a dropship vendor central partnership, they had a vendor central where Amazon was owning and picking up the inventory. And then they were leveraging us for those smaller items. And we were putting them into FBA. From an action perspective, the first thing that we did was we helped them launch and create their math and econ policy. And we optimize over 100 860 product detail pages. And then we invested 5% of sales back into advertising. So this started again from 2019 and is ongoing. A big point out on this advertising budget of 5% of sales. Sometimes we get asked, you know how much of my How do I determine my ad budget as a percentage of my total sales. Please keep in mind for Howard Miller that they have really high retail prices. So advertising as it relates to sales is much lower, and it's much more beneficial than maybe a CPG brand that has retail around 10 to $15. So understand that you may have to have a higher advertising budget But from a results perspective, this is what we've seen, which has just been absolutely phenomenal. So from 2019, to 2020, collectively across all platforms, they saw 150% increase in sales year over year. And yes, there was some benefit from COVID. To that, absolutely. But we are actually on track, even this year to grow 131% versus 2020. So we've still, you know, the the growth has fallen off a little bit, but we're still seeing it, obviously be much larger than last year. And on top of that, we've been able to decrease our map violations by 50% per day over a seven month period. And what that looks like is like 200 violations per day, and that is across all platforms. And this was at the help of Howard Miller, implementing a map strategy, us being able to monitor and enforce that. And with that, we've actually been able to remove 311, rogue sellers on Amazon. So this is really what I would say is a perfect case scenario, right? Where we're able to control all the content control all the advertising, really dictate what this pricing looks like, right on. And we get to set those prices based on the pricing that we have with Howard Miller and their map policy. But on top of that their one p business is also really growing. So they looked at the catalog and said, what makes sense to move to Retail Bloom, what makes sense to keep with Amazon. And the exercise we did to figure that out was that chart that I had showed several slides ago to show you the difference of fees of selling at one P versus selling it through us looking at the referral and the FBA fees. So it's worked out really well for them, we continue to move skews over to us slowly there, their catalog is absolutely mammoth. But it's worked out for them. And I would guess that we'll continue to do that probably for the next 12 months. And with that we revisit this every six months and say, Okay, what makes sense now, what changes are we seeing on the one p side versus the three p side? How do we leverage one p when we're seeing FBA limitation? So it's definitely an ongoing conversation with Howard Miller to say what is best for the brand? what is best for retail Bloom? And then what's going to give the consumer the best shopping experience.

Aaron Conant 47:29

Awesome. Love it. So a question comes in. You know, we're What are you doing to get items listed that are gated right now the three piece side, I have two refurbished items that we used to sell, but now can't list them, they won't let me list three p because they have a vendor relationship. I think going back to that that little snippet you put up there, you've got a vendor relationship with with the company is, is that when they need to talk to a buyer to get them listed?

Nicole Reich 47:57

Yeah, so you are seeing this, whether it for you know, us or new, you're not going to get we haven't had any luck getting away from this. We've tested it through Brand Registry, we've tried to make sure that it was set up correctly. Ultimately, in those examples, unfortunately, we've been we've had to go back to the vendor central side, and either offer the product to one p to get it listed, or to at least build a skew through vendor central shut it down and then link to it on the three p side. So a lot of times what we're finding is that on a seller central side, you can link to the ASN, right, you can sell inventory, you just can't create the UPC.

Aaron Conant 48:38

Awesome, and I can connect you with them just for you know, a conversation as a whole. Because that's going to go a little bit more in depth as a whole. In the example you show list price and then your lower Map price, what is it normal? What is normal for a map price Keystone or lower in your experience?

Nicole Reich 48:55

I just want to get to sorry, that slide and bouncing around just a little bit. So in this example right here,

Nicole Reich 49:02

it depends on the category. So I guess that would all speak to what we're really familiar with in apparel or in sporting goods category. A lot of times that's Keystone, I would say in the soft like hardware or electronics, it's way different, right? Like brand sells, retailers only making 30 points. So I can't actually speak to what I would propose your map policy be based on your wholesale costs and until I understand what category you're in, and also give you some ideas of what the competitive landscape looks like because it really depends on the category that you're in.

Aaron Conant 49:41

Awesome and like more than happy to connect you with Nicole afterwards so you can do a deep dive. There's a whole so I see we've probably got about four minutes left here, maybe five or we push it a little bit. other stuff. Do you want to make sure that we get to a quick reminder to everybody, you want to have a follow up conversation. You know more than happy to put you in touch with Nicole. I'd love to jump on the phone with you as well pick your your brain see what's topic. topics are kind of the top of mind for you right now. Also any you want recommendations across the board on any service providers never hesitate to reach out, I'm more than happy to kind of gives you what the what the network as a whole is kind of saying, obviously, Nicole and Retail Bloom are at the top here for overall digital strategy on Amazon. it for sure. But anyways, yeah, Nicole. Thoughts here is we got a few minutes left. Yeah, so

Nicole Reich 50:34

the last thing I want to just point out is from the three p perspective, if you have your own seller account, or you're leveraging a seller central account, from a retailer, know that the quantity restrictions or the FBA restrictions for q4 PrEP is not going away. They're getting a little bit better versus 2020, and COVID. But there are still significant delays that we're seeing, we're seeing and receiving times, we are seeing restrictions across the board on the number of units you can send into Amazon, which has made q4 prep really difficult. There's some different ways to get around that that I'd be happy to talk about as it relates to different offerings or seller fulfilled prime as backups. The other thing that we're seeing on one p side right now is that they aren't purchasing enough inventory to get them through all of the holiday season. So a lot of brands are saying, Hey, you know, I think that Amazon is going to stock out again, or maybe I'm in a non essential category and with COVID being a bigger deal again, what does this mean for my brand? Am I going to stock out from the front end? And what's the impact of that. So another great way to maybe use or test out the hybrid strategy, if you think you're gonna stock out on one p, maybe this is a good way to test out another third party seller or launching your account. So if Amazon does stock out, you still have an offering out there. So that would be my last couple of points that I'm seeing as relates to supply chain right now.

Aaron Conant 52:05

Awesome. Yeah, well, that I mean, I think you nailed it to the other side of this, as we go into q4, Amazon did not build enough fulfillment centers of the past year, to be able to handle the inventory that you're going to want to put in there, whether you're one p or three p, find a digital age three PL, somebody that can do drop shipping, you know, find a real table that can help you with the with the inventory as a whole. Because it's gonna get really crazy. I think if you just think about last year as a whole, the same things are happening, and they're going to be repeated again. But once again, you know, I you know, other last minute key takeaways as we wrap up in the final minute here.

Nicole Reich 52:49

I think that's all I have for right now, if anyone does have any other questions, happy to hop on in a lot of calls on a call after this. And if you are seeing those limitations from creating new skews, we are testing out several different things on our end. And we'll be sure to post a blog. So keep your eyes out for that once we find a more streamlined solution. I would say right now it's a lot of testing.

Aaron Conant 53:13

Awesome, awesome. I love it. Well, I would encourage anybody if you're looking to learn more about this, or if you're actively going down the path, have a follow up conversation with Nicole and the team at Retail Bloom. They're crushing in this space. They're helping tons of brands out within the network as a whole. And they're all around fun people to talk to, which is great. If you're looking for you know, follow up with a recording. Just email patrick@bwgconnect.com you can go to the BWG Connect website and just find this event. It'll probably be a week out, we'll post it there. But with that, you know, I'm going to say hey, thanks to everybody who was able to dial in today. Thanks Nicole for your your time. Thanks for the great information. As always, thanks for being so open to sharing and let us you know, throw a ton of different questions at you across the board. Everybody look for a follow up email from us. Let us know if you're in like Chicago with the upcoming retail acts. We're gonna be there as with some in person events, if you're out in Boston, let us know what's the next ones that are popping up. We'd love to have a conversation with you around any of that. And with that, I think we're going to wrap it up. hope everybody has a fantastic Monday, wonderful week and look forward to having you on a future event. Thanks again, Nicole. Thanks, everybody.

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