Insights From Catalyst Europe 2015: Amazon Fireside Chat

April 24, 2015

Marketplaces Laura Lane By Laura Lane

blog catalystScot Wingo and Chris Poad Amazon chat

Scot: We couldn’t do the show without Amazon. Amazon is a huge player and today has 270 million active buyers. But people have blamed you for Black Friday! (laughter)

Chris: We wanted to bring Black Friday to the UK and we want more sellers to take part this year.

Scot: Some say that Amazon promotes its own business over 3rd party sellers. Would you say there’s any justification?

Chris: Amazon does lots of things, we publish books, make TV shows and we are a retailer but above all we are made up of platforms, and yes, Amazon absolutely competes with marketplace sellers, we think this is good in terms of competition. And our 3rd party sellers and it has already grown, our 3rd party business has grown more than our own business.

Scot: People tend to get paranoid when looking at the figures released from Amazon. But ChannelAdvisor tracks Amazon retail and it is growing at 12 percent, while the marketplace is growing at 33 percent, so Amazon certainly aren’t trying to put 3rd party sellers out of business.

Scot: Any other things sellers should be looking at?

Chris:  FBA and Global selling are the main drivers as well as expanding into new categories. Fastest rate of growth is fashion and consumables, health and beauty. We now have a fashion specific studio centre in the UK, in Shoreditch.

Scot: How about Europe?

Chris: With 11.9 billion in Germany, and great success all over Europe the EU is a big opportunity for us long term. It has the unique characteristics re CBT, all our CBT initiatives were launched in Europe, its the centre of excellence for global selling because of political union

Scot: What about Prime: Now into 10s of millions, and big increase during 2013/14 (50%). Its predicted to get even bigger. What do you see Prime as, strategically?

Chris: Prime is an extremely important program not just in terms of delivery but because it offers instant video, offers on Kindle, Statistics show that when customers become prime they buy more, so this is a lucrative market.

Chris: How about FBA? The active number of sellers using FBA has grown 65% year on year. We’re currently improving the stats for sellers re: targeting to help give them more detailed information about where they should be actively marketing in future.

Scot: What about Sunday deliveries?

Chris: Amazon lets FBA sellers deliver on Sundays, via Amazon logistics, Amazon do the last mile delivery but that’s actually a network of independent couriers, using an Amazon device to do the tracking,

Chris: How are you on drones?

Scot: No idea. (Laughter)

Scot: How about mobile?

Chris: Amazon often has multiple offers from single buyers on one page – but with mobile there isn’t the space which is an issue.

Scot: When it comes to CBT in China and Hong Kong export has grown 80 percent year on year. Are we in the UK right to be scared of this competition?

Chris: Amazon believes that the only way to compete is to focus on great prices, great selection, because that’s good for our customers it will be better for all sellers.

Scot: Brands going direct? Many want a multi-faceted relationship with Amazon.

Chris: Customers want fair prices and a good selection. If you are a wholesale fashion brand that sells in department stores the relationship should be the same with Amazon – to give Amazon a chance to compete on price,

Scot: What about sponsoring products?

Chris: Self serve advertising is still in the early stages. There is now the opportunity to do onsite sponsorship which means no longer simply having to rely on search results. Sellers can now drive traffic to their pages by a CPC model, and the seller can work out if it makes sense to use based on ROI generated. In fact 3rd party sellers do better than us on product ads, based on a CPC model, product ads which expand their selection- a selection that otherwise wouldn’t be on the website.

Scot: Account managers?

Chris: Amazon has 2 million sellers and we need to find ways to help scale, but having armies of staff doesn’t scale. We invest in technologies, and we have experimented with account management, where we’ve tried to select sellers who would benefit, and that doesn’t necessarily mean the biggest. We understand that it’s sometimes helpful to have real human beings – but don’t expect to see 100s of account managers at Amazon.

Scot: Are Nudges helpful?

Chris: Yes sellers have found this helpful, sending tips via email, good “non spammy” advice, which gives them a real opinion rather than something simply based on algorithms and software.