Podcast transcript
Introduction
Hi everyone, and welcome to another live episode of Marketplace Masters brought to you by MerchantSpring, the leading marketplace analytics platform for Amazon agencies and Amazon vendors. Now I am very excited because we have just released a suite of analytics specifically for Amazon vendors. If you are an Amazon vendor, this is for you. If you're looking to improve your reporting, make sure to check us out at merchantspring.io. Now, Marketplace Masters is all about going deeper into the challenges that brands and agencies face to lift performance via practical actions and insights.
Paul Sonneveld
I'm your host, Paul, and today we are going over the fundamentals of Amazon vendor in Australia and specifically how to set yourself up for success. Now to help me do this, I have invited my good friend Warren Coxall to join us and share his expertise. And before I hand over to him, let me just take the opportunity to introduce him. Warren is the founder of Totalyty, a Sydney based E-Commerce agency, firmly focused on Amazon with a strong portfolio of vendor central clients.
Warren is also an Amazon seller himself, so it brings a broad range of experience to the conversation today. Thank you for being on the show today, Warren.
Warren Coxall
Thanks, Paul. Appreciate it. Nice to be here.
Paul Sonneveld
Always happy to talk about Amazon, especially in the Australian context. Obviously very close to home for you and I, but also Amazon in Australia is still young, right? It's launched about four or five years ago. Still not the largest marketplace here in Australia yet, but growing very, very rapidly. So, let's get into it and maybe start with the first question, why Amazon, if I'm a CPG business in Australia, or a brand owner, why should I even consider Amazon right now?
Warren Coxall
Yeah. Well, I mean, we all know Amazon is a, one of the most successful companies in the world and certainly, they've got one of the largest e-com captured audiences in the world, but they're more than just a marketplace. So, when I think about Amazon and what gets me really excited is where they put their investment dollars.
So they're investing, I think there's still, there's Silver Bullet really is Amazon Prime. They've got over 200 million people around the world who have Amazon Prime, which means that the first platform they go to look at when they're looking for online sales is Amazon because it means they're going to get more often than not free shipping. But Amazon also has lots of flexible seller and fulfillment models to suit anybody and from a seller's perspective, that might be through merchant model, it might be a fulfilled by Amazon model or equally in what we're going to be talking about more today, in a wholesale capacity.
I also think that Amazon's a really great model for brands who, in one country or a few countries that want to expand into many countries, that the traditional barriers around operating costs, marketing costs, et cetera. A largely, perhaps not removed, but minimalized, when you're, when you're talking about jumping on, on the platform.
And then beyond that, and some of these things aren't in Australia yet, Amazon Flex is, that's pretty new, but it's that sort of Uber style delivery where anyone with a mobile phone and a van can jump in into their car and deliver parcels, direct to consumer, equally Amazon Prime Air, which has been, in testing for a long time and it's all about automated drone deliveries. And so that will come.
Amazon, their mission really is to get products to consumers within 30 minutes of order, which will be pretty incredible if they do achieve that. And then in the US they've also got Amazon Air, which is different to Amazon Prime Air. Amazon Air, it's literally a cargo airline dedicated to Amazon deliveries. So, as successful as Amazon is, I think they're just scratching the surface in terms of disrupting seller models and fulfillment models.
Paul Sonneveld
Yeah, for sure. I mean, clearly Amazon, and we know this from other geographies as you were pointed out, it's just as massive ecosystem. We can, we could probably do a 20 podcast series on every single component, but, today obviously we're talking about Amazon Vendor Central specifically, and before we kind of jump off the cliff on that topic, let me just pause and say, you're a founder of Totality. Just tell me a little bit more, how did totalyty start? What was the driving force? how did it come about?
Warren Coxall
Yeah, well, it started very much as a side hustle. My wife and I were white-labeling products out of China and sending it over to the US to sell on Amazon over there. And you know, we quickly realized that just understanding how Amazon's algorithm works, a little bit of optimization, we could win against established brands who were being perhaps a little bit more complacent or didn't have the same knowledge that we did on the platform. And we were able to win against those brands And so we've been doing that off and on, for a number of years.
And then, it was, last year actually, I reached out to a good friend of mine, he's the CEO and he won't mind me sharing this. He's the CEO of a company called Bounce. For those not familiar with Bounce, they do a lot of, it's a health and wellness brand.
They do pro protein balls, keto bars, chocolates, the kids range, et cetera. and I just saw an opportunity for them to really improve the way that they were selling via Amazon based on the experience that my wife and I had learned doing it via Seller Essential in the US. And, you know, we made an agreement that we'd, we'd give it a go and we did do that. I think we're on a six-month trial initially. But within three months, we had generated more wholesale orders for them in that one month than they did for the entire year prior. so that said to us that we're, we're on the right path. we can really help brands generate sales via the platform and we just made the decision that one of us would jump out of our full-time job and go and help other brands and it's just sort of grown really quickly from there.
Paul Sonneveld
Yeah, look, that's really fantastic to hear. And there's a bit of a common thread there. I've heard earlier this week around partnering, finding sort of an initial reference client, and really having an open and honest conversation saying, let's see if we can if we can work this together. Let's see if I can prove your results. And that certainly seemed to be the case with you and the orders for Bounce.
So let's talk, about being a vendor on Amazon, why would a brand someone like Bounce consider even becoming a vendor? Why not go on the seller route or why not look at other e-commerce options? Why become a vendor, on Amazon's vendor?
Warren Coxall
Yeah, sure. I mean, firstly, I think Amazon Seller Central, I love it. I think it, it works for a lot of brands and in the same breadth. I don't think Amazon Vendor Central is for everybody. But it certainly does work well for brands, who are well established to already driving high volume sales in other channels. And they're very familiar with wholesale relationships, leveraging their distribution partners to get their products in front of consumers. And it really, it's good for clients who want to be a little bit more hands off, hey want to get their weekly purchase orders as opposed to worrying about direct-to-consumer fulfillment.
And also, brands who want to leverage the algorithmic price management that comes with Amazon, now that, we'll talk about that later, but that can also be a bit of a con, as far as, the Vendor Central model. But, it is a really great tool to leverage. Also as a vendor, you get category management support, which you don't get on Seller Central. It also suits brands that want to be a little bit hands off as far as customer service goes. They don't have to deal with any of any customer, dialogue, returns, anything of that nature. That's all handled by, by Vendor Central.
Paul Sonneveld
Yeah, I was going to ask you a bit more about that actually, because category management support probably has some meaning to someone if like you're supplying Woolworths or Coles or Cape Mine in this market. You have a rough idea of what that means, but how would you summarize that service. Because openly, I'm hearing kind of positive and negatives in relation to that service and seems to really depend on the vendor manager. But what is a reasonable expectation around the category management support from Amazon in Australia?
Warren Coxall
I think the best way to sort of describe it is, and look, it does depend on the brand and the volume that that brand's doing, which will depend on the level of support, that you get. But it's very different than a category manager that you might see in some of those other traditional retail, businesses that, that you mentioned before.
Vendor Central, and they'll admit this themselves. It's a, it still is a self-service platform. So, you really want to get into it with the understanding that 99% of it you are going to be looking after yourself from an everyday management and operational perspective. And to consider the category management that you get there as a nice to have as opposed to an expectation. I think from my experience they're thin on the ground, and you're not necessarily going to get immediate responses when you're looking for them. It's just not their model. It's not sort of a fault of theirs, it's just not their model.
Paul Sonneveld
Yeah, they're certainly different and I think this sort of leads onto, but the next thing I wanted to pick your brain on is around expectations. Certainly, when I was working with a number of Amazon Vendors a couple years ago, there was a lot of hype. Amazon was launching. Amazon was aggressively recruiting vendors, placing very large initial purchase orders that started to generate a lot of excitement. but then the sellout did happen. And there was just, all the stock sort of piling up inside Amazon's warehouse, new purchase orders weren't being generated and a lot of brands probably feeling a little bit underwhelmed by the sales performance and this was three, four years ago. Where do you feel that that topic is now? and when you hear that, what's your response? Where do you feel they may have gone wrong?
Warren Coxall
Yeah, I think, I think it's a, a misconception out there around, what does the relationship with Amazon actually mean when you are a vendor. I think, often people engage with Amazon in a vendor capacity in the hope that Amazon will take care of almost all of the direct to consumers selling. They'll generate high volume sales, and that will inevitably trigger wholesale orders for those brands.
But the reality is, the actual amount of work that the brand needs to do from an optimization perspective is almost identical to what you need to do in Seller Central.
you still need to manage your catalog. You still need to optimize that catalog to ensure that it's retail ready, and that Amazon's algorithms are going to push your products. You're going to get them in front of the right people who are going to buy it and at that point Amazon will start triggering orders.
It's definitely not a set and forget platform. And I think, to answer your question, I think that's where people have gone wrong. They just, they sign up with Amazon, they get an initial order and then sort of nothing happens and then they stop getting orders and they don't hear from Amazon. And I think they get frustrated at that point.
Paul Sonneveld
So I wanna go a bit deeper on this topic of optimization. Because I feel a lot of vendors, particularly you don't have the optimization skills, because typically the retailers have done that for them. I'm talking about the bricks and water retailers.
What does optimization look like? and the vendors that you are working with perhaps you're doing this service on their behalf. What are you looking for? What boxes are you ticking to say, right, this, I'm really happy with the level of optimization.
We've done that and obviously that expands content. But that may cover all the topics as well. What does it look like from your point of view? What does success look like in that area? Very long question, but I I think there's probably a big answer there too. Hopefully.
Warren Coxall
Yeah, it is a big answer and there is a lot involved. I mean, I think, Amazon's algorithm favors products that they consider retail ready, and there's like a whole checklist that sits around that. But I think first and foremost, you've got to remember that Amazon is a very visual platform. So the first thing, that I look at when I'm doing perhaps a health audit on a brand is the quality of images that they have, on their product listings. Do they have five or six really high-quality images there? Is it a mix of studio shots, lifestyle shots, infographics, and more commonly, videos? You could put videos on your product pages and that they can help drive sales as well. So, that would be the first thing that I would look at because it's the first thing that the customer looks at.
The other thing is having a great title. It's the most important, SEO Real Estate on a product listing and it's about understanding if, has the brand used all 250 characters available to them? Have they researched what keywords their clients are winning on? and have they packed their title with the right keywords so that they can be organically found in search results? It's a real fine balance because you're, obviously, you are writing your title to appeal to human beings who are getting on Amazon looking to buy your products. But equally you are writing for a machine. You need the Amazon algorithm to pick up on those keywords so that you can be found.
And then, you know, if that's your most important real estate. The next thing we will go to look at are the bullet points. Amazon gives you five bullet points. Real estate are five bullet points that you can use. So, are you using that real estate? And again, have you done your research to work out what are the keywords that are going to drive sale for your products? And have you packed your, your bullet points with those keywords? Then Amazon also gives you some search terms in the backend that you can leverage which is where you can put spelling mistakes and things like that just that you don't want to have in your main copy.
The other thing that is important around being retail ready is ratings and reviews. So, and we're a funny bunch in Australia because we do shop by looking at ratings and reviews. We all do. But I, for whatever reason, culturally, we are terrible at giving reviews. So that's a big challenge for vendors is how do you grow reviews.
But Amazon's, Amazon will look at, does your product have a certain amount of ratings and a certain amount of reviews against it? And once it hits that threshold, the algorithm starts to favor your products.
They also look at inventory health, and they can mean different things depending on whether you're an Amazon seller or an Amazon vendor. But certainly on in vendor land, it is. If Amazon triggers a purchase order, have you confirmed that you can accept that order within 24 to 48 hours? and are you able to fulfill those orders? There, there are essentially three things that a vendor has to do when a purchase order comes in, that's confirmed the order. They have to set up their shipping plan and then they need to create an invoice against that purchase order. And if all of those things are happening, that's a tick in the box as far as Amazon is concerned. And then I guess an extension to all of that, and it doesn't necessarily sit within what is considered, a retail ready product. But I'm a big fan of brands setting up a shopfront within Amazon. It's a destination where customers can actually go and look at all of your products and you can tell your brand story and such and you have to be a brand owner to sell on Amazon Vendor Central anyway.
But one of those tools is, called A-Plus Content or it used to be called Enhanced Brand Content and what it is if you are on the listing page of a product, and you scroll down towards the bottom. You get a section there that says, typically from the manufacturer where you can tell your brand's story and you can cross sell products. It's a good way to sort of pack in more SEO. And I think on average, the last stats I read on it were that if you had that A-Plus content, you could drive to 5% more in sales just from having that. And then getting involved in the promotions the Amazon run, we just had prime day. It literally just cleaned out some of my clients in terms of the stock that they had, using coupons.
One of the biggest things, which we could spend a whole podcast on, is sponsored advertising. You can't win on the Amazon platform unless you're investing in sponsored advertising. So, I just went through that list at a really high level and just sort of listed them up. There's a lot of things there that you've got to manage in order to be successful.
Paul Sonneveld
Yeah, sure. No, look, there's a lot of components there. You and I could do even more detail hands on workshop covering each of those and then some great content on LinkedIn out there as well. I do have two specific questions in relation to that long list. The first one is about advertising. I'll hold the other one in a sec, but how evolved/sophisticated is the advertising platform in Australia versus what you've seen in the US or, in the Amazon ecosystem in Europe? How would you compare it at the moment?
Warren Coxall
Look, I think it is very sophisticated. I think where some of those other larger markets have an advantage is that they have so many third party apps that can plug into those platforms to create a whole level of sophistication on top of what Amazon already offers. But it's set up for any level of education you might have around PPC or sponsored advertising. We always recommend using all of their tools. So you can set up automatic sponsored brand campaigns to help raise it. What keywords are we going to win on? Where are we going to sell our products outside of the obvious ones.
It's using things like their sponsored brand campaigns and their sponsored brand video campaigns, sponsored display campaigns as well. Having that whole mix before you really get deep dive into manual sponsored campaigns, which are really, once you start to get a better understanding of the search terms that, that you're going to win on.
Paul Sonneveld
Yeah. One of the things that's really clear to me is this is not a hands off channel, right? This is even though you are selling products to Amazon which arguably, is sort of a wholesale type relationship. Amazon is technically the merchant of record.
They're doing the pricing, they're selling things on the vendor platform. Actually, you are very involved in terms of managing purchase orders, running campaigns, optimizing listings, creating A-Plus content, making the most the other marketing opportunities like, prime deals and the like at Amazon throws at you. So, it's certainly not a set and forget type of arrangement, you know, and I guess that's clearly why some brands have turned to you to help them on that.
Warren Coxall
That's why also Paul, that's why it's a good time in Australia to do it because you can't win on Amazon unless you are investing in advertising. But as an example, if you're in the US and you are listing a brand-new product, you are going to be many, many, many pages, down, away from page one. And Amazon, by their own admission will say that 70% of their customers don't look past page one. So, if you're not there, you're not winning. And so the investment in advertising to get you anywhere near page one is going to be far more expensive than it would be here in Australia, because you're comparing an audience of 330 million with, I think we are somewhere near 27 million here in Australia.
So whilst you you might advertise a new product here in Australia, you'll still unlikely to be on page one straight away, but the investment to get to page one, is less. And then as you pointed out at the start, Amazon is so still relatively new in Australia. So, if, if you do it now and you get on the platform, as more or more of your competitors jump on the platform, you've got an, an economic win immediately.
Paul Sonneveld
Yeah, for sure. It's certainly, there's still a window here in Australia to get into a good position with relatively moderate investment. And yeah, something that can pay off, in years down the road. Let me come back to my other practical question. It's a very nitty gritty question, but I think it's something that a lot of our audience have struggled with.
I know we have in the past, and that is, As a brand owner coming on the Amazon vendor platform, it is quite likely that you may already see a seller or another distributor selling you a product, and therefore they've created the product pages and what you see on those product pages doesn't necessarily reflect how you want your content and your products to show up on Amazon. And from my own experience, I know is getting that fixed can be a very painful process. What insights and tips do you have for us with respect to that question?
Warren Coxall
Yeah, it's, look, it's a challenging one for brands, because you don't want to upset other distributors that might be partners of yours. But to your point, sometimes you just don’t know who these sellers are, they're just selling your products on the platform. And in some ways competing with you and also not representing your brand in the right light.
But as a vendor, as I mentioned before, you have to be a brand owner and you register yourself in Amazon brand registry program and that provides a whole bunch of tools. Some of those tools are around advertising and marketing, creating stores, and the A-Plus content that I spoke about earlier. But other ones are designed to protect your brand and so, as the brand owner, you can actually remove sellers selling your products and there's different ways you can do it.
When we first started Totalyty, we were perhaps a little bit more aggressive around, how we did it and that is basically we used to set up cases within Amazon brand registry. We used to give them all of the listings that we wanted removed and Amazon would remove them because those other sellers didn't have permission to be using our IP to sell those products.
But I think as we've evolved, we take a bit more of a lightly touch on that and we actually approach the sellers first and have a conversation with them, and sort of say to them like listen, you know, either we don't mind you selling it, but you have to bring it up to a certain level, or you don't have permission to be using our imagery and our IP, so we, we prefer you don’t. And in nine times out to 10, they'll remove those listings. But where they don't, you can leverage Amazon's tools and have them removed.
Paul Sonneveld
That brings me to the last topic, for today and that is really around, I used to call it, channel conflict. Vendors, if you go out there to brands, if you say who wants to grow their e-commerce sales? everyone say yes, right? Who wants to participate in a new channel that is growing at strong double digits? Everyone will say yes. If you then say, who wants to go on Amazon Vendor? Some will say, oh, I'm a little bit worried about because I've got a really vested relationship with their Murphy's or with JB Hafi or with Bunnies or some other really big retailer. And I worry that the upside from something like an Amazon may not justify the downside from a relationship going sour on the other side. How do you face into those more strategic channel conversations?
Warren Coxall
Yeah. great question and it comes up all the time. In fact, it would be the number one biggest concern brands have when I talk to them about potentially considering Amazon Vendor Central because as I mentioned at the start, as an Amazon vendor, you don't own your stock, Amazon owns the stock. So they can change the price and you do get an opportunity to say, look, this is the recommended retail price and Amazon does respect that, but at the same time, if they want to move the stock, or the, the algorithm is seeing competition elsewhere, their algorithm will change the pricing. And so their concern is, well, you know, what are my already established distribution partners I either be supermarkets and such, what are they going to say? when Amazon's undercutting us?
And really there's ways you can get around it and probably the most common one is to come up with Amazon specific product offerings. It might be bundles, for example, that you're not offering through some of thosr other channels. So, so there's definitely ways of thinking about it so that you don't upset the apple cart as it were.
Paul Sonneveld
Yeah, very challenging topic, and important to get right. Now we're almost out of time, but we do have a couple of questions from our audience. So, this is my favorite part of the podcast because I get to put you on the spot, without any notice, and really test your expertise.
So, look, the good news is we've only got, we've got time for one or two, but, let me try and bring up here. It comes from, it comes from Krishna, What is the estimated monthly GMV for Amazon in Australia? Now, that might be a tricky one. I don't know if you, I did Google it as you were talking before, so I've got the answer here.
Warren Coxall
What is the answer I'd like to know?
Paul Sonneveld
It's well, according to their statutory financial statements, they just hit 1.8. Billion Australian dollars in 2021. So you're factoring some growth reasonably strong, double digit. Safe to say they've probably crossed a 2 billion, 2 billion mark.
last time I checked there was still, a little bit smaller than eBay here in Australia, but you know, I think there's a good chance that they may cross over later this year or early next year or so.
Warren Coxall
Yeah, I mean, we've got a decent, e-com penetration rate in Australia. I think it's something like 74%, which is pretty high. And a lot of what I hear is that Amazon will take 25% of that, which is a fairly big number by 2025. Still a far away from the US that is already 50% of all online sales but here in Australia, it's new and it's grown.
Paul Sonneveld
I've got another question here from Tim who talks about contribution authority in Vendor Central versus Seller Central. I'm not sure we're talking contribution or content here, but I've certainly come across this as well where you, you know, you're saying, I want to update the content. I'm the vendor, I'm the brand owner. I'm uploading it, and Amazon rejects it. Have you come across that and what's your response to dealing with it?
Warren Coxall
Yeah, we come across it all the time and I think it's just one of the frustrations that people have as vendors and sellers on Amazon, if they're the brand owner. I mean, the first thing is you've got to have brand, you've got to be a brand owner and registered in there, in the Amazon brand registry.
But the other thing I would say is that it's persistence, and that's quite literally all it is. There's no sort of magic wand you can wave to fix that every time. When you create a case and you ask Amazon to accept the changes that you've made, and it gets rejected for a million different reasons that they'll come up with. It's about pressing them, asking it again, trying to be more clear around what you are trying to get eventually you will win. But sometimes it can take months and many, many, emails and phone calls to Amazon to get those things changed. Unfortunately, that's just part of the game.
Paul Sonneveld
I do remember specific, I'm going to say nightmares, but it's probably too strong. But, keeping very detailed spreadsheets, ASIN by ASIN and tracking, you know, have our preferred content changes now flown through, you know, whether it be images or bullet points.
you know, certainly what you were saying was our experience and this is a couple years old now, but just logging a new case and a new case and a new case and, you know, whoever, let's see if Amazon gives up before you do and, and you sort of get your content fixed.
Warren Coxall
Amazon changes themselves sometimes. Sometimes you'll put the effort into optimizing a listing and then you got to keep looking at your catalog because every now and then those listings change. The title will be different, the bullet points will be shorter and different for whatever reason.
Paul Sonneveld
Yeah. Alright, one last question, which I think is actually a really good one to finish off, it comes from Krishna, can you throw some light on the cost of operations for a brand selling on vendor vs seller? In other words, where do you make more money? How do you think about that?
Warren Coxall
Yeah. I mean, look, they're pretty similar. In Vendor Central you don't pay anything to be there but you certainly do pay, marketing costs and damage costs, and you certainly do. Amazon will clip the ticket on all of the sales, and that varies depending on the product in, category that, that you are selling within which is really no different to seller central. If you go to Seller Central, it's really clearly listed on their website, what those costs are. But I'm happy to talk anyone through the individual, cost items around Vendor Central, line by line if they want to hear about it.
Paul Sonneveld
Great. Well we are out of time and we've got a little bit over, actually, so let's wrap it up there. First of all Warren, thank you for coming on the show today. really appreciate your openness, your expertise, love the fact that you've, put your hand up and you were wrestling through some of the challenges around Amazon Vendor which are not straightforward. Appreciate the practical tips along the way too. So thanks for coming on the show today. Now just in case, if there are any viewers wondering I could use Warren's help or I'd love to pick his brain. What is the best way to get hold of you?
Warren Coxall
Yeah, well, you can get me directly on LinkedIn, or equally you could go to our website, which is totalyty.com. That's total-Y-T-Y.com and just go to the contact us page and my phone number's there, or you can submit a form that way.
Paul Sonneveld
Thank you very much. All right. That's it for this episode of Marketplace Masters. Thank you so much for tuning in and don't forget to visit MerchantSpring and have a look at those new vendor analytics that we've just released. Thanks for watching and see you next time.
