Google Shopping and Amazon 3P: Growth via the Ecommerce Giants

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Mercent VP of Product Frank Kochenash's presentation from IBM's Smarter Commerce conference in Tampa, FL., 5/15/2014. …

Mercent VP of Product Frank Kochenash's presentation from IBM's Smarter Commerce conference in Tampa, FL., 5/15/2014.

Tips, tricks, and perspective on growing revenue through the internet's two largest shopping destinations.

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  • 1. Succeeding on Google and Amazon IBM Smarter Commerce Conference May 2014
  • 2. Cross-channelanalytics Mercent Retail: Ensures the world’s leading retailers are visible, competitive, and profitable wherever consumers shop Catalog Inventory Price Optimize dynamically: Assortment Content Bids Price Paid search PLA CSE Local SEO Marketplaces Retailer
  • 3. Founded 2005 by Amazon.com veterans Award-winning SaaS Platform: Mercent Retail™ – Technology & Services for Top Retail Brands – Paid Search, Product Listing Ads, Marketplaces, Shopping Destinations, Local Clients: 200 Retailers / 550 B Brands – Internet Retailer Top 500+ SaaS Model: Subscription license + variable fees on data, transactions $1.5B 2013 annual transaction value IBM DDX Certified Partner, WebSphere Commerce validation pending Mercent Key Facts
  • 4. Amazon is the most important search engine to “shoppers” • 30 percent of online buyers use Amazon to research first (2012) • Google attracted 13 percent (2012) • Over 20% of ecommerce occurs on Amazon • Some estimate 85% of ecommerce transactions influenced by Amazon • Together Google and Amazon influence 40-50% of ecommerce Source: Forrester Research quoted at: http://venturebeat.com/2012/07/26/amazon-online-shoppers-research/#14o1oVRyubfHzthx.99
  • 5. Amazon’s product details and offer transparency are keys to search success 5
  • 6. To succeed in retail search, Google is becoming more like a shopping site
  • 7. Over 50% of SERP above the fold is paid or Google curated 7
  • 8. Amazon’s playbook is well known, but its advantages remain strong 8 Broad assortment Value pricing Authoritative product catalog Trusted fulfillment and customer service Effective shopping user experience N/A N/AN/A ? ? ? Big Retailers Building Building Building Building Improving Improving   AsaRetailerAsaMarketplace
  • 9. Amazon’s 3P marketplace performs well 9 Same Store Sales Y/Y Growth % 0 % 5 % 10 % 15 % 20 % 25 % 30 % 35 % 40 % 45 % Y/Y Growth % Prior Year Y/Y %
  • 10. Google Shopping performs better 10 Same Store Sales Y/Y Growth % 0 % 20 % 40 % 60 % 80 % 100 % 120 % Y/Y Growth % Prior Year Y/Y %
  • 11. Comparatively, Google Shopping is the faster growing channel 11 Same Store Sales Y/Y Growth % 0 % 20 % 40 % 60 % 80 % 100 % 120 % Google Shopping Amazon Marketplace
  • 12. PLA serve mostly to non-retail-brand queries 12 Account Type Cost Impressions Clicks Client 1 Multi-channel 100% 100% 100% Client 2 Multi-channel 100% 98% 98% Client 3 Multi-channel 98% 98% 97% Client 4 Multi-channel 99% 98% 97% Client 5 Multi-channel 99% 98% 96% Client 6 Multi-channel 99% 98% 97% Client 7 Multi-channel 100% 97% 97% Client 8 Multi-channel 99% 97% 97% Client 9 Multi-channel 99% 96% 97% Client 10 Online 100% 100% 100% Client 11 Online 100% 100% 100% Client 12 Online 98% 99% 97% Client 13 Online 100% 99% 97% Client 14 Online 99% 98% 99% % of PLA (cost, impressions spend) against non-brand search queries 0% 20% 40% 60% 80% 100% 120% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 PLA Impressions (% served on non-trademark queries)
  • 13. PLA has grown relative to “traditional” paid search . . . Comparison of Google Shopping to SEM Ratios 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 0% 10% 20% 30% 40% 50% 60% Sales Ratio Ad SpendRatio Conversion Rate
  • 14. . . . And despite rising CPCs on google Shopping . . . $0.33 $0.49 $0.59 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 Google Shopping Average CPC (Mercent clients)
  • 15. . . . But to retailers, the economics are quite different relative to Amazon . . . Amazon Google Shopping Shopping Sales % of Total 43% 42% 15% Avg. Order Value $50 $162 $114 Units Sold / Order 1.4 3.1 3.2 Cost of Sales Ratio 16% 13% 16% Cost / Order $8 $20 $18 Sales / SKU Sent $6 $5 $0.47 “Owns” the customer Amazon Retailer Retailer 15 Average of “Trifecta Stores,” stores actively participating in all 3 channel programs during April 2014
  • 16. . . . The impact is showing as Google Shopping grows share of sales 16 Trifecta Stores, Channel Sales Distribution 67% 62% 58% 53% 52% 51% 52% 44% 43% 14% 20% 26% 28% 27% 31% 32% 38% 42% 19% 18% 16% 19% 22% 18% 16% 18% 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 Shopping Google Shopping Amazon
  • 17. Amazon participation may impact efficiency on other customer acquisition channels 17 -40% -30% -20% -10% 0% 10% 20% 30% Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 YoY CSE sales growth Not on AMZN in 2013 On Amazon all of 2013 0% 100% 200% 300% 400% 500% 600% Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 YoY Google Shopping sales growth Not on AMZN in 2013 On Amazon all of 2013
  • 18. An oversimplified comparison: Sales Margin Customers 18 Sales Margin Guaranteed return Need to pay CPC Need to manage customer acquisition No guaranteed return Need to pay CPA Remarketing rights You get: You give:
  • 19. Great info . . . Now what? 19
  • 20. Certain fundamentals are necessary for success on both Amazon and Google High quality data: – Well structured product data – Optimized product content – Timely, accurate inventory and price data – Compliant for matching Competitive pricing Excellent “back office” fulfilment and customer service On Google: well structured campaigns and sound bidding implementations 20
  • 21. Example of improving data quality - automate, optimize and structure content Original Title Gretsch G6121 Nashville Solid Body Mercent Optimized Title Gretsch G6121 Nashville Vintage Bigsby Electric Guitar
  • 22. Strategies need to be honed to each platform Google Advertise on Enable channel partners Fulfill through 22 Amazon Sell to Sell on Fulfill through Advertise on Compete
  • 23. Considerations for setting Google strategy Advertise “on” consistent with return objectives unless – Brand does not benefit from broad promotion – Distribution is entirely left to channel partners (i.e., retailers) Consider funding channel partner ads on Google (i.e., COOP) Partner, including fulfillment, without exchanging data necessary to preserve competitive differentiation 23
  • 24. • Campaign Structure • Product Level Analysis • Automated Bidding • Negatives • Promotions • Keyword targeting • Data cleansing • Error resolution • Product Delivery Success on Google Shopping - an integrated approach Integrate feed management and campaign management tasks into single user interface Product level performance is supplemented by the data feed to inform campaign analytics and strategy Feed Management Campaign Management Product Ad Management
  • 25. Google Advertising – Text ads, brand targeted – Text ads, non-brand – Shopping Campaigns (Product Listing Ads) – Local Product Listing Ads (Store Assortment on Mobile) Shopping Express Trusted Stores Wallet Circulars Beta measurement programs 25
  • 26. Strategically, 4 steps to discover your Amazon strategy What is your competitive differentiation to Amazon? What are your brand strength/aspirations and time horizon? What is your channel strategy? What is your metric of success? 26
  • 27. Amazon consideration 1: Competitive differentiation Larger assortment? High quality assortment? Unique assortment? More efficient operations? Larger scale? Advantageous supplier contracts? Better customer service? More appealing experience? 27
  • 28. Amazon consideration 2: Brand strength/aspirations and time horizon Own or building a brand? In it to win it for the long haul? Seizing a time limited opportunity? 28 Thought starter: Can you build a brand on Amazon?
  • 29. Amazon consideration 3: Channel strategy Narrow Wide Direct-to-consumer only 29
  • 30. Amazon consideration 4: Metric of success Traffic Sales Orders Profit New customers Customer Lifetime value 30
  • 31. Amazon Advertise on – Product Ads – Display Ads – Brand programs Marketplace (Sell on) Fulfillment by Amazon Checkout by Amazon Pay with Amazon Prime on Your Site Sponsored products Brand pages on Amazon 31
  • 32. A question of how, not if 32 Thank you