The Death of the Category: Winning on Amazon and other Ecommerce Marketplaces

What if we told you that you may be approaching Amazon in all the wrong ways? Many brands, especially more established ones who started out in brick and mortar, have been playing a game of catch up while trying to quickly figure out how to sell on Amazon and win. But it may feel like a confusing place to win. Especially if a brand is trying to apply a brick and mortar sales approach, like winning a category, to online platforms like Amazon, Target, or Walmart.

But we all love a good underdog story, which is why we invited Andrea Leigh to the show to share her secrets. 

Andrea is the VP of Strategy & Insights at Ideoclick, a full-service ecommerce optimization platform. Before Ideoclick, she spent nearly a decade working for Amazon, so she is coming to the table with a true insider’s view and strategies in her back pocket that she’s seen work on Amazon and other marketplaces.

In this interview, which was one of my favorites I’ve ever done so far this year, Andrea and I discuss why brands need to accept the death of the category and start thinking about how to stand out against an entire competitive set. Doing that means repositioning your brand and winning the share of search, it means optimizing for SEO, and it also means going back to the basics of differentiation so that you’re not just another option in a sea of products that look exactly the same. Plus, we talk about selling across multiple ecommerce platforms, and how to think about Amazon releasing “white label” product lines. I hope you enjoy this discussion as much as we did!

Main Takeaways:

• Category Chaos: Brick-and-mortar shopping lends itself to categorization, but in the world of ecommerce, particularly on Amazon, categories are not something brands should focus on. Customers shopping online are fed suggestions based on their entire history of shopping, so when they search for something like peanut butter, they don’t just see Jif and Skippy, they see that and then anything peanut butter adjacent that might resonate with them even a tiny bit. With this in mind, brands need to figure out how to compete in entire segments, rather than specific categories.
• One Metric To Rule Them All: Share of search is one of the best metrics an ecommerce brand can look at to measure everything from how customers are finding them, to what the customer experience is when they search for something, to who the competition is in their set.  
• Mining For Gold: One of the places that Amazon has excelled is aggregating consumer complaints, and then coming out with an Amazon Basics product that addresses all of them, which then becomes a top-seller. CPG brands large and small should be employing a similar approach. And, they should be highlighting the bells and whistles of their product that separates them from the white-label product that any marketplace offers because that is what differentiates you from the mass amount of search results a consumer will be combing through.

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

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Transcript:

Stephanie:

Hey, everyone. And welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder and CEO at Mission.org. Today on the show, we have Andrea Leigh, the VP of strategy and insights at Ideoclick. Andrea, welcome.

Andrea:

Thanks for having me. I'm excited to be here.

Stephanie:

I'm excited to have you on too. I was looking through your bio and I saw that you were at Amazon for almost a decade, and I'm sure you have some good juicy stories from that those 10 years.

Andrea:

I do. It was a wild, wild ride. I think when I started, I was employee 4,012 or something like that, and then when I left, 99.9% of the company had started working there after me, so I was literally a dinosaur. Yeah.

Stephanie:

Oh my gosh. That's amazing. So what were, high level, some of the things that you did at Amazon and are any of those things still relevant today?

Andrea:

Yeah, I think they're super relevant. I spent my entire career there working on their ecommerce business, and everything from the early days of helping launch their price matching software, the software they use to price-match other retailers. I worked on Harry Potter book launches back when print books were the only way to read books. We also had some things that we did with Oprah's Book Club. I worked on the launch of the grocery category on Amazon.com, and the Fulfilled by Amazon program there, helped launch the baby registry and built the baby category after Amazon severed ties with Babies R Us.

Andrea:

I was general manager for Amazon Fresh for a little while. At my last three years there, probably the most exciting, I moved onto our Canada business and I launched 15 product categories for Amazon Canada. I ran the Prime program up there, and then I also managed our transportation network. And that was probably my most exciting role because it was certainly cross functional. But I think the common thread is, and probably why I liked Canada so much in the later years was just, I really, really enjoy working with the manufacturer community.

Andrea:

I think that the process that they go through to really understand the customer, to build products, to address customer needs, and then to figure out how to connect consumers to the values that they've built in their products, I think is just really exciting, and figuring out how to do that online is even more exciting. Certainly, in the early years of Amazon, we spent a lot of time working with brand manufacturers and partnering with them because we weren't very big back then and we were really trying to get these categories built and to get customers shopping online for things besides books.

Andrea:

And I found that to be really enjoyable because every manufacturer has a unique set of challenges. It's like a puzzle to be and to collaborate on. And that's still what I get a chance to do today at Ideoclick and really, really enjoy that process of helping manufacturers solve those puzzles. And we certainly don't have all the answers, but I think it's a similar process to go through with each manufacturer to identify where they are on their ecommerce journey, and then help them figure out how they're going to build a sustainable business.

Stephanie:

That's awesome. So tell me a bit about Ideoclick. How did you think about creating Ideoclick? And what is it? What does it do? How does it help companies?

Andrea:

Yeah. We're an ecommerce optimization platform, and we're a hybrid of a software solution and a services organization. And my husband actually started Ideoclick about 13 years ago. We were both working at Amazon together at the time, he left and started Ideoclick and I stayed at Amazon for 10 more years. And I joined up with him about, it was probably like four or five years ago now, to help him run Ideoclick. And really, it came from the same place that I was talking about earlier, really wanting to work more closely with the manufacturers, help them figure out how to navigate Amazon.

Andrea:

As Amazon became bigger and bigger, not only did it become more important to the manufacturers' business, but it started to become a little unwieldily in terms of how to be successful, how to make sure your products stand out, and how to negotiate and operate. With such a big player, that's so unique and looks so different from brick and mortar, which is what most manufacturers have been really accustomed to for so many years. And so Ideoclick was really born out of that to help manufacturers navigate these waters. And we are a full service, white glove providers.

Andrea:

So we do everything from setting up the items in the digital catalog, writing content, running all of the automated advertising on Amazon, Walmart, Target and Instacart, and also going back and assisting with operations, managing the chargebacks and fees that the retailers often slap on the manufacturers and recovering some of those fees. So we're a full service agency, we're in a category called managed services.

Stephanie:

Got it. So what are some of the biggest maybe missteps that manufacturers or sellers are making on the platform where you're like, "I've got all these secrets from an exec at Amazon that I know how to prevent that or why you shouldn't be doing that." What kind of things are you preventing from happening when you're working with them?

Andrea:

Yeah. I think my answer would have been really different a couple of years ago, especially COVID impact on ecommerce. Amazon's not the only game in town anymore, and these other platforms, more specifically Walmart and Target, but if you look category by category, they're a becoming a really big player in each space, whether it's Wayfair for furniture, or Sephora and ULTA for beauty, or Chewy for pets, there's a player there that's starting to represent a sizeable portion of the business. So a couple of years ago, I would've said getting these Amazon foundational things right is the most important and it's the biggest misstep.

Andrea:

But I think now we would say not having a strategy across all of these eCom players is a real big misstep, and shooting from the hip, because I think we're in a world where these retailers are in fierce competition with one another, they're price-matching each other, they're very closely watching what one another is doing. And you don't want the customer to suffer as a result of that. And so having a strategy that does things like differentiating assortment or helps you figure out how you're going to allocate your ad budgets, now that all these platforms have ad platforms associated with them as well.

Andrea:

I think that shooting from the hip is probably the most common misstep that we see. But I think some of the same things still hold true from several years ago, which is just getting those foundational elements right. There's certainly little tricks you can do and little black hat tactics that will get you some more reviews real quick or help you get to the top of search. We don't focus on that stuff, it's not sustainable, most of it's against Amazon's policies. So it's really about making sure your products are in stock, making sure you have the correct information on your product pages, making sure that you've got resources internally within your organization to support ecommerce and to drive it, making sure that you have good SEO and you're making use of the ad platform in appropriate ways.

Stephanie:

So now that you just mentioned SEO, I do want to talk a bit about categories. I know that you've been on, maybe a brand or whatever it may be for a while around like, categories aren't the way forward anymore, and that you really need to optimize for search, just like you would anywhere else. So tell me a little bit about how ecommerce owners should think about that going forward. Why is Amazon not as focused on categories anymore? Or maybe the buyer's not focused there?

Andrea:

Yeah, I think it really starts with the customer, and the customer not being as focused on categories. I can tell a little story that might help illustrate it. We had a manufacturer come to us and say, "I'm like the number two or three bottled water brand in the world, and so I should be number two in my category on Amazon." And there are a number of reasons why that thinking is a little bit out of date or flawed. When a customer goes to Amazon and searches for bottled water, they don't just see bottled water, they see tea and electrolyte water and powdered electrolytes for water and ice, flavored water, and all kinds of things that are category adjacent. But they may also see things that are out of category.

Andrea:

Peanut butter is another great example. If you search peanut butter on Amazon, you're going to get some peanut butter, you're going to get peanut butter crackers, you're going to get peanut butter bars. And it's not because like Amazon is not thoughtful about deciding what to return in those search results, for example, they're returning those products because those are the products customers are buying. Their algorithms are very, very smart. And even from an advertising perspective, you can't win those ad slots unless there's a history of customers making that search and buying your product.

Andrea:

And so the concept of a brick and mortar category totally makes sense if a customer is going to a store, they're going down an aisle, they're presented with bottled water, they choose from what's available to them, and then they move on to shop at a different category. But eCom customers don't shop that way, the category is dynamic, it's continually evolving, shaped around that customer. And what they've specifically looked at when retailers are using automation and personalization. And so you can't really apply that same mental model to ecommerce. You have to really think about that entire competitive set.

Andrea:

And so that manufacturer who thought he should be number two or number three bottled water brand his competitors on Amazon, aren't just bottled water, as we stated, they're tea and they're electrolyte water and all kinds of other things. So his competitive set is different, but also because ecommerce platforms and more specifically, Amazon, has frictionless entry, so any manufacturer can sell on Amazon, the competitive set is going to look a lot different than in a brick and mortar store where you have like a buyer making assortment decisions.

Andrea:

So, whereas there might be five or 10 nationally recognized brands in a brick and mortar store and maybe a couple of local players and private label, on Amazon, there is a huge long tail of brands that are not nationally distributed, maybe only sell on Amazon so that competitive set looks entirely different. And I think that's a big misstep that manufacturers make, is applying that same mental model, trying to look at like market share and category and ranking category, versus moving their thinking to the ecommerce world where there's really no such thing as a category.

Stephanie:

Yeah. The only time I can see categories being helpful is if you're in the browsing mood where you're like, I'm going to be having a baby, and I just want to see, what do you buy for babies? So like if you're in that browsing mood, which maybe isn't always high intent to buy, more just kind of looking around and maybe you buy, or if it's a curated category, like here's the guest for Father's Day. I have found those helpful where I'm like, I don't know what to get my dad, and on the homepage, it's like, "Here's a whole... " Maybe it's not a category, but the whole curated collection, pick one and go.

Andrea:

And that's where I think some of these category specific players win over Amazon. They do encourage more browsing because they are curated assortment, because their browse and data are really clean, and it's a more enjoyable experience. But if yo did try to shop by category on Amazon, the data shows that more than 90% of customers just go and start searching, you would maybe not like what you found. It's an overwhelming experience, it's not curated in any way. And then the categorization data is bad because Amazon doesn't use it. They're building a search platform more than they are building a browse platform. And I do think these other eCom players, this is where they can win over Amazon, is they make the shopping experience more enjoyable, they encourage browse, and they curate the assortment.

Stephanie:

Yeah. We just had on a company called The Fascination. It was about discovering new D2C companies and being able to browse around. But once again, that's highly curated versus just going to a category and being like, "Whoa, let's see what's here today. Oh, there's like 1,000 things. No, thanks." So if we're in a search world now, where you need to optimize for that instead of just worrying about being the number two water bottle, showing up in the category, how should a brand be thinking about that? How do you optimize for search? Are you bidding on keywords? Do you have to use just Amazon platform? Or is it more of like a holistic approach of like, you got to have a good product, you have to have good reviews, and all encompassing?

Andrea:

Well, certainly it's a whole package deal. There's not like one thing that drives all of the success. But I do think that really understanding that customer and the process we go through at Ideoclick and manufacturers could go through a similar process on their own is we identify these customer search groups. Identify the customer that you're going after and the product that meets their needs. And then from there, what are all of the search terms that customer might search when they're looking for that product? And then bouncing that against if there's any search philosophy. Amazon publishes that data, so it's knowable to know if a search actually has any volume associated with it. And then that's your customer search group. And then we're able to measure progress on achieving placement in search on that customer search group relative to the competition. So the way that we're doing that is, in a brick and mortar world, this would be like market share.

Andrea:

Like you'd say, "What are my sales over the entire category sales?" And in ecommerce what we do is share of search search. So we say, "What are all of my positions within those first 20, 30 search results relative to the entire set?" And obviously, there's some weighting associated with that, because like if you're up on top, that's more valuable, drives more sales than if you're like down at the bottom or the customer has to scroll a lot on their phones. So measuring that share of search for your customer search group relative to the competition.

Andrea:

And it does a couple of things that I think are a lot better than a brick and mortar market share model. The first is it very quickly identifies who your competitors are. So if you didn't know which... Most manufacturers don't know who their Amazon competitors are, and that's because manufacturers, when they're checking on their products on Amazon, tend to search for their brand name. So of course you're going to get your products. But if you take a step back and instead of searching for your branded facial moisturizer, you search for face moisturizer, you're going to see an entirely different picture of who's turning up.

Andrea:

And so this allows you to really measure your percentage of that customer experience, essentially, going back to the customer. And in addition, it gives you more of an upstream look at what's about to happen. So market share is, it already happened, your sales occurred and now you're measuring as a percentage of a total. This allows you to affect what's going to happen in the future, so it's an upstream, maybe an input metric versus an output metric. And then lastly, the share of search is measuring like a finite amount of the first or second page, which is really, as far as the customer is typically going on like a basic search...

Andrea:

And that looks a lot different in terms of number of brands than what you might see in like a finite category on a brick and mortar shelf. So there may be more brands, more types of categories represented, and measuring that as the percentage of a customer experience really allows you to develop some advanced strategies against those competitors.

Stephanie:

Is Amazon providing the tools so you can see your share of search, or are you doing this for your customers? Or if I was by myself trying to be like, "Who are my competitors?" Would I be going through the first three pages and being like, "Here they are? How do I figure out that share of search?

Andrea:

Yeah, it's really tricky. So we have software that does it for us, and share a search is our proprietary offering that we provide to our clients. But it wouldn't be hard to do a very simplistic view of this, which is identify like five terms that you think matter for your product, run a search and count how many of the first page you have. It's not a difficult activity. To get more nuanced about it and track it over time and track all the competitors and all of that, obviously you need some software, but you can do a really simplistic look. And this is often what we do for a manufacturer who is considering working with us, we'll take a look, we'll do a quick share of search audit and do exactly that exercise.

Andrea:

What are the five terms that we think matter? How much of the page they have, and who else is showing up? And you can really quickly see how you fair relative to those competitors, not just in the position of search, but like how many reviews do you have versus the competition? What's your star rating? What's your price point look like? What is your packaging look like? It's a very fast view of how you compare in this marketplace. And there are some really aggressive brands out there. We have clients that come to us and they say, "I'm private equity backed, I am a new go-to-market brand," no one has ever heard of them, "I have no distribution, and I want to get distribution in Costco next year, in a year. What is your plan for me?"

Andrea:

And we have a program for that. It involves a really, really large marketing investment. But but that's what these traditional manufacturers are up against, are these really upstart brands that are doing pure play Amazon and really trying to make a presence for themselves. And while they feel like ankle biters when you're just looking at the Amazon search results, next year when they are in Costco, they're no longer ankle biters.

Stephanie:

Yeah. Which is what's great about it. How do you think about when someone comes to you and says they want to be in Costco... I mean, I've read amazing articles about how Costco will make sure that your product... Like their product always has to be slightly better, but they'll also still work with you to make sure that your yours is selling as well. So one example was like Starbucks. They made sure that their coffee, Costco brand, Kirkland brand was a little bit better than Starbucks based off whatever criteria, but then they also made sure that Starbucks was also being sold, or whatever the brand name was, in a way that it wasn't cannibalizing.

Stephanie:

But Amazon feels a little bit different when they come out with white label versions of things. You see that, and you're like, "Oh crap. There goes my products."

Andrea:

Look out.

Stephanie:

Yeah. That's the one thing that I think sellers are scared of now, is Amazon just copying you? How do you deal with them?

Andrea:

Well, I think you touched on a couple of things. The first is the beauty of a value-added retailer like Costco for a manufacturer. In that model, in the value-added retailer model, the retailer takes responsibility for the inventory, for the promotion, for making sure it sells, for the profitability, for curation, deciding what the product should be. All of that happens on the retailer side. And that's true across traditional retail, whether you're talking about an ULTA or a Nordstrom or whomever, they own that responsibility. In marketplaces, the responsibility is all shifted back to the manufacturer, so they decide what assortment they're going to carry, they decide how they're going to price it, they have to promote it and market it. And it's a really different model.

Andrea:

So I think that's one interesting thing about what you were talking about, is that Costco does that. And when retailers complain about Amazon or say how much of their business Amazon's stealing, I think it's important to remember they're there to lean into their strengths, which is providing this value add for these manufacturers and reducing a lot of that burden, and usually, producing a higher profit margin for that manufacturer because they don't have to take on all of that work themselves. On the private label front, it's really interesting what Amazon's doing there. Some of the categories like consumables are getting up to about 10% of the sales being Amazon private label, which is really... And fashion, I think, was maybe even higher than that.

Andrea:

As a part of Amazon's antitrust hearings, they had to release that data and you have to dig around to find it, but it shares the percentage of each category sales that are driven by Amazon private label. It's really interesting. And manufacturers will often come to us and they'll say, "Oh my gosh, my life is over. Amazon just launched a private label in my category." But I think really, it's an opportunity for the manufacturer to really be more on their toes. And a great example of that is, if you take a look at Amazon Basics, they have a luggage spinner. And if you search luggage spinner, suitcase, or whatever, you see Amazon Basics and you see Samsonite and a bunch of others.

Andrea:

And the Basics, it's like a third of the price and it looks just the same. And I think what's really interesting here is that Samsonite has an opportunity. If you actually click through to the product pages, you still can't really see a difference. But as a part of an article I was writing, I then went to the Samsonite manufacturer site and actually specked out what's really different about it, and there were enormous differences. It was like a TSA compatible lock, it had all of these extra features that weren't even coming through on the product page, that certainly weren't coming through in the title and the search results and the hero image.

Andrea:

And so I think Amazon is going to usually come in at this lower price point and this more value driven offering. And for these manufacturers who have better bells and whistles on their products, talk about them. I mean, it's classic differentiation stuff, just the way you differentiate looks a lot different in an ecommerce marketplace. Like you have to do it through the images and you have to make sure that the bullet points really display that, you have to have a title that calls out something about the feature that's really unique. I do think Amazon's seeing a lot of success with their private label because they are able to leverage their own platform and they know it best.

Andrea:

But through share of search, we've also identified enormous holes in their strategy from a marketing perspective, like entire categories of keywords they aren't bidding on, and then you can get really granular and really go after those holes that Amazon's left wide open. And I think it's because I think the reason Amazon has those holes is they're using an algorithm to drive their private label. It's not people back there saying, "Okay, we got to bid on these five keywords. These are the ones that matter, and here are the features that everyone cares about." And then I think if you don't have a point of differentiation against Amazon's private label, it's time to take a real hard look at your product, because if it's that copyable, it's not just Amazon private label that can copy it.

Andrea:

But also, if you often look at the differences between the top selling product in the category... Soup's a great example, you can search chicken noodle soup on Amazon, and Amazon has totally innovated the packaging and the format of the product to address all of the customer complaints. Canned soup is terrible online, it dents. No one really likes to eat anything out of a can anyway. So Campbell Soup showing the can traditional format, you look at Amazon's chicken noodle soup, it comes in a reclosable box, which is one of the top complaints in the reviews about the Campbell Soup, which is like, "I can only eat half of it. And then what do I do with it?"

Andrea:

It ships in its own container, so they're all nicely tightly packaged into a box so it doesn't dent or get damaged in the shipping. It's way more profitable for both the retailer and the manufacturer. So I think there are some areas where Amazon's really innovated on the behalf of the customer and it should be keeping manufacturers on their toes.

Stephanie:

Yeah. That's such a great point. So many things to unravel there, thinking about, you need to be different and leaning into your differences. And the whole point of having a product is to have a great story and showcase your features and don't get complacent. I love that. I could see even being able to look through the data and find opportunities, just like Amazon is, of like going through reviews and seeing what is someone complaining about? Oh, so many people keep talking about this, creating a whole spin off product, I guess Amazon could do the same, but it seems like there's a lot of opportunity in the data that's already there too.

Andrea:

There is. And I think this is one area that large established CPGs really struggle, and it's because they have so many brands and they carry so many products. If you're a nutrition bar and you only have 20 items on Amazon and you're growing really fast, it's really easy for you to look through the reviews on your 20 items and come to develop some insights and say, "Okay five people are complaining that they think it's a little bit too sweet, or 10 don't like the sugar content," or whatever. And you can re adjust your product in your next product development cycle. But if you're a large established CPG working across so many brands, so many different categories, I did my air quotes there.

Andrea:

But if you're a large established consumer brand, maybe you've got 1,500, 2,500, 5,000 items, there's no scalable way to do that right now. And I think that's an excellent business opportunity for someone to get into, which is like really analyzing some of that consumer feedback. I actually just had an MBA student from Northwestern reach out to me through a connection wanting to talk about like that very business idea. She's like, "What about all the customer reviews? Who's got data, that's mining that?" And I'm like, "No one." There are some players out there like Reviewbox and I think Profitero, and maybe even Salsify to some degree that allow you to access them, because Amazon doesn't even provide them, you have to just look at them, and develop some basic insights and maybe some word clouds and things like that.

Andrea:

But there's so much more to be gained from those reviews that would really help inform product development.

Stephanie:

We've even heard from so many of our guests talking about the long tail reviews or where the insights are. I think we had someone from HP and then Stitch Fix, of course, talking about like, that's the ones that you need to dive into to see... If someone's providing paragraphs of data to tell you how to make your product better, you better be looking at that and seeing, are enough people saying that? To pivot whatever product you're working on.

Andrea:

Yeah. You really need some natural language processing technology to really make the most of those reviews. But either Amazon has it or they're just really good at it, because if you look at... I could give so many examples of this, but if you search short-sleeve wrap dress, they have an Amazon Basics, it's a top seller, I even have it. It's a great dress.

Stephanie:

How did they stick that one up?

Andrea:

And relative to like the top three other results, I mean, you go through the negatives on the other top three results, and it's like, "It's too short, so it's not work appropriate. It doesn't wrap enough to be able to sit down in it well enough at work. It doesn't come and extended sizes." Those were the top three complaints. And Amazons comes out with an offering that's more conservative, slightly longer, comes in extended size. It immediately just addressed all of the things, all of the negative reviews about the other top three sellers. They've either got something that's helping them do that, or they're just really good at it.

Stephanie:

Yeah. But I think that also just plays to the point of needing to be diversified and beyond all the platforms. I look at Walmart right now and so many influencers are showing me stuff from Walmart, I'm just even thinking... I've bought rugs in the past month, I bought an egg chair from Walmart, all because these influencers are talking about stuff at Walmart, which also I think has increased quality a lot, and they are becoming a larger player. Maybe their tech and backend still needs a little bit of work and out of stock issues and all that, but I do see them coming up strong. Target also. How do you advise the companies you work with to think about all the platforms and be on all of them and optimize for each one in a unique way?

Andrea:

Yeah. And I think that's really the million-dollar question, because up until a couple of years ago, those other eCom platforms didn't really matter as much, up until last year, they didn't even have ad platforms. The world is moving and changing so quickly. I actually was just giving an internal speech right before this to our employee base and I was like, "Retail, if you really go back, is meant to be a really simple business. It's, a manufacturer has a product, they sell it to the retailer, and the retailer resells it." And the people who grew up with that model, it's relatively uncomplex or simple process. But if you just look at what's happened over the last five years, even five years ago, you had to be advertising on Amazon and search engines like Google and maybe even Facebook at that time.

Andrea:

Now, there's social live streaming, there's social media networks, and you have retailer ad platforms. The level of complexity that these manufacturers are faced with right now, and if you think about the ones who lived through all of this, they weren't attracted to this field because it was a technology field, they were attracted to this field because it was really based in sales and product. And so the level of complexity that they are faced with is an enormous. And I was in a share group the other day where a manufacturer called the...

Andrea:

In our space, we're like the service providers, it's super fragmented, it's a ton of point solutions that help these manufacturers be successful across all these different platforms. He called it a Frankenstein, and this company that was presenting at the share group was working with 35 different service providers from data and analytics to execution, to strategy and execution and strategies, where we set to operations and EDI and inventory management, and how do you allocate inventory across all these platforms. So there's certainly no perfect answer to how do you think across the different eCom platforms, but I do think it's important to really think about, where's your customer?

Andrea:

Is your customer shopping on Walmart, Target and Amazon? And most of them are because most of them are cross shopping. Where else is your customer shopping? What category specific players should be really important to you? And then where are you most profitable? And where can you get a good ROI? And what platform do you use for what? For Target, it's a little bit more about that curated assortment being on trend with merchandise and being associated with, Target gives your brand a little bit of a boost.

Andrea:

Walmart stands more for value, Amazon is about assortment, and obviously, price and all of that, but I think really aligning yourself with the marketplaces that are core to your brand's identity feels really important. So the customer, what's consistent with your brand, and then in terms of the investments to make across them. A lot of the fundamentals are pretty similar, so that's good, you have to have those, you have to be retail ready. And the ad platforms are similar, but different in very important ways. And so I think when you think about how to allocate those investments, then it really comes down to profit and what you're trying to accomplish, if it's awareness, if it's maintaining your position in the market, whatever it is.

Stephanie:

Yeah. I always think about the opportunity that exists for manufacturers of creating a piece of tech that allows them to plug in all the inputs that they have to deal with, even when I'm having companies come on and say, "Oh, we feature D2C companies on our website and they have a backend place to log on." And like, okay, that's one place. Then they're on Amazon and then they're on Walmart, and they're trying to figure out their own inventory stuff. There's so much stuff for them to keep track of that it feels like there's no unifying source right now for them to be able to get a holistic picture of their company as a whole.

Andrea:

In fact, I got this urgent call yesterday from this guy, this colleague of mine that I've worked with in the past, and he's teaching a course at Harvard right now called The Future Of Work in one of the courses. And he called me yesterday, he's like, "Okay, I'm preparing for this thing, I'm making a deck, I'm showing this crazy environment that we're in with all these providers and all these different things that these manufacturers have to keep track of." He's like, "Who are the service providers who can help them unify it?" And I was like, "There aren't any. It's not because you didn't look hard enough, it doesn't exist."

Stephanie:

I always think like, "Who is out there?" I even asked an exec, I'm like, "What do you do?" And they're like, "Oh, it's just hard." I'm like, "Someone needs to solve this."

Andrea:

Someone needs to solve it. It would be a really big job, but even just take like logistics like 3PLs. So you can outsource your warehousing and your purchase order fulfillment either direct to customer or to retailers to a three PL. I just did this as a part of an industry trends report. There are tons of 3PLs 70 some percent of them have fewer than five customers each. So it is a super fragmented industry. It's so fragmented in fact that the new trend is a 4PL. And a 4PL is a broker that helps you manage all your 3PLs.

Stephanie:

I have not heard about that yet.

Andrea:

Isn't that crazy? That's like a new cottage industry, is 4PLs, and that's the broker that helps you manage across the other PLs, I guess the other 3PLs. And that's just in logistics. So it's a really challenging space and I think what ends up happening, the ones that end up suffering... Right now, I think the manufacturers are suffering because all of this complexity deteriorates their profit margins. And then they also have to advertise on the reseller platforms now too, which is new, and pay and pay for that. But I think in the future, eventually, if no one figures this out, the customer's going to have to pay for it because the prices are going to go up.

Andrea:

The manufacturers can't shift from 5% of their business online to 50% of their business online, which is a much lower margin business for them and not raise their product costs. I just don't see how that happens. So hopefully, someone will figure it out.

Stephanie:

Yeah. Do you see any manufacturers doing it well right now where you're like, "Oh, I just talk with someone and they are doing it this way," that seems like it's streamlining at least a piece of the process. It might not be all of it, but any stories there that highlight someone doing something really good?

Andrea:

I think there are a few folks who are doing a really nice job designing for online. So that's first and foremost, make the packaging and products such that it's low weight and it ships economically, because that's number one. If you can't do that, if you're trying to still try to sell dry bags of conventional dog food or cat litter online, you have no future in that. And so we've certainly seen like Clorox do some really interesting things in the litter space, Purina36:10 they're doing lightweight litter. There's some great examples of companies designing for online.

Andrea:

So, how do you build a sustainably ecommerce business? Well, make sure that it can ship well or the retailers aren't going to want it, and you don't have a future in it. So I think there's some good examples of that. Clorox is also doing, they did a green works product a while back that instead of selling three bottles of spray cleaner, there's one bottle with two tiny concentrate refills, so it's less water, it's less waste, it's more sustainable packaging. I'm certainly seeing some really cool stuff from some upstart brands. There's one called Ethique, which does shampoo and conditioner bars.

Andrea:

That's, again, less weight, ships really well, online store as well, it doesn't leak. And then we're certainly seeing a lot with Liquid I.V. and all of the electrolyte powder drinks. So moving from selling it as a bottle that has water in it that you can't ship to powder. So some interesting stuff on designing for online. I think there are some companies who do a really nice job like aligning their org structures to support ecommerce. I think some good examples of that would probably be, L'Oreal does a really nice job there, P&G has a pretty solid and smart eCom department.

Andrea:

There are a few CPGs who do a really good job there. And then I think the one that everyone seems to struggle with those logistics, especially the larger CPGs, they're built to scale products and ship truckloads and not necessarily fill direct customer orders or ship like super small quantities to all these little Amazon warehouses. So I think logistics is really been hard on the CPG industry, ecommerce logistics.

Stephanie:

Yeah. I only see it getting harder and worse. I'm thinking about my interview with Domm from Fast, and him talking about one click checkout where they'll batch the orders on the backend for you buy, buy, buy all in separate transactions, but that's still also encouraging one-off orders that maybe you wouldn't have had otherwise that maybe brands aren't used to, someone just coming in and buying one shampoo or something because normally they have limits. So I only see it getting more difficult as technology gets better and they figure out how to make things easier to buy, it just makes it harder logistically.

Andrea:

Yeah. And I'm starting to see, I just feel like ecommerce retailers have gone I've really come a long way on this in the last couple of years probably to compete with Amazon, but I can't remember which retailer said, he was Wayfair, I was shopping on the other day. And they suggest that, they're like, "Batch my orders, you can select it. It's like defaults to batch my orders, so they all show up on one day or you can check the other boxes, no ship them each as they become available. And Amazon has been also doing that because in ecommerce, at least on the Amazon, the average order's one.

Stephanie:

Yeah. And I think that's what Domm said that Amazon's been doing this for a long time, it's that most ecommerce companies aren't doing that. So that's why on Amazon, you can always go and hit, buy now, buy now, buy now, and you don't even think.

Andrea:

And they'll try and batch it.

Stephanie:

They'll try and figure it out, but you don't even have to worry about a cart anymore. And that seems to be the way of the future, but I'm just thinking about these smaller brands who are trying to, up and coming, trying to get their foothold and then be like, "Oh my gosh, customers are expecting to be able to just hit, click buy for one thing, and I wasn't prepared for that."

Andrea:

I think we're going to continue to see... We'll certainly continue to see Amazon grow, they had an amazing quarter, but also I think we'll continue to see customers really being less loyal. And I think that because these other retailers are really upping their game. And if you look at, there was a study that came out that showed the top reseller app downloads in 2020, Walmart was right there under Amazon. And granted Amazon is a huge in-store base, so we need to take it with a grain of salt. Wayfair was on there, Wish, all these other retailers.

Andrea:

And so I think the pandemic has forced us all to shop more online, but also due to product availability, shop more across retailers. And as a result, we have discovered that the shopping experiences on some of these other retailers sites are more favorable to the types of products we're looking for. Maybe even more fun or more curated or whatever it is that you're looking for, and I think the retailers are starting to figure out how to be more efficient with batching orders or, remember when you used to have to go get your credit card every time you placed an order online?

Andrea:

They're all saving it now, I mean, stuff that we take for granted because Amazon set a really high bar. 

Stephanie:

Yep. I love that. I know we don't have a ton of time, so I want a quick touch on Bezos. I know he just recently stepped down as CEO from Amazon, so I want to hear your hot take on what does that look like for Amazon of the future? How do you see that changing things?

Andrea:

Yeah. Well, first I should probably say, I don't know, Jeff personally, and I don't have any inside information. I've been gone from Amazon for five or six years now, but I do think if I were him and knowing what I know about him as the fearless leader, he's an inventor, that's what he's really good at, he's really good at inventing and disrupting industries and inventing on behalf of the customer experience. And when I look at what he has really had to focus his energy on the last couple of years, even pre-COVID, you had the antitrust investigation, they were under intense scrutiny for their treatment of their warehouse workers, counterfeits on the site and fake reviews, labor unionization efforts, here in Seattle, they've been under just a ton of intense pressure for contributing significantly to local elections.

Andrea:

Our local government put in place a headcount tax just to stick it to Amazon. And it's been really intense here, and also a lot of discussion about their role in increasing housing prices and driving the Seattle's homelessness epidemic. The stuff that he's had to deal with, a super public divorce, all of that stuff. And then you layer in COVID and all of the operational complexity of that that he had to deal with, nothing in there is inventing. And if I were him, I would not only be exhausted because I think the best way to exhaust an inventor is to tax them with a bunch of drama.

Andrea:

And so if I were him, I would be exhausted, and I'd be really bored, there's no inventing in there anywhere. They've made some really interesting inventions, I guess, disruptions more, I think of them less as inventions, more of disruptions as it relates to transportation. And in the earnings call yesterday, they said half of their packages now are being delivered by their own fleet. Incredible. They are a huge transportation company now, and they'll probably license that out and just walk out, but there's not a lot of inventing happening now, it's all about scaling, managing under scrutiny and really going head to head against some super fierce competition for ad dollars and for customers.

Andrea:

And so if I were Jeff, I'd be looking at the future and I would just be like, "Not interested, if I were an inventor and I was Jeff. So I think that speaks to why he would step down, I think timing it with going out on the high note with the Q4 earnings being just astoundingly positive probably makes sense. It's interesting, I don't know a lot about Jassy, but I think he was the CEO of AWS for a very long time and he's really good at scaling a business and scaling a business against adversity or fierce competition. If you look at what they are up against with Microsoft, and I think they even like filed a lawsuit against for an RFP that they didn't feel like was handled correctly, he really has gone head to head.

Andrea:

And I think that that's maybe signaling that Amazon's going to be a bit more about scaling and more about competing and a little bit less about inventing going forward, which maybe that's the stage that they're in.

Stephanie:

Yeah. Cool. All right. Well, with a couple of minutes left, we have a quick lightning round. Lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask a question, but this time, you only have 30 seconds or less. Usually I get people a minute, but you're so quick, I'm like, you can't have a minute. You get 30 seconds.

Andrea:

I'll do my best.

Stephanie:

All right. What one thing will have the biggest impact on ecommerce in the next year?

Andrea:

I'm going to go logistics. I think the ability for other retailers and D2C to prevail against Amazon or compete effectively with Amazon, is going to be their ability to ship fast and for us to see some consolidation and maturity in that industry.

Stephanie:

Yeah. I love that. If you were to have a podcast, which you're about to, what would it be about and who would your first guest be?

Andrea:

Our podcast that we're going to have is Melissa Burdick of Pacvue, who is a competing agency for us in the ecommerce advertising space, and myself. And we're going to be doing a hot take on ecommerce current events. And my job as VP of strategy is all about staying current on ecommerce trends and news. And it's even hard for me to keep up, there's so much happening right now. And so we wanted to really try to provide a value to the manufacturer community of helping keep them current and tell them what they need to know. And then more importantly, tell them what we think it means for them.

Stephanie:

I love that. I can't wait to listen. What's up next on your reading list?

Andrea:

On my reading list, oh gosh. Well, I guess on my reading list is a lot of research because I'm trying to write a book about eCom.

Stephanie:

You're a busy lady.

Andrea:

I'm a busy lady. I'm trying to write a book about ecommerce and really transitioning our thinking beyond that physical aisle, kind of some of the things that we talked about today. So a lot of my research right now is reading some other pieces of thought leadership around that. And in fact, on my immediate reading list is I need to read a case about Unilever for my class with Harvard on Friday morning, and it's all about Unilever and how they have successfully transitioned to an ecommerce framework and mindset.

Stephanie:

Oh, I could come to your class too, that sounds good. Awesome. And then the last one, one thing do you not understand today that you wish you did?

Andrea:

I don't understand, well, I think a couple of areas, one is that as a manufacturer thinking about when is the right time to invest in the most forward-thinking ecommerce technology, which in my mind right now is live streaming. And I don't know a lot about live streaming, I'm learning more about it, I'm certainly watching some of it and trying to participate in it. So nascent here in the United States, but in China, it is incredibly powerful. And in this Harvard class, they had a woman who's a super influencer in China comes to the class and she live-streamed in the class and she was selling Harvard t-shirts, and I think she sold, I don't want to say like hundreds or thousands in a minute.

Andrea:

It was insane. And then they projected what was on her phone to the screen and we got to see it. And it really blew my mind that we're in such a different place as it relates to ecommerce. So I don't understand it super well, and I want to understand more of it so we can do a better job of helping our brands transition.

Stephanie:

Yeah. That's a really good one. Definitely one I don't fully understand either, but I know it's very different market there, so maybe people shop differently, but any insights, bring in my way, because I don't get it either. Cool. Well, Andrea, it's been a blast having you on, I hope we can bring you back for round two in the future because I feel like I could probably keep going on for an extra hour if I didn't have a meeting in a couple of minutes, but where can people find out more about you and Ideoclick?

Andrea:

You can follow me on LinkedIn and Twitter, you can visit my website at Andreakleighconsulting.com. I write and speak and post very frequently about ecommerce. And you can find Ideoclick at Ideoclick.com.

Stephanie:

Amazing. Thanks so much for joining us. It was a blast.

Andrea:

Thank you. Thanks for having me.