Google Shopping and Amazon 3P: Growth via the Ecommerce Giants
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Transcript of Google Shopping and Amazon 3P: Growth via the Ecommerce Giants
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Succeeding on Google and Amazon
IBM Smarter Commerce Conference
May 2014
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Mercent Retail: Ensures the world’s leading retailers are visible, competitive, and profitable wherever consumers shop
CatalogInventory
Price
Optimize dynamically:Assortment
ContentBidsPrice
Paid search
PLA
CSE
Local
SEO
Marketplaces
Retailer
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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
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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
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Amazon’s product details and offer transparency are keys to search success
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To succeed in retail search, Google is becoming more like a shopping site
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Over 50% of SERP above the fold is paid or Google curated
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Amazon’s playbook is well known, but its advantages remain strong
Broad assortment
Value pricing
Authoritative product catalog
Trusted fulfillment and customer service
Effective shopping user experience
N/A N/AN/A
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Big Retailers
Building Building
Building Building
Improving Improving
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Amazon’s 3P marketplace performs well
Same Store Sales Y/Y Growth %
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40 %
5 %
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45 %
Y/Y Growth % Prior Year Y/Y %
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Google Shopping performs better
Same Store Sales Y/Y Growth %
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May
13
Jun
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13
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3
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Apr 1
40 %
20 %
40 %
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120 %
Y/Y Growth % Prior Year Y/Y %
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Comparatively, Google Shopping is the faster growing channel
Same Store Sales Y/Y Growth %
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May
13
Jun
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Apr 1
40 %
20 %
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60 %
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120 %
Google Shopping Amazon Marketplace
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PLA serve mostly to non-retail-brand queries
Account Type Cost Impressions ClicksClient 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 queries0% 20% 40% 60% 80% 100% 120%
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PLA Impressions (% served on non-trademark queries)
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PLA has grown relative to “traditional” paid search . . .
Comparison of Google Shopping to SEM Ratios
Apr 1
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12
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40 %
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0.0%
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Sales Ratio Ad Spend Ratio Conversion Rate
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. . . And despite rising CPCs on google Shopping . . .
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4$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.33
$0.49
$0.59
Google Shopping Average CPC (Mercent clients)
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. . . 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
Average of “Trifecta Stores,” stores actively participating in all 3 channel programs during
April 2014
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. . . The impact is showing as Google Shopping grows share of sales
Trifecta Stores, Channel Sales Distribution
2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q20%
10%
20%
30%
40%
50%
60%
70%
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90%
100%
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%
ShoppingGoogle ShoppingAmazon
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Amazon participation may impact efficiency on other customer acquisition channels
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
-40%
-30%
-20%
-10%
0%
10%
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30%
YoY CSE sales growth
Not on AMZN in 2013 On Amazon all of 2013
Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-130%
100%
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300%
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YoY Google Shopping sales growth
Not on AMZN in 2013 On Amazon all of 2013
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An oversimplified comparison:
Sales
Margin
Customers
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:
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Great info . . . Now what?
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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
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Example of improving data quality - automate, optimize and structure content
Original TitleGretsch G6121 Nashville Solid Body
Mercent Optimized TitleGretsch G6121 Nashville Vintage Bigsby Electric Guitar
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Strategies need to be honed to each platform
Advertise on
Enable channel partners
Fulfill through
Amazon
Sell to
Sell on
Fulfill through
Advertise on
Compete
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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
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• 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
FeedManagement
CampaignManagement
Product AdManagement
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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
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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?
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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?
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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?
Thought starter: Can you build a
brand on Amazon?
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Amazon consideration 3:
Channel strategy
Narrow
Wide
Direct-to-consumer only
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Amazon consideration 4:
Metric of success
Traffic
Sales
Orders
Profit
New customers
Customer Lifetime value
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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
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A question of how, not if
Thank you