Takeaways from Catalyst Europe – including FBA, eBay, Amazon, Wholesale, Google and more (episode 047)

25th April by Chloë Thomas

Last Wednesday I attended Channel Advisor’s Catalyst Conference in London. So in this episode I’m bringing you our second Takeaways episode of 2016!

I am going to run through the following topics:

eBay and Amazon updates
Google’s getting in on the marketplace game
Recommended approach for big market place selling
Consistent trend themes
Logistics is still a huge battleground
Keep an eye on mobile
The awakening of manufacturers / brand owners / wholesalers is going to change the landscape
Google update

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All summed up with some key potential actions.

Full Script:

On Wednesday I attended the Channel Advisor Catalyst Conference in London. And I have some great takeaways coming up shortly, including some very interesting insights into Manufacturer / Wholesaler – retailer relationships; as well as the eBay, Amazon and general marketplace updates I’m sure you’re expecting.

Catalyst is a one day conference run by Channel Advisor. There are 2 versions each year, one in Las Vegas and one in London (unfortunately I didn’t have the time to nip over to Vegas!). This year there were about 500 delegates, it was hosted at the Savoy on the Thames, and there was just one stream of content (plus some expert round table sessions which I didn’t attend). I did attend the whole conference bar the final session (I had to leave to get the train home).

Channel Advisor is a software system for putting your products onto the marketplaces (and onto other things! I’m sure they’d describe themselves a little differently). They are probably the market leader in their field, and have been running the conference for several years.

I went for the first time in a while last year, and found it to be my top ecommerce conference of 2016 (tied in first place with IRC/eDC – they’re so different I really can’t chose between them). So I was planning on going again this year, and bought my ticket soon after our experts recommended it as one of the top conferences of 2016.

Why do I like Catalyst?

As you know my specialism isn’t marketplace selling, I focus mainly on selling from your own website. But you can’t work in eCommerce and not keep an eye on what’s happening in marketplace world! Most of those I advise have some level of marketplace selling, including several who are busy working to reduce their reliance on the marketplaces, and for many businesses marketplace selling is a crucial way to grow sales or test overseas expansion.

The Catalyst conference gives me a very easy way to get my knowledge up to speed – a whole day immersed in the world of the marketplaces.

One of the key things I personally take away from a day in marketplace-world is that it’s the same as a day in own-site eCommerce world. Very similar challenges and opportunities, and the fundamentals remain the same – find the right product, promote it in the right way, and look after your customers.

But don’t think these takeaways are going to be all about Amazon and eBay and Alibaba. Whilst the conference is aimed at marketplace sellers the content is much more wide-ranging than just eBay this, NewEgg that. So there’s plenty in this episode for everyone in eCommerce.

It’s also a conference at which I meet really interesting delegates – I had some great chats and met some really interesting people, a couple of whom will hopefully be on the podcast in the near future – Tim and Ruth, I am talking about you!!

Quick definitions

“marketplaces”:

I’ve already used this word a few times, so before we dive in I just wanted to clarify that a marketplace is anywhere online that’s not your website, which you’re feeding your products onto. There are now 100s of them, big ones like eBay and Amazon, and niche ones for specific ones for different product categories, customers, or geographies. Remember my takeaways from TeComm last year, where I talked about La Mode?

“Third party”:

That’s when you sell on Amazon – you’re a third party

Health warning time

Before I dive into the takeaways I need to get one health warning out of the way.

This conference (and thus podcast) is all about marketplaces, so it’s focused in on just one part of the eCommerce mix. Don’t think of this podcast as giving you your next 12 months of actions and strategy! Rather think of it as a window into the world of marketplaces, just like the takeaways from The Delivery Conference was a window in to the world of delivery.

At the end I will run through a summary of things I think you might want to be putting on the to do list.

The takeaways

1. eBay and Amazon updates

As you can imagine a lot was said about eBay and Amazon during the day, and each had a session on stage (with Amazon keeping their cards very close to their chest – Simon Johnson could give any politician a run for their money). Neither of them announced anything new, but there were some elements that I think it’s worth having a refresh about.

Where each is focusing

I’m adding this in because (I think) it was the first time I remember hearing this so clearly…

Amazon are focused on

Selection
Convenience (shipping)
Price

eBay are focused on

Being the world’s leading virtual mall for discovering great value and unique selection

At first listen those might appear the same – both focused on range and price.

But there are some important differences between them. Which are borne out in their actions as well as their strategy.

Customer service – Amazon put it front and centre, and want to control it (see FBA, delivery systems and more) recognising that the most important part is the shipping and convenience; eBay don’t mention it
Selection – amazon seems more populist, it’s about “selection” for the masses, whilst for eBay it’s a huge focus “discovering… unique selection” –that unique selection requires the causal consumer lister.

I guess that’s what happens when one starts off as a marketplace, and the other starts off as a retailer (eBay – marketplace, and amazon retailer in case you’re wondering!)

Let’s focus on the updates about each.

We can’t ignore Amazon

Channel advisor reckon Amazon is considerably bigger and growing faster than we realise. That’s because their earnings statements only include the commission they earn from third party sales NOT the value of those sales. Taking that into account it is probably twice as big as we all think it is. David Spitz (CEO Channel Advisor) suggests that it’s probably just become the largest retailer in the world – larger than Walmart.

On the growth side in Q4 2015 Wells Fargo (US bank) reckon that Amazon absorbed 55% of ALL US retail growth (that’s on and offline growth in retail, and in the US eCommerce is only 10% of the retail mix – UK we’re at about 15-20%). 55% of US retail growth – that’s HUGE, and a massive increase on the previous year when it was 42% (which is still huge).

The good news though is that Amazon need all of us as well – 47% of their unit sales are now third party sales.

And they’re continuing to do a lot to both make it easier for you to use FBA and easier for customers to shop with them.

FBA is fulfilled by Amazon – it’s where you deliver your products to Amazon, you trade them, and Amazon do the despatching. And they certainly seem to be continuing to push you to do this:

Massive investment in warehousing etc
FBA Small and Light – for products under £7 that fit into an envelope.
Pushing the ease of cross border sales using FBA

In the customer service side of things, obviously Prime continues to become even better. With Same Day and ‘Now’ options being rolled out in the UK at the moment. In the USA they’re now selling something called “Amazon echo” which is a box that sits in your house waiting for you to talk to it, and has “skills” it learns – a bit like apps. Apparently it’s very impressive.

Can be used to build a shopping list that you then access via a corresponding phone app. Skills include things like Uber – so you just say you want an uber, and it orders it for you; as well as Dominos Pizza. I look forward to seeing if it can get a pizza delivered to my house in rural Cornwall.

eBay is no longer a garage sale

79% of eBay sales are NEW items. It’s time we all get over our preconceptions and properly evaluate what eBay could do for our businesses.

Almost half of all their sales are “touched” by mobile – at some point the customer uses their mobile app to facilitate the purchase.

Like Amazon they’re also interested in CBT. (cross border trade).

They are very focused on building relationships with retailers in order to grow their “unique inventory” – just like amazon is.

2. Google’s getting in on the marketplace game

Google have been running a pilot programme on GSCs where you can purchase right from the ad.

3. Recommended approach for big market place selling

As Amazon is now so big, it can’t be ignored, so during his intro key note David Spitz of Channel Advisor recommend the following approach for retailers not yet using Amazon. I think you could also use this approach for eBay, and that it should help take the nervousness out of it all.

Find the overlap and sell that on the marketplace – Work out which of your product inventory is already on Amazon, and add yourself to the list of sellers
Look at your non-strategic product and any of that that’s not already on Amazon – list it to be the only supplier of it. (non-strategic product is the product that’s not core to your strategy – eg last week’s podcast guest was Jules of The TeaShed their strategic product is tea(!), their non-strategic product is teapots.)
Do not list your strategically important products that aren’t already on Amazon!

I thought that was a really well explained way to approach marketplace selling, now that it can’t be ignored.

If you’re taking this approach I’d suggest re-evaluating every 3 or 6 months as you update your stock.

4. Consistent trend themes

eBay’s Andy Lippert summed up a theme that ran through the whole conference, (and which I’ve mentioned in previous takeaway episodes). The retail environment is changing, driven by:

Accelerating technological innovation
Ever-evolving customer expectations and behaviours

He illustrated the convergence of these drivers by demonstrating how empowered customers have become since 2000:

In 2000 they used desktops, now it’s multiscreen
In 2000 they had a standard selection of products to choose from, now they swipe through an unlimited selection
In 2000 to buy something online was a bit of an adventure! Now it’s a personalised experience that they expect to be both easy and convenient.

It’s still the case that to deal with this you need to focus on delivering the services your customer wants (a process which my new book Customer Manipulation is designed to help you deal with).

5. Logistics is still a huge battleground

I’ve covered this in a LOT of detail of late, and all the same messages were being given out here, plus chat (as already run through) about FBA and Prime etc.

6. Keep an eye on mobile

People are now more likely to click on a mobile, than on a desktop. But they are still doing their converting on a desktop.

You can’t stick your head in the sand about it, BUT there’s no clear idea of how the customers’ shift to mobile is going to play out.

There are theories that it’s going to be all about Apps, (but before you dive off to brief an app) consumers are using fewer apps – so for an app to be used it kinda has to be on the home screen, and there’s not much space on the home screen.

In the world of apps power is already heavily consolidated in the hands of Facebook and Google . And predictions are that eCommerce will be consolidated into a handful of big-name apps – Amazon / PayPal / Facebook. This has already happened in China with WeChat – its’ a whole ecosystem much like the internet is.

Customers prefer an app because it’s easier (they have less typing to do), they also feel it is more secure. But they only use a limited number.

So maybe it will be about mobile wallets rather than apps? That’s a payment method within the phone (an app) which can be used on websites. Think apple pay, PayPal.

If it’s wallets over apps then you’re going to need a mobile friendly website. BUT should you go responsive, or build one site for desktop and another for mobile?

Right now there’s no clear winning route.

So, keep your ears open, and track your sessions and conversion rate each month split out by device, NOT all mixed in together. Not only will this give you a better view of what’s happening to conversion on your site, it will also help you understand how your customers are using devices. (thanks to Dave Elston of Clarks shoes for that tip).

Oh, and keep an eye on messaging apps for their power to look after customer services.

7. The awakening of manufacturers / brand owners / wholesalers is going to change the landscape

This was something I found it very refreshing to hear talked about.

(Admittedly Channel Advisor have 2 new areas of their software that enables a wholesaler to keep an eye on what their retailers are doing, and they give the wholesaler the ability to turn the stockist page of the website into a mini-marketplace of their own; so it’s clearly a big sales opportunity for them.)

BUT everything that I’m about to run through, and its importance as a trend, does stack up with many conversations I’ve been having over the last 6-12 months.

By manufacturers / brand owners we’re meaning the businesses who sell the product to retailers. So it could be like whirlpool (more on them later) who do zero direct selling to consumers, and do everything via their retail partners. Or it could be businesses who both wholesale and retail their products. I know in a lot of cases the company involved might not actually be doing the manufacturing, so I’m going to refer them as wholesalers here.

Both Amazon and eBay are busy building programs to help such businesses as well.

Amazon have 2 key tools for these businesses. The ‘brand registry’ allows them to take some control over the listings of their products – from a brand angle. And the ‘launchpad’ is an area that showcases new, creatively launched products.

eBay are doing a fair bit more (or that’s the impression I got from the conference). They are partnering with big wholesalers like Bosch (the world leader in powertools) to help them represent their brand better on eBay. Creating “showrooms” with extra content, where only the members of the Bosch eBay “authorised sellers program” are able to list their products. This seems to be a great way for the wholesaler to be working WITH their retail partners rather than just wielding a stick at them each time they use the wrong photo.

FYI Bosch have only allowed their top 5 UK sellers to be part of the “authorised sellers program” so it’s a real benefit to the seller too.

David Spitz thinks this ‘awakening of wholesalers’ is going to be such a big impact that it’s comparable to the impact of Netflix on blockbuster. I think that might be overstating it – but we’ll see. He shared the example of Johnson and Johnson who have licensed the Channel Advisor software for 20 of their resellers, meaning J&J are easily able to control the brand content on both eBay and Amazon.

We had a whole session from Whirlpool – a manufacturer and brand owner of white goods who do all their sales via retail partners. Liam Paige their head of marketing (service) took us through how they’ve changed their approach to collaborate closely with retailers in order to better serve the end customer.

They’ve done it all because consumers are increasingly choosing to purchase their appliances online. It’s growing in all territories to around 10-15% in 2015. The UK is a total anomaly with 55% of us choosing to buy our appliances online – again making the UK a great place to test out new approaches to eCommerce sales.

Appliances is an interesting sector to be doing this in because marketing spend has been cut a great deal, there’s a long lifecycle between purchases, and the levels of price competition and intense. That all makes it very hard to differentiate a brand, hence why Whirlpool decided to take advantage to the change in customer behaviour and do online better than anyone else.

Many businesses would have at that point decided to start selling themselves, but Whirlpool decided to work with their existing retail partner network instead to create a consistent consumer experience. Generally their retailers are really appreciating it because it’s increasing their conversion rates, plus (I’m reading between the lines here!) they’ve had margin incentives to comply.
Whirlpool has created all the sorts of content the retailers need – video, copy, spec sheets, and images. Worked with them to improve how it all fits together on the website. They then see the impact of what they’re doing and share that across the retailer network.

They also monitor the retailers performance – not just sales, but also how well they’re using the new content, and complying with the new guidelines. Interestingly video has made the biggest difference.

Liam summed the project up as creating a win win for both parties, building a true competitive advantage.

So if you’re trying to identify the product for your StartUp – I’d start looking to some manufacturers who need someone to sell direct.

If you’re a retailer already working with those wholesalers there could be some good opportunities ahead!

And if you’re a wholesaler – think about how you can work with (not against) your retailers.

8. Google update

I’ve one last takeaway for you. It’s got very little to do with marketplace selling, but I do know how you love an update from Google.

At the conference Jeremy Morris (industry head, retail and technology) ran through some Google best practices about AdWords (basically). So here’s the key points I took:

Don’t make demographic assumptions (only 31% of searches for video games are by men aged between 18 and 34(!); and 40% of baby product purchasers live in households with no children
Consumers want the ads to be relevant to them, and they want to get to their results fast.
Cross device tracking is essential – for a proper understanding of what’s happening – and you should be moving from last click being the be all end all. 90% of consumers are embarking on multi device journeys to purchase. Cross device tracking captures 16% more conversions.
The best performing retailers in the UK are targeting 25% of their search audience. He didn’t specifically explain what he meant by this, but it was implied that ‘targeting’ was by what device they were on, or using RLSA – so remarketing lists in search advertising
Ad extensions are really important. Ads with extensions see a 10-20% CTR improvement, AND seem to get higher positions in the search results. Of course they also take up more space on the page. FYI extensions are shop locations, site links, etc etc
You should be using GSCs – about 40% of clicks go to GSCs instead of text ads
If you’re physical retail you should feed your individual stores’ stock into Google shopping campaigns as well – a quarter of consumers want to know if the item they want is in stock before they visit the store

What I take from this is that if you want Google Adwords to work for you, you’ve got to work harder at making it work for you. Use those remarketing lists to improve ad performance, use geographic and device targeting, add in the right extensions.

Personally I’d outsource it (and I love tinkering with Adwords!).

Bullet point takeaways

You can’t afford to ignore the marketplaces
You don’t have to put all your products on the marketplaces
There may be a niche marketplace for you
Customer expectations are growing and changing
Have a great fulfilment solutions
Track your conversion rates by device – not as a whole, and keep a casual ear open for the mobile solution
If you’re a wholesaler / manufacturer the time is now – work with you retailers, not against them
Outsource Adwords management so it’s working properly for you

Thanks for listening today to my takeaways from Catalyst, I hope you’ve found it useful.

Make sure you listen to our next episode (once it’s available!) where I’ll be bringing you my takeaways from a totally different type of eCommerce Conference – Internet Retailing Expo in Birmingham. If any of you are coming along, please do find me and say hi – I’ll be in a brightly coloured leather jacket, so I’m pretty easy to spot. On Wednesday I’ll be chairing the Insight and Experience conference stream, and on Thursday the Digital Merchandising conference stream – we’ve got some great speakers lined up so do pop along and have a listen, as it’s all free to attend.

Have a great week, and keep optimising