Source: U.S. Department of Commerce
Right now, there is a golden opportunity for brands to take the initiative, go direct and gain share, launching new products and upping visibility at a time when many competitors are holding back due to various challenges related to COVID-19, experts from ChannelAdvisor said.
“Companies can push up their new releases outside the normal cycle, and give themselves the ability to differentiate from their competitors,” said Ryan Barker, a sales engineer for ChannelAdvisor. “Most folks are either pulling back or maintaining what they have. In this world where we’ve shifted to predominantly online, there’s certainly value in taking advantage of the opportunity to introduce products when there are more eyeballs online than ever before.”
Barker and Michael Schwartz, Senior Client Strategy Manager for ChannelAdvisor, will take part in a free Multichannel Merchant webinar, “Essential Strategies to Protect Profit Margins on Amazon,” on Wednesday, May 27 at 2 p.m. ET. You can register for the webinar here.
Barker said the current market disruption is an opportunity not only for new product introductions, but also to reintroduce items that maybe hadn’t been big movers but could catch fire now. He cited an incredible statistic from the U.S. Department of Commerce: Domestic ecommerce sales gained more share of overall retail in two months (March and April) than in the past 10 years, reaching 27%. In 2019, it was 11%, the department said.
“A lot of sellers are out of stock and too scared to advertise, which provides more space for you to step into, especially in an area that had been too competitive to launch or refocus on slower movers,” he said. “There’s enough momentum in ecommerce to step to the forefront, and if you do it now it’s easier later to hold share you already have than gain share you don’t. It’s the best time to get into that position.”
Schwartz said he’s talked to a lot of brands who unfortunately have a “set it and forget it” approach to their Amazon campaigns, leaving them without the flexibility to quickly respond and address opportunities that are presenting themselves now.
“Most of those companies ended up completely pulling the plug on advertising in the midst of the crisis, and CPCs plummeted during the height of shelter in place,” he said. “We’ve seen it come back up as more advertising comes online. It’s really important for DTC brands to have a granular, well-structured strategy so they can quickly turn things off and on as circumstances dictate.”
Both Barker and Schwartz said if nothing else, the COVID-19 pandemic has taught ecommerce sellers to be more diversified, both in their supply chains and in not over-relying on a single channel, like Amazon FBA. When Amazon shut off FBA to nonessential items in mid-March, it caught thousands of sellers flat-footed who weren’t prepared to shift into the company’s Fulfilled By Merchant (FBM) program.
“Some companies were prepared with both FBA and FBM, taking advantage of the slowness of Prime and delivering faster, while others were in FBA but had no model for going DTC,” Barker said. “Some went on hiatus for a bit, pulling backing and maintaining inventory levels. It’s certainly opened up everyone’s eyes to prepare for next time, whether it’s a second wave of COVID-19 or something else, to be e diversified in their strategy.”