Online Retailers Talk Amazon and Group-Buying

eTail Conference

eTail Palm Springs 2012 Conference Recap – Part 2

It has been a whirlwind week since coming back from eTail Palm Springs and thought I would share my key takeaways from the conference.  For those not familiar with the conference, it is described as, “The leading multi-channel and online conference since 1999, eTail presents the latest detailed tactical case studies in e-commerce and cross-channel campaign management.” Having taken a 3 year leave of absence from the e-commerce space, I was super excited to see what had changed.  I’m pleased to report, in many ways nothing has changed.  And in many ways, everything has changed.  In the first of two posts, I covered what were clearly the two most used words at the conference, mobile and social.  In this second part, I cover some interesting insights on marketplaces, competing against or with Amazon, and group buying/flash sale retail models.

Manic Merchants and Marketplaces

Retailers continue to have a “love or hate” relationship with online marketplaces.  Without question, marketplace sales are growing, the number and types of marketplaces are growing, and the number of merchants making them part of their strategy is growing.  I spoke with dozens of retailers who are leveraging one or multiple marketplaces as part of a multichannel strategy.  While some are selling direct on the marketplaces, others are using tools such as Monsoon Edge and Monsoon Pro to manage inventory, listings, and repricing across multiple marketplaces.  A great example was shared by @jordanrohn, Managing Director at Stifel Nicolaus.  According to Jordan, Tesco is now selling DVDs on Amazon under a different name in an attempt to maintain market share in that category.  They are competing against their own stores knowing the sales would occur anyway on the marketplace, so why not try to capture them.

At eTail, a panel of very smart e-commerce veterans including @shaneevangelist, from U.S. Auto Parts Network, Brad Wolansky, CEO the Golf Warehouse, Michael Burgess, EVP FTD, and @dbrussin, CEO Monetate took on the question that most retailers struggle with, “How can you effectively compete against Amazon?”  Here is a synopsis of their of the most compelling responses:

    • Private label, private label, private label
    • Be first to market with new SKUs
    • Go where they are not – in categories, sub-categories, and market segments
    • Create a more engaging, personal experience
    • Elevate your brand; make the story both compelling and relevant
    • Provide better than expected customer service
    • Focus on priorities that differentiate your business
    • Make customer feedback a natural part of the buying process, it is information that will make money and is mostly free

These are all great ideas and strategies, whether you are competing against Amazon or any other competitor.  This is particularly true for mid-sized retailers.  A recent Internet Retailer article highlights the apparent advantages for these retailers:

“…an analysis of the top 1,000 web retailers listed in the Internet Retailer Top 500 and Second 500 Guides shows that overall it’s not the biggest e-retailers—apart from Amazon—that are growing the fastest.  Nor is it the smallest e-retailers, which are growing off a small base and thus can register large percentage increases with small growth in dollar sales.  In fact, the fastest-growing web retailers are in the 500 to 700 range of the Top 1000, merchants capturing $5 million to $13 million in annual online sales.”

These companies tend to be more nimble, more niche focused, more able to exploit unaddressed market spaces, and generally able to get closer to their customers.

Group Buying and Flash Sale Retail Models

Another well-attended and very interesting panel focused on new and emerging retail models in both e-commerce and retail.  The panel included @mitchspolan, SVP of Living Social, @gregbettinelli, CMO of Hautelook, John Mulliken, GM of Wayfair, and @robertmckeon, CEO of Picture It On Canvas.  A few of the key takeaways include:

    • Living social works closely with retailers to put together programs that are win-win; @mitchspolan mentioned, “We turn down more programs than we run.”
    • For a retailer like Wayfair, group buying is not necessarily about the economics, it is about wooing consumers and elevating the brand.  Personally, that seems like a tough proposition for most retailers.
    • There is an interesting, inherent conflict with group buying models.  The promoter of the deal benefits from the “breakage (unused deals)” at the expense of the retailer; though many promoters actively push consumers to use the deals purchased.
    • There was a consensus by the panel, for most retailers, the value is more about up-sell, re-purchase, and word-of-mouth than the initial purchase.  While it is tough for many established retailers to build an ROI model beyond initial purchase, this has to be a consideration for testing these new models.
    • The future for flash sale and group buying will be greater relevancy through targeting and personalization of offers based on data and behavior.

Like most discount and promotion strategies, these new models seem to work best for new customer acquisition and encouraging trials of new products by existing customers.  Picture it On Canvas used it almost exclusively to build their business from scratch, with great success.  The economics and results would have been much different if they were a mature business with brand recognition and an established customer base.  Some studies show these types of promotions need to drive 40-60% net new customers to make the program pay off, depending on your business.

However, another factor needs to be considered—the emergence of a new segment of young, mobile, and digitally enabled consumers who are now growing with these new models.  Kevin Hillstrom of Mine that Data has done some interesting research on this segment and he refers to it as Jasmine:

“Jasmine is representative of a customer between the ages of 18 and 34… she doesn’t have the earning power she will one day have.  Therefore, Jasmine has to find the best deals at the best prices.  She’s not going to pay $400 for a handbag, when she can spend $99 for a handbag at a flash sales website.”

Although the growth of these new models has been exponential, somewhat fueled by a tough economy, new business models, and stiff competition, the longer-term role in the overall retail and e-commerce marketing mix is being defined every day.

Overall, eTail was a great event with excellent presentations and panels by retailers, thought leaders, and vendors.  It is great to be back in the #ecommerce and retail space.  The new dynamic nature of the market combined with continued e-commerce growth ensures exciting times to come.

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About Casey Carey

VP, Marketing at Monsoon Commerce.
This entry was posted in Industry Trends, Marketplaces, Monsoon Commerce, Online Stores, Stores, Uncategorized and tagged , , , , , , , . Bookmark the permalink.

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