Probably the best conversation I've ever had on customer lifetime value, and how paramount data continues to be in the world of ecommerce.
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In this episode we discuss:
[0:00:01] George Reid: Welcome to us Always Day One. My name is George Reid, a former Amazonian turned Amazon consultant. Each week in the podcast, you're gonna hear industry expert Brando it on Amazon employees share their answers to the basic yet fundamental questions. You should be asking yourself a bag, your Amazon business. Now, let's jump in. Hello, Ryan. Firstly, I want to thank you so much for coming on the show today. Really appreciate it on day. Thank you again for doing your hair. Especially for May not was not recorded video today. So for those who can't see Roy in sports in a beautiful haircut, I've still got my shaved back and sides in the covert locked down invite that rhyme digressing slightly. Don't give it a quick background And how you got involved in this Amazon world and what you're doing at the moment.
[0:00:53] Rael Cline: Oh, boy. Yeah. I'm really kind of fell into it seven years ago. Um, got have my degree in nonprofit management, but really no money. No money there. So pivoted into ah, building an Amazon business for a local company in Utah. Um, just kind of learned on the job from there, and, uh, loved it ever since. So it is currently led me to details where I am the senior manager of subscriptions.
[0:01:29] George Reid: Yeah, you recently pivoted. If I'm correct, you weren't. You've just moved to the subscription side of the business. But before you arm or in managements in the agency side of crack
[0:01:40] Rael Cline: slightly I mean, details kind of use it in a very similar vein. If it's not automated through a computer, it's least gonna try to be automated through a person you know, at least as much as possible. So, um, they they kind of merged them together from kind of, um in the same in the same vein
[0:02:01] George Reid: and having having pivoted away from that, you still find yourself. Obviously, your your roots are running, running and Amazon Businesslike company in Utah. Do you still find yourself continuously looking and fascinated by what's going on in the Amazon world from a a learning perspective as well as kind of a sales perspective and advertising perspective? You still
[0:02:24] Rael Cline: Oh, sure, yeah, of course. I mean, I think it's, um, I think it's essential at any point in the video work. However, wherever you are in the business, you know, whatever your business follow is related to Amazon. Um, it's essential for you to have a knowledge base. It's essential for you to be passionate about your learning about Amazon to stay up to date on the you know what's going on. The trends and changes Amazon's made you know, etcetera,
[0:02:55] George Reid: etcetera. How would you guess? I've not really thought. This certainly is, since the question have got written down. But I was just thinking aloud here. Would you say that's important as well for people in different parts of the business? If you're within a kind of a brand environment, your your brand selling on Amazon, would you say that it's important for people on the operational side as well? Is kind of the customer facing kind of retail side to understand the Amazon little bit and to understand what's happening to understand advertising changing to understand some of the small details, even if you are in the warehouse, you know, just to go well or keep an ear to the wall so I know a little bit about what's going on.
[0:03:41] Rael Cline: Oh, yeah, I mean, I would think it's ah again. Anyone, anywhere in the business should have a near to Amazon, especially if it's a major portion of profit for that particular brand. But the example being you know, if you're in product development for a brand, you're gonna want to look at the packaging in a way that sports, um, e commerce. You know that sports easy shipping that's, you know, supports getting it to the customer via FedEx or UPS. You know, like that's what you're gonna want to take a lens versus a previous You know, um, way of looking at products is way, the way it looks on the shelf or how it's presented when presented by a person by any counter, you know, like so there's different ways of looking at things. Even your traditional jobs in A with a current brand need to have a viewpoint and Amazon viewpoint, you know, kind of correlated to their current job, or at least a viewpoint integrated into the current job.
[0:04:48] George Reid: I think that surgery and it's something I know really given too much thought to before it's gone. It's like if you are a procurement, obviously you you're probably getting fed instructions. You've gotta set criteria of what you're looking for, using tools your your thinking about ex wives that. But perhaps you're not studying what's going on in kind of a wider marketplace and go, And actually, this sort of packaging isn't gonna work anymore, or these are the sort of inserts we previously done. But they're not gonna be eligibility more so just continuously studying on guess being studios. And no matter what point your honor business like I work, it's another big brands. They've got a procurement team of 5 10 people. I thought I do question how many of them are actually on linked in regularly, which is a brilliant source. Ahamed Live them or listening to podcast regularly and studying and going one of the changes in advertising. How does that that have a knock on impact to what we're doing with with the procurement, right?
[0:05:49] Rael Cline: Exactly. Yeah, I think you know, even if it's not, um, a focus of the company, you should least have someone have a focus on Amazon whether you pay, you know, like an agency such as details, or you find your own sources of your own. Ah, research. Um, you know, I think it is important to have that knowledge base or that resource available to you at least let you be aware of what you don't know. You don't know what? You don't know everything.
[0:06:20] George Reid: Yeah, yeah, that's true. Like it's ensuring that the trading is stripped down. A lot of people will be like, Oh, we're in the brand side So we're going to be speaking to the agency. But it is that information from the agency dripping down throughout the whole company way
[0:06:35] Rael Cline: to the CEO. Exactly.
[0:06:38] George Reid: That's interesting, interesting thought process. And in recently, keeping on the operations topic. How much more important has operations become for brands in recent years and Amazon?
[0:06:52] Rael Cline: When you say operations, you mean it starts faras like shipping, logistics, warehousing, that kind of
[0:06:58] George Reid: take it wherever you want. Like there's different ways of looking at operations, right? There's logistics. But then there's kind of structures and processes that you haven't playwright take away you want.
[0:07:09] Rael Cline: Yes, I mean, I think if you're looking at it like in a warehouse perspective, um, well, can you rephrase the question?
[0:07:26] George Reid: Yeah, I make it a little bit easier from a logistic side. How much Mawr has been focused attention being required for brands operating and Amazon from a logistic side of the business.
[0:07:41] Rael Cline: Uh, well, especially on Amazon, I would say it's well again. Like, if you're looking at it in terms of advertising, um, your costs and your efficiency, you know, it is really what's kind of driven where before it was kind of a free for all opportunity. So when it comes to driving that it's gonna be more efficiency basis. So that's gonna be more software base. You know, that's gonna be more subscriptions, you know, type of, you know, a solution to come up for those for those profit problems if it's coming to, like warehousing. Um, you know, the default answer has always been to do F B A or some sort of version of symmetrical prime. Something like that, that's not always going to be the case anymore. Going forward, the profit margins on individual listings air so small nowadays that you have to look at you deliver, you have to look at F B. M. You have to look at, um, alternate ways of getting the product to your customer. You know, bulk sizing. You know, that kind of stuff. Final turn the ways to make a profit while still getting wall still selling on Amazon and that in itself it may not necessarily be, you know, automated. That itself could be something that just needs no focus from a person you know focus from from all from a warehouse perspective, you
[0:09:12] George Reid: think the other the other kind of key point there is. It's so true, I think, up until the start of this year were also recording Saturday, September 2020. Now, up until the start of this year, it was always the default. Get yourself on FB A. I don't even think about looking at warehouses. Don't even think about any of that. It's a waste of time and energy focus and F b A and then put your energy elsewhere. But now it's suddenly OK. Self God, we put all our eggs in one basket here. FBI isn't necessarily going to work because of some of the things that Amazon a kicking back saying stories limits, etcetera on what you're allowed to send in and delays and this side and the other and it's going right, we're out of stock now Way haven't got a problem for
[0:10:01] Rael Cline: you. Uh, no, that's where that's the exact problem I was just having today with a number of brands that we managed to their currently out of stock. Amazon has, you know, we have a number of units already inbound. Amazon won't let us send us. Won't let us send more because they limited the number of units per sq. Now, you know, so that this was just a recent thing that came out in response to Cove aid. But it's left a lot of brands kind of stuck in the river up the creek. Kind of a thing with because they were so reliant on FB A. They now have no no other options. You know, they don't have their own warehouse tooted ship these out. We're now scrambling to look for, you know? Does does. He tells warehouse it forum, just deliver warehouse, you know, forum. So I think, you know, having a viewpoint, having that kind of backup plan. No, not all of your eggs in one basket. Kind of strategy from the start is very important for brands going forward.
[0:11:08] George Reid: What of what's gonna be in the consensus from compliant today, are they? But they furious our or another people going or I had a wee. How do we get around this? What's the kind of mentality? Is a lot of it Just few hurry. Like this is ridiculous. Like throwing towards how the primal
[0:11:29] Rael Cline: Well, I mean, Amazon always does provided certain amount of fury released for me. But, um, no, you know, especially on details. We find that we have a very, you know, let's work through it. Let's figure it out like that because Amazon has always been a a marketplace of change, you know, ever since they started, you know, there's always been policy changes, different ways of selling new things coming out. And so you kind of have to have a mentality of like, Well, this is new. Let's figure it out, Let's fix it. And so that's the mentality that details has internally, and that's the kind of mentality that we share with our partners. But I think a lot of them do get They get the difficulties of the marketplace to get the difficulties of the industry itself, and they want someone who understands how difficult those difficulties and understands the you know, the work required. Not necessarily just the quick answer.
[0:12:30] George Reid: Yeah, I think it's a good men mentality toe have and still with the people you're working with that you know, it's not gonna be used that you can't expect plain sailing. You've got to expect the hurdle to be thrown at your head any point in time. And if you go into it with that mentality and always aware, ready to jump on things or that and pivot. But what are a lot of people doing at the moment? Then what is the solution? What are you finding when people go, I want to get stocking. We've got queue for its prime day around the corner. What? What solutions have you found at the moment?
[0:13:06] Rael Cline: Really? Just the third Party Solutions, you tells us, kind of built out its own beta warehousing solution for certain partners. And so we're offering bad up where we've partnered with deliver recently to offer warehousing solutions for Old time was on and Walmart So it's really you know, if they can do it and we can get Amazon to do it, then, yeah, there's only the only option is gonna be those third party warehousing solutions. Better that really popped out recently as a as an offer to this kind of problem,
[0:13:41] George Reid: and I think that's gonna become bigger and bigger. Right now. We have David on from Flex Your the week as well, and kind of they're looking to be the AWS off logistics and crates. Ah, similar, experienced what you get with FBI and deaths of pay. I think that's something you need to be exploring now and going right. We can't just rely on hours and at all times, like no doubt there will. In a year's time it will be completely different and in two years time that infrastructure be even better. But it's kind of learning your lesson here of OK, it's coming to you for we can't get a room entry in. This could really make the whole experience acute for very challenging forests. What can we learn from this? Is never be over reliance on one platform or one channel or one partner.
[0:14:34] Rael Cline: Yeah, exactly. And that's what I mean. When we were at as an agency partner, that's exactly what we would focus on it at details that was our first initiative is all right. Look your you've got your website, you've got Amazon. We need to diversify. We need to make sure you've got back up plans, you know, because you know, he tells itself, you know, we get, we get thrown. No wrenches in the works, all the times from Amazon being one of the biggest sellers out there. You know, we always have to pivot. And so we're having that backup plan I think is usually gonna be Step one, then Step two looking to, you know, increased sales increase volume, that kind of stuff from there, but yeah, step one. Make sure you've got your back up
[0:15:19] George Reid: with with regard said, obviously e tailers were traditionally a a seller first, right? What? What things have you found over your years? Working there have worked really well when it comes to splitting kind of the resource across different channels, you probably got Wal Mart. You got Amazon, you've got you bantams of the marketplaces. And then obviously you've got your own website was the kind of it was a simple process to split. The resource is up across those and go right. Amazon needs more focus. Now. Fill from that team you go over work over there was is simple. Is that or is it still a continuous challenge.
[0:15:58] Rael Cline: Well, he tells is Ah, a little different because it started as a third party Amazon seller. Like it's It's so focused was Amazon and so it way Recently, we only pivoted to you other marketplaces within the last. That's a three or four years. So, uh, to say, you know what we saw, though, is that this is what I saw even before I joined details is the the third party, um, business model is diminishing. You know the problem. The profit margin on the third party business model has gone to the point where it's no longer sustainable. And so at that point, it just became a a point of view. Phil, from marketing has to start working on on Walmart because otherwise, you know, we're not gonna make you know our profits this quarter, you know, are no. We have to start an agency business model because the third party just isn't cutting what we need any more for growth. And so it was a requirement of our growth. Who's requirement of survival? Almost two. To diversify into these other other marketplaces, including software agency, Yeah, warehousing that time.
[0:17:22] George Reid: And with that also be kind of did you pivot to their own channel as well? And are a lot of other brands are advising at the moment. Are they still putting a lot of energy and resource into building their own channel? Their own asset out?
[0:17:37] Rael Cline: Well, uh, not under, like the details name he tells itself, does have a number of private label brands that we are building out, and, um, certainly owning the the dot coms for for those but, uh, no, we, uh because, you know, you people will only focused on Amazon. Most of our partnerships are Amazon, based on Lee. Anyway, So that opportunity for dot com placement really isn't there at the moment
[0:18:07] George Reid: with the brands were working with what one thing are you advising at the moment to create sustainable success, Then, on the Amazon marketplace,
[0:18:18] Rael Cline: uh, our biggest, our single biggest focus or last couple years has been on advertising, and I would still say it, given the growth of the even, given the growth of they've seen over the last few years. There's still a lot of growth in that, you know, in sponsored products, there's a lot more growth in sponsor brands. Uh, Amazon itself is coming out with new features every day in all of these, you know, placements. And so even if you have a established advertisement, you know, advertising campaign on Amazon for for all of your products, I think it's still be good to go in and review those and see what else has come out. What's new? But what sponsored display campaigns can you create to help with the additional placements for your products? Um, I would say that that's still my single biggest driver when I when I look at brands internally and I would recommend that for anyone trying to look at a holistic look at Amazon.
[0:19:22] George Reid: And you think that's where the sustainable successes like doubling down on the advertising continuously, looking for new opportunities, new streams of income from different types. That's what's gonna create that sustainability. Do you
[0:19:36] Rael Cline: think, uh, at least for a taste for the next couple of years, for sure it's not gonna be That's not the end all strategy for sure for sustainable growth over the long term, Um, over the long term, I would say you need to look at increasing your your presence on international marketplace is increasing again, not putting all your eggs in one basket, increasing your your, uh, placement on Walmart on eBay on those kinds of things. Um, diversifying your portfolio, I think would still be, uh, you know, prudent for long term growth. Those you know, the Wal Marts in the world, those kinds of things should, you know, they're seeing, you know, double digit triple digit growth, you know, year over year at this point. So investing those would be good as well.
[0:20:34] George Reid: Now that makes sense. It's interest you mentioned about Thean International side of things. I think it's still quite overlooked. Who had a great discussion with the chap in Germany, Did that, and he said, like there is he described off probably a slight breakdown in communication, he says, a lack of professionalism on the German market place at the moment, which I thought it's got a nice you were describing it. I think there is still so much opportunity there. But with the clients, obviously, are a lot of your clients predominately us. They looking at Europe, for instance, and going Nah, we just we want to focus on the U. S. And getting it right first or what's what are those discussions?
[0:21:18] Rael Cline: Well, the Yeah, the discussions really rely around what is what You know, their capabilities, you know, like, you know, Yeah. We would love to be able to get them into the pan EU programme. But how likely is it for them to be able to get a translation, um, of their product for every necessary marketplace? And how likely is it for them to, you know, meet all the product compliant compliance requirements for Germany? You know, you know that kind of stuff. So what we're finding is that there's, ah, there's a high cost of entry into that into that marketplace, even though the opportunity is there. Ah, lot of Brian's are just not set up to t meet those compliance requirements,
[0:22:05] George Reid: but they is their mindset. Not if we get it right, particularly those of the big Range. And they create these systems because of the high cost of entry. If they create that system, they can make that process more efficient and bring that cost down for themselves. It positions incredibly well.
[0:22:24] Rael Cline: Yeah, but I mean, they that requires resource is and a lot of the brands that were working with just don't have. The resource is to put towards developing a whole new marketplace. Because essentially, if they're gonna do it for Amazon, they might as well created, you know, a dot de, you know, for their for their own, you know, website, you know, and you know, they're doing half the work already. You know, So putting, just putting the work down, um, seems to be out is with With the necessary resource is in the nest. Running out of time seems to be the the main. The main problem.
[0:23:01] George Reid: I guess we look back in Woodson and just focus on the U. S. For a lot of the brand focusing on the area, competition is obviously intensifying. You can see that with cost per clicks. You can see it with just the sheer aggression some players are taking with the marketplace. But that being said, how much focus do you think Brand should be giving to their competition on Amazon at the moment? Is it something they should be looking at regularly? Or is it having an Amazon mindset, which is focus on the customer?
[0:23:38] Rael Cline: I think it's one of the same, don't you, uh, you know, like if they're if they're focused on the customer, they're, you know, they're apparently going to be focused on on their competition. But getting to the to the to the crux of it, of the question that the brands themselves really should be focusing on on the customer, like like how Amazon is. And that's because it's not necessarily just your traditional brands that you need to be worried about. As as your competitors. We're now getting into the day and age where your own manufacturers are taking the products that you're having the manufacturer for you. They're taking an output, selling it directly to your to your customers. And so your own manufacturers are now becoming your your competitors. And I was on itself is seeing this seeing this trend as well? And so they are focused on what they call the customer experience. They're focused on becoming a ah, platform there, pick up. They're you know they're there. They're becoming an experience for for buyers. No, not necessarily just a catalog of products. And so I think you need to as a brand to stave off your competition, you need to focus on your on your customers. You need to focus on. Why air their customers Choosing you versus You're manufacturer who's now signed your own product for a 30% cheaper, you know, just because they don't have all the middle.
[0:25:11] George Reid: I guess that's such a good point there, like it's replicating what Amazon are doing with their cost, more obsession and looking to replicated yourself by going right. We can do that with ours because there's always going to be that threat off your competitor, essentially being your supplier in some capacity and you go right well, how we differentiating ourselves wise accustom paying 30% mawr. It's what What things would you be doing right now if we think about the customer or any other kind of Why do you want to go with it? What would you be doing right now to defend yourself from something like that happening?
[0:25:51] Rael Cline: Uh, well, again, like setting, making sure your advertising is on point because she your understanding your your you know, uh, showing your differentiators on in your advertising. You're showing why you're different from your competitors in every placement through every through every section of the of the funnel. You know, you're making sure they understand why they're choosing you over any anybody else. Um, and so, you know, advertising and then making sure your optimization and your your keywords, you know, match that same, that same narrative. Um, you're also gonna want Make sure you're using all of the tools Amazon has given, you know, the brand stores, they plus content the brand registry type of, uh, placements out there. You know, you're gonna want take advantage those because that's gonna give you a leg up over those non brand registered Amazon competitors. But also again, it just speaks to that narrative that speaks to why that that buyer should choose you first. Anybody else?
[0:26:56] George Reid: I think that's that's such a big component. I say it's like building the moat more, building the brand on if you can get to that place that there was ultimately, there's always in some time going to be a cheaper product, which is the same, basically, is yours, but it's 30% cheaper on people of history is showing that people are willing to pay more money for stuff, even if it's basically the same on that. Could be because you're the first one they saw, which comes back to your advertising. Or it could just be because they connect with you better as a brand, because your values because of your message, your tone, your voice, all of these things, methods if brands I think that the mind is if your manufacturers coming and looking to compete with you, I would argue they are less focused on the brand side of things on bmore focused on the price point side of things exactly. That's you can always wear that I don't I think it's gonna be a very long time before those manufacturers are nailing the brand, nailing the communication net and the customer experience.
[0:28:11] Rael Cline: Yeah, I think it absolutely right doesn't know. Majority of manufacturers air in China and they don't don't necessarily have the full understanding of the audience that you're going after. They may not fully understand the the why behind your brand or the purpose for, uh for why you exist, you know? And so we've No, They may replicate the product. They may not replicate the purpose.
[0:28:34] George Reid: Yeah, and that that that purpose is such a big one that had the discussion in the previous Podcasts River with Donald Theresa, who worked Mayotte Amazon dams the business team, and we spoke about Guinness a little bit and how you know those his history on there, pulling on that as a lever on that is the message. Even if someone tried to replicate Guinness with a similar product, that I have seen some attempts and they could make it 50% of the price, and even if the taste was the same, people would still be happy to buy more because of that heritage history, what the brand means to them. And you're right. I think the Chinese manufacturers are going to take a long time if they could ever do it to replicate that. I just don't think it's necessarily in their DNA. There's obviously going to be anomalies. It'll be interesting to see Mawr Mawr partnerships. I think where manufacturers ago, we want a bigger piece, this pine. They're partnering, perhaps with companies in the U. S. Companies in Europe and go right. We could sell you the product or we could partner. You handled one side. We handle another. I think I've seen a number of examples out there off this where there is that kind of a deeper integration, that deeper partnership between the kind of the two cultures to create the best of both worlds, right?
[0:29:58] Rael Cline: Yeah. No, I totally agree. We're seeing the same thing yet at details. You know, where our ah lot of the people who used to reach out to us where u S based, you know, smaller brands meeting help in getting getting their foot in the door, getting established on on Amazon. Uh, now we're starting to see more and more interest from, you know, manufacturers from India, Some some manufacturers from from China reaching out saying, Hey, we have a number of products that we know aren't being sold on Amazon at all in any capacity. We want to be able to offer them to the U. S. Market. Help us, you know, So it's not necessarily a, you know, direct you no threat to US brands. But you're going to see a flood of non us Mark Theo, non US products coming to market, and then you'll see um said the direct competition from your from your manufactures for your product
[0:30:58] George Reid: and is that them approaching details is a distributed more Southern agencies to clarify right
[0:31:06] Rael Cline: both because, you know, they're there in India. They need help just getting through customs. And they need help warehousing within the U. S. And so yet it's basically owning the full the full channel from manufacturing to to the Amazon buyer using details Thio, Thio, help them do that if they need that kind of stuff. But it basically, you know, we can details itself. We can fit in wherever necessary is what they have. Warehousing options already in us. We can help with the, you know, the advertising Where the hell the search part of it or vice versa. What have you
[0:31:44] George Reid: kind of on the topic of looking at the manufacturers and the competition they pose? Would you say they're the biggest threat to an Amazon brand on the market place right now, or are there other elements to that?
[0:31:58] Rael Cline: Uh, I guess it really depends on your on your your your time frame. Your you know how long you're looking for? If we're talking 5, 10 years, definitely. They definitely should be on your radar within the next five years. Um, if if we're talking, you know, the next three years, I would say probably the biggest threat. Um, is still, you know, just your current competitors, you know, whoever you are currently competing with on the US marketplace. Um, with both price and advertising placement, that's gonna be your biggest, um, your biggest threat. Currently, in the short, short term,
[0:32:43] George Reid: the defensive strategy is still echo what you mentioned before about nailing them fundamentals, utilizing all tours available, having a strong ad strategy in place
[0:32:53] Rael Cline: and in and knowing your audience, knowing you know why I exist and why you are who you're selling to or why. If you can nail that narrative, you can you can usually own the audience.
[0:33:08] George Reid: And if we think about the audience, I just wanna pivots slightly to the organic side of things. We've discussed a little bit today about getting those that paid traffic of what strategies? A. You and your clients implementing right now to achieve the organic shelf space rather than the pain.
[0:33:28] Rael Cline: Uh, really. I mean, it dovetails what we've been talking about. It's again knowing your audience, but again, knowing how you know what your audience uses to search with you. What keywords are they using to find your competitors and what he would say the using to find to find you. Um, that's Ah, that's gonna be your biggest, uh, for us right now, that's our kind of our biggest focus is really narrowing. Uh, basically your your top 10 keywords. If you can nail those top 10 you can. You can both gig great organic results as well as good, you know, advertising results
[0:34:10] George Reid: of what strategy should be doing to achieve those top 10. Obviously, advertising is going to be born. Is there anything else that you know?
[0:34:20] Rael Cline: There's a lot of tools that were used like we're using the Jungle Scout and those kinds of Haley intend those kinds of tools to help figure out search volume. But you were also starting to implement some A B testing within, you know, the the ended screen or the product listing itself. And so both the were replacing and what keywords replacing where we're finding, you know, trying to differentiate trying. Figure out what you tease out, what makes something better versus another. And so um, 80 tested itself is some reason to implement to did, to help in that cause to help in your in your cause for for better organic place?
[0:35:06] George Reid: Absolutely. I think if your test in the structure of your title in the different keywords. Maybe you're going on the top One key word to begin with, but that's not working. So you throw another key word in your title and switch it out. And that's you know, you can do that across bullets and different structure of bullets. You can put one, but higher than the other. You change all these things, but with the A B testing, how you doing that efficiently using tools on If I'm not out to help with their or,
[0:35:37] Rael Cline: yeah, I mean, this is really just something we just found within last couple of weeks. And so there's, ah, a coup
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