The Amazon Dilemma: Shifting Outlook from Marketplace to Platform

May 24, 2022 12:00 pm1:00 PM EST

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Key Discussion Takeaways

How is your brand using direct-to-consumer marketing efforts to scale? Amazon brands control their prices and have access to consumer data. This is crucial when evaluating your internal capability and goals. Why? It provides an opportunity and the insight necessary to gain a competitive advantage so your business can become more profitable.

Brands sometimes struggle in dealing with Amazon, especially when pushing through a price increase on products. Consider adopting a fundamental shift to your mindset and view Amazon like any other platform instead of as a retailer. As an expert on all things Amazon, John Ghiorso sees Amazon as a technology-driven machine that mostly has open access to companies or individuals who choose to interact with that machine. To further your goals, viewing Amazon as a platform that you can work with and through to get specific outcomes is a much better approach for leveraging that relationship. Amazon has a robust ecosystem for implementing various providers, so how can you make that work to your brand’s advantage?  

In this virtual event, Aaron Conant sits down with John Ghiorso, Founder and CEO at Orca Pacific, to discuss what brands can accomplish through Amazon’s automated tools. John talks about the strengths of the Amazon platform, the monetary value and management efforts of measuring your KPIs, and why it is crucial to understand the fundamental attributes of your product to scale your brand. 

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

  • John Ghiorso discusses viewing Amazon as a platform rather than a retailer to strengthen consumer relations
  • Ways to utilize the Amazon platform completely to reach your goals
  • Why your brand still needs a team to resolve complex issues on Amazon
  • How can you have foundational partnerships with other platforms?
  • The robust ecosystem Amazon offers sellers
  • What is the monetary value of measuring your KPIs?
  • Why do channel management efforts reflect the amount invested?
  • Understanding the fundamental attributes of your product
  • What is the next big thing for Amazon?
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Event Partners

Media.Monks

Headquartered in Seattle, WA, Media.Monks is an agency primarily focused on Amazon. They are one of very few Amazon Preferred Partners, which gives them direct access to Amazon API data. Their seasoned team has in-depth knowledge on all things related to Amazon including sales, logistics, SEO optimization, content creation, advertising & more.

Connect with Media.Monks

Guest Speaker

John Ghiorso

SVP of Performance and Enterprise eCommerce at Media.Monks

John Ghiorso is the Founder and CEO at Orca Pacific, a Media.Monks company, which is a full-service Amazon marketing services agency. He has over a decade of experience working with Orca Pacific and has built a reputation for approximating industry reactions and shifts in the Amazon marketplace.

John is a keynote speaker and has been featured in publications like The Wall Street Journal, Forbes, Vox, Modern Retail, and Digiday. He graduated from the University of Arizona Eller College of Management with a degree in marketing and entrepreneurship.

Aaron Conant

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.

Event Moderator

John Ghiorso

SVP of Performance and Enterprise eCommerce at Media.Monks

John Ghiorso is the Founder and CEO at Orca Pacific, a Media.Monks company, which is a full-service Amazon marketing services agency. He has over a decade of experience working with Orca Pacific and has built a reputation for approximating industry reactions and shifts in the Amazon marketplace.

John is a keynote speaker and has been featured in publications like The Wall Street Journal, Forbes, Vox, Modern Retail, and Digiday. He graduated from the University of Arizona Eller College of Management with a degree in marketing and entrepreneurship.

Aaron Conant

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.

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Aaron Conant

Co-Founder & Managing Director at BWG Connect


BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution.

Co-Founder & Managing Director Aaron Conant runs the group & connects with dozens of brand executives every week, always for free.


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Discussion Transcription

Aaron Conant  0:18  

Happy Tuesday everybody, my name is Aaron Conant, I'm the Co-founder and Managing Director here at BWG Connect. We're a networking knowledge sharing group with 1000s of brands that do exactly that we network and knowledge share together to stay on top of the newest trends and chat with 20 to 30 brands each week to stay on top of those. Also, you know, engage with people like John and other industry experts, we launched a podcast, if you're looking to hear from the leaders in digital across the space, check out the podcast, we can drop a link in there. And if you know people or you want to be on the podcast, just ping us. This kind of what we do here is just leverage the network as a whole. And, you know, a couple housekeeping items starting to, you know, four minutes after the hour. So we're going to wrap up probably with four minutes to go but also love these sessions to be as educational informational as possible. So at any point in time, if you have a question, you have a comment, drop into the chat, drop it in the q&a, and you can always email me questions anytime of the day, Aaron Aaron@BWGconnect.com. And more than happy to get you an answer just connect with you in chat on digital, we don't sell anything here. But we are going to do close to close to 100 in-person, small format dinners in the tier one city. If you're around, we'd love to see you at those you can find upcoming links in virtual webinars and the link we have there. But you know, getting back to the topic for today. And we actually did a podcast on this. And we'll drop that in the link too. And I was talking with John here from Media.Monks, previously Orca Pacific, about this idea of Amazon and how brands view it. And so before we jump into that, you know, John, if you want to give us a brief background on yourself, how you've lived and breathed Amazon for decades now. I always like to hear that. And then, you know, kind of media amongst what you guys are doing in this space. And we got to jump into this this topic of the Amazon dilemma.

 

John Ghiorso  2:10  

Yeah, for sure. So, um, this, this elevator pitch has gotten more complicated recently. But the legacy for me is I've been in the eCommerce space since 2008. For the majority of that time, running a company called Orca Pacific. Orca Pacific was historically a full service agency with an exclusive focus on Amazon. Over the last couple of years, we've merged with Media.Monks, I now run a piece of the eCommerce practice across both SMB and enterprise clients in North America. And we also work globally across every region. Well, basically every region of the world, we also now have a focus on Amazon, but across top 10 eCommerce platforms basically. And we handle everything on behalf of our clients from paid media to content strategy, account management, back end operational, all the kind of less shiny, but really critical components of the business. We have about 80 people in North America, another 60 globally, working on eCommerce, and we have a some of the best people in the business and then a proprietary software and technology stack that we use to support a lot of what we do.

 

Aaron Conant  3:41  

Awesome. Love it. And you've been, you know, fully focused on Amazon for the longest time. And we were having a conversation around when brands struggle. Right. So I was on the brand side, you know, it's this constant conversation with the executive team around Amazon in price increases and negotiations and they weren't coming to the table and they wouldn't give anything. And then you kind of pointed out like, Well, yeah, it's a fundamental shift that, that executive teams and people as a whole have to have with Amazon. Right. And I, you know, that's part of this, and others along the way have questions on things for us to address. Anything related to Amazon whatsoever, drop into the chat or q&a, but you had mentioned like, viewing Amazon as a platform versus a retailer and would love to just start to hash through that and what that means a little bit.

 

John Ghiorso  4:33  

Yeah, sure. So I think, you know, I know everyone uses this term platform, but you know, to define it. When I think of a platform, I think of a kind of technology driven machine that for the most part has open access for the companies or individuals that are choosing to interact with that machine. And in a lot of ways it's kind of this this self sustaining self manage things. So. So I think, from a kind of a mindset perspective, this is more interesting. I think from a thought exercise perspective, I really believe that if an organization shifts their mindset and puts Amazon in the bucket of platform, along with Facebook, Google, Salesforce go down the list versus retailer, you know, obviously in the mix, then with Walmart, Costco target go down the list, they're going to have more success by kind of changing that macro philosophy around who Amazon is. Now, you could argue that they're both right. But I think just from a kind of simplistic sake, viewing Amazon is a platform that you can work with and through to get specific outcomes, KPIs goals achieved on behalf of your business that you cannot achieve anywhere else, just because of the scale, the unique attributes, the customer access to data that Amazon has, is a much better approach to your overall kind of relationship with Amazon. versus saying, Oh, they're this kind of not very good partner retailer, right? Like, I wish they were more like and you know, big retails hard to work with, right. But I, I still hear I wish Amazon was more like, Walmart, Walmart used to be the hardest one right to work with, but I wish they were more like Walmart, I wish we had the relationship that we had at Costco with Amazon. And I would say, relationships and people still matter. You know, there's there's 100,000 employees in Seattle for a reason at Amazon. So I'm not discounting the relationship aspect, but what I am saying is approaching his platform first, and then can you use those relationships to kind of further your goals with with the machine overall?

 

Aaron Conant  7:01  

Yeah, I love it. Because it's a communication thing. At the end of the day, right? Especially you talk about strength, you want the vendor manager, if you have one, you know, whoever you have contacts with, if you have them internally at Amazon, you want them rooting for you, because they have a million things to do. Yeah, right in, if you're constantly harping on them around, you know, the, you know, pricing increases, you know, in a traditional sense, they just want to shut down and walk away, they want to work with somebody who views them as a platform is gonna work. And it doesn't mean you're not ever gonna get a price increase, or it's not as mean that you shouldn't ask for the price increase. Right, but it will significantly change your mindset and how you interact with them, and then how they interact with you. Because they want to grow your business too. Right. I mean, they have goals tied to on the vendor side, your growth and their number for a year. Is that correct?

 

John Ghiorso  7:56  

Yeah, absolutely. They have, you know, top line bottom line goals, as you'd expect any, anyone kind of, you know, managing a brand, which there's certainly still vendor managers there for a reason. You know, I think for me, what it does is instead of, I think a way to think about this is it's sometimes it's misinterpreted, and people think, oh, that just means like, we need to, you know, do less with the people we work with at Amazon net, that's not what I'm saying at all. What I'm saying is do a lot more with the platform, because that's Unlimited, right? You don't have to say, well, I can only reach out to a vendor manager once or twice a week, or they'll be you know, there'll be annoyed, I can't ask Him for everything. You can do 90% of what you need to accomplish, you can accomplish through the automated tools, there's another 10%, it's super critical that I still believe you need some sort of human interaction or relationship for. So again, not discounting that entirely, but approach it platform first. And then if you're running up against technical limitations, or things that in some cases still do have to go through a human a price increase is a good example of that. Then, of course, you work with the people that the best even even in those situations, the best way to approach it is to say we did everything we could do with the platform. Now we need the person internally to help pull that lever and that actually, that really resonates with the folks that you work with at Amazon because they they then understand they're not just going to have to repeat your all the stuff you should have already done on on their site.

 

Aaron Conant  9:34  

Yeah, so quick question that comes in. If 90% of things can be accomplished through automated tools, what are your thoughts on the SAS the Strategic Account Services program?

 

John Ghiorso  9:45  

Yeah, so um, I actually have I honestly I've mixed thoughts on this. So I used to be a little more in the no camp when it came to this program. I do think they've, by the way, this program Just for some history is had seven different names it's been around for as long as I've been doing this. I think 

 

Aaron Conant  10:06  

So originally, is this part of the SPS programs?

 

John Ghiorso  10:09  

Yes. You know, it's been called Brand Manager, there's been multiple versions running simultaneously. But essentially, it's always the same. It's Amazon charges their vendors, for a person to help them. Not full time, not exclusively, you theoretically get a segment of that person's time. The, the program has, has really, it started out strong, it got really, really bad. There was no value there. 

 

Aaron Conant  10:42  

And I think now we can do a raise of hands of people who had the

 

John Ghiorso  10:45  

Yeah, I mean, there were some really, really bad experiences maybe three or four years ago, um, just based on the way the program was being run, you know, that you were people were paying 300 grand for somebody that was supposed to be full time, and they had 10 brands assigned to them. I mean, it was just it was, it was crazy. It's better now, I would say it's hit some sort of equilibrium. A lot of it is, is based on the quality of the person you get, which is not under your control, because you don't hire them. So that's tricky, right? Because you and you need a relationship, it's still a relationship. And yes, they're technically sort of working for you, but they're not really working for you. They're working for Amazon, and they're, you know, trying to help you. So you, you still need a relationship and to get to get to the point where I think it can add value, especially if you're running up against a lot of operational issues, or really complex catalog issues, where you've gone through the automated systems, you've used the tool, and then you've used the, you know, the back office call center, you've opened tickets, you've spoken with the people in India, no one can solve it or resolve it. And it's, and it has a significant negative cost, like a tangible cost. That's when I think okay, it's justifiable to spend this amount of money to get someone who can help break through that logjam. Think of them essentially, as someone who has the same authority level as a vendor manager, but theoretically has more time. So if that's something that's willing, you know, you're willing to pay for it, then then it can absolutely make sense in certain situations, I would not, however, expect them to run your business for you. You know, have some magic wand, like if you have fairly low expectations, then I think it can it can pay off.

 

Aaron Conant  12:39  

Right, but it's not going to be the same is when you have you know, help on a Meijer team or a Kroger or Walmart team and the traditional, maybe a demon or somebody like that

 

John Ghiorso  12:49  

is those people have, you know, yeah, it's just, it's nowhere near that, here's what I would say maybe put it in a different, a different framework, or to give perspective, they never replace anyone on your team, like, so that's the value that you have to expect, like, they're not gonna replace an agency, they're not going to replace anyone you have internally, they're never going to be the equivalent of someone on your side working part time or full time on your business, you know, you're getting an additional five hours a week, maybe 10 of somebody to go and very. And you have to be very targeted in your asks, right, you have to make sure you're asking them to do things that they can own, that can only be done internally, or you're not going to get any value out of it. So we've spent 30 hours on this project. We've done all the work, we've done everything, here's all the documentation, we really need you to spend now two hours getting these last pieces pushed through. So we have ownership issues with content resolve, we have labeling issues resolved that are causing all kinds of and on courts. We have, you know, some weird back end issue. POs weren't cut properly, and we had to cancel and things like that where you're going we've done everything, we cannot get this resolved until someone internally pull that lever. We have someone who can pull more levers now, theoretically,

 

Aaron Conant  14:09  

how is so a question that comes in we've got a couple more that have come in, but one is around, you know, teaching this upward. So how to how to teams educate executive teams, on this, this point, because I really believe in the point that you're making, that they're not a traditional retailer. But executive teams view it that way. Because Amazon's buying wholesale and it's being sold. Yeah, but there, it just happens to be something Amazon can do. Right? And so they're doing it but in an instant, they could shut off 1P and push everybody third party, and then it would be completely changed the view that doesn't necessarily have to, but I think getting executive teams on board with viewing Amazon this way and then leveraging Amazon in a different manner is is incredibly beneficial to overall growth on the platform, but also brand awareness how you're utilizing it drives consumer growth in store growth. It's, it's instrumental as opposed to wasting hours and hours being frustrated with an Amazon team. And then maybe getting oh, we're gonna cut POS where, you know, get a line item these items off, we're going to stop Amazon, you know, paid media. Yeah, just out of frustration.

 

John Ghiorso  15:24  

Yeah. So I really I mean, you know, I'm repeating myself here, but I can tell you personal experience working with a midsize and some of the largest brands in the world where our main point of contact gets hit, right? Like, it's not probably a lot of people on this call, they get it. They're going Yeah, I know. The real battle is how do you convince the people that are not eCommerce experts in your company, to kind of shift their mindset and and I have gotten traction with this platform concept. And I think that, you know, these these people are, they're educated, right? They understand things. They're just not experts in this specific company. So if you can put it in the framework of how do we work with Google? How do we work with meta? How do we work with Salesforce, we have relationships you should write, you should have some relationships at meta or Google. But you don't get mad at Google. If your website was ranked number three, and they do an algorithm change. And now it's ranked number seven, you don't say, you know, screw Google, we're not going to be on Google anymore. Like, it doesn't make any sense, right? Like, it's not a person making that decision. And also, they don't care. And, you know, it just that doesn't make any sense. I really believe that you need to kind of foundationally approach Amazon in a similar way. And that takes a lot of that kind of, you know, we're fighting the word that we like them, we don't like them, they're on our side, they're not on our side. They're bad partners, they're good partners, it just sort of takes all of that off the table. And then what you can think about is, okay, it's massively scaled platform, huge amount of customer access, huge amount of capability, data technology, huge research platform for products, not just not just sales, they we have access to all of our customers, we have access to all of this technology through this platform that we just fundamentally can't get anywhere else. So let's just make the best of that at a foundational level. And then if we can add on top, like, let's, let's add on top. So, again, I know this is over simplified, and well, what about cost increases, you need, you know, you need to push that through. But even that maybe is a good example. Yeah, there might be a person like you might be talking to your vendor manager about the cost increase, right. But they're just a cog in a machine. Like they don't, you know, they can't just accept a cost increase or block it based on their own personal feelings, they're still limited to a framework to a process, you know, they're night 90% of this is restricted with process and then 10% of it is their discretion. So you still have to, even though you might be talking to an actual human on the other side, you might be going out to dinner, and they're talking about the cost increase, you have to understand that they're still very, very limited in terms of what they can do. And if they are going to accept something, they need to show that the process of spit has been gone through that all the documentation is in place that they said No, five times. And then on the sixth, they can say yes, I mean, so you're still you're still talking to a machine. You've just got a person who's the mouthpiece for that machine. And yeah, I mean, that's so explain, that's tough. I mean, I probably am going to put an article out about this. And feel free to reference that if it's helpful. But it's, it's tricky. It's tricky to convince people of this, but if you can add to it, you'll see a real kind of fundamental shift, which opens up a lot of opportunity internally to go out and start getting things done testing, learning, investing, etc.

 

Aaron Conant  19:29  

Awesome. So on the price increase a question that comes in, and maybe you just kind of addressed it a little bit. Best practices, ideas and how we can get Amazon to accept price increases by impacting both the platform and the people.

 

John Ghiorso  19:41  

Yeah, a couple things. I'm not an exhaustive list, but just a couple a couple kind of helpful tips. Make sure Amazon understands that it's market wide. That's very important. Remember, their pricing is relative, right? So their their retail price just match the market. So theoretically, if everyone accepts the same cost increase and raises their prices, theoretically, right, Amazon should maintain the same margin. So make sure they know it's market wide, it's fair, everyone's getting it. Number two, make sure it is based on real input costs, increases, transportation, labor, raw materials, whatever that is, make sure it is real, and it is documented, and you provide that documentation makes it much, much more credible. Um, you know, just keep pushing, I would say, number three, kind of practical advice here. Have a timeline, to in terms of when this goes into effect, be willing to give one be able to push that timeline one time, like have a pre planned okay it's, you know, it's going into effect July 1, internally, we know we're going to be we're going to let them push until August 1. And then you make it very clear. Okay, we gave you one exception, it's now August 1, we cannot ship you. If you don't accept this on August 1 on August 1, if POS come through at the old price, do not accept them, cancel them, if you accept them, you will never get the cost increase. It will never happen because you will destroy all of your credibility. And Amazon will test this right. They know that some cost increases aren't real, or it's just a cash grab from the vendor. So they'll just push, they'll just push POS through and see what happens. And if they get accepted. It's not valid, they just keep pushing them through at the lower cost. So those are probably the the couple practical pieces of advice.

 

Aaron Conant  21:48  

Yeah, I mean, another question is, what about chargebacks? And we cancelled POS? And on a lot of cases, you can line item, any I mean, the the agreement I had on the vendor side for any reason, I could reject the PO. Right? I mean, the issue comes in is you automatically accept them, and then go back and cancel them when they're coming.

 

John Ghiorso  22:07  

There are now chargebacks even for rejecting POS in some cases. So yeah, that is tricky. In some cases, you might have to eat the chargeback, you might have to work within the rules to communicate to Amazon and then try to get the chargeback paid back. chargebacks are super tricky. We spent a lot of time fighting them. I'm not an expert in chargebacks. Candidly, there's certainly people on our team that do this all day long. I would just say, with a lot of work, we usually get the majority of them paid back. And then there's a whole separate bucket of chargebacks which are related to kind of perfect inbound and the way you're doing operations. Most of those are preventable. chargebacks related to canceling POS are tough. But I believe there's ways to prevent that from happening. But uh, yeah, I just, I'm the details.

 

Aaron Conant  23:07  

Awesome. And then missed all of the rights in here. They've had, you know, quite a bit of success getting UMap issues under control, tapping into the SPS partner, which he goes goes back to it's kind of hit and miss as a whole. You know, sometimes you get a great person, sometimes you don't. And the hope, though, that that person is going to turn into your vendor manager is that I don't know how many times that's ever happened maybe once every 1000 times. You know, just by happenstance, it seems like there's that was the original pitch.

 

John Ghiorso  23:38  

Well, that was like the 10 year 10 years ago, it did happen actually, that was it was the career trajectories, they'd hire an SPS, and then they go VM and VM, the senior senior to GMM etc. And it was a pretty clear like career path. Because as the business scale, they kept hiring people, right. So if they doubled their business, they doubled their, their buyers, they even use call buyers, right like and then they were vendor managers. But remember with hands off the wheel now, which has been going forever, but it's still progressing. The goal is that as the business scales, you need proportionally less and less people. So there's not really that same career path. Now, internally, a lot of the time. An SPS or SAS will go on to another internal role, just because there's not enough vendor manager jobs, right, like there's way more SPS is in there, our VMs VMs are actually getting, there's a smaller number of them every year. So it's not a great like career path internally. And everyone knows that now. So they often go, you know, they'll go to a role in finance, they'll go to roll operations, you'll never see him again because they'll be on an internal job so. 

 

Aaron Conant  24:50  

What about on the paid media side? You know, the same type of thing, right? You got this interesting blend and I know, like, retail media as a whole is one of the hottest topics out there right now, right? I mean, Walmart has fixed a lot of the issues it had, including the bid algorithm. The, you know, if you're taken away the restrictions, you have to be a top 120, I think on the search term, so they're making changes, and there's a lot of shift in view on retail media that, you know, Rondelle and Target. And you know, everyplace else is got a retail media. But, you know, Amazon, still, I think, is grabbing the biggest chunk of it. And, you know, is it any changes on how brands should view that platform? Is it still, you know, retail media? Or do you think it's closer kind of, you're saying it's the, it's the Facebook, it's the Google,

 

John Ghiorso  25:41  

I mean, I think the name is fine. Amazon is still the vast majority of retail media, they have more scale, they have, arguably better data, although you can, you could argue that point. They have a lot more of it, and they have much more robust tools and ecosystem, you know, with third parties, etc, that plugin to their platform, you just do a lot more with it. So I think you're gonna stay the biggest in retail media, for the foreseeable future. I think it's a critical part, to any business on the platform. I think it's the key unlock at the highest level. For Amazon, retail media, both from an efficiency and an efficacy standpoint, is to have a really good, really smart experienced people doing this, and the best in class technology. Maybe that's the most obvious statement in the world, maybe you could make that statement about anything. But honestly, it it makes a difference, like having someone with a PhD. I don't mean that literally, but you know, effectively a PhD at Amazon retail media, and then having best in class technology will show results. 

 

Aaron Conant  27:08  

Like they really mean you can't do this without technology now, right? I mean, I was just hosting, you know, Nick, over at Sky, you know, for one of the podcast episodes on retail media, specifically. And, you know, the average costs, you know, per click on, you know, Amazon paid media was, you know, up like, 70%, unless you're using technology, and then it was up like 16%, or something like that. The technology makes that big of a difference. You can't afford not to have it.

 

John Ghiorso  27:39  

Yeah, absolutely is table stakes. And I would say third party technology, Amazon's in house tech isn't good enough. There's a reason there's an ecosystem of different providers out there, like they add value, we use sky. So obviously I'm, I'm, I'm, well, I don't want to say I'm too biased, but we know all the tools, we evaluate them skies up there, I think leading the pack, but there's other very good tools out there as well. So there's not there's not like a single one you have to use. But there's, you know, there's a handful of really credible, robust tools, some of different features, benefits, you know, apples and oranges and all that. And then again, people, right, like you, you still need really smart people, you know, I always use this analogy of, of, you know, a motor race, but like, you've got to have the best car, you've got to have the best tuned, you know, most up to date technology car, but you need a really a driver to one or the other is not going to get you there. Now, that being said, because I know there's a lot of, you know, mid market companies on this call, like, what I just said, is investing six figures in your technology plus team, potentially to do this. Now, if you've got a $5,000 month ad budget, that doesn't make a lot of sense, right? So sometimes you have to kind of crawl Walk Run into how do you build this capability? Do you use an agency? Do you find, you know, a tool that's maybe a little more cost effective, but doesn't have all the bells and whistles? Like so there are practical considerations here too. But, you know, I would, I would say that my view is always that you should get you should achieve on a smaller budget. If you are in that kind of smaller budget realm, you should achieve the foundational goals that you're looking to achieve on the platform. Depends you can measure on a number of different KPIs. But I would measure try to measure things on kind of a longer term basis in terms of the results you're getting, and then max out your budget, both in terms of actual ad spend, as well as the budget to facilitate that ad spend people plus tag, max that out until you see diminishing returns on the KPIs. In most cases, brands are surprised that the ceiling is much much higher than they believed. So you know, I know it sounds like I'm just saying to spend more money on Amazon. It's my bias but what I can tell you Is it brands that find themselves in a situation where they're wanting to spend more money? Because they're like, Wow, we spent five grand, then we spent 10. And we spent 20, then we spent 50 a month. And we still got these results. Those are the brands that dramatically increase their top line year over year. Those are the brands that grow it up, you know, 100% plus. On the on the platform.

 

Aaron Conant  30:25  

Yeah, I like the car analogy. I was, you know, preaching it internally was, you know, because they were, I was out there trying to get the traditional media agency to run it. And I was explained to him like Amazon's a Ferrari, right. And what we have is a very good boat mechanic. Right, that's another agency, now we can put that boat mechanic on the Ferrari and it's going to run, it will run, it just won't ever run like we want it to run. Right, it will never reach its full potential because you need a Ferrari mechanic to jump in there. And that Ferrari mechanic might cost more at first, but will definitely pay for themselves over time. So a couple other questions have come in. Let's see if a brand is selling direct and 1P 3P how many 3P approved partners is ideal. That is, oh, this is a whole other call by ideas. One, right.

 

John Ghiorso  31:21  

Yeah, I mean, so I would, I would also say one or two, merely to serve as inventory backup, right? If Amazon goes out of stock, it's good to have someone who's mapped who can fill that, you know, that demand growth. So you keep the sale, you keep the momentum, that's not a bad thing. You can run into issues if you have a single third party seller with this is you know, all channel management stuff, but you can run into issues with exclusive agent clause where Amazon will shut them down because they see it as kind of gaming the platform. So, you know, sometimes a network, like five to 10 approved map third party sellers can be more of like, in a perfect world, you just have kind of one or two. But in a more practical real world sense, five to 10 can be more sustainable, I'd say like Amazon won't shut them off. But then you have to map you know, you have to map agreements, you have to manage five to 10 sellers, which can be a big job on its own. So um, so that's, yeah, yeah,

 

Aaron Conant  32:35  

that's what I'm no QA, you know? Well, we'll probably host eight to 10 events on that this year, specifically, or it's just an hour long, deep dive, because I see, Lindsay's dropped in a question here that, you know, we can have a follow up, you know, that's what how do you control robe 3P sellers. You need an authorized reseller policy, and it needs to be legal and binding. And you can get around the first sale doctrine via the Lanham Act. And just make it illegal for unauthorized resellers to sell your product on the platform because it's fundamentally different. 

 

John Ghiorso  33:10  

Yeah, I feel like you're you've done enough of these calls. Or you might have a lot of greed. Yeah. Yeah, here's, here's what I would say. Again, it's general advice. But don't try to do legal stuff. When you're not a lawyer, go hire a good lawyer, a seasoned lawyer. There's a reason they have law school and certifications and pass the bar and all that like, the reason I say that is you can create by dipping into the waters of things that are legal in nature, you can create other legal problems for yourself if you're not careful. So we're not lawyers. We don't have lawyers on staff. We certainly talk a lot about channel management can provide strategy expertise. But you know, if we're going to legal things, we've been calling lawyers. So

 

Aaron Conant  34:04  

yeah, and just a quick for everybody out there. One of the just an example of what John's talking about if you were to want a product shut off, and you are to say just flag it as counterfeit. If it is not counterfeit, and Amazon shuts down that seller for selling counterfeit product and you can't approve it, that seller can come back to you for loss, sales and damages. And that's where we've seen brands get in trouble where they get frustrated, people aren't dropping the product. Here's the reality is if you don't have an authorized reseller policy in place that makes your product fundamentally different between the quality control or warranty than an unauthorized reseller. They can sell your product. The first sale doctrine says that and there's nothing you can do about it and they don't have to take down and the listing and they won't that the small people will write like mom and pop just randomly find something. They throw it up there. They want to sell it to professionals. sellers that are causing you trouble and wreaking havoc on price points there. They're not coming down. They're not coming down until they get a cease and desist letter from a law firm with you know, the backup explaining why. So anybody wants to have a chat on that shoot me an email, Aaron Aaron@BWGconnect.com. More than happy to go down that rabbit hole with everybody on the line today. just done a lot of sessions on that as a whole and probably talked to 150 brands on it. So more than happy to just set aside time. You know, that kind of addresses map as well on here. John what a day, this goes back to a traditional retailer and viewing them as a platform map. I mean, luxury beauty Professional Beauty. And maybe if you're Lego like

 

John Ghiorso  35:46  

Yeah, yeah, there's a there's a couple situations where Amazon still gates, brands meaning to position. Your is for a third party reseller to list against that listing, they have to get approval, usually it's open, right? Like for the vast majority of brands on Amazon, I can get a product, it's new decide I don't want anymore. And I personally can go set up an account and sell it against their listing, right and then sell that one item for some categories. That Aaron that you mentioned already, and some specific brands, you know, the basically top 100 brands on the platform, there are gating arrangements in place. If you don't already have that, you're probably not going to get it unless you work for literally a top 100 consumer product brand. So yeah, it's an open platform. channel management is a whole big discussion. It is, again, it's one of these things that just depends on here's what I would say in terms of channel management in general, like you, you're going to get the results aren't going to be based on the amount of effort and expense you put into it. And I'm not saying you it's it's, it's not binary, it's not all or nothing. But there is no kind of hack, there is no loophole, there's no magic bullet on this. Like, if you want to go full on you go hire a law firm, you come up with a big strategy, you start deploying it, it's a multi year thing, you're gonna piss off a lot of other partners and resellers, some may have had long relationships with you, that's part of the deal, too. There is kind of a less aggressive version of that, where you just try to get the most egregious violators and the ones that are in your control. kind of handled, it's not gonna be perfect, but you're improving it to some degree incrementally. You know, the, the companies that are legitimately like black market counterfeit goods, in some cases that those are actually easier to to get rid of, because Amazon doesn't want those either. So Amazon's on your side, when it comes to gray market black market product, right? You don't necessarily need a lawyer because Amazon has plenty of lawyers. And if you can prove that something's actually counterfeit than Amazon's gonna go after him. It's the map. You know, unauthorized reseller conversations really tricky, because that's where you're actually, on the opposite side of Amazon, Amazon wants an open platform as long as their customers aren't getting, as long as your customer is getting a real genuine new products not open box, it's not knock off whatever. Amazon sees that as a win, they just see that as a benefit to their customer. So you don't want that most of the time as a brand. So that's where you're on the opposite side of Amazon. So they are going to help you at all in fact, they are going to make it in some cases harder to to do this type of thing. So that's where it gets particularly tricky. One thing just and I wouldn't I wouldn't deploy this strategy just to deal with channel management but there are situations where if you're heavily relying on dropship, you can kind of use the upstream inventory supply either on or off to do channel management yourself. can be tricky. I don't know if I fully endorse it because it can be you know, get you into some tricky situations if you're not careful. But you know for example, you just if you do dropship and oftentimes it's going to be a furniture brand you know large appliances. If you're selling kayaks or something LTL stuff you're probably already doing a lot of dropship you can just full flow through they dropped you know, they dropped their price we just shut them off wait for it to go back up shutting back on kind of play that game that that I have seen. I I don't know how scalable that is, but that that has been somewhat effective.

 

Aaron Conant  40:04  

Awesome. So thinking about the platform question is this one has been coming up? broader question on 1P versus 3P strategy. In the long term, should we be 3P or just rely 100% on 1P. So Seller Central for those of you listening seller, central versus vendor Central, especially given that 3P business is now bigger on Amazon than their 1P business? 

 

John Ghiorso  40:29  

So this depends. And I know that's a lame answer, but all but it genuinely because I, I've been hearing this question for a decade, it's very easy to give us a simple answer is it well, 3P's better, because you control your own price, you have more access to customer data, or one piece better, because you don't have to deal with all the logistics stuff they just taught POS, you treat him like a big retailer. Sure. Right. Sure. But it really, really depends. And it depends on a couple things. One, it depends on your internal capability and goals. What are your logistics capabilities? Do you have dropship at scale capability? Do you have customer service? Scaled capability, not just something was wrong with the product, although that's really important, but also customer service related to the dropship didn't show up on time, it was damaged, whatever. If you don't have it, are you building? That's a big determinant in terms of capability? Do you have a strong kind of need and use case for more robust customer data? Cool a habit, but are you actually doing anything with it? Are you using that to advanced direct to consumer other marketing efforts, etc? So that's a kind of a plus in the 3P camp. You know, are you set up? The opposite of this is are you set up with every other sales channel to really operate in a vendor? Retailer relationship? So is Amazon going to be the single situation where you're doing dropship? At scale? If so, it's tough, and it takes a fee investment and a long time to get right. So other things you need to consider? How does the How clean is Amazon? From a channel perspective? Is everyone a map? If so, you can go 3P and you can just sell it map and either win the buy box and that's fine. But is the product been football around all the time? Because if so, if you go 3P you now have to match the lowest reseller you have to directly sell your product for way less than you think you should be selling it in the open marketplace. What does that do to Walmart and Target Costco? What do they do when they see you selling your product for less than it's sold on their shelf? So that I think that's one of the biggest thing that gets lost in that calculation because you can go into the FBA calculator. Yeah. Right, and you're putting in your mat and 3999 and the products sold for 23 bucks.

 

Aaron Conant  42:39  

You have to put in that price to get it and it's just interesting, because it seems like nine times out of 10 It's a wash. Well, you crunch the actual numbers and ends up being awash within three percentage points, you know, two percentage points

 

John Ghiorso  43:25  

I so I have a slightly different view on this. But I'll add one more kind of big thing big consideration point and just what are the fundamental attributes the product? How big is it? How heavy is it? How often does it sell? Is it fast moving? Do you sell them you know, $5,000 product but you sell one a month like that really, really matters too, because that impacts the cost on the FBA side whether FBA is even viable, whether you have to do your own drop ship that changes the dynamic then Okay, so there's a lot we're not going to be able to cover all this call but what I would say is when you do the analysis, I would say on average Aaron, it's a wash but on an individual basis, it's everywhere from you need to be 1P if you don't say 1P or you're going to wreck your business there's no way to make money all the way to you need to be 3P this is going to be way more profitable, way more benefit for your business. Your get rid of all these headaches. I mean, honestly, everywhere in between, sometimes for a brand it is a wash, kind of like I don't know, do either one, it's you're still gonna have the same challenges, same, same profitability, but I've seen a number of cases that fall all over the spectrum. And again, it just it depends, it depends on all these variables. These things genuinely matter. And it's also not static, because maybe you know, you were only purely just a vendor, and now you have a big DTC operation that you've built up over three years and Now 3P makes a lot more sense on Amazon. So it's also can be a moving target just based on your goals and kind of the capabilities of your business. But, um, I haven't a deep dive into any of those things. But those are that's kind of the broad framework of it's a number of considerations that need to be made. There is no single answer to that question.

 

Aaron Conant  45:22  

Yeah, the just made me think of another part of it, which is the staying in stock is the other key thing. So I have a lot of brands right now looking for, I call them a digital age drop shipper, right, not your traditional three PL that's, you know, shuffling LTL, pallets, you know, full truckloads around, you know, for a micro fulfillment center needs about three to 5x, the amount of space is a traditional three PL, so these traditional three bills are trying to break into the space and say, Hey, we can dropship for you. Yeah, they can't hit the one the two day timeline. So just, it's really tough. This is something that can, but these new micro fulfillment centers that are popping up all over the place is almost essential at this point in time, right to have that backup. So, you know, holidays come in, and you're not a giftable item and your FBA or your you know, pos go down? Yeah, yeah, how do you keep selling at volume and still have prime availability? You see a lot of people doing that as well?

 

John Ghiorso  46:25  

Well, yeah, especially, you know, over the last two years, I mean, getting supply chain, right, which a lot of it's been out of control of the brands, you know, that's been the make or break game, and a lot of cases, it's just like, whoever's in stock is winning. So, yeah, that's, that's certainly another consideration. You know, I think a lot of this very few consumer product companies, in my experience, are static in terms of their overall kind of view of direct to consumer and their goals in terms of capabilities, etc. Most are building something, changing something just not with Amazon, just overall as an organization. So I would just make sure your Amazon plans fit into that. And then you do it at kind of a, in a responsible sustainable cadence. One thing I will mention, too, because it may be a lingering question for people. For a number of years, there's been a question about what is Amazon gonna do? Like, are we gonna go through this whole exercise and then Amazon's just gonna force us to be 3P or forces to be 1P, you know, we're gonna do this whole thing for nine months, and Amazon's just going to change the rules on us. 

 

Aaron Conant  47:40  

Remember that email? Like, what was it three years ago? Now with a shock?

 

John Ghiorso  47:44  

Yeah, that was a shock talk. It was like, What 2018 or 19? It was, it was like the wound it Yeah, it was crazy. It was the most dramatic Well, besides maybe COVID. Right. But like, it was one of the most dramatic weeks in my career. It was crazy. So where I'm going with this, though, actually, I think it's good news. I've seen I don't want to say, you know, everything is possible, right. But I've seen less signals that Amazon is going to make a big change like that. They've basically since COVID. I think they just decided and you know, there's a lot of other pressure by Amazon, governmental pressure, etc. I don't see them making making any big changes when it comes to the 1P 3P dynamic I think status quo is mostly going to stay in place for for the foreseeable future.

 

Aaron Conant  48:36  

So yeah, I mean, for them, I mean, they had a very huge data point. Right, because when that came out, like it that was it, yeah. During Shop Talk is the set shop talk on fire. Right. That was like the number one topic.

 

John Ghiorso  48:53  

Yeah, yeah. Well, I think it was brought up in a congressional testimony now it's like so it's it's reached a level of there's just a lot more five years ago Amazon who just do whatever they wanted, they were just a company like any other now they're sort of this you know, institution in the US that just has a different level of scrutiny and they're just more limited in terms of what they could do with with stuff like this. 

 

Aaron Conant  49:17  

So what are what are you most excited about? Right? And Amazon? You know, living in this space every day you kind of get an inside look just so whatever you can share, that'd be awesome. What are you most excited about? What should they be planning for? Right What are their

 

John Ghiorso  49:38  

plan? Like? Are we talking this year or five years out? I I was on a call with Bill the other day and I started I got my tinfoil hat on it started talking like 10 years out new site. All right. I don't think anyone can like shit that but no, I mean, you know, I'm, I think just from a personal you know, fanboy perspective. Do I think I think this some of the stuff they're doing in brick and mortar is fascinating. I mean, I do believe that they're kind of, and we it's funny because you don't, there's no single giant announcement, there's a lot of like little incremental steps. So I think this is going to creep up on us, but I think in the not too distant future, shopping in an Amazon owned store, so Amazon Fresh Whole Foods, etc, is really going to be an experience that is like a step into the future, and feels fundamentally different than maybe not fundamentally, but like, you know, you feel like you're in a different decade versus when you walk into any other grocery store, or department store or whatever else. So the amount of technology that they're now putting into these stores, you know, cashierless, checkout, the kind of smart shopping carts, a lot of it's still testing, you know, it's biometric stuff. So you know, so you don't even have to pull out your phone. It's, it's pretty cool. And I do think it's going to offer at some point when all this stuff really coalesce is in the not too distant future, I think walking into one of these stores, especially as they they scaled on and they roll out this tech and Whole Foods, which is, you know, there's many more than Amazon Fresh, I think, a decent chunk of American and eventually global consumers are going to have a fundamentally different experience when, for the most part grocery shopping, due to this tech that Amazon's rolling out. So to me, that's cool. That's just super interesting. And then, you know, eventually where that goes is interesting. I'm, I'm, it's, it's probably too far out to really be useful. But I do think that augmented reality is going to be a game changer within five years. For for retail, and Amazon's gonna lead the charge in the same way that they are with the other technology in their stores, you still need the killer app, the killer device that everyone actually uses, which could be three to four years away, I think. But I think that's going to be a game changer. Some of the things that Amazon is doing now and in other consumer services, healthcare, pharmaceuticals. You know, I think that for Amazon to get to the next level in terms of size, which is really, really big, right, as a company, if Amazon truly like, steps up to the next level, they'll be not only one of the largest companies in the world, there'll be one of like, there'll be an unprecedented size, the way they do that. And the way they achieve that is they turn the Prime membership into something that you really can't live without, it's almost a non negotiable, you know, it's a three, four or $500 a year subscription, and it handles your prescription drugs, your travel, automotive, you know, all of the stuff you buy, it covers all of our big chunk of the media you consume, it covers, you know, Matt, like multiple multiple touch points in your everyday life, wherever you go and spend money and interact in some way with commerce prime is there. I know that science fiction and frankly, No, I never get there, but I think that's where they're trying to go. No, I

 

Aaron Conant  53:40  

I think it's going to be here soon. If they can switch prime from a subscription to prime being your digital identity that carries your wallet, your health data, right so prime becomes more of like a digital. Yes, a digital ID. Right? That gives you access to Amazon in the Amazon Metaverse as well as opens the door to Facebook in the Facebook Metaverse and can carry and you can buy NF T's and have them shipped to your house Oh by the way it's got my biometric data so when I'm shopping I mean they have by with Prime Now I'm buying a direct to consumer site it knows my body shape so it knows that I need the medium instead of a large right because of because it knows me can make product recommendations. If you you know blockchain encrypt that then you it becomes your identity and your key to get into all the different meta verses that are out there because right I mean, meta will have one Google will have one Alibaba will have one I just like the San Diego Zoo could have one right where you can walk around zoo virtually and click the button and he bought the you know, black rhino you know, skin and walk around found in the pen the right yeah, yeah,

 

John Ghiorso  55:02  

I mean, I think yeah, I think that's, that's maybe even further out, I guess I just see, you know, right now prime is fast, convenient shipping on products and media is basically what it is right. That's what the vast majority of people, that's why they buy you get Amazon music and throw that in media bucket. So those are kind of the two big value propositions I think you're gonna see over the next 10 years. Several other big pillars added to that to the point where if you pay, you know, three, four or $500, it's a good value. And that just sort of shows I think, will prove the value like I mean that that has to be really robust, right to pay that much. I do think they'll get there. And it'll be a combination of prescription drugs, you know, other consumer services, I think that's the big the big new pushes is services.

 

Aaron Conant  56:00  

So awesome. Well, we're right here at time. Again, if anybody needs help across the board with anything, Amazon, they branched into other areas, and retail media and direct consumer performance marketing, as well encourage you to set up some time with John and his team. They've been great friends, partner support is the network since we kicked this off five years ago. If you need any help with partner selection on anything from Amazon, to direct to consumer to chargebacks to drop shipping, you know, performance marketing, SEO, don't hesitate to reach out that's how we work together as a network to identify that the players out there that really work obviously John and his team and Media.Monks are of those select few. But don't ever hesitate to shoot me an email Aaron Aaron@BWGconnect.com. We'll make sure we have a link to the podcast that covered a lot of this stuff with John as well in the follow up email we send out. But with that, we're gonna wrap it up, you know, thanks again to everybody who dialed in. Thanks for the great questions. Hope everybody has a fantastic Tuesday. Have a great rest of your week. John again. Thanks so much, my friend. Always love the conversations. 

 

John Ghiorso  56:59  

Yeah, thanks, Aaron. I'm gonna buy that black rhino NFT and yeah,

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