Nathan: All right, so the third big trend that you’re seeing, what is that?
Brian: This is an interesting one. It’s kind of a larger trend that we’re noticing and I’ve heard a couple other people mention it as well, which is you’re getting and expansion of the small, we’ll call it traditionally Etsy-style businesses are coming online. For example, maybe you’re a serial entrepreneur and you have five businesses without storefronts and you can hop on Shopify, because the barrier to entry is pretty low, and you start starting all of these businesses without storefronts. So you’re seeing a lot more of those businesses starting to enter the space, whether it’s their drop shipping from manufacturers. So they just have a storefront, and then eventually, they’ll start putting inventory in their store based on what’s working in their back ends.
Also in the same sense, you’re getting a lot more direct to consumer brands coming into the space. So for example, you might have a company that historically said, “It’s not worth it for me to ship at all if it’s under a truckload of inventory anywhere.” So they just wouldn’t sell direct to consumers. But they’re noticing, based on, “Hey, I can wholesale it to people and take up 50 percent of my margins when they sell it or I could get all of my margins if I sell it directly online.” Like I said, the barrier to entry is changing.
So, you’re noticing a lot of those traditional brands that have stayed away from being direct in the space having the ability to buy something on their site are actually starting to move in that direction. An example, this is kind of the typical three-part fold to this, so the first step is, they have a website. That’s the first step. So you get a website. And you’d be surprised how many brands don’t have websites.
Step two is, “Hey, I have a website but everything’s a store locator. So you can go down, it almost feels like an e-commerce experience that just leads you to a dead end and that dead end is find a store. So you feel like you’re going through a shopping process. You get there and, “Where do I find my Oreos, oh, they’re at Safeway next to me.”
The third step is actually what Oreo’s done on their website, which is they have that same experience, it feels like e-commerce, there’s a lot of brands building there, and when you click buy now, it actually leads you to their Amazon site. So it’s an easy way, if you’re doing Fulfilled by Amazon, you give Amazon your inventory, you don’t have to worry about storing all that, or the distribution of sending out to individual customers and people end up fulfilling all their experience on Amazon.
Then the last step is that they realize that they’re paying Amazon a percentage of their margins and they think, “What if I just led these people to an experience that you could buy directly online?” That’s where we’re starting to see a lot of people move, and either the Amazon movement where they buy on Amazon or actually buy on their website, where traditionally, they weren’t in the space. This just affects everyone else that was reselling their products or people that have been doing a product for awhile and then all of a sudden a brand that hasn’t had a digital presence pops up as a competitor.
There’s a lot more of that happening in 2019.
Nathan: You mention Amazon, so I’m just curious if the fourth trend is just that increase in those kind of shopping portals. Can you talk about that?
Brian: We’re noticing that a lot, and actually, if you look at some of the, even TV advertising that’s happening right now with Amazon, is they’re really focusing on that local, small business messaging, saying, “Amazon small business, small businesses are using Amazon.” You are seeing Amazon take a larger, a big chunk of the marketplace. That’s not new. But what’s new is really they’ve been revamping their advertising on Amazon, so that you can advertise a little heavier, that’s sponsored products, that’s the banners at the top. There’s a number of different ways you can advertise now and that platform is only getting more and more robust. Where historically, it was a little bit harder to work on, or maybe people weren’t seeing quite the results they were hoping for.
You’re starting to see a lot of these shopping portals or shopping experiences becoming more popular. Google has their own version with Google Express, very similar style. Google Express is actually popping up in the Google shopping results, and it’s the same thing, one click experience if you’re signed in, then you can just use your cart information, just like Amazon. That’s kind of a larger trend in the e-commerce space, if you’re talking about search engine advertising. I remember when shopping was first introduced kind of as a paid product, and you started to see shopping cannibalizing a little bit of the text ads. Over time, that market share has gotten bigger and bigger. In 2018 and then going in 2019, we’re actually seeing shopping significantly taking up more real estate on Google search engine, and also more of the investment, especially on e-commerce high competitive products. We’re noticing that a lot of their shopping investment is actually starting to become the master or the lion’s share of the account, if it wasn’t before. And text is definitely shrinking.
I think it’s just, consumers are more used to one, engaging with pictures, which are, I will admit, more exciting than text ads for the most part. They’re used to that Amazon style click in, buy a product. So I think you’re just seeing an expansion of that, not only on Amazon, but on Google as well as other shopping platforms. That will only continue to be more and more in 2019.
Nathan: With something like that, and we’re talking about paid, do you also see more effort on organically trying to optimize on those platforms, like you would never have done that before, you wouldn’t think … We always talk about SEO, and we’re talking about search engines, but do you think marketers are going to start thinking about SEO for Amazon, or something like that?
Brian: You’re seeing that more and more. Amazon is a very interesting, kind of how they rank their different products. I won’t go into that right now. But I think there is a lot more overall of realization that one, you can always pay to play to get in some of these positions, but the organic value is there, especially when you’re talking about the volume that’s coming. So really, a lot of it boils down to feed optimization, which is becoming more and more popular and people are realizing more and more the value of optimizing your feed.
You think about it, how does Amazon or Google or any other shopping platform really know when you search something in their platform, how should I show a product up? Well, you have to be able to somewhere tell Amazon or Google or whatever, as a platform, that this product is a box, or is a toothpaste dispenser. It has to know somewhere, whether it be you’re categorizing it a certain way, or you’re telling it somewhere in the feed. A lot of people, historically, haven’t done a great job of figuring out, “How do I optimize this so that I can show up for the types of searches that my consumers would be looking for?”
From a paid and from an organic standpoint, you see a lot more feed optimization happening. I do expect that Amazon, as more advertisers enter the space, that more people will investigate more into, “How do I continue to get my product up higher and higher and in these different feature spaces without necessarily paying for it? How do I optimize the feed? How do I get more products of mine selling, so that I can rank higher?” That, I would say, has been a trend, but will be even more so, especially on Amazon, I think, in 2019.