CPM partners in Amazon research

As part of its mission to help brands optimise their online sales, outsource sales agency CPM’s dedicated Digital division has partnered with sales development consultancy the Quantic Group in conducting a three-pronged research project amongst Amazon shoppers, suppliers and retailers – to discover how manufacturers and brands can best engage with the internet giant to maximise the benefits of their trading relationship.

Tony Stratton, chairman of both companies, instigated the research study, harnessing their combined resources to produce the research.

Explained Stratton: “Between them, Quantic and CPM provide advice and services to household name grocery brands on a global basis. Many of them supply to Amazon and we felt it would be valuable to identify the opportunities and the issues facing Amazon suppliers – so that we could help brands deliver profitable future business.”

The resultant report reveals insights into online shopper spending habits and impulse purchasing; category management expertise; Amazon’s pre-eminence in understanding shopper preferences and the rise of online retailers against bricks-and-mortar stores.

In February 2013 CPM’s Digital Marketing division undertook shopper research, using data supplied by 900 of the company’s own staff, aged between 18 and 65+, and living in all regions of the UK in a mix of single and shared households, and families.

The Quantic Group then conducted in-depth confidential interviews amongst 14 key interested parties, including Amazon supplier brands, major retailers and ex-Amazon senior managers – to discover how Amazon is viewed by its various stakeholders.

“The outcomes of both studies have given us a multi-layered picture of Amazon’s existing USPs and future prospects” explained Stratton.

The report revealed that physical retailers continue to take comfort in their ability to service impulse purchasing needs; which is not a strength of online retailing. Amazon caters mainly to the need of shoppers who want something specific. However, several stakeholders believed that its increasing understanding of the shopper journey and its ability to suggest additional related purchase indicates that the retailers’ perceived advantage is eroding.

Another area where physical shops claimed to have an advantage is in category management – “We edit choice. Shoppers want some of the hard work taken out of the shopper journey and limitless choice can be time consuming and frustrating” said one interviewee. However, Amazon would claim to be able to do this invisibly, offering each customer their own individual range. The report cites John Lewis as a good example of a UK retailer that is particularly effective in range management based on well understood shopper needs and which is able to offer a blended experience on-line and in-store.

Amazon can certainly claim mastery of category management in a digital environment. There is a perceived risk that retailers will be unable to resist the temptation to intervene in the online shopping process in a way that irritates, rather than adds value to the shopper. Own label pop-ups being a prime example. Amazon’s marketing services, coupled with the quality and quantity of its data systems and analytics, enable it to work with suppliers to ensure that the shopper journey is enhanced, rather than interrupted.

Explained Stratton: “Freed from the constraints of the physical world, online category management is about helping shoppers to express their needs quickly and clearly and then giving them clear and relevant choices. It’s also about recognising and following up a shopper’s initial browsing and purchasing patterns with well-directed recommendations and follow-on selling.”

The report offered brand owners four key recommendations for maximising their trading relationship with Amazon:

 

1. Plan for Amazon to be a top three account

Amazon is powerful, effective, ambitious, well financed and prepared to take a long-term view. Any supplier organisation that does not recognise this and the potential for growth will lose out in the mid/long term. For most categories, Amazon is a baby gorilla. Suppliers need to work out how they are going to live with an adult gorilla before that baby grows up.

 

1. Put the best people you have to work with Amazon

Amazon differs from traditional, physical retailers in its business model, its obsession with the shopper experience, its drive for innovation and its preparedness to invest behind it; all of which make it an exciting but challenging account. The people Amazon employs think and behave in a different way and will move at a pace that most account handlers will not have experienced. Making sure that the supplier’s Amazon account team are the best, with the resources to develop the relationship and optimise the opportunities, will pay back. This will increase creative marketing and technical (IT) expertise, delivered by task-oriented, analytically capable individuals. And if you can’t spare your best people, pick the brightest and report them straight into the sales director!

 

1. Don’t deal with Amazon in isolation

Whilst Amazon might claim to be a unique channel for many suppliers, it doesn’t exist in isolation. eBay and others will play an increasingly important role as brand owners battle to engage with consumers and shoppers in an increasingly complex market place. Clarity of thought regarding an overarching channel strategy that sits across all channels, including Amazon, will help to focus all elements of the commercial mix and set Amazon in a holistic context.

 

1. Think consumer and shopper development

Amazon is not just an online retailer. Amazon Web Services (AWS) is already a global supplier of technology services. Kindle Fire is a tablet that now competes with Apple and Samsung. The increasing list of Amazon on-line services is designed to engage customers in a shopper experience that is unrivalled for choice, service and price. However, the view that brand owners and suppliers must not abdicate responsibility for their brands within an Amazon context is strongly argued and brands will need to up-weight their own marketing effort, alongside any Amazon activity. This will require marketing expertise within the Amazon Account team. Suppliers who understand that Amazon is a new kind of customer – one who offers the ability to engage with shoppers – will win with them. Those who don’t, won’t.