The E-Commerce Acceleration Playbook. How to Prioritize Your E-Commerce Activity to Grow Sales Faster
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- Bernadette Dawson
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1 The E-Commerce Acceleration Playbook How to Prioritize Your E-Commerce Activity to Grow Sales Faster
2 Introduction: Why it s time for a new approach to e-commerce optimization You start your car in the morning and notice the check engine light is on. You don t know if it s because something is serious with the engine. Or if it s some small issue, like a filter that needs replacement, or a tire that s a little low on air because it s cold outside. Should you drive to work, or call the mechanic? In short, you have data telling you there s a problem, but no way to judge the importance of the problem so you can act. This is exactly the challenge many companies face today with their e-commerce analytics. They ve got hyper-sensitive auditing tools that are identifying issues and problems across a dozen Ps of the digital shelf like Price or Placement. But each issue is weighted equally, across all retailers. There's no way to judge which problems are more urgent and more costly to the bottom line. Crushed by the avalanche of so many problems and warnings, analyst teams get overwhelmed. And business teams receive scorecards and KPIs that don t seem actionable and lose trust. It's no way to run a business. Right? Companies need to stop treating all issues and opportunities on the digital shelf with equal weight and instead, size and prioritize actions that will move the needle. The only way to do that is by judging your potential actions against what will most impact sales. But how? This is exactly the question we set out to answer at Profitero. Using our daily updating, item-level view of Amazon sales and share, we examined the impact of more than 10,000 unique change events across the digital shelf, spanning 7,200 products across categories. Change events were things like updating content with specific types of images, or increasing the number of reviews. We then ranked each change event from first to last according to what drove the most sales for the products studied. The result is a sales-prioritized approach to e-commerce optimization we call the E-Commerce Acceleration Playbook. 2
3 The E-Commerce Acceleration Playbook is your checklist for focusing on the biggest priorities and opportunities across your e-commerce business, so you can grow sales faster. At the highest level, the playbook starts by defining your digital levers. These are the things you must monitor, influence and optimize to achieve higher online sales. Here you can see that the key levers of influence are Availability, Traffic and Conversion and below that, you can see the specific drivers of digital shelf performance. What this graphic tells you is that when looking for opportunities to improve sales, you should generally start with Availability, then Traffic and then Conversion. Following this order will get you the most sales, fastest, based on our research. Note: This framework is generalized, and your specific business context may justify re-prioritization. For example, if you re already getting enough traffic, you may focus instead on improving conversion rates. Profitero s analysts help clients apply the E-Commerce Acceleration Playbook to their unique situation and competitive position. 3
4 Digging deeper For each digital shelf driver, you can go a step further to find the specific actions that are most correlated to sales impact. This allows you to flex depending on the resources available to you. Take Search & Placement for example. Let's assume you have a small Marketing team and no agency support to help with search. The Playbook says you should focus most of your energy on increasing your share of page 1 for the top keywords relevant to your highest-potential products. But should you have a larger team, you ll want them to also tackle more advanced opportunities, like sponsoring competitors brand keywords. 4
5 Why focus on availability first? If the right products aren t available and in-stock, it doesn t matter how sophisticated your internal SEO game is or how complete and compelling your product content is. Shoppers can t buy a product that isn t available on-shelf. And worse, some retailers algorithms penalize a product the longer it s unavailable think of it as the reverse flywheel effect. Addressing Availability issues can also yield massive returns, quickly. If you need proof, look at these two charts. They show the out-of-stock rate (and associated lost sales opportunity) for 2 major consumer brands (one food, one baby) across its leading retailer channels. And this is for a single month: November! Multiplied over a year, out-ofstocks are shaving a lot of dollars off the topline. 5
6 Another key area to address for improving Availability especially at Amazon is Pricing and Profitability. What does Pricing and Profitability have to do with Availability? Both have an oversized impact on determining whether your product is available to buy in the first place. If your product is priced too high, third-party (3P) sellers will win the Buy Box and you won t get credit for the sale. It s essentially like being out of stock. On top of that, unprofitable products are heavily penalized by Amazon in its first party (1P) retail business and in the worst-case scenario, can be delisted altogether (designated as CRAP Can t Realize any Profit). As dynamic price competition between retailers puts downward pressure on average selling prices (ASPs), more and more manufacturers are finding it essential to monitor channel dynamics and build fact-based business cases for more sustainable ways to maintain share and margin. Finally, a key part of availability is manufacturing and selling the right items. On Amazon, third parties selling exclusive configurations of your items (e.g. variety packs that you don t manufacture directly) or exclusive listings (e.g. items that you cannot sell to Amazon directly for various reasons) can sap huge amounts of sales from your brand. If you can quantify the volume lost to third parties via 3P-exclusive listings, you can optimize your distribution strategy accordingly. 6
7 Maximize traffic opportunities next Once your product is available, focus on driving traffic. Here (as already mentioned) your first goal should be to increase your share of page 1 placement for prioritized general keywords in your category and your own brand keywords. In fact, our research shows that winning page 1 placement for top keywords can double sales. Getting to the top of page 1 is also important, but based on our research, it's a lower priority. This chart shows it: Moving a product from page 2 to the bottom of page 1 for a top keyword yields a +84% sales lift, which is a much bigger lift than moving a product at the bottom of page 1 to the top (+152% 84% = +68%). 7
8 In general, you want to tackle your organic opportunities before jumping to paid search. But if you re going to prioritize where to focus sponsorship dollars initially, focus on sponsoring your own brand terms, because those should always be the terms for which you re ranking first. Here s an example where Delta and Elkay are sponsoring Kohler's faucet keywords and winning. (See our e-book for search tips.) 8
9 Drive up conversion opportunities Now that you re getting enough traffic, it s time to boost conversion. Start by prioritizing the products not converting well. You can do this via retailer-direct analytics (e.g. Amazon Retail Analytics), third-party data from behavioral panel operators with access to clickstream data, or by looking at sales underperformers and eliminating other easily-observable causes (e.g. zero reviews, availability issues). Once you ve identified products with significant conversion upside, focus on improving Product Content, and then Reviews for those products. Assuming your products already get enough traffic, visual content (images, video, and enhanced or A+ content) correlate strongly with improved conversion rates. In this chart, you can see that enhancing content substantially boosted conversion rates for poorly converting products (in the bottom 25% percentile of conversion). 9
10 Build a critical mass of reviews With Reviews, focus on boosting review counts for products. When a product goes from having no reviews to many reviews, sales can more than double as shown by this chart. Accelerating your rate of review-creation will be especially critical for new products to take hold. Download our report to learn more. 10
11 Embedding sales-prioritized optimization into your everyday business Once you ve adopted the philosophy of a sales-prioritized approach to optimization, the next thing you want to do is operationalize it within your everyday business. Specifically, you want to implement tools that actually link sales performance to digital shelf performance and provide teams with a real-time view of what s causing sales to move up and down. This removes all of the guessing about what KPIs or parts of the digital shelf matter, because the thing that matters is what s causing the biggest sales decreases or increases, on the products that matter most today! This is exactly what we ve set up for manufacturers around the world. What you see in this graphic is a workflow in the Profitero application that allows anyone to go from diagnosing a sales loss on Amazon to identifying a specific root cause on the digital shelf, within seconds. In this particular example, the e-commerce sales manager on the Amazon account has noticed a product with a 6% loss in sales on Amazon. Quickly, they see the issue is due to third-party (3P) buy box losses, which are caused by a large price increase on the product. With this view of cause and effect, prioritizing action becomes easy. 11
12 Wrapping up When companies stop treating all performance issues and opportunities equally and instead judge them based on sales impact, amazing things happen. 1. You free up time for your analyst team by filtering out the noise within your auditing data. They're less stretched out and can spend more time nurturing valuable insights where it matters. 2. You can scale your e-commerce program more efficiently because you know where to invest resources for the biggest ROI. You may not have a big team today and that's OK, because your top priority (at least for now) is someone tracking Availability. 3. You grow sales faster because you're optimizing the right things in the first place. Are you using a sales-prioritized digital shelf auditing approach? If not, do you have a plan to get there? Want your own personalized playbook? Profitero's e-commerce experts will create a personalized E-Commerce Acceleration Playbook for your brands, for FREE. For more information, sales@profitero.com or visit For additional guidance, contact Profitero today at: Tel US: Tel UK: About Profitero Profitero helps brands grow their online sales faster. With our solution, brands can benchmark their complete digital shelf performance against any competitor, across any global retailer site or mobile app, in real-time. Only Profitero can link digital shelf performance to increases in sales and market share, allowing brands to achieve better focus and ROI from their optimization. Many of the world s leading brand manufacturers and retailers depend on Profitero s granular and highly accurate data to measure and improve their e-commerce performance. These include Barilla, General Mills, L Oreal, Beiersdorf, Sam s Club, Waitrose, Ocado, and Delhaize. 12
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