At this point, most of us are familiar with the incredible ecommerce demand spikes that have occured for certain categories of consumer goods during the COVID-19 crisis. Here are two examples, health care products and household cleaning products.
For both graphs, the last quarter, with its close-to-vertical upswing, gives us that hockey-stick graph that’s become so familiar. Many other categories, such as baby products and paper and plastic goods are exhibiting the same behavior. The question is no longer what’s going to happen to e-commerce sales during the pandemic. We know the answer because we’re living it. The real question is what will happen to e-commerce sales once the crisis is over? Will sales revert to what was predicted before the crisis or will the baseline be higher than what was predicted pre-COVID?
The Future Is Now
Here at CommerceIQ, we believe there will be a permanent shift in how people buy consumer goods and that shift will be in e-commerce’s favor. Broadly, we think that e-commerce sales will plateau at a number between 16% and 27% higher than the original predictions. Another way to think about it is that the timeline for e-commerce has accelerated by at least five years. The future is now and deferring decisions on how to cope with growing demand is no longer an option. From our own discussions with executives, many CEOs are now making success in e-commerce a top priority.
Invest in Ecommerce Channel Optimization
Remember that e-commerce platforms are all about helping consumers buy things. Consumer behavior controls the shelf and that behavior is constantly being evaluated not by people but by algorithms. Those algorithms ultimately determine what products are being sold and how visible they are to potential buyers.
The only way for brands to win in e-commerce is through Ecommerce Channel Optimization (ECO). ECO is the practice of using machine learning, analytics and automation to optimize the ecommerce channel across supply chain, marketing and sales operations to win at the moment of purchase and drive profitable market share growth.
ECO enables your teams to make timely, informed decisions. While this was always going to be true because of the steadily increasing growth of e-commerce sales, it’s become an immediate concern because of the accelerated growth we talked about. The increases in complexity and volatility that were supposed to come gradually are here now.
The practice of using machine learning, analytics and automation to optimize the ecommerce channel across supply chain, marketing and sales operations to win at the moment of purchase and drive profitable market share growth
Without ECO, your people will spend all their time trying (and failing) to keep up with the volatile e-commerce market. Their decisions will be reactive and based on data that’s probably stale. The reason is that the number of variables any team has to take into consideration is simply too great. Based on one of our actual customers, we found that a brand that sells on Amazon and has 400 ASINs would have to make around 84,000 decisions a week. For a team of 10 people working 12 hours a day, 5 days a week, that comes to 2 decisions a minute. These numbers are clearly impossible and many brands have thousands of distinct products, not hundreds.
Benefits of ECO
Let’s talk about a few of the benefits ECO provides.
Unite teams with a single source of truth.
A shared, rather than a siloed view, enables teams to work together and gives them a common vocabulary and a single source of truth. In our experience, high performers automatically collect data from across the spectrum of concerns, such as marketing, sales, and operations and, in near real time, use that shared single source of truth to prioritize decisions and actions.
With ECO, you collect marketing, sales, operations, supply chain, competitive and non-Amazon marketplace data. You get near real-time visibility and benchmarking. ECO automatically maps dependencies across all the variables that impact performance. With a clear understanding of where you’re excelling and where you can improve, you can respond immediately to issues.
Although it may not seem immediately obvious, your advertising strategy needs to take more variables into account than simply your return on ad spend (ROAS). Instead, it should focus on increasing your share of voice (SOV). This is a more complex calculation and needs to account for factors such as the supply chain. You don’t want your marketing team to develop promotions for items that may be unavailable. That’s a sure way to both lose customer loyalty and damage your search rankings. With ECO, your team will always know where to focus its energy.
Minimize out-of-stock issues
One way to foster loyalty is to be reliable. That means you can actually fulfill your orders which, in turn, means staying on top of items that are either out of stock (OOS) or have low inventory. Doing this manually is no longer viable because the marketplace is so volatile. With ECO, you can stay current about which items are unavailable.
Eliminate 3P competition
Your brand can be damaged by rogue third parties (3P) but tracking them down manually is a tedious, time consuming job. With ECO, you can automatically detect rogue 3P competition and also automatically create tickets to alert your e-commerce platform about the problem. The same goes for duplicate 3P listings.
Effective decision making
ECO uses machine learning to analyze all the data it collects automatically. Those analyses provide you with actions you can take and strategies you can implement that will improve demand capture, demand conversion, and profitability.
The higher baseline that’s coming will be true for many brands. It’s not just you but your competitors as well who’ll get that potential boost. To make sure your brand is the one that takes maximum advantage of the market, it’s critical to invest now in ECO. We’ve talked about a few ways that ECO can give your people the data and analyses they need to boost your brand equity and stay at the top of their game. If you want to learn more, visit our site or take advantage of Growth Navigator, a complimentary 90-day managed service program that is helping leading consumer brands prepare for the future of ecommerce.