It’s never been easier to stand up a professional eCommerce entity, but brands are finding it hard to make a dollar. The Wall Street Journal recently released an article stating that Amazon has posted its first quarterly loss since 2015, mainly due to supply chain issues, inflation, and a slump in online shopping. 

If an eCommerce giant like Amazon has trouble generating profits, what does this mean for your eCommerce brand? Is there a way to become more profitable?

What’s Consuming Your Profits?

Profits

Why aren’t companies making money on their eCommerce platforms? Two likely culprits are engulfing your profits: the cost of consumer acquisition and supply chain and fulfillment difficulties.

According to Michael Zakkour of 5 New Digital, the average cost of consumer acquisition for a large retailer was $124 two years ago. This year, the average cost of acquisition is $505. If you're spending that much money on marketing and advertising to get people to buy from you once, make sure you have a plan in place to turn them into long-term customers.

In addition to the cost of customer acquisition and loyalty, brands are losing profits due to supply chain and fulfillment costs. There's been extreme pressure on the supply chain overall, particularly during the last year and a half. As the cost of manufacturing, transportation, and distribution has risen, inflation has also affected fulfillment. The expenses for simply shipping packages have hit highs. So, now you've got downward pressure on the supply chain and downward pressure on fulfillment.

The Unified Commerce Approach

Rather than just selling on digital channels, it’s vital that your brand takes a unified commerce approach if you want to survive. This means connecting channels in meaningful ways. For example, try asking yourself, “How does livestreaming create an in-store purchase? How does an in-store browse turn into a QR code purchase in a new CRM acquisition?” 

A principle supporting unified commerce is the ability to diversify your channels. Especially when you're looking at new channels, this step is crucial. Livestream, QR codes, social commerce, Roblox, TikTok, and The Metaverse are just a few strategies and platforms where you can generate sales, reach a wider audience, and increase profits.

Along the same lines, think about physical retail in addition to eCommerce. Simply being online or offline won't produce success. To have a prosperous enterprise, invest in various types of retail platforms and shape a cohesive strategy. 

Essential Strategies To Become More Profitable

The unified commerce approach is key to boosting eCommerce profitability. But what specific actions should you take? First, do a complete and honest assessment of your eCommerce business and financials.

Next, assess your service level and supply chain pain points. Look at what people expect in terms of customization and personalization because it’s not a one-size-fits-all approach. During these assessments, it’s important to recognize that technology, data science, and digital tools are the power sources for profitability.

Finally, it’s crucial to sell on profitable channels and create an operation with a unified marketing approach and sales strategy. Consumers expect an eCommerce presence, so you need to develop new strategies across diversified channels to meet their needs and create long-term customers (and sales).

John Ghiorso

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.

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

In this episode…

Are you an Amazon seller who wants to drive more traffic to build your brand? Scaling your brand is about taking chances and figuring out what works and what doesn’t — so what can you do to optimize and manage your brand?

John Ghiorso says that to overcome the dilemma of a typical four-wall retail strategy, brands need to understand the Amazon environment to be successful. If you have a foundational approach to retail platforms, you can find tremendous opportunities for growth as you move away from traditional methods. But use caution when establishing a marketing strategy. John recommends installing a budget and following how consumers perceive products. 

In this episode of The Digital Deep Dive, Aaron Conant sits down with Founder and CEO at Orca Pacific, a Media.Monks company, to discuss viewing Amazon as an opportunity to optimize your brand. John talks about the shift in brands considering Amazon as a growth platform, why establishing a budget is crucial for tremendous success, and using targeted marketing strategies to upscale products and increase ranking.

Resources mentioned in this episode:

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