Winning on Amazon: Know What Your Competitors are Doing
Surya Agrawal
on Mar 07 2018

Businesses are inherently competitive, and it’s even more intense for consumer brands. These brands continue to invest aggressively in above the line [ATL] ads to create recall and an emotional connection with consumers. Bids for a 30-second Super Bowl ad spot reached a staggering $5 million [1] last year. On the other hand, the battle to dominate retail shelves is not going anywhere anytime soon. CPG brands collectively spent around $225 billion [2] last year on various kinds of marketing activities, the biggest chunk of which was trade promotions. This is the world brand marketers know like the back of their hand.

In a brick-and-mortar setup, it was relatively easy to know what rivals are doing. You just had to see ad campaigns on TV, radio and print, and make occasional visits to stores to get a sense of what was happening in your category. Moreover, many legacy data providers helped brands stay on top of the market. The decision-making cycles were typically weeks and months.

Enter Amazon, and things are not the same.

As Amazon becomes more of a strategic play for consumer brands, none of the old methods of doing business apply. In this vast and dynamic marketplace, being extremely data-driven and nimble separates men from the boys. As a first-party vendor, you are competing for shelf space with other large national brands, smaller up-and-coming brands, and also third-party sellers. Your success not only depends on the actions you take, but also on the actions taken by your competitors.

Given the pace of change on e-commerce platforms, the decisions have to be made and executed on a daily basis rather than weekly or monthly, which was the norm in the brick-and-mortar days. This makes staying on top of day-to-day category dynamics an absolute must to win.

Based on our experience of working with some of the top brands, here are some learnings:

1. Identify competitors on the digital shelf. Most brands have a very brick-and-mortar-centric notion of competitors. But on Amazon, there are many instances of nimble digital-first and savvy brands that don’t get noticed for a long time. One example is RxBar, which was acquired by Kellogg’s. Another good example in the beverage space is Bai. There are countless such brands in almost every category that are constantly working their way up. The good thing is that Amazon has enough data points that can be systematically mined by specialized software. Some places to look are search result pages, Amazon Best Seller ranks, product recommendations and sponsored ads. This is not a one-time activity and must be done regularly to keep on top of the market trends.

2. Leverage out of stock situations. Top-selling SKUs routinely go OOS on Amazon due to the unpredictability of demand. A competitor going OOS opens up ambush marketing opportunities. You can immediately launch product display ads and promote your SKUs to take some of the demand away.

3. Optimize Promotions. Different brands constantly launch promotions on Amazon in the form of Vendor Powered Coupons (VPC), Deals of the Day or Buy one get one (BOGO). Monitoring Amazon Best Seller ranks can tell you the impact it’s having on the category and your demand. Depending on the severity of impact, there are specific strategies that can be deployed. You can choose to run a counter promo or ignore. You should also look at changes in click through rates for affected ASINs (Amazon Standard Identification Numbers) and consider whether to double down on Amazon Marketing Services (AMS) or pull back. Machine-learning-based software can track promo calendars and other patterns for various brands, which can help you plan your own calendar more strategically. One of our clients ran promotions just a few days before the leading competitor in their category after understanding the pattern. This led to a spike in demand, which made competitor’s promotion partially ineffective.

4. Monitor competitors in organic search. As more and more sales are generated through Amazon’s mobile app and mobile website, page one presence doesn’t guarantee success. You have to be present among top 10 results for each relevant keyword. Identify a set of generic keywords that are most important for your category and constantly analyze the brand presence. If the top slots are taken up by rivals, immediately experiment with targeted content changes, AMS campaigns or promotions to boost sales and improve rank improvement. Once you occupy the top slots, Amazon’s flywheel effect kicks in. It’s extremely important to observe brands which are entering or staying in the top slots, it tells you about what’s hot in the marketplace.

5. Make content changes. It’s always hard to keep generating content ideas for all your SKUs. The keywords being searched on Amazon keep changing based on seasonality and occasions. During special shopping seasons, content changes made by competitors can provide key input to help optimize your own content. For example, during the Valentine’s Day period, we noticed lots of title changes being made to common gift items from competitors of one of our client brands. Similarly, during the week before Halloween, there were lot of content changes on candy and chocolate SKUs by leading brands. Using such an advance warning system, content changes on strategic SKUs were immediately prioritized. Not doing so would have meant lost sales.

Doing all of this is desirable for every ecommerce team, but not feasible if it’s done manually. It requires machine learning and AI-first software that can track the market continuously and discover anomalies and make prescriptive recommendations. Intelligent software like Boomerang’s CommerceIQ™ can learn actions that are most effective in specific situations, thus making it smarter. Man + machine is a lethal combination just like Ironman.

References

  1. http://www.businessinsider.com/super-bowl-ad-price-cost-2017-2
  2. https://www.warc.com/newsandopinion/news/cpg_brands_boost_digital_ad_budgets/38261
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