Podcast transcript
James Dihardjo
Troy, thank you for joining me in what I believe is, your evening. I really appreciate you making time to do this interview. I actually wanted to kick off and by handballing straight to you and get you to tell us about, what you do in the e-commerce space and a bit about your background as well.
Troy Johnston
Yeah. No, thanks James. Appreciate you having me on. And yeah, so a little bit about me. I am an Amazon FBA seller myself, running brands in categories such as beauty, supplements, health. But really what my main focus today and where my passion lies is what we do at Seller.Tools.
So I'm a co-founder of the platform and we are just constantly thinking of ways of adding value to FBA sellers. We focus just purely on Amazon and ways of optimizing your presence, generating more sales, and those important things, ranking and reviews for Amazon's success.
James Dihardjo
Awesome. That sounds like a really good space to be in given the hype that we're seeing in this, in this industry. So my next question is, you know, what challenges do you think people will be facing in 2022 now, I guess, given that you've got so many touchpoints, you can answer that from a seller perspective, Agency aggregators like tend to hear your thoughts, Troy.
Troy Johnston
Yeah, I think it's a really interesting time we're on. We're still in the little bit of what we'll call, the COVID hangover that has hit e-commerce where there is a little bit of instability for supply chains and raw materials. And we're all collectively I think, looking for almost getting back to the status quo. So there is a logistics and product aspect that really impacts e-commerce businesses and Amazon FBA businesses.
But the other thing that's really big that's really specific to our space is the shifting Amazon landscape. And that is really showing up in different ways that Amazon's making clear the things you can and cannot do as a brand and as a seller. Some of those things are really advantageous that give you a competitive advantage.
And so it's going to be really interesting as PPC continues to scale up. I forget the numbers. It was like, I think 30, 31 billion, attributed to Amazon PPC and that's like, Almost all margin, right?
So, you have the diversity of Ad types, you have the pay-to-play aspect. And so it's a very unique backdrop for sellers to think about where their unique competitive advantage is given that Amazon likes to normalize most brands presence. And that's really where we spend a lot of time with the tools. But I also think with my seller lens as well. I'm always thinking, okay, how am I using external traffic? How am I owning, traffic and my customers? How am I creating longevity instead of being purely transactional on the platform? And those are the big challenges, but also I think opportunities.
James Dihardjo
Do you think that those challenges and opportunities are the same for sellers, aggregators and like agencies who are ultimately running Amazon stores? or Do you think this may slightly vary? What's your thinking on that?
Troy Johnston
I think it really hits its brands at all levels. It really is one of those things that often it can be a question of scale. Because when you're aggregators and you've maybe got, 10, 15, 20 brands under your umbrella, if you're leveraging a strategy, you want to have to, you want to really mitigate your risk, but you also know, as you increase that perceived risk, there's more room to create that customer LTV and that repeat purchase behavior or that cross-selling potential.
And so I think it is, it really is a shared challenge where brands, aggregators and even agencies because obviously they take on some presume liability just by virtue of advising and directing clients that, and this is really what I teach a lot, especially with some of our tools, is getting the foundation right, some of the basics. With all of these changes we've seen in a regression of the mean, because so many brands are doing kind of doing the same thing and then finding success purely by chance as opposed to doing better keyword research, better listing optimization, PPC campaign configuration and being able to systematize and almost exploit a competitive advantage. So to the spirit and to answer your question, I think it is, it truly is a shared challenge. It's just almost a measure of scale.
James Dihardjo
Interesting. I guess I just wanted to kind of flesh out one more thing from what you said just now.
Troy Johnston
Yeah.
James Dihardjo
So you mentioned about what you can and cannot do on Amazon. You know, you kind of touched on that. Could you give us an example of maybe what you think, what you cannot do, what you can do, and how that'll kind of example of those and how that'll come into play in 2022?
Troy Johnston
Yeah, absolutely. So I mean, an example of one thing that Amazon has called out that is in the can't do bucket necessarily is using something like a superhero. These optimized links help to create a perceivably organic buying experience, but they're optimized to give you a greater rank benefit. So that's a good example of something that just by virtue of time, a recent change has been made more explicit. But where you're operating more in the gray as a brand is customer ownership. Because the way that Amazon's terms of service and just really the way the spirit that they operate is they want everything happening in their ecosystem. And the communication limited to buyer seller messaging and the interactions being very facilitated by Amazon.
Now, there's a few exceptions to that with my customer engagement tool. These new sorts of olive branches that Amazon is extending. But if we talk about it just today before those things really roll out, it's a question of how you read Amazon's policies and what you're comfortable with but understanding if you're building more than an Amazon brand.
Taking that customer beyond the transaction is into your best interest and is going to give you an advantage. And honestly, if done right, it's a better buying experience and customer engagement experience that you facilitate because you don't want to just be the product that they transact with. You want to generate, consistent repeat purchase behavior. You want to build that brand loyalty, that brand equity. And that is the question I think brands have to answer for themselves.
Understanding Amazon wants it all in their sandbox, but you know, on your site, on your social media channels, these different avenues to engage, to support, to build that value that is, that's an obvious positive. But where do you land in terms of what you're most comfortable with and your post-purchase strategies are, how you communicate with your customers in the way that you can.
James Dihardjo
Interesting, very detailed commentary there, Troy. And I think that's a good segue into what's your top prediction for 2022. And what I'm saying is, what do you think you'll see change from like could be seller behavior or even Amazon policy or, you know, what is it your thinking?
Troy Johnston
Yeah, I think in many ways we're going to see a lot more consolidation on a number of fronts. One that we really see consistently, and we read into this, we sort of read the tea leaves with the Amazon's rolling out for some of their own tools. Some of their tools, product opportunity explorers as one, which is a product research tool that actually comes from Amazon first party data, direct from them.
And we can start to see, and it really validates some of the assumptions where what they're breaking down in terms of what they refer to as niches is that there are only a very small set of search terms that translate into what is visible for a specific niche or what, what, what is the relevant products within that niche? And so what we're going to continue to see at that level is presumably you're not going to have Amazon search results where there's going to be pages 6, 7, 8, 9, 10, and so on, because Amazon sort of knows in the same way that we know with Google. That's where you hide the results, right?
There's nobody going to that level of detail because the relevancy just drops off a cliff. So, what does that mean for brands is that that means getting creative with long tail keywords, taking advantage why that window may still be open of getting that ranking and visibility, kind of winning those battles, as I like to say, before you win the bigger war, going after your main keywords.
But then we also have consolidation in other facets of this space. When we talk about aggregators, even when we talk about agencies where we touched on kind of the sameness in some of the, I don't want to say the lack of strategic sophistication, but some of that to a degree where if as an example for aggregators that have to show so much shareholder value and have to generate return so quickly with all this capital being raised and the relative underperformance, that there is likely going to be a consolidation where the cream is going to rise to the top. There's going to be a refinement and there's going to be a higher quality, hopefully. But as, probably a smaller quantity, that we'll see if we forecast out, I think, to the next eight, 10, and 12 months.
So I think consolidation may be kind of the, kind of the buzzword. But I think that also plays into the 80/20. When we focus on what works on Amazon, what's shifting? It's a bit of maybe happening organically, and then a lot of these external economic forces and the opportunity that's welcoming all this capital and all the interesting things that are coming together for Amazon FBA and e-commerce.
James Dihardjo
Yeah. Interesting and that's a very, again, very detailed commentary there. Troy, but are you talking about this specifically from through a US lens, or do you think this is, you know, we'll see the same things rolled out to other, you know, you'll see the same kind of changes in other Amazon markets around the world. What do you think?
Troy Johnston
Yeah, James, I think that's completely fair. My view may be myopic where I do view it mostly from a .com lens and North American-based, aggregators and sort of seeing what is taking place because I think if a far less cynical view would be, well, you have a lot of these new Amazon marketplaces coming online, so there's new footprints and they're going to welcome more consumers, more eyeballs, more capital. So you have this sort of revisiting of the concept. So that could welcome and and sort of burst my bubble, my thinking in terms of this consolidation that could take place.
However, I think the Amazon specific aspect, I think is where I don't see a major shift there. I think what, what they're doing with the ecosystem, what they're empowering sellers with, with brand. On the other side of brand registry with more tools, more resources, obviously is forcing a lot of innovation on third-party tools, which is great. Because the brands win when we're all sort of fighting for the best way to provide them value.
But yeah, I think that perspective zooming out a little bit more. I could be too focused on my local market here and missing out on the global implications. Which, you know, absolutely Amazon sees too. We throw out that 30 billion number. As soon as you have more, more footprints, more clicks, more searches that's just more Ad revenue, that's just more to Amazon's bottom line.
James Dihardjo
Yeah. Interesting perspective, Troy. Well, look, I'll leave it there as it's probably time for bed for you and it's time for me to do more work as it's my morning. But thanks again, Troy. And we'd love to have you back later in the year to discuss and review your predictions. So thanks again.
Troy Johnston
Sounds great. Thanks, James. Appreciate you having me.
