As brands increasingly focus on digital sales, they have emphasized streamlining operations and automating logistics through ecommerce technology to effectively manage aspects like inventory systems and ad campaigns.
I’ve found brands tend to put about 50% of their initial operating budgets into tech solutions like these, but insufficient in-house knowledge and people resources mean they essentially allow their tech to go unused (or at the very least, underutilized). At the end of the day, software alone is not enough to guarantee positive outcomes, and when mismanaged, it can even do more harm than good.
There are several ways well-intentioned brands commonly understaff or under-strategize their ecommerce technology investments; here are three.
Inventory Allocation
Feeds such as EDI, SAP and others act as intermediaries between the brand or manufacturer and the marketplace. No two are alike because they rely on APIs created and maintained by the retailer. This means small changes to listing settings, back-end API or integration changes will often result in misfires, which can manifest as products showing availability when none is available.
As a result, affected brands must cancel or refund customer orders and do damage control, such as offering a discount on future purchases as an apology for this back-end disconnect. Softlines or fashion businesses or those with added complexity to their catalogs tend to be more prone to these kinds of errors.
When the product in question is a popular one, the impact can be acute. Misfires recently affected a New York beauty brand whose bestselling eye cream went out of stock due to COVID-19-related supply chain issues. When it became available, customers flocked to the website only to have their orders cancelled and refunded. The brand was left apologizing to its loyal following for the poor customer experience.
Product Information and Listing Creation
Popular ecommerce platforms that feed data from sellers were intended to help increase convenience by adding product information from your website onto marketplaces, but they can have issues, including algorithmic optimizations that can backfire and create long-term harm. They can also be challenged by complex catalogs, especially those with more than one variable type (size and color, size and weight, size and material, etc.), and can accidentally break up product variations.
These errors are especially harmful when they occur in conjunction with a key marketing or sales period. A leading athleisure brand recently launched a new limited edition legging colorway which was being promoted with influencers, across several retailers and online. While it was successfully added to the overall parent listing at launch, the feed confused some of the backend variables and broke the listing’s parent-child relationship, not only causing it to sit separately from the original listing but breaking up each size. Ecommerce marketplaces generally factor sales histories into customer discoverability, so the breakage made the product nearly impossible for consumers to find, leading to a disappointing launch.
Advertising Bidding
There is software that works to optimize bidding on third-party marketplaces, but brands and manufacturers that blindly trust algorithms to run their advertising strategies are increasingly falling into several traps. These include artificially increasing bids for branded keywords or overlooking important peak periods for specific categories. Ecommerce algorithms are still in early stages of development, so the nuances for each specific product category – the detail that helps brands ultimately gain advantage and grow – are often overlooked.
The beauty industry is eagerly watching Amazon’s beauty takeover event scheduled for most of October. Relevant brands advertising on the platform should have begun carefully tweaking their CPC and DSP campaigns in late September, with plans to continue through the event period. These adjustments should be closely overseen by brand staff given the quick timeline. The likelihood is low that automated software could turn around algorithmic changes like these to truly and accurately capture the expected influx of customers on such short notice. Brands that rely on automation in such a situation will find themselves disappointed by their results.
Ecommerce Teams: Specific Roles, Core Competencies
To avoid these and other scenarios, decision-makers need to complement their ecommerce technology investments with well-rounded teams that have the correct skill sets to make strategic and informed decisions, often on short notice. The teams that manage brands’ ecommerce platforms should have several specific capabilities and structural elements:
Staffing with consolidated, specific marketplace expertise: To catch mistakes quickly and resolve them before they have time to scale, brand teams need a deep understanding of each piece of the ecommerce technology puzzle, including the API and integration with the ecommerce platform, as well as an intimate understanding of their own systems and databases. General knowledge is not enough here. Teams need at least one person considered an expert on every platform they sell on. If that expertise can be consolidated into one team, that’s even better as marketplace algorithms often affect one another, and a single decision-making body ensures strategies remain thoughtful and cohesive.
Product listing scrapes: To determine whether information integrity has been maintained, teams should be regularly policing and scraping listings. Ecommerce technology can create some real benefits when appropriately managed, but today’s systems can’t course-correct if a break occurs. “Listings scrapes” can be conducted manually if your catalog is manageable, and there are several scalable levels at which this can be done, depending on team bandwidth.
Utilize advertising benchmarking: Ad performance is increasingly complex, so “set it and forget it” strategies no longer suffice. Brands need to understand how their campaign results compare to others in their category and subcategory to have the healthiest, most productive performance marketing strategies. If such data is not readily available, team leads may want to consider strategic investments to secure anonymized benchmarking data and/or programmatic and CPC campaign management expertise.
Ecommerce technology automation can be valuable in helping streamline operational efficiency, but technology decision-makers must consider a bevy of other factors before making these investments. When executed with sufficient oversight and staffing, any brand can develop a thoughtful approach to navigating the risks of overreliance on automated sales technology.
Elaine Kwon is a co-founder and partner at Kwontified