NEMOA Notes on Scot Wingo – Amazon is rocking our Industry!
For those of you not familiar with the organization, NEMOA (the National E-tailing and Mailing Organization of America) is one of the last association conferences dedicated to covering directing marketing best practices for print, web, email, mobile, AND social marketing. 500+ attendees attended NEMOA’s spring conference – a new record by far. NEMOA has 245 member companies; up from 215 last year.
I have a detailed write up on this blog on presenter Moosejaw. Below are notes from another favorite session by Scot Wingo
Innovations in E-Commerce
Scot Wingo, ChannelAdvisor
On Twitter: scotwingo
Scot walked us through 4 waves of Innovation that are rocking our industry. The info below about Amazon’s growth was news to me. Overall, we heard that web sales have gone from 4% of total retail sales in 2004 to 10% in 2012. Most sales on the web are during the cold months – Q4 and Q1.
#1 – Amazon
- Q4 sales were up 22%, with $21 billion in sales. The fastest growth is in merchandise v. Amazon’s more traditional media sales. Growth is especially strong overseas.
- Merch growth includes “3P” sales – merchandise from a 3rd party vendor. Most big-box stores already have an Amazon store on the site.
- Amazon is showing an overall decrease in revenue but an increase in profit. This is because with 3P vendors, they only show income of 10% of the 3P offer (since they are not paying for inventory). This is a huge cash-cow for Amazon as a no-risk way to sell product. If they were selling 3P product they had to purchase, overall sales would be $40 billion, v. their reported $21 billion. 3P sales are growing at a rate of about 40%/year.
- Amazon Prime is changing how people shop – they pay one flat rate for all shipping for a year. Most products are delivered in 2 days; some in 1 depending on how close you are to a distribution warehouse. And more distribution warehouses are being built!
- New stores are in the works where you can try on product – then order on-line.
- Amazon lockers are being set up in central locations, like Staples, for easy shipping if you don’t want to get product shipped to your office, and/or are not at home for a delivery. This service is growing fast overseas.
- Amazon is now lobbying in DC for the “fair tax” rule to take effect on all Internet transactions for all retailers. This is because they are building new warehouses “at a crazed state” in many states and will soon have nexus. Most of the new facilities are 1,000,000+ square feet, with new robotics in place to pick and pack. Most are built near an airport hub and near large metro areas. In most states, they have been able to set their own terms on taxes – getting a 6-month waiver in return for building a shipping facility. In the long run, they will save money as their shipping costs go down with shorter distances to ship. And when they can fulfill faster, sales may also go up.
- Scot anticipates Amazon sales to hit $200 billion by 2017; only Walmart and Costco are bigger.
- With the new warehouses, Amazon Prime shipping will most likely be 1-day delivery (it currently guarantees 2-day delivery), and in some areas will be same-day. Scot pictures someone ordering groceries on their smart phone, and having the groceries arrive same day…
- 60% of consumers looking for items to purchase start with a search on Amazon – which is now ranked higher than Google for search.
#2 – Mobile/Local
- Amazon and Ebay are the largest digital retailers.
- On Cyber Thursday, 37% of internet sales were from mobile devices (phones, tablets). New sites are being built in a mobile format first (Fab.com is a good example)
- Scot recommends a mobile friendly site over having an app for your catalog. Most download dozens of apps, but only use 5-6 on a regular basis.
- Most mobile sales are from web-enabled mobile sites (80%), v. from an app (20%)
#3 – Social
- Facebook now has over one billion active users. New on FB: Collections – photo albums with links of where to buy the product in the shot. They are also selling gifts now for birthdays, congratulation notes – send Starbucks, or a gift.
- Pinterest has 29 million users and is a great way to showcase product.
- Instagram has images along with conversation. The comments on photos are what makes this site unique – and it works really well for mobile.
#4 – Global growth
- “The world is getting smaller.”
Latin America sales are growing at 30%; Asia Pacific countries are also growing fast – China.
- In Asia, most internet shopping is in a digital marketplace.
Bottom line: 10% of retail transactions are currently done on line. Within 5 years, this will be 20%. To thrive in the new marketplace you need to:
- Diversify – use SEO, paid search, comparison shopping sites, Amazon 3P, Ebay (now with 60% of products at a fixed price). Use all at your disposal – try everything.
- If you can’t beat them, join them (Amazon), including using Amazon product ads that they build/ you pay per click.
- Ride the international growth wave.
- Keep experimenting with social. Turn on FacebookX for retargeting. Try Pinterest and Instagram. Put 10% of your marketing efforts into social. Experiment, and don’t expect an immediate payoff. Social is a long-term strategy.
- Leverage your assets. Tie all of your programs together.
- Picture what the world is going to look like with all free shipping, all 1-day – because this is coming. Look at outsourcing fulfillment.
- Embrace Google shopping with product listing ads (PLA) v. more traditional search. Why is Google going to keep up organic search when they can charge for this?
- Revisit ad words and search programs. For every 50 million products you have, you should have at least 100 million keywords.
- Consider an Ebay outlet. This needs to be for clearance – with lower than normal pricing. When you market through Ebay, you get control of the customer v. sales through Amazon – so you can remarket.
- Mobile traffic will account for 30%-50% of traffic in the next 3 years. Embrace it.
Good stuff. For information on the next NEMOA conference visit the NEMOA website.
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