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In this episode…
Marshall Taplits, the founder of East Coast 3PL Ship It Done, joins us again on the podcast, this time to share his e-commerce expertise and catch us up on 6 major trends affecting online retailers in late 2021. This is useful information, especially if Amazon is a key platform for you, as he focuses on what they’re doing now and likely to be doing in the near future. It’s not all good, either, as you won’t be impressed by the costs or some of the ways that Amazon might compete with you (and win)! But the good news is that Marshall gives some helpful guidance on how to build out your online presence in order to reduce your reliance on platforms like Amazon and move forward with more control over your business and its future.
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🎧 Marshall Taplits | 6 E-commerce Trends (With A Focus On Amazon) 🎧
Show Sections
00:00 – Greetings & introducing Marshall Taplits & Ship It Done.
02:10 – TREND 1: The share of products being sold by e-commerce is increasing.
Keeping products in stock for brick and mortar stores has been a challenge due to shortages, whereas e-commerce stores have tended to have more stable stock. Black Friday and Cyber Monday earnings were down on previous years, but this may be due to certain shortages.
06:17 – Does e-commerce’s market share seem unlikely to go down now since Covid?
Yes, it seems here to stay, due to hybrid models encouraging more connectivity between e-commerce and brick and mortar stores. Traditional stores are promoting their websites more and leveraging their physical locations as Amazon drop-off points or ‘click and collect’ locations which provide the benefit of getting more customers through the doors. Other retailers, such as Best Buy, carry a small number of models in stock, prompting customers to order the majority through their websites. On the other hand, e-commerce stores like Amazon are opening physical stores connected to their online business, where shoppers can go in and purchase items using their Amazon accounts. The rise of e-commerce sales is also connected to the habits formed by shoppers during coronavirus lockdowns. Faced with staying at home, more people than ever started shopping online and continue to do so now that they have become familiar with it.
09:03 – TREND 2: E-commerce sellers going ‘omnichannel’ to reduce reliance on just one platform, such as Amazon.
Vendors have been going omni/multichannel for some time, but the success of it has been average. Amazon is so powerful at connecting you with buyers who are ready to buy now that it’s very difficult to find the same number of customers like this through online advertising of your own site, for example. However, vendors will really benefit from growing their own shopify store over time in order to avoid putting all eggs in one basket, especially when Amazon is charging more and competing with their own products.
Another benefit of running your own store you can build up a customer base, mailing list, etc, and contact them in future. This is totally the opposite of working with Amazon, even FBM (fulfilled by merchant) sales, as they obscure almost all customer information from you which prevents you from building up your own customer base.
15:44 – Is FBM or FBA cheaper/preferable for Amazon vendors?
All vendors pay a flat 15% fee to Amazon regardless of how items are fulfilled. Then there’s a single fulfillment cost for anywhere in the country if it’s FBA, and this is charged again on returns. On top of that, their storage costs are expensive, especially in October through December due to the Christmas period. The advantage is that FBA items can be delivered the next day with Prime, and therefore FBA items do sell better. Generally, though, using a separate 3PL company to handle FBM does work out cheaper.
Amazon also has storage limits and vendors who are already at their limit (maybe because something Amazon is storing isn’t selling so quickly) often use a 3rd party 3PL to start selling FBM rather than wait, because at least they can start getting sales that way.
Some vendors selling more expensive items also prefer to sell FBM and not store items in Amazon’s facilities because they feel it’s more secure and they can access them quickly.
19:34 – How Amazon are making a killing from FBA.
Amazon has recently raised FBA prices again and take around 30% of the average revenue, so this isn’t great for retailers. E-commerce has become a cash cow for them, in the USA, at least.
21:24 – Are Amazon starting to become another UPS or FedEx?
Amazon is now running their own fleet of airplanes for fast airfreight, chartering and buying their own container and regular ships, and has a fleet of branded trucks and drivers for ‘last mile’ deliveries. Having their own logistics presence makes them more than a UPS, because with the ability to do continental shipping they’re like a Maersk, too. It’s possible in future that vendors will pay Amazon for shipping to the USA, then storage, then vendor fees.
24:31 – TREND 3: Companies are paying more attention to being eco-friendly.
Sofeast customers have shown a lot more interest recently in having recycled and recyclable packaging, using bioplastics instead of oil-based plastics, and finding other ways to be green. Is this a trend Marshall sees? Yes, although on Amazon eco-friendly products tend to be more expensive and this will negatively affect their ability to be seen, as the algorithm will naturally place cheaper, less sustainable, products above them in search as they’re purchased more often. Paying more for a sustainable product may be good for the environment, but it isn’t necessarily good for business on Amazon. If vendors know they have a market and people are definitely searching for eco-friendly products, though, then this could be successful, but in general, to stand out among the large listings, it’s important to find some kind of USP or niche. If your USP is to be eco-friendly, but at a cost in comparison to other similar products, then selling on your online store where you can tell the story and send a mailing list more information, etc, may serve you better than Amazon.
29:08 – TREND 4: Augmented reality being used to improve how shoppers can visualize products on e-commerce.
In general, this is happening slowly, but there are some furniture retailers like Amazon or IKEA who allow you to use AR to place their furniture in real photos of your room at home. Being able to try on clothing virtually would improve conversions for some apparel shoppers.
31:43 – TREND 5: Amazon competing against its own resellers.
Amazon competes against resellers on its platform with its own brand products, for example, the ‘Amazon basics’ range. It’s been shown that they used reseller data to influence their own decisions to launch competing products. Will this hostile environment for resellers continue? Amazon claims that its internal regulations forbid its sales teams from checking reseller data, so it must be rogue employees who have broken the rules. Oftentimes, Amazon has multiple own-brand products (some brands are owned by Amazon and customers never even know this) in the top 5 search results, making it very difficult to compete with them.
India has taken action against this behavior, as they’ve made it illegal to run a sales platform and be a vendor on it at the same time.
If you are trying to build a brand, this shows that it’s more important than ever to have your own website and web presence as well as selling on Amazon, as Amazon can’t be relied upon to provide a level playing field. Jeff Bezos said himself: “Your margin is my opportunity.”
34:39 – TREND 6: Compliance checks hotting up.
France just banned the US e-commerce platform Wish due to numerous non-compliant and unsafe products being sold. This is a big deal, as it’s a warning to other e-commerce platforms. Amazon moved to ban hoverboards when they were proven to be unsafe but has been criticised for selling dangerous products, such as toys before Christmas in the UK, themselves. Marshall believes that the US, with the exception of California, is less strict than the EU. Many e-commerce vendors are small and new to the market, they probably believe that they won’t be affected by investigations and that doing all of the compliance and safety checks isn’t affordable. Amazon has added some demands, making it a little more difficult to get listed, but there hasn’t been a widespread move by the US Federal government to tighten up compliance rules.
38:37 – Wrapping up.
Related content…
- How To Choose The Right 3PL Logistics Company?
- How To Dropship From China?
- Why Amazon FBA Prep Should Be Done In China (Not The West)
- How Amazon FBA Sellers Should Control Quality in China
- Green manufacturing resources
- France bans Wish
- Amazon selling ‘illegal and unsafe’ toys before Christmas
- Exploring Product Safety & Reliability Issue Liability [Podcast]
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