Top 10 Reasons Amazon Will Be Kicking Ecommerce Butt in 2014 via scenttrail marketing

Top 10 Reasons Amazon Kicks Ecommerce Butt

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If your ecommerce website is going to survive you MUST learn to steal from Amazon. There is MUCH to steal. I meant to cover all top 10 Reasons Amazon Will Kick Ecommerce Butt in 2014 and hit 1,000 words after five. Since I hate blog posts that go over 1,000 words, and to take a lesson from Amazon (always create MORE pages from the simple content you already have) I broke the list into two posts find reasons 6 – 10 here.

Amazon Ecom Butt Kicking #1: Content Curation

Amazon has millions of pages in Google. Understanding the relationship between catching fish and the size of their net Amazon riffs, spins and snips content to create speed and scale.

Use Google’s “site: Amazon.com” command on any given day and you will see 40,000,000 to 100,000,000 pages in Google. Today’s count is 48,400,000. Lessons any content marketer should learn from Amazon include:

  • Why make 1 page when you can make 3 (just make sure you aren’t duping).
  • Interlink across your site.
  • Stream something even if you suck at it (they do and it isn’t stopping them).
  • Mine User Generated Content (UGC).
  • Think IN SCALE (ask for 1,000 book reviewers).
  • The INFORMATION is half the profit.

A word of caution about pagespread in a post Panda, Penguin, Hummingbird world. Pages unsupported by social shares get dropped. Amazon’s page count in Google was, at one point about 2 years ago, almost a billion pages. Note that 90% of those pages are now GONE BABY GONE. When you create new pages from the Lego-content you’ve already created make sure those pages FILL A NEED. Every page must generate SOCIAL SHARES or it won’t count for much.

Amazon Ecom Butt Kicking #2: Information Is Half The Profit

Amazon is a web retailer. They don’t have preconceived catalog or brick and mortar notations, notions that can slow understanding of how the web is a very DIFFERENT playground. Jeff Bezos’ is a former Wall Streeter.

Bezos moved the street’s “arbitrage anything” attitude to online retailing. Amazon and Bezos understood online retailing would be about INFORMATION as much as MONEY. Amazon treats the information it learns as if that information is at least half their profit. Amazon is famous for selling at cost, so, in some cases, the information you supplied by making an Amazon purchase may BE THE PROFIT!

This “half the profit is the information” idea is very different from the direct marketing catalog retailers I worked with. My catalog / direct marketing bosses understood some implications of online retailing. “What is my budget,” I remember asking my boss not long after accepting the job as Director of Ecommerce, “You don’t have a budget,” she responded.

First time I’d ever heard that (lol).

My boss went on to explain that as long as I could demonstrate Return On Investment (ROI) my budget was limitless. I took her at her word and increased our PPC spend from nothing to $1.5M generating $3 to $1 Return On Ad Spend (ROAS known as ROW AS). By the time we washed that $3 to $1 ROAS through our P&L it was marginally profitable (magic math I never quite understood).

My DM bosses understood HALF the new online world – spend what generates return. They missed the second and equally as important point – information = scale and scale is all online. When we gave away shipping I never heard the end of it.

“Shipping is a real hard costs,” my DM boss would complain. I never convinced her that in the online world free shipping is the cost of poker, the ante. In a year (or so) free shipping out and back will be the ante, an ante set by Zappos now owned by Amazon.

Amazon doesn’t care if it makes a dime from book sales. Book sales are its “advertising”, Amazon’s “loss leader”. A loss leader is an item retailers sell at near their costs because it has velocity (high demand) and in the hope that product’s purchase will lead to others now or in the future (so profit is deferred).

Amazon looks at “books” as a “loss leader”. Books become the engine that makes all other ideas possible, practical and feasible. Amazon will make more money from its cloud services soon, an opportunity they saw thanks to their partner network.

Since Amazon could care if its retailing makes a dime in profit they approach it differently. 99% of the time Amazon sets the basement online price on a “hot” product. And there isn’t ONE Amazon.

Attending the Digital Marketing For Business conference last year a speaker mentioned a competition between Sears and Amazon. Amazon changed price on the product the study was watching 13 times in a day. Sears never changed its price. Amazon treats price as an arbitrage.

Sears treats price like a brick and mortar retailer – as a set number. Changing the price at Sears means retail pain, changing the price at Amazon is controlled by sophisticated algorithms so the win goes to Amazon.

Top 10 Reasons Amazon Kicks Ecommerce Butt - Brand Vampires graphicAmazon Ecom Butt Kicking #3: Price Arbitrage

“You are violating our MSRP,” an angry merchant said to me over the phone. I was midway through my 7 year tenure as a Director of Ecommerce, “Oh, how do you figure I’m violating your MSRP,” I asked quietly back.

“Your online price is 10% below our MSRP,” he continued complaining. I knew the item the merchant was asking about since it was flying out of our warehouse and that usually meant my team had the price just right. “I’m still 12% above Amazon,” I explained.

The merchant said he disagreed. Amazon wasn’t that low he protested. I asked how he knew Amazon’s price on his merchandise. How had he “gone into” Amazon? Was he logged in? Did he go to amazon via a price comparison engine such as shop.com or PriceGrabber.com?

Nope, he walked in Amazon’s front door and assumed the price he saw was the price for all. Patiently I explained Amazon’s arbitrage. Amazon might have 10 different prices on a single item.

Prices could be set by new or returning customers, by how customers came to the product pages such as from an email or a shopping comparison engine. Amazon’s “price” was an arbitrage set to capture sales. Amazon, I explained, is a “brand vampire”.

“Brand vampire, what is that,” I remember a much quieter merchant asking. Brand vampires, and Amazon is by no means the only one, look for brands like the manufacturer I had on the phone. Brands that are moving FAST create a tremendous wake behind them.

Amazon’s algorithms are so sophisticated they know something is about to blow up BEFORE it blows up. Amazon’s job is to make that explosion happen BIGGER and FASTER and they want the lion’s share of the money and customer information from the explosion.

Amazon is not in the “brand nurturing” business. Amazon wants a brand to go UP fast and if it comes down just as fast that is fine too since Amazon has already moved on to a new walking dead. “What can I do,” the now very quiet and very worried manufacturer asked me.

“Keep innovating,” was and is the only answer. The good news is one of this manufacturers’ products was exploding. The bad news was one of his products was exploding. The best and only protection was to make hay while the sun was shinning, learn as much as possible as fast as possible and come out with the Redux version, the “new and improved” version and the Zebra version as soon as possible.

“What is the ‘Zebra version’,” I remember him asking me right on cue. I explained Zebras are something completely left field from where you are now. Assume where you are now is gone. What’s next?

“Sounds exhausting,” my manufacturer friend said and that made me laugh a little too loud. Welcome to Internet marketing is how I ended the call with a much quieter and apologetic manufacturer who never bothered me about MSRP again.

Amazon Ecom Butt Kicking #4: Arbitrage Everything

Price isn’t the only thing Amazon treats like frozen orange juice or pork bellies. Amazon is always on the make. Its algorithm is spinning and snipping its content.

I’ve joked that if the Brooklyn Bridge fell down tomorrow Amazon would have a full landing page with David MuCulloch’s book, art books about the bridge and books about similar disasters within minutes.

The point of building a 40M-page archive is NOT to rest on any laurels. Every Amazon page is in evolution all the time. The engine behind Amazon’s curtain is their ability to generate and mine User Generated Content (UGC).

Amazon has 1,000 writers fighting to be a “Top 1,000” reviewer. The honor of being a “Top 1000 Amazon Reviewer” means some free books and enough work to choke a horse (to keep the Top 1,000 badge). This subtle gamification creates almost 50M pages in Google and every page is a “pennies for dollars” trading
post.

Amazon Ecom Butt Kicking #5: Think In Scale

Since Amazon isn’t limited by bricks or preconceived ideas about catalog scale they look at the WEB as their platform’s playground. Amazon is a de facto search engine for books, reviews about books and the “long tail” of books. The long tail is where the genius of Amazon’s platform lives.

Amazon understands the first rule of Internet marketing SCALE determines money NOT the other way around. My old Direct Marketing bosses wanted to see MONEY before they would invest in SCALE. WRONG.

Amazon invests in scale in order to make money. Not a SUBTLE difference, but the difference between looking for ROI in order to invest and investing to generate ROI is what separates online KINGS from serfs.

“But we have to generate ROI to invest,” I can hear your Chief Financial Officer arguing. Sorry, but that “online line” thinking doesn’t work online. By the time you justify an online position it isn’t worth the work you did to create the justification.

Online means moving FAST and looking for blue oceans, those rare moments when your value proposition will scale, will win the day. You will play many hands of poker until everything sets up just right. The difference between Amazon and almost every other online retailer is Amazon PLAYS to create ROI.

Amazon understand they can’t scale if they don’t play and SCALE = ONLINE WINNERS. Everything Amazon does is about creating blue oceans where they win, win again and win bigger.

The advantages are easy to see (if you are looking). Amazon is late to social media marketing, but their scale means the minute they tip their toe in they have a million followers on Twitter and millions on Facebook. Scale means you don’t have to do every crazy bleeding edge idea first.

Scale means you can sit back, watch the serfs kill each other over tiny crumbs and then, when you are good and ready, step in, take over and win with scale. Unless your company is willing to PLAY the SCALE GAME, the game where ROI comes from playing not the other way around, Amazon will continue to kick your ecommerce butt.

 

Amazon must steal tactics for 2014 continues with 6 – 10 here.

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