Archive for July, 2020

Moving from 1P to 3P on Amazon: Checkmate Your Competition

Moving from 1P to 3P on Amazon

How to Checkmate Your Competition

As a seller on Amazon, one of the most important decisions you will make is deciding whether to sell on Vendor Central (1P) or Seller Central (3P). A simple Google search will bring up an endless array of articles and blogs on this topic. Most of them say the same thing: Amazon 1P and 3P models both have their advantages and disadvantages, and deciding which is right for your business depends on numerous factors including:

  • Supply Chain & Logistics
  • Funding
  • Inventory
  • Pricing Strategy
  • Distribution
  • Assortment
  • Goals & Success Metrics

All this is true, but it’s only the beginning of the conversation – especially for businesses that have decided 3P is the right model for them. Transitioning to Seller Central is a major change that will impact both the short-term and long-term operations of your company. The good news is: 3P offers an opportunity to significantly increase not just revenue, but net profits. The bad news is: if you don’t transition strategically, it will be much more challenging to succeed on Seller Central.

As an e-commerce channel management agency with a proven track record on Amazon, we’ve helped many businesses make the change from Vendor Central to Seller Central. We know first-hand the common pitfalls that businesses often face along the way, and more importantly, how to navigate around (and sometimes through) them. It can be a complicated process. To help simplify it, we’re going to detail two primary challenges a Channel Key client faced during their transition from 1P to 3P, and most importantly, how we helped our client overcome them, checkmate their competition, and ultimately crush it on the Amazon marketplace.

Understanding the Amazon 3P Model

First, the basics. In the 1P model, you are the wholesaler and Amazon is the retailer. This follows a traditional 2 tier distribution model where you negotiate pricing and terms with your Amazon buyer, sign a Vendor Agreement, and ship your product to Amazon when sent weekly replenishment purchase orders. This business is run through the Vendor Central portal.

When you transition to 3P, you become the retailer. In this model, you set up your own Amazon storefront and sell your products directly to consumers. Sellers on Amazon have full brand authority and complete control over how their products are listed and marketed. Unlike 1P Vendors, 3P Sellers set their own pricing, determine which products to list and promote, and manage their own inventory. All of this requires much more work than the 1P model, but if done correctly, it can lead to higher profits.

Managing the Amazon Sell Down Period

Many businesses begin their Amazon journey on Vendor Central. When you transition to Seller Central, you need to build your storefront on the platform and create all-new listings for your products. Here’s the catch: Amazon probably still has items in their warehouse that you sold to them as a vendor. If you list these products on your new 3P storefront, you’ll essentially be competing with Amazon. Spoiler alert: they’ll win every time. You will need to wait for Amazon to sell the very last item of a particular SKU before you sell the same item on Seller Central. This is called the “sell down” period. Even when Amazon runs out of your product, there might be other resellers offering those items as well. Managing these conflicts is paramount to winning the buy box and controlling pricing for your inventory as a 3P Seller.

The following is an actual 1P to 3P conversion scenario for an active Channel Key client with a seven-figure Amazon business. They have 144 parent SKUs and 270+ total SKUs in their assortment. Not only did Amazon own some of their products during their transition, but there were also several resellers competing with Amazon for the buy box on these items. This is a precarious position to be in because not only was our client losing the buy box (and therefore not generating any new sales), but the competition between Amazon and 3rd party sellers were driving the price on these items down. Resellers were offering our client’s #1 product at a 42%+ discount off the MSRP and MAP.

Channel Key created our client’s Seller Central Account and implemented an aggressive, customized strategy to regain control of their brand on the Amazon marketplace. After changing their 1P status from Planned Replenishment to Obsolete in Vendor Central, we severed distribution channels to the brand’s primary 3rd party reseller. The 1P Amazon sell down period took approximately 120 days, during which Channel Key created a fully optimized 3P storefront (more on this below).

Through careful management of the sell-down period, Channel Key helped our client grow their percentage of the buy box win for their top ten products to 93%. Since then, their #1 product has not deviated from the MSRP/MAP. Their Vendor Central to Seller Central sales comparison- adjusted from July to December (YoY) resulted in a 17% Top-Line Decrease and a 151% Bottom Line-Increase.

The Power of Content and Inventory Control 

Another important step of transitioning from 1P to 3P is optimizing your content. One of the main challenges for our client was not only the competition for the buy box against Amazon and resellers but also regaining control of the brand’s catalog and presence on the platform. Many of their products listed by resellers were disorganized and poorly optimized. While managing the sell-down period, Channel Key created an organized 3P storefront, secured Brand Registry, and created fully optimized listings with Enhanced Brand Content based on a detailed keyword search strategy.

Once our client had control over their brand listings, we leveraged aggressive and comprehensive Sponsored Products and Headline Search Ad programs for both branded and non-branded search terms to drive traffic to the storefront listings. Overall, Channel Key’s content optimization and advertising strategy achieved numerous measurable results including:

  • Converting 100% to 3P with no degradation in revenue
  • Doubling net margin profitability
  • Driving 33.3% of sales from sponsored products at a 5% ACoS
  • Increasing overall conversion rate from .57% to 7.95%
  • Generating 50 seller reviews and 103 product reviews within 10 months

The Key to Transitioning from Vendor Central to Seller Central on Amazon

Transitioning from 1P to 3P is different for every brand. In the above scenario, our client’s primary challenges were: 1) regaining control of their brand, and 2) neutralizing 3rd party resellers quickly and efficiently. Remember, timing matters. When you’re no longer filling weekly Amazon replenishment purchase orders as you do with the 1P model, the longer it takes to win the buy box for your items means the longer you go without Amazon sales for those items.

Checkmating resellers isn’t the only challenge that can cause expensive delays during your 1P to 3P transition. The key to moving your Amazon business to Seller Central successfully is to identify what hurdles your business is likely to face, then implementing a strategy that will overcome these hurdles promptly. For this reason, partnering with an e-commerce channel management agency is often the best and most profitable way to transition from 1P to 3P on Amazon.

To learn more about what a partnership with Channel Key looks like, including our proprietary e-commerce tactics and strategies that have helped many businesses transition successfully from Vendor Central to Seller Central Amazon, simply fill out the form below and we’ll be in touch.

The 2020 Race to $700 Billion: How COVID-19 is Redefining the Role of e-commerce

The race is on – and $700 billion is at the finish line. That’s what economists forecast digital sales in the U.S. to reach in 2020. $710 billion to be exact, an 18% increase from last year.

There’s no denying COVID-19 has changed the way consumers purchase goods. Stay-at-home mandates have forced many people to shift their shopping routines to online platforms like Amazon. Now that we are more than halfway through the year, it’s becoming clearer what this could mean for the future of business: success or failure.

 

In June, Adobe released its latest Digital Economy Index, a global economic report that measures the buying power of digital consumers. One of the most surprising figures in the report shows that total online spending for May surpassed forecasts by $77 billion, which equates to more than half of the 2019 holiday season. June generated $73.2 billion in online spend, a 76.2% year-over-year increase. In total, the first six months of 2020 have driven a whopping $368.8B in online sales.

 

 

“According to our data, it would’ve taken between 4 and 6 years to get to the levels that we saw in May if the growth continued at the same levels it was at for the past few years,” Vivek Pandya, Adobe’s Digital Insights Manager, told Business Insider for an article published June 12, 2020. “We typically don’t expect to see surges at this level, at any time outside of the holiday season. For context, last year’s holiday season drove $142.5 billion dollars from November 1st to December 31st, and that was a 13% year-over-year increase.”

 

It’s no surprise that medical supplies top the list as the fastest-growing e-commerce category during the pandemic, but many others are seeing an increase as well. Digital sales of household goods and baby products have risen more than 200%, while sales of toys, wellness products, and home office supplies have almost doubled.

 

 

Perhaps most interesting is that new customers and those with only one previous order represent the bulk of the increase in online purchases for April, May, and June. This suggests that the shift to e-commerce shopping is not a temporary change. “We’ve had three months to adjust to the new normal,” said Taylor Schreiner, director of Adobe Digital Insights. “We are seeing signs that online purchasing trends formed during the pandemic may see permanent adoption.”

 

 

All of this data points to a revealing insight: we are living through one of the most important times in the brief history of e-commerce. The coronavirus pandemic has given a turbo boost to online shopping as many brands race to build their online presence to meet this rising demand. They know if they don’t, their competitors will. As the largest e-commerce platform in the U.S., Amazon alone provides businesses access to 150 million prime members who are estimated to spend $240 billion in 2020.

 

Indeed, businesses with a strong Amazon presence have an advantage over those that are new to the digital giant. Building a successful presence on Amazon is no easy task. In addition to the company’s complex and ever-changing protocols, there are currently 2.5 million sellers across all Amazon marketplaces. Thus, it’s not just a matter of having your business on the platform, it’s a matter of distinguishing your brand from your competitors.

 

Fortunately, if your business is among those working hard to catch up to the brands currently dominating e-commerce channels, there is a way to accelerate your digital growth. Channel Key is a full-service channel management marketplace consulting agency with a proven track record of helping brands from around the world achieve measurable success on platforms like Amazon. With more than 30 years of combined experience, we’ve helped complete more than 4.5 million e-commerce transactions on Amazon, resulting in $250 million in cumulative sales.

 

In addition to working closely with Amazon on a day-to-day basis, Channel Key provides complete 360-degree services including:

 

  • Marketplace Strategy
  • Brand Store Creation
  • New Product Launches
  • Catalog Management
  • Ad Strategy Management
  • Organic Search Placement
  • Fulfillment Setup
  • KPI Management
  • Gap Analysis
  • Segmentation

 

It’s impossible to predict what the future will look like post COVID-19, but virtually every economist agrees that online shopping will not only continue to grow exponentially but will become an essential source of revenue for brands. Even if traffic to brick and mortar businesses resumes to pre-pandemic rates, e-commerce platforms like Amazon are here to stay. With $700 billion on the line for this year alone, the 2020 race to digital profits is well underway. To learn more about how Channel Key can help accelerate your business to the front of the pack, contact us today for a free consultation.

 


 

REFERENCES:

 

https://www.adobe.com/content/dam/www/us/en/experience-cloud/digital-insights/pdfs/adobe_analytics-digital-economy-index-2020.pdf

 

https://www.forbes.com/sites/johnkoetsier/2020/06/12/covid-19-accelerated-e-commerce-growth-4-to-6-years/#384bd4d8600f

 

https://www.softwareadvice.com/resources/covid-19-digital-transformation-retail/

 

https://www.techrepublic.com/article/e-commerce-spending-in-may-2020-greater-than-the-entire-2019-holiday-season/

 

https://www.wsj.com/articles/amazons-sales-jump-as-coronavirus-prompts-surge-in-online-shopping-11588278740

 

https://commonthreadco.com/blogs/coachs-corner/coronavirus-ecommerce#coronavirus-ecommerce-data

 

https://public.flourish.studio/visualisation/1800215/?utm_source=showcase&utm_campaign=visualisation/1800215

Channel Key Names Ryan Rollo Chief Operating Officer

Channel Key Names Ryan Rollo Chief Operating Officer

Channel Key is excited to announce that Ryan Rollo has been named Chief Operating Officer. This newly created position will help scale our agency’s rapid growth and will report directly to President, CEO, and Co-Founder Dan Brownsher.

“Ryan has an impressive background of successfully leading and growing businesses in technology and e-commerce markets,” said Brownsher. “His experience, business acumen and foresight are exactly what we need to drive forward and take Channel Key to the next level.”

Effective immediately, Rollo will be responsible for operational excellence, developing and executing business strategy, building, and inspiring Channel Key departments, and ensuring client success. Rollo will work cross-functionally to integrate service, sales, finance, HR, business development, and strategic partnerships to position the organization for sustainable growth.

“Amazon and its advertising business are growing rapidly,” said Rollo. “As brick and mortar continues to be disrupted, brands are leaning into Amazon for both distribution and advertising. Channel Key is uniquely positioned as a full-service boutique agency to help brands and retailers achieve success on major online marketplaces. I’m excited to join such an experienced team of Amazon professionals at this pivotal time in digital commerce.”

Before joining Channel Key, Rollo led catalog growth and was part of the marketplace launch strategy team for Loblaw Digital, the technology division of Canada’s largest retailer. His role at Loblaw developed from an acquisition of Rollo’s previous company, Pricefalls.com, and PF Tech, a retail marketplace and technology SaaS company. There, Ryan served as VP of Operations, among numerous other roles over the course of ten years. At Pricefalls.com, he worked with 1000s of online retailers and D2C brands and helped the company raise multimillion-dollar capital rounds, culminating in a successful transition of the business into a larger organization.

About Channel Key

Channel Key is one of the fastest-growing full-service channel management marketplace consulting agencies. The company works with leading retail brands from around the world. Complete 360-degree services include guidance on marketplace strategies and turnkey marketplace support comprising of content development, custom ad campaigns and marketing programs, inventory, and operations management and stress-free marketplace set up, maintenance, and ongoing consulting. All services are tailored to each customer. For more information about how Channel Key can help your business achieve success on e-commerce marketplaces, contact us today for a free consultation.

Amazon Prime Day 2020

When is Amazon Prime Day 2020? That’s been the million-dollar question. Billion dollars, actually. In 2019, Prime Day generated an estimated $7.16 billion in sales over the course of 48 hours. It’s no wonder this is the most anticipated annual event for Amazon sellers and vendors. Since its launch in 2015 to celebrate the 20th anniversary of Amazon, Prime Day has continued to set records. At the beginning of 2020, market analysts were forecasting an even greater turnout this summer.

 

Of course, nothing interrupts the economy quite like a global pandemic. With much of the U.S. still shut down, Amazon has remained virtually silent about this year’s Prime Day – until recently. According to a leaked email first reported by Business Insider, Amazon informed 3P sellers to use the week of October 5th as a placeholder for Prime Day 2020. The article quotes Amazon as stating, “A definitive date will be announced as we get closer to the event. We are looking forward to seeing submissions that offer the most delight to customers during one of the biggest shopping days of the year, Prime Day!”

 

While no official announcement has been made, the leaked email all but confirms an autumn time frame for Prime Day 2020. With the clock ticking, Channel Key is advising businesses to begin preparing. You don’t want to be scrambling at the last second when the stakes are this high. The following steps will help position your business for success during the biggest e-commerce shopping event of the year.

 

The First Step to a Successful Prime Day Promotion

 

Before launching a campaign, every business should first decide if a Prime Day promotion is right for them. Remember, this is the biggest shopping event on the largest e-commerce platform in the U.S. It takes time and resources to stand out from the competition. Even then, there is no guarantee you will hit a home run. It’s prudent to examine previous Prime Days to understand what items sold well and what items didn’t. The most sought-after products typically fall under three main categories: 1) high-search items like electronics and devices, 2) mass-volume products that consumers need regularly, and 3) hot-ticket items. Unfortunately, the latter is difficult to predict. In 2019, LifeStraw Personal Water Filters, Instant Pots, and 23andMe Health + Ancestry kits were top sellers. The point is: not all promotions on Prime Day are successful. If your product portfolio does not include items similar to those that have performed well in past Prime Day events, it might be wiser to save your resources for the holiday season.

 

Optimizing Your Amazon Visibility

 

Okay, you’ve studied past Prime Day results and know exactly which products you want to promote. Now it’s time to make sure these items are optimized properly. After all, Amazon is more than a store; it’s a giant search engine that utilizes complex SEO algorithms to control search results. These are based on numerous factors including product titles and information, attributes, keywords, images, and more. You’ll want to go over your listings carefully to make sure everything is up-to-date and fully optimized for the best visibility, click-through-rate, and most importantly, conversion rate.

 

Timing Your Prime Day Promotion

 

Just like all promotions, successful Prime Day campaigns begin before the actual event. With a tentative date of October 5th set for the mega shopping event, now is a good time to develop a digital marketing strategy specifically for your promotion. Even if the event is postponed again, you’ll be ready for when it does take place. Your plan should incorporate all digital marketing tactics at your disposal including (but not limited to) content marketing, social media, email marketing, paid advertising, and search marketing. Having a plan ready will give you more time to promote your Prime Day sale when the date is finally announced.

 

Analyzing Your Prime Day Results

 

It’s no secret that successful Prime Day promotions require a lot of work. When it’s over, you’ll likely be tempted to kick back and relax. And sure, you definitely earned some celebration. Just don’t forget to analyze your campaign’s performance; not only sales figures and marketing costs, but what worked and what didn’t. Did customers respond to your Deal of the Day better than your couponed items? Also, check your website analytics. Businesses often enjoy a halo effect after Prime Day is over. Your promotion may increase organic searches and sales for your non-promoted products. If so, which ones? Can they be better optimized for search engines? All of this important data will give you valuable insight so you can make necessary adjustments for Cyber Monday.

 

The ULTIMATE Secret to Selling on Prime Day

 

Whether it takes place in October or not, one thing is certain: there will be another Amazon Prime Day. These strategies will make it much easier for your business to harness the buying power of Amazon’s 150 million Prime members. Of course, successful digital marketing on Amazon requires a plan customized specifically for your business. With a combined 30+ years of experience selling on Amazon, the Channel Key team includes the pedigree of a Top 200 Amazon seller, former Amazon insiders, and marketing experts. Together we have developed a separate and specialized body of knowledge for promoting products in specific Amazon categories. To learn more about Channel Key’s proven strategies to increase sales in your market, contact us today for a free consultation.

 


 

REFERENCES:

 

https://www.digitalcommerce360.com/article/amazon-prime-day-sales

 

https://www.businessinsider.com/when-is-amazon-prime-day

 

https://www.businessinsider.com/amazon-delays-prime-day-again-to-october-2020-7

 

https://www.marketwatch.com/story/here-are-some-of-the-best-selling-items-on-amazon-prime-day-from-around-the-world-2019-07-17

How to Choose the Right Amazon Agency

COVID-19 has changed the way many people shop. A recent Mastercard SpendingPulse report found that e-commerce sales jumped by nearly 93% in May of 2020, while a PYMNTS.com report found that 4 out of 10 people are now buying retail goods online. Given this boost in e-commerce, along with a pandemic that continues to impact the country, brands need to shift their focus to online marketplaces if they want to remain competitive. As the largest e-commerce platform in the U.S., Amazon provides businesses access to 150 million prime members who are estimated to spend a whopping $240 billion in 2020.

Unfortunately, selling successfully on Amazon is no simple feat. There are currently 2.5 million sellers across all Amazon marketplaces, which makes distinguishing your brand not only crucial, but difficult. For this reason, more and more businesses are turning to channel management agencies for help. This growing demand has caused a surge in e-commerce consultants. So, how do you choose the right Amazon agency? With the stakes this high, your decision could mean the difference between success and failure.

What differentiates one agency from another?

The first thing to know when choosing an Amazon agency is that not all agencies are the same. Some have a large in-house team, some maintain a modest-sized staff, and others consist of only a few consultants. Size does not necessarily matter, but experience does. Therefore, the first question to ask is: what differentiates your agency from all the others?

At Channel Key, we pride ourselves on three primary distinctions: 1) our pedigree, 2) our boutique experience, and 3) our proprietary process. Our pedigree stems from our sister company that is currently a Top 200 Amazon seller. We have more than 30 years of combined experience helping clients in many industries succeed on Amazon, resulting in $250 million in cumulative sales. In other words, we walk the walk.

Our boutique approach is our paramount focus and pro-active mindset to detail, communication, quality over quantity, and brand goals. Every business is unique. Customizing a successful Amazon marketplace strategy begins with learning and understanding the particular and often changing needs of your business. This requires the kind of attention and communication that large agencies often struggle to provide.

Our primary goal at Channel Key is to develop smart and competitive strategies that increase your company’s sales and overall revenue. To achieve this, we have developed proprietary processes to ensure a consistent approach that creates alignment and generates maximum results. These include providing your business with a dedicated account manager, content strategist, marketer, and data analyst who will work directly with your team to develop a strategic plan and build you a best-in-class Amazon business.

What can your business expect regarding growth and performance?

One of the most important questions to ask an Amazon agency is: what kind of results should I expect? Beware of agencies that promise exponential growth in a short amount of time. The Amazon marketplace just does not work that way. Instead, seek agencies with proven track records. Channel Key has helped complete more than 4.5 million e-commerce transactions on Amazon and has managed more than 145,000 SKUs. While exact sales numbers are impossible to forecast, we guarantee to provide you the same results-driven, comprehensive service that has proven successful for our diverse roster of clients. We are happy to share case studies, testimonials, and white papers that detail our successful strategies that have directly increased traffic and sales on Amazon.

How will an agency grow your business on Amazon?

When it comes to Amazon agencies, details matter. Successful agencies will not only help you understand what kind of results you can expect, but more importantly, how they will achieve them. Selling on Amazon requires a multitude of key functional components operating simultaneously to drive the best results. These include listing optimization, advertising campaigns, technology integration, data analysis, operations, supply chain management, and much more.

For example, Channel Key uses a proprietary algorithm to identify the best keyword opportunities for your business by incorporating numerous critical marketplace factors like competition and search volume. Based on a detailed analysis of the results, Channel Key will customize a multi-pronged approach that incorporates numerous tactics and strategies that can include:

  • Strategic Business Planning
  • Brand Store Creation
  • New Product Launches
  • Catalog Management
  • Ad Strategy Management
  • Organic Search Placement
  • Fulfillment Setup
  • KPI Management
  • Gap Analysis
  • Segmentation

The most important factor to consider when choosing an Amazon agency

Of all the questions to ask when choosing an Amazon agency, one is undoubtedly the most important: is this the right agency for my business? Not every agency or consultant will tell you this. Channel Key has a successful track record because we are selective about the businesses with which we partner. We know that not every business will be a good fit, and that is okay.

Transparency is one of our core values. Every relationship with our clients begins with an initial phone call to learn more about their business and goals. This helps us determine if we are the right agency to help them succeed. At the end of the day, success for our clients means success for us. As a business, you should seek an agency that follows this guiding principle and has the record to back it up. If you are interested in strengthening your presence on the Amazon marketplace and would like to know more about how we may be able to help, contact us today for a free consultation.


 

REFERENCES:

https://mastercardcontentexchange.com/newsroom/press-releases/2020/june/mastercard-spendingpulse-estimated-53-billion-in-additional-us-e-commerce-sales-as-pandemic-drives-consumers-online-in-april-and-may/

https://securecdn.pymnts.com/wp-content/uploads/2020/05/The-Great-Reopening-Tracking-Digitals-Quantum-Leap.pdf

https://www.statista.com/statistics/304938/amazon-prime-and-non-prime-members-average-sales-spend/

https://www.oberlo.com/blog/amazon-statistics

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