Quarantine & Ecommerce

Quarantine & Ecommerce

Quarantine does have its advantages.

Dressing up means wearing pants. You now have a rock-solid excuse to not speak to your shitty neighbor. Groceries are delivered and you never even have to face the delivery person (who is definitely shaming you in their head for the case of Pop-Tarts). The Vodka & Valium Flavor. Your dog is asking “don’t you work?”

If you live in my grand city of Los Angeles, we’re at the beginning of a torturous plague that is infecting thousands per day. You can’t get a drink anywhere and “fine dining” means not-the-paper plates. Economically, we’re facing the prospect of not having one.

I’m watching closely how this is impacting us, and particularly how we behave as consumers. If I were to fully comply with California’s guidelines, I would have no toilet paper, food, water and my dog would have definitely left me for greener pastures. It seems, that the entire country is “just making it through.” And I totes get it.

 

RELATED: U.S. Ecommerce Up 92.7%

The Change is Permanent

This isn’t happening automatically. There has been a fundamental shift in e-commerce and the signs are just beginning to show. McKinsey & Company has a fairly good read with “The great consumer shift: Ten charts that show how US shopping behavior is changing

Not to put too fine a point on it, but there is this:

Black Friday shopping in stores craters 52% during the pandemic as e-commerce sales surge.

  • Traffic at stores on Black Friday fell by 52.1% compared with last year, according to preliminary data from Sensormatic Solutions.
  • “Shoppers are spreading out their shopping throughout the holiday season because of concerns about social distancing and the pandemic,” said Brian Field.
  • Online spending on Black Friday surged 21.6% to hit a new record, according to data from Adobe Analytics.

CNBC, again

It is a perfect confluence. Isolation + Fear = Online Shopping. And boy, did it take off. With roughly nine months of experiencing the cataclysm that is COVID-19, The data is astounding:

  • Holiday shoppers spent $10.8 billion on Cyber Monday, up 15.1% from a year ago, setting a record for the largest U.S. online shopping day ever, according to Adobe.
  • That came in short of Adobe’s original forecast of $12.7 billion in spending.
  • Adobe cut its online sales forecast for the entire holiday season to $184 billion, which is a 30% increase from last year.
  • Shoppers started their gift-buying earlier than ever, as retailers promoted deals in October.

CNBC

Curate or Die

Curate or Die

We’re cultural slobs.

Our propensity for swallowing, huge, shit-loads of pop crap is astounding. Yes, please, I would like some promo for a shitty movie with my McDonald’s meal. We don’t think twice about what we consume. Or how we behave… O, the list goes on. Personally, I blame Blackberry, but that’s me.

Critical thought lags behind Instagram (stress the “insta”), Google and Facebook. Where am I? What am I doing? What do I like? All these perplexing problems have been solved for you by algorithms (which is not AI).

Make a Damn Choice

Curation puts a check on these modern ill-thought-out behaviors. Curation is defined by Google (I know) as:

cu·ra·tion
/kyəˈrāSHən/
noun
noun: curation; plural noun: curations
  1. the action or process of selecting, organizing, and looking after the items in a collection or exhibition.
    “the curation of the exhibition was informed by my experience as an artist”
    • the selection of performers or performances that will feature in an arts event or program.
      “I had a chance to talk with a fellow musician about the festival’s curation”
    • the selection, organization, and presentation of online content, merchandise, information, etc., typically using professional or expert knowledge.
      “curation of online content that is relevant to your business can be an excellent way to drive SEO”

An article in Forbes caught my eye. Yes, you’ll have to jump through some hoops and give up your personal data to access it (fuckers) but here it is and it’s all about Target.

Today, eMarketer reported that Target has surpassed three competitors to become the eighth-largest retailer in the U.S. in terms of e-commerce sales, up from 11th place just one year ago. 

Very impressive. But not quite good enough in terms of technology-business Darwinism.

 

COMPETITION?

So how does one compete? Does one even have to compete? Evidently, we are tooled to dominate. But is this the healthiest thing, business-wise? Remember, companies only exist to serve people, not the other way around.

CRITICAL THOUGHT, PART DEUX

I’m really good at some things. Like design and content and eating doughnuts with coffee. Total pro. I totally suck at most other things, basic things, like bagging groceries or balancing a bank account or laundry. This is why I turn to people who know a shit-ton more than I do about these things.

Enter: Target’s brilliant strategy. 

OMNIBUS vs. MONOBUS

Target’s e-commerce marketplace (known as Target+ or Target Plus) assortment is highly curated, as opposed to Walmart and certainly to Amazon. 

You are not Amazon. You never have been and are not now and will never be. It’s a freak of nature and an anomaly and an abusive, weird oligarchy that also shoots shit into space and builds clocks that will outlive us all. Just… deep breath. Because I’m OK and you’re OK. We don’t have to do that whole “Masters of the Universe” thing cause it ended really badly in the 90s, right?

RIGHT AND TIGHT

Target has gotten the message and has ran with it:

Target can avoid some of the negative consequences of Amazon’s burgeoning marketplace, chiefly counterfeit products, gray-market inventory sold by third parties which creates headaches for brand owners, and fake product reviews. Amazon shoppers also face an avalanche of brandless products when searching across many product categories like bluetooth headphones, pajamas, and fish oil supplements. (For further reading, see this great New York Times piece.) While you’d imagine that the overabundance of options might cause many shoppers to abandon their searches, Amazon continues to power on—acquiring more market share every year. 

Target+ could also attract the same brands who have shunned Amazon in recent years due to concerns with counterfeiting and unauthorized resellers.  

  • 60 active sellers on Target+
  • 36,754 sellers on Walmart.com
  • 1,010,695 active sellers on Amazon.com

FOCUS LIKE A FUCKING LASER

Do not try to be all things to all people. See: Corinthians. Sorry, I got biblical. Look at what you do and what you do well. Discard the stuff that doesn’t achieve that goal; they are distractions. Limited resources = limited marketing. Do you like cats? Go for it and make it sing. You don’t see that site also selling detergent or dry cleaning, do you? No. No, you do not. Learn.

The most successful small- to mid-sized online retailers have a focus. I’m not talking about bullshit mission statements or slogans. I’m talking about doing one thing and doing it well.

What’s your focus? 

Let’s talk.

 

Porn + Food = Ecommerce

Porn + Food = Ecommerce

I ran across an interesting article on the BBC “Worklife” page titled: “The curious origins of online shopping.”

If you were an early adapter, you might remember the thrill of upgrading from a 14.4K modem to 28.8K. Was that speed even possible back then? Soon, a mind-blowing 56K would be available and that was pure, straight-up science fiction at that point.

 

Right then, the first group of large-scale online services began to take shape. These were almost entirely social-based experiments. Prodigy, AOL, Compuserve, these were attempting to figure out not only the “how” but the “why.” What did they provide besides a way to chat and email and lookup phone numbers? One company, Amazon, had the foresight to begin the very first models of e-commerce. The market matured and slowly, this weird concept of buying products via computer started to put down some roots.

Online bookstore and IPO

After reading a report about the future of the Internet that projected annual web commerce growth at 2,300%, Bezos created a list of 20 products that could be marketed online. He narrowed the list to what he felt were the five most promising products, which included: compact discs, computer hardware, computer software, videos, and books. Bezos finally decided that his new business would sell books online, because of the large worldwide demand for literature, the low unit price for books, and the huge number of titles available in print.[9] Amazon was founded in the garage of Bezos’ rented home in Bellevue, Washington.[7][10][11] Bezos’ parents invested almost $250,000 in the start-up.[12]

SOURCE: Wikipedia

The Porn Paradigm

I firmly believe that the impetus for users to go online was porn. It was the perfect match between content and delivery. It was prurient but discrete; enticing and easy. Likewise, Amazon chose a similarly (if not less carnal) product to marry to this new form distribution: books. They were easy to ship, they were easily identified and sorted digitally since they were already assigned an ISBN # and, perhaps most importantly, they did not need to be personally inspected like, say, a pair of pants.

It often takes a tectonic social shift to see if a trend becomes a more permanent feature of any large, diverse community. And we are at that moment right now. One could not create a more telling stress test for e-commerce than COVID-19. And the preliminary statistics show it:

Between March 2020 and April 2020 in the US, ecommerce sales jumped 49%, led by online grocery with a 110% boost in daily sales. Kahn says that ecommerce has finally reached the kind of high penetration (the kind that makes more sense relative to its age) because people have turned to the internet to buy food.

— Source: BBC

These numbers are astonishing in any environment. The rate of acceptance of previously brink-and-mortar-only retail drives an entirely new type of ecommerce. We are now shopping for survival, not for fun.

“A real inflection point for online shopping as we know it today could be traced to around 2017. By the end of the prior year, many Americans were “starting to shop online as often as [they] take out the trash”; according to the Pew Research Center, eight in 10 Americans used a computer or phone to buy something online that year – as opposed to the just 22% who did so in 2000.”

— Source: BBC

EARLY, BUT DEAD, PIONEERS in ECOMMERCE

(my hat’s off to them)

Warehoused

Warehoused

There’s something deeply disturbing whenever one uses the word “warehouse” as a verb. Especially when the objects are human.

This John Oliver piece makes me think twice when reveling in the fact that my order arrives almost before I placed it. Why yes, how did you know, Amazon, that I needed coconut coir planting material and a squishy baby head that is surprisingly creepy?

Amazon Drops Their No-Compete Pricing Policy

Amazon Drops Their No-Compete Pricing Policy

from CNN Business:

Amazon sellers just got a little more freedom. The e-commerce company will no longer prohibit its third-party sellers from listing their products on other sites for less than they do on Amazon’s US site. The change comes amid concern that the stipulation, called price parity, could be in violation of US antitrust law.

Amazon (AMZN) confirmed the policy change, which took effect Monday, but would not comment on it. Senator Richard Blumenthal had called previously on the Department of Justice and the Federal Trade Commission for an investigation into antitrust violations and how they could affect the prices that consumers pay for goods.”Amazon’s price parity provisions may raise prices for consumers both in the short term and in the long run,” he wrote in letters to the DOJ and FTC in December. “Relatedly, Amazon’s price parity provisions may work to block the emergence of more efficient online marketplaces that might offer consumers lower prices on their favorite goods.”In a statement to CNN Business, Blumenthal said he welcomed Amazon’s decision, but that he is “deeply troubled that federal regulators responsible for cracking down on anti-competitive practices seem asleep at the wheel, at great cost to American innovation and consumers.”Amazon still faces scrutiny from legislators who want more regulation of large tech companies.

Senator Elizabeth Warren has called for tech companies to be broken up because they have too much power. She’s singled out several companies, including Amazon, and has proposed a law that would mean, among other things, that Amazon wouldn’t be able to sell its own branded products like AmazonBasics on its platform, which would mean lost revenue.

CNN Business

Hands on Ecommerce: 101

Hands on Ecommerce: 101

I write a lot about ecommerce and, indeed, working on ecommerce sites is the bulk of my business. [caption id="attachment_2282" align="alignnone" width="1024"]cgk.ink | STORE Select STORE from the top menu to begin.[/caption] So I thought it was time to demonstrate my skills in real, live, concrete ways. I’ve decided to create the cgk.ink store as a sort of teaching tool so that you can see the mechanizations and processes behind running an effective online retail store yourself. I plan on using this as a workshop of sorts where I put into play a lot of the things I talk about in concrete ways. This is a fully functioning ecommerce site and the products are very real — as will be the charge to your card if you decide to buy. Wherever you see  means that there is a pop up that explains in more detail exactly what that component does, why it’s there and resources to explore. The first installment is all about a rapidly growing type of ecommerce that is akin to drop shipping but with a twist: Direct to Garment (DTG) print fulfillment. Companies like Printify, Printful, Art in America, etc. have been around for a while. Essentially the process works like this:

  1. You select an image or design
  2. You transmit that to the selected company
  3. They take a blank item (T-shirt, plate, mug — the product list grows every day) and using their own machinery imprint the design on the item which someone has selected on your customer-facing web site.
  4. You enjoy the fact that there are no upfront costs, no inventory to keep and the printer ships and fulfills the item directly to your customer.
  5. You collect the profit which is your retail price – the manufacturer’s cost.
Sounds pretty simple. And it is, but there are several concerns to address as well as unique marketing opportunities. Which images work best? How do you optimize an image that is being displayed in a different medium? How do you price your item? Let’s explore our first steps together.]]>

RETURN TO SENDER

RETURN TO SENDER

One of Amazon’s best features is that returns are free and easy.

I know, I do it a lot. It’s a staple in ecommerce, especially when you sell tangible items (clothing, perfume, anything that you need to sense, really). Ecommerce does a lot of things, but tactile is not a feature on any site.

So, this means Amazon has a little problem with returns. Amazon, as always, will not release numbers on anything, but let’s just assume that it’s a large number. There are internal outlets for these items; Amazon Warehouse, Woot!, etc. But what do you do with this:

From The Atlantic:

“With a couple hundred dollars and a few minutes, you could go to a liquidation website right now and buy a pallet full of stuff that people have returned to Amazon. It will have, perhaps, been lightly sorted by product category—home decor, outdoor, apparel—but this is mostly aspirational. For example, in one pallet labeled “home decor,” available for sale on liquidation.com, you could find hiking crampons, shimmer fabric paint, a High Visibility Thermal Winter Trapper Hat, a Mr. Ellie Pooh Natural White Paper List Pad, a St. Patrick’s Pot O’ Gold Cupcake Decorating Kit, a Spoontiques Golf Thermometer, a Feliz Cumpleanos Candle Packaged Balloon, and five Caterpillar Hoodies for Pets.”

Chaos. Not a Theory.

It’s not ideal and there a lot of questions, but when you buy a palette from Amazon that they say is worth $4K for only $200, you definitely feel like you’re an insider getting the bargain of a century. Except they aren’t:

“Every box is a core sample drilled through the digital crust of platform capitalism. On Amazon’s website, sophisticated sorting algorithms relentlessly rank and organize these products before they go out into the world, but once the goods return to the warehouse, they shake free of the database and become random objects thrown together into a box by fate. Most likely, never will this precise box of shit ever exist again in the world. On liquidation.com, each pallet’s manifest comes with suggested prices for each product in a pristine state. If you add them up, the “value” of the box might be $4,000, while the auction price might only come to $200.”

“So, Liquidity Services, the operator of liquidation.com, became a major (though not exclusive) handler of Amazon’s American liquidations. The company calls dealing with returns “the reverse supply chain”—a part of the retail business that has been growing in importance as online shopping becomes more popular. Liquidity Services now has 3,357,000 registered buyers on its various liquidation websites. In the past fiscal year, it sold $626.4 million worth of stuff.

Amazon represents a growing chunk of Liquidity’s business. In its most recent SEC filing, the company disclosed that it spent approximately $33.7 million on Amazon liquidation inventory, which it then turns around and sells for maybe 5 percent of the supposed retail value. And, assuming the company is trying to turn a profit, it must buy the inventory for a fraction of that. Doing the rough math, we’re talking about inventory that once had a collective value reaching into the billions, before it landed in some box on a doorstep.”

Inventory Just Sucks

Any business will tell you that the cost of acquiring, storing, safeguarding and delivering inventory is the #1 thing tugging their bottom line down. It sucks. HARD.

I’m seeing more and more of my clients move to “physical cloud services,” by which I mean that they employ Fulfilled By Amazon, Shipstation and a ton of other fulfillment services. And they are either delighted that the onus of carrying inventory has been lifted off their shoulders. Until they realize that they have lost control of their entire brand due to the whimsical policies that firms like Amazon mandate. Hairspray. OK yesterday. Not OK today.

cgk.ink can help navigate the turbulent evolution of ecommerce. Let’s talk more in depth about your latest project.

FBA Can Bankrupt You

FBA Can Bankrupt You

Fulfilled By Amazon (FBA) is indeed, a brilliant idea.

It’s also an unbelievably huge, complicated mess that has reduced grown men to tears.

The concept is simple enough to anyone who understands drop shipping. You purchase bulk items from a third party — usually one located in a country where wages and expenses are insanely low — then mark them up and sell them online without ever touching a package.

Amazon inserts itself in this cycle and the third party goods get shipped to one of their warehouses where they store, package, ship, deal with all sorts of customer issues and then take a fee. Sounds easy. But it’s not.

You’re playing with Amazon. That Amazon which is currently worth more than the GDP of Kuwait. The process of selling on Amazon is so detailed and delicate that most vendors simply give up. In addition to the fees paid and the set-up headaches, it is an unsaid fact that you will need to pour money into an ever-gaping maw since you are (most likely) competing with several hundred or thousand vendors — who bought the same, identical product. Advertising quickly adds up and somewhat shady practices need to be deployed to get your product noticed. If caught, Amazon can (and does) shut you down in a second with no appeal.

The idea of passively watching your bank account swell while on some tropical island quickly becomes a depressing reality.

In her excellent article in the January The Atlantic, Alana Semuels’ How To Lose Tens of Thousands of Dollars on Amazon, she describes how this scenario has allowed a very special type of “consultant” to thrive. 

 

Amazon depends on both of these players as more than 50% of all 500 million of it’s products come from Marketplace vendors. So it’s in their best interest to address this quickly and effectively… which they’re not doing.

I’ve successfully integrated several clients’ sites and products into the Amazon Marketplace. I have also advised many more clients to avoid it. It’s easy to say that you want to sell on Amazon but the reality is that there are several (very unpleasant) factors to consider.Often, it’s better to take the money you would spend on Amazon (and other sales channels) and reinvest it into your existing operations. Operations over which Amazon has no control

 cgk.ink can help determine if sales channels are right for your online projects. Let’s chat and see what your options are.