Timely Check-in on Amazon Predictions for 2020 and Beyond

Timely Check-in on Amazon Predictions for 2020 and Beyond

Back in November 2019, Andrea Leigh, Ideoclick’s VP of Strategy and Insights, recorded her predictions for Amazon’s business during 2020 and beyond. Since then, the ecommerce industry has shifted dramatically, but many of these Amazon predictions are still very relevant, and are especially interesting today.  

Leigh preceded the content of the video with the statement that her Amazon predictions are not based on any inside information. Leigh’s predictions are formed through her knowledge of Amazon’s behaviors in the past, Amazon information in the news, and her personal opinions. 

Prediction #1: Amazon Will Spin-Off a Business Segment 

The prediction was that Amazon will spin-off its AWS and/or its advertising business. This was based on the observation that Jeff Bezos prefers to resolve issues his own way instead of waiting for the government to get involved or provide guidance. For example, recounting the reaction to the headcount tax in Seattle, Bezos responded by stating that he will stop hiring in Seattle.  

“This [spin-off move] would distance Amazon a little from the question the government is asking about whether they are taking funds from highly profitable segments and shift to help their retail business, therefore making their retail anti-competitive,” Leigh explained. 

UpdateThe heat is on with Jeff Bezos being called into a congressional antitrust hearing to testify along with other technology leaders from Google, Facebook, and Apple. Although Amazon is not being charged with antitrust violations at this hearing, it’s a solid reminder that the government will always be curious when one company wields such a vast amount of power.   

Prediction #2Grocery Consolidation 

Considering the many different grocery formats Amazon has (Amazon Fresh, Prime Now, Amazon Go, Pick Up Points), Leigh’s next Amazon prediction was that they will create some integration between the different formats. She noted that the platforms are growing and likely becoming more costly to operate separately, which creates a good business case for consolidation. “I would expect some integration here,” she said. “Maybe some rebranding [to alleviate format confusion] and potentially some consolidation.” 

Update: Now that consumers are navigating social distancing orders due to the COVID-19 pandemic, Amazon Fresh has become a heavily relied-upon method for many families to receive their groceries. This may lead the direction for Amazon’s grocery consolidation decisions.  

Amazon Pantry has recently paused taking new items, indicating that it may be folded into another program. Ultimately, there’s still a need for Amazon to at least repair the confusion around how the different Amazon grocery formats work.  

Prediction #3: Retail Acquisitions for Amazon 

Leigh predicted more retail acquisitions would be being targeted by Amazon, specifically in the small drug-store chain and fashion categories. An Amazon purchase of a small format drugstore chain would enable the company to gain an instant geographic footprint versus negotiating leases one by one, noted Leigh. She explained that this model can be especially helpful in creating locations for order pickup in more densely populated neighborhoods with apartment dwellings where ecommerce tends to struggle.  

Fashion is another acquisition category Leigh predicted. With Nordstrom aligned in technology, innovation and customer focus, she thought they would be an ideal acquisition target. Amazon is after credibility in the fashion space, she explained, and was previously unable to achieve it.  

“They’ve been unable to break into this space in a meaningful way,” Leigh said. “I think [Amazon] believed in the past that they would be able to sign some higher-end [lines] and fix their site to make the navigation and discovery experience different for fashion.”  

Leigh noted that Amazon’s private label fashion assortment has become interesting and could conceivably be sold through acquired retail locations.  

Update: As the coronavirus pandemic has caused tremendous economic strain and even closures for retailers, especially in the fashion sector, the price tag for another retailer acquisition could be decreasing. The company’s recent talks with JC Penney wouldn’t gain Amazon much fashion credibility but could provide them with real estate for their own fashion endeavors.  

From a fashion image standpoint, Amazon has made progress with the introduction of Amazon Prime’s “Making the Cut” fashion reality show featuring Heidi Klum and Tim Gunn – enabling them to become affiliated with a higher fashion sense and bridge the gap between fashion and online purchasing.  

In March of this year, Vogue and the CFDA partnered with Amazon to create Common Threads fashion storefront to support the financial pressures independent designers are experiencing during coronavirus. The storefront, promoted heavily in the Amazon Prime Wardrobe try-before-you-buy shopping service, is where fashion-savvy consumers can find designer $1,200 summer dresses and $85 face masks. This has opened yet another area where Amazon is sidling up to well-respected brands and hand-selected designers to improve its fashion reputation.  

Prediction #4: Voice is the New Search 

“I think we’ve all been underestimating the power of voice,” said Leigh, when talking about her fourth Amazon prediction for Amazon’s upcoming year. She explained how her belief is that Amazon’s entry into Voice is not directly about shopping, but about the company’s quest to know the consumer.  

The reason Amazon wants to know a consumer’s likes, dislikes, and search behavior is for them to continue growing as a company. “They need to figure out how to continue to monetize the traffic they’re experiencing on their website.”  

With a shift to thinking about Amazon as more of a search engine than a retailer, the company can leverage their traffic on a whole new level, Leigh speculated. There’s a compelling reason why Amazon, through its Alexa Fund, has invested tens of millions of dollars to help the Voice industry move forward, and it will be interesting to watch the platform and voice technologies open new possibilities in the future. 

Update: Amazon has announced a huge increase in the use of Voice in the home for music, skills, and search while people are spending more time in the home due to the COVID-19 pandemic. “In many ways, Alexa acts as a search engine but without the need for an extra device. There’s also a more personal element to the voice interactions,” said Tom Taylor, SVP for Amazon Alexa in this recent Geekwire article

It also seems that every week, new and more affordable products are being added to the IoT household voice-controlled list. The depth of data collection in this realm is enormous and will be in high demand by CPG companies. It may be a matter of time before that data becomes a selling point for Amazon’s demand side platform (DSP) advertising. Amazon can keep its commitment not to store personal information from its Alexa smart speaker devices while still leveraging the behavioral data. 

We frequently post tips and insights on how to succeed on Amazon. And, be sure to subscribe to our YouTube channel so you will be alerted when our next prediction video is aired!

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How Product Innovation Creates Wins in the New Commerce Landscape

How Product Innovation Creates Wins in the New Commerce Landscape

Adapting Product Innovation Strategies to Pandemic and Post-Pandemic Realities

Retail has always needed to adapt to shifting trends in the marketplace. With the onslaught of the COVID-19 pandemic, companies of all types have been forced to reassess marketing programs, product offerings, and supply chain strategies in warp-speed. Many companies have learned that product innovation can create wins in connecting with consumers during the new commerce landscape.

At the forefront has been a notion of “essentials versus non-essentials” and how manufacturers and suppliers approach the pandemic-induced transformation of shopping behaviors, manufacturing capabilities, and supply chain disruption.

Kristine Urea of Market Performance Group commented on this from a product innovation viewpoint, in the “Adapting Your Products” session of our Deinvest to Reinvest Virtual Leadership Summit.

“Innovation is going to be critically important across the board, as it relates to the essential category. I think there will actually be a push by a lot of retailers to expand offerings in those areas and then make room for that expansion in some of those higher-demand categories.”

Urea also noted that companies will have to “sharpen their pencils” as it relates to non-essential categories. Companies will have to account for progress in areas like differentiation and incremental category growth, as a part of what they are bringing to the table from a product innovation standpoint.

Refocused Product Development, Based on Consumer Needs

In terms of new product development, some companies have refocused their efforts. Sean Riley of Dude Products shared with the panel the example of his company’s Dude Bomb product, which was deemed non-essential throughout the depths of the pandemic. As a pivot, Dude Products launched an at-home bidet attachment to supplement the demands of the toilet paper supply craze that occurred at the beginning of the pandemic.

“It was important to step back and ask, ‘What is something core that the consumer needs, and how can we do that better?’ It’s almost going back to your roots, simplifying and then innovating your way back. [The bidet] was a way for us to double-down on innovating. We may have to pull back [certain] innovation dollars and redeploy them into what we do best.”

How Product Innovation Helps Connect to Your Consumer Base

One key point, specifically among retail brands, is being conscious of the messaging and content being promoted during the pandemic universe. Ideoclick’s Andrea Leigh referenced the dichotomy between Banana Republic, who was still deploying “work wear” digital advertisements and Anthropolgie, who immediately recognized the risk of appearing tone-deaf and created an entirely new lifestyle section on its website that covered things like working from home, sprucing up your home office, and creating WFH playlists.

“Where the innovation has to come from now is around messaging and content; being more timely and relevant. And, figuring out different ways to engage with customers, even though [companies] may not be in what’s considered an essential category. It’s not necessarily about products, but rather how you’re thinking about the customer and really understanding where they are at.”

Jessica Hauff of L’Oreal echoed Leigh’s sentiments about keeping the customer as the focus—and even redeploying internal resources in order to meet consumers’ needs.

“Hair color was becoming the new toilet paper. So many women were buying at-home hair color for the first time in their lives. But, it can be a very intimidating process. It’s messy, it smells, there’s a four-page pamphlet of instructions and warnings. We really ramped up content—especially digital content—around helping people pick the right shade, helping with their first-time application, how to follow it up.”

L’Oreal also utilized its tech center participants as company ambassadors, since those individuals were no longer able to go into a physical office. “They started creating content, doing live chats, webinars, etceterra with consumers. We just really tried to think about creative ways to connect with consumers and make sure they know we’re still here,” added Hauff.

SKU Rationalization: Keep the Discussion Going

With many retailers (supermarkets, drug stores, some “bigger box” retail players) grappling with the essential versus non-essential argument, session mediator Kevin Coupe of Morning News Beat raised the very pertinent and prudent question about reducing SKU count. All panel members agreed this approach is not simply black-and-white.

Riley proposed that certain suppliers can actually benefit from a bit of diversity, instead of “betting the farm” on two or three big brands—citing the shortage of toilet paper and related items. “I agree about making the selection simpler. But, suppliers that don’t have a lot of diversity in one category—[leads to] why they ran out of toilet paper and flushable wipes. Suppliers that carry more brands were actually able to serve the customer better.”

For retailers that are still very focused on a brick-and-mortar presence, Leigh cautioned they are going to need a reason to draw people back into the stores. “If they really shrunk their assortment, I think they run a risk. You have to do what you have to do, but you also have to be careful about what you’re cutting and why.”

Hauff reinforced this necessary balance, based on customer-centricity and the costs involved with supply chain issues and in-store stocking. “Each [retailer] is going to find this a bit differently. Take Target, which people think of as a place to go and discover new brands; new products. For them, not to offer that breadth of assortment wouldn’t be in line with their positioning in the marketplace. Other retailers that are more of a replenishment mindset, they probably have an opportunity to scale back.”

Message of the Day: Be Quick on Your Feet

As all panel members look to the future, they are cautiously optimistic about pandemic recovery—but are also cognizant a post-pandemic recessionary period is likely inevitable. Ultimately, a company’s ability to nimbly adapt and implement change will determine its continued success in the months, and years, to come.

To learn more about how Ideoclick helps brands build velocity on Amazon, connect with us here.

Important Chargeback Updates from Amazon for VC Clients

7.23.20 – Hello from Ideoclick, 
For those brands selling on Vendor Central, we wanted to share the following chargeback updates from Amazon:

1.  Effective immediately, Amazon is increasing the financial charge associated with Carton Content Accuracy chargebacks from $0.50/unit to $1.50/unit. This chargeback is surfaced when the products or the product quantities in a carton Amazon received does not match the information in the Advance Shipment Notification (ASN). Please note that the date listed in the communication from Amazon (below) has been confirmed as a typo.
 
2. Pickup accuracy chargeback for Collect Shipping is being relaunched. At this time, there is no information on the associated financial charge associated or the go-live date, so we recommend that you begin monitoring for this chargeback type in the Operational Performance dashboard in Vendor Central and stay tuned for more information be released later this year.  

The following related information below was provided by Amazon:  

Fee Increase Carton Content Accuracy Amazon has audited the costs of resolving mismatches between product quantities received in a carton and the information provided in the Advance Shipment Notification (ASN). The current Carton Content Accuracy chargeback rate does not cover our operating costs; therefore, it is necessary to increase the rate by 50c to $1.50 per defect. This fee change is effective from August 26, 2019 (sic).

For more details about this chargeback, review the Help topic under Vendor Operational Performance (Chargebacks) > Chargebacks – Problems With the Receive Process > About Carton Content Accuracy.  

Pickup Accuracy chargeback change for Collect shipping: Amazon has relaunched the Pickup Accuracy chargeback for Collect shipments involving truckload (TL) volumes. You will not incur charges yet for this chargeback, but you should closely monitor it, as we will be enabling this chargeback later in the year.  

Missed pickups have negative impacts on Amazon’s supply chain. When Amazon schedules a pickup for Collect vendors, it plans the optimal carrier, allocates transportation capacity, and reserves fulfillment center (FC) labor and dock. Any failure to meet the scheduled pickup time makes Vendor Lead Time (VLT) volatile, disrupts carrier planning, elevates transportation costs, creates capacity issues, and eventually jeopardizes our mutual goal to maintain optimal inventory levels to serve customer demand.  

This chargeback will be applied to Collect TL shipments where we have GPS tracking of the pickup to confirm the carrier’s arrival at your site.

How will this chargeback work?
If you are a Collect vendor, you will receive the confirmed pickup date and time of your TL shipments from Amazon.
You will have until 5:00 p.m. PST on the day prior to the scheduled pickup time to reschedule the pickup, if you cannot accommodate the time given. If you reschedule after 5:00 p.m. PST on the day prior to the scheduled pickup, you will incur this chargeback. If you do not reschedule, the carrier arrives on time, and your freight is not ready or you are unable to load the carrier in the expected timeframe, you will incur this chargeback. Follow the instructions in the Routing Request emails from Amazon to request a reschedule.

How you can prevent this?
1. Always confirm the planned pickup time given after routing for pickup to ensure that you can accommodate the pickup date and time. If you are not able to accommodate the given pickup time, reschedule the pickup before 5:00 p.m. PST on the day before the scheduled pickup date.
2. Ensure that your facility operating hours are up to date so that shipments are not scheduled outside of your facility’s operating hours.
3. Ensure that your freight is ready when the driver arrives at the scheduled time. (Note: Drivers must be loaded within 60 minutes of their scheduled arrival time.)  

Your Partners,   The Ideoclick Team
For additional information on staying up to date on chargeback updates from Amazon and how Ideoclick helps clients optimize operational compliance, please contact us.

Multiple Amazon Updates for Sellers, including Prime Day

7.15.20 – Hello from Ideoclick, 

We have multiple Amazon updates for sellers (both Seller Central and Vendor Central) we wanted to make sure you’re aware of this week.

Prime Day

Although an official date for Amazon Prime Day has not yet been announced, communication from Amazon Vendor Central explains that POs for approved Prime Day deals will begin in August. Our estimation is that Prime Day will be held during the first or second week of October. 

For Seller Central clients, plan to start increasing your inventory position on FBA four to six weeks prior to October 1st. 

For Vendor Central clients, Amazon stated that you should expect to receive POs for approved deals in two phases starting at the beginning of August. 

FFP/SIOC Chargeback Grace Period Extension

Amazon has announced that it will extend its grace period on the SIOC minimum dimensions chargeback. The SIOC exemption rule will now be effective 1/1/2021. For visibility to which ASINs are likely to be eventually affected, you will notice them under “waived” status in Vendor Central chargeback notices. The main point is that the baseline SIOC requirements have not changed, meaning that an ASIN with packaging larger than 18″ x 14″ x 8″ or greater than 20 lbs will require SIOC FFP certification

This is a highly detailed and confusing subject, and we are here to help you navigate it. If you need assistance, please reach out to your client success manager or contact us if you’re not already a client.

Upcoming Warehouse Limits

Please be aware that in preparation for holiday and due to the COVID pandemic, Amazon intends to apply storage limits to sellers using FBA . The limits are expected to extend to all product categories. Starting today, Amazon is removing its inventory removal fee to accommodate the new standards. This is expected to alleviate some supply chain constraints, but we don’t have information on how long the new inventory regulations will apply. 

Seller Central Visibility

Along with other Amazon updates for sellers, the company has announced that U.S. based 3P sellers must now disclose contact information publicly. The decision should help brand manufacturers identify and shut down the sale of counterfeit or unregulated goods as well as identify unauthorized sellers.

Thank you,

Your Ideoclick Team

Industry Discussion on Go-to-Market Innovation

Industry Discussion on Go-to-Market Innovation

Get on Board or Get Left Behind

With an unprecedented event like the COVID-19 pandemic, no universal playbook exists to guide companies on how to resume, reinvent, or reinvigorate operations. Everyone is maneuvering as best they can, but it’s now time for companies to take a hard look at their go-to-market innovation strategies. 

At the heart of that is innovation. In this installment of our “Deinvest to Reinvest” Virtual Leadership Summit blog series, we return to moderator Thom Blischok of The Dialogic Group and panel members Anne Zybowski of Clorox, Jim Norred of Microsoft for Walmart, Patrick Spear of GMDC, and Bill Campbell of Premium Retail Services.  

Old-School vs. New-School Approach 

COVID has changed everything.  It is critical that companies leverage current and emerging technologies to rise to customer expectations, as well as shift processes relating to the supply chain. 

Anne Zybowski of Clorox illustrated this shift in terms of moving from old-school economics to new-school economics, and why it’s important to “lean in harder” to e-Commerce as part of a deinvest-to-reinvest strategy to address go-to-market innovation.  

“We have to think hard about where some of our traditional monies and efforts at the intersection of retailers and CPGs have gone, as well as how we communicate and engage with the customer. The old economics forced us to think that we could move consumers into channels, but now people are going to whatever channels they can,” she noted. “We fundamentally need to revisit the old [economics] and look at how we can reinvest more into digital, because that’s the way we’ve connected.” 

Patrick Spear of GMDC discussed how many manufacturers are considering a streamlining of product lines. As an association that serves both retailers and suppliers, GMDC witnesses shifts from a retailer’s perspective, predicated on consumer demand—but also from the suppliers’ perspective in terms of demand shock and the supply chain.  

“There’s the necessity right now to think differently about product assortment and where [companies] are putting the focus, just to meet near-term consumer needs. I think this is going to be a lasting trend,” shared Spear. 

Technology in Action 

Bill Campbell of Premium Retail Services provided three examples of technology in action. “We are overhauling our digital and commerce strategy with a heavy focus on virtual reps, which I think are going to get big in the future, online brand champions, and then trying to position ourselves to help with online order/pickup at store initiatives. Second, we have to hyper-focus on reducing costs so we’re ready for the future. And lastly, trying to ready ourselves for retailer shifts—including [retailers] outsourcing more operational responsibilities so that we’re ready when they’re ready.” 

Bringing the Store to the Customer 

Looking at the progress of technology integration into the shopper’s experience, Jim Norred of Microsoft for Walmart, stated that the COVID-19 crisis has drastically changed shopper expectations. This evolution requires re-imagination from the inside-out, as it relates to considerations like digital storefronts, order fulfillment, auto-replenishment, dark stores, micro-fulfillment, and home delivery. 

“If [customers] can’t come to the store, you have to start thinking about ‘How do I bring the store to the customer through digital experiences?’ There’s been this topic around contactless shopping, but that’s really now frictionless shopping. Shoppers will be loyal to the brands that can deliver on these new experiences the way they want,” advised Norred. 

Addressing Health & Hygiene 

Also factoring in to the shopping experience—and shoppers’ expectations—is the component of health and hygiene. Spear spoke about this in terms of micro-fulfillment centers (MFCs), which he says “are coming.”  

“How we think about front-end contact-less, frictionless, in the future—but also what role innovation and technology plays around health and hygiene. Not just for the store associates, but also the customers.” 

Part of this involves the exploration into “COVID certification” to ensure hygiene and sanitation—and where that might be implemented as companies move forward. “If you have lead certification for a building, why couldn’t you have COVID certification for a restaurant, or a bar, or a distribution center? If there are policies and protocols you could follow to ensure [safety], from a standpoint of being a great place to be an employee, or a great place to shop, COVID certification would be relevant,” added Spear. 

Why Working from Home Is Much More than “Convenience” 

Norred expanded upon the technology aspect from a slightly different operational perspective: working from home (WFH). After 25 years working with retailers and CPGs that haven’t supported WFH, he avers the mentality that “work from work” as a superior way to conduct business is waning.  

“That’s simply not the case today. I think technologies like Teams and Zoom or other collaboration tools are enabling [WFH], and I think you’ll see it more and more from traditional companies. It’s one of those things that can help drive costs down, because you don’t need the real estate anymore.” 

Norred also noted that many companies are realizing how employees are proving to be more productive in a WFH environment.  

Disrupt, Disrupt, Disrupt 

All panelists were staunch that the approach of “wait and see” is not an option.  

“Companies will have to begin creating and dedicating efforts to disrupting their own business models. Creating truly differentiated consumer experiences and operating models that let them compete versus waiting on [the pandemic] to be a forcing function,” stated Norred. 

Without a concerted effort into innovative solutions across the board, businesses will unfortunately be left behind. “We think about innovation three ways: products, service, technology. You can’t have one without the other,” advised Spear.