Amazon Business: Confronting the Brutal Opportunity

Brian Beck:
Hello everyone. Welcome to the bonus session for my virtual book tour for my book Billion Dollar B2B e-commerce. My name is Brian Beck. I'm thrilled that you'd join me. You can find out more about the book here on my website, billiondollarB2Becommerce.com. And the book is now available on amazon.com in paperback, ebook and audiobook formats. Today is the ninth session of our virtual book tour.

Brian Beck:
Before I go much further, I want to thank our sponsor's Elastic Path, our platinum sponsor, and the other sponsors of this tour, which has been quite a journey all through 2020 and during the COVID situation. We brought a lot of value, I think, to the market and help them learn a lot about their own digital transformation. Today I'm excited to continue that with a topic all around Amazon and Amazon Business.

Brian Beck:
Here are the sessions that we've aired prior to this session. You can see quite a few different sessions here. Eight in fact. We've gone through everything from the digital, necessity for leadership, as well as organizational alignment, aligning selling channels. We've talked about digital marketing, selecting an e-commerce platform, even our digital future.

Brian Beck:
Today, we're going to tackle chapter seven of the book, which is all about Amazon Business and how you can take advantage of Amazon while also making sure that you have an Amazon strategy for your B2B business. Even if you're competing with Amazon in many ways. I call it confronting the brutal reality/opportunity for your business. Because Amazon, I do believe, represents an opportunity for many businesses, particularly those who manufacture products.

Brian Beck:
So today's agenda, again, it's a bonus session, we're going to be going through a couple of things. The Amazon Trends, B2B. What is this momentum about? What kind of momentum do they have in the industry? Why are they poised to be one of the largest industrial distributors? For example, in the marketplace. We're going to define Amazon Business. What is Amazon Business? We're going to talk about paths to selling. If you do decide to sell, how can you sell, what are the best options? How can you optimize Amazon? And then really, what is your playbook look like in approaching an Amazon strategy? Those are our topics let's dive in.

Brian Beck:
So before I get into the specifics of Amazon, I wanted to share one thing with you. In addition to writing books for a living, I've only written one. I also am the managing partner of a company called Enceiba. And we took the name Enceiba from this tree here. It's called the Ceiba tree. It's the tallest tree in the Amazon rainforest. We are the only company in the industry that has a focus on helping B2B firms succeed on Amazon. We understand B2B and we focus on helping you grow there. And our idea here is that we're helping you stand out in the rain forest, just like this tree.

Brian Beck:
We help you drive massive profitable growth from the channel, again, we're the only agency focused on B2B. We offer a full suite of Amazon services, everything from the strategy, how to take advantage of Amazon, how to sell, how not to sell, how to compete, et cetera, all the way through to executing your program on Amazon. We're based in Los Angeles, California, you can find more information on our website enceiba.com, that is E-N-C-E-I-B-A.com.

Brian Beck:
So, many of you know that Amazon is a juggernaut. If I could ask you all to raise your virtual hands, how many of you are not Amazon Prime members? I would get probably one or two people in the audience when I ask that question, two, three, four, or 500 people in an audience. I used to have to ask the other thing, who is an Amazon Prime member? But today it's quite the opposite. Particularly with the advent of COVID, people are shifting much of their behavior for purchases towards Amazon. And a lot of this is happening in the consumer market as you can see here.

Brian Beck:
Amazon is responsible for almost 50% of online retail sales in the United States. They have crossed 150 million Prime members this year. Really just a tremendous powerhouse in the e-commerce sector. You can't really talk about e-commerce unless you're talking about Amazon and the bar it's setting for all of us operating in the e-commerce field.

Brian Beck:
There's a war going on between Google and Amazon. And it's a war for relevance in product search. And what a lot of folks don't know is that Amazon is actually winning that war. In the United States, Amazon is responsible for up to 70% of product searches and where they begin. So when someone wants a product, they go to Amazon first. Google share is down to, depending on the survey, anywhere from 20 to 30%. It's really become a pervasive force, not only in transactions, but also in product search. So it's become a search engine. This is something you have to pay attention to stay relevant to your customer.

Brian Beck:
To my last point, where do you start a product search? This is a survey, the blue bar here, blue bars from BloomReach, a few years ago. This is just three or four years ago. And you can see from this data, Amazon was in the 40, 45% range. In just four years, they've climbed up to almost 70% of product searches starting on Amazon. Why? Well, buyers like the fact that Amazon gets you to your product quickly.

Brian Beck:
Amazon has almost 600 million products on it. And no e-commerce site, this surveyed buyer say, gets them to the product faster, more quickly or personalizes the experience better than Amazon does. So again, to my point about search engine, Amazon really has become that.

Brian Beck:
And when we look at what's happening with COVID. This is a very dramatic chart. I've been in the e-commerce field for 20 years, and I've seen a slow, steady growth, look back to 2009, slow steady growth all the way through 2019. Turn the corner, at the end of 2019, we were at about 16% e-commerce penetration. Now with COVID, we've tripled it. It's almost doubled it. It's over 30% of commerce transactions are now happening via e-commerce.

Brian Beck:
We've got 10 years of growth in three months. So what does this mean? It means the world is changing. It means that these behaviors are not only going to be on the consumer side, but increasingly penetrating what's happening on the B2B side. You may say this is all B2C, but it's not. As I'll show you in a moment.

Brian Beck:
COVID-19 Celebrating Amazon's penetration across all sectors. It has forced the hand of e-commerce, homebound buyers have no other way to buy than through e-commerce. Buyers that have been reticent to use e-commerce are now being forced to because they don't have other ways to get products. 50% of customers are buying products they've never bought online before, almost half of businesses are experiencing online sales growth and Amazon is winning.

Brian Beck:
As of quarter two, 2020, their sales were up 40% year over year, net income up over 100% and they're guiding similar growth for the remainder of 2020. They've hired almost 200,000 people, think about that for a moment, to support all this demand. And I believe that many of these behaviors will be ingrained. Look, we're not going to return to a full type of a "normalcy" for some time. We'll be social distancing for a while and even after we're back to normal, these behaviors, as they become easier, as customers and B2B buyers understand that these are easier ways to transact, these behaviors will stick.

Brian Beck:
So I'm in B2B, this doesn't matter right? Wrong. In fact, Amazon is already here with very significant B2B capabilities. There's this book I love to quote, and I love to quote my own book, but I love to quote this book. Jim Collins, Good to Great. If you haven't read it, you should. I have, several times cited several times in my book. And one of the things that Jim talks about in this book, is confronting the reality of your situation.

Brian Beck:
That's where I took the title of today's bonus session. We need to confront the reality that Amazon has entered this channel B2B e-commerce and confront the fact that it's influencing and accommodating buyer behaviors in the B2B side in ways that many of you are not. So, confront the reality that Amazon is in your market and learn to embrace it, but to have a strategy for it and a smart strategy. My goal today is to arm you with some of these strategies. And so, hopefully, I'll be able to impart that to you as we go through this.

Brian Beck:
So B2B is here. Amazon Business is a marketplace dedicated to business customers and sellers. It's not a separate website. Some folks might remember Amazon Supply. Amazon Supply was an earlier version of Amazon Business. Amazon Business is a next-generation, it was founded in 2015. It's already at $16 billion in sales in 2019 and growing at 20% a month. And Amazon, what they do is look for places where inefficiencies exist in the marketplace and they look to create better solutions for customers.

Brian Beck:
They've done that marvelously for almost 30 years and they're going to continue to do it. And in the B2B side, if you read my book, you'll see that there's a lot of inefficiencies today in the B2B market. And Amazon is solving that for some B2B buyers. It's always about the customer with Amazon. Amazon is on track to be one of the largest B2B distributors in the world. This is some data here from RBC capital markets from late 2019. And it shows a projection of where this Wall Street Investment bank expects Amazon to be, in just a few years.

Brian Beck:
If you take a look at the right here, $52 billion by 2023. Just to give us a sanity check, many of you know the distributor Granger. This will make them five times Granger's current size. Granger is about an $11 billion company today. So why is Amazon poised to grow so rapidly in B2B? Well, again, Amazon looks for opportunities where the market is inefficiently served and Amazon has the right competencies.

Brian Beck:
There is attractive economics in B2B. Many of you are in businesses that are highly profitable. Amazon looks at that and says, "Boy, there's opportunity for me to better serve the buyer and make a profit." And so they attack and they do so in a very intelligent way. We're going to talk more about that in a moment. The results are pretty astounding when you look at what's happened so far with Amazon Business. 55 of the fortune 100 companies have a presence with Amazon Business. Two million B2B accounts created across Amazon Business, likely more than that now.

Brian Beck:
50% of the biggest U.S hospital systems are working through Amazon Business. 40% of the 100 most populous local governments, 150,000 Amazon Business sellers, I think there are close to 200,000. Now, guys, this is not coming it's here. Amazon Business is a significant player today, and it's not just about office products or takes out containers for your restaurant. It's about much more than that. They have a very significant assortment in things like healthcare and MRO, maintenance, repair, and operations, industrial. They have quite an assortment and they're doing things very, very well here.

Brian Beck:
So why is it disrupting B2B channels? Well, a number of reasons. Business buyers already use Amazon. Did you know that within five years, 75% of the global workforce will be millennials? Those born between 1980 and 2000. So we think about that for a moment. These folks are digital natives and they're already using Amazon. In fact, that group, I just told you, uses Amazon for almost 100% of their online shopping, at least part of it. So these are Amazon natives, not just digital natives and these buyers are using Amazon.

Brian Beck:
And if you think about why Amazon went into B2B in the first place, they were already getting B2B purchases on the platform 20 years ago. And they noticed this as a growing trend. So, they look to capitalize on these behaviors. Amazon is 10 years ahead in terms of its use of data versus most B2B sellers. They have exceptional e-commerce capabilities. Again, most of you are Amazon Prime members. You can attest to this yourself. Fulfillment advantages are enormous. Over a hundred warehouses, just in the U.S. They have airplanes.

Brian Beck:
They have a fleet of airplanes. You probably know that. Building online workflows to support B2B purchasing. Did you know, for example, that Amazon extends credit terms to B2B buyers on its platform? That's been an advantage that distributors have used for years to accommodate the business buyer. And then they have people in the field. This is a key thing they're doing. These folks are hiring are very smart and they're out of the industry in many cases, and they understand the B2B dynamic. They understand your business.

Brian Beck:
So, the old maxim that Amazon is just a technology company and they're not going to get into and understand the relationships, that have differentiated you as a BDB company for years, is no longer true. B2B product research is starting on Amazon. 92% of BDB buyers say they have used Amazon to research a purchase for work. Similarly, Amazon buying, it's happening right now, B2B buying. Over 50% of B2B buyers make at least 10% of their work purchases on Amazon. This is as of August last year, 2019, as this is from a digital commerce 360survey.

Brian Beck:
And just look at this chart, it's astounding. Some are making over 50% of their B2B purchases on Amazon Business. So this isn't just talking about office supplies, guys. This is talking about other categories too, and more is going to be spent this year. 55% of B2B buyers are planning to grow their business in this year, some by more than 50%. Now, this is pre-COVID. Keep that in mind, this data. So this is going to be even more dramatic when we look back at this data at the end of the year or into next year. So what's different about Amazon Business?

Brian Beck:
Well, there are tools specifically for business buyers. I mentioned buying on terms. You can also set permissions for people buying through your organization. There are spend management tools that help buyers manage their spend across multiple categories. There are pricing tools in Amazon Business that allow a buyer to, excuse me, a seller to set business term pricing and quantity discounts in bulk pricing. Companies can request quotes through Amazon. So the whole request for quote process is now available through Amazon.

Brian Beck:
Businesses can set up seller profiles, including quality and diversity credentials. Add content, it's more complex than you'd find with a typical consumer product. And there's also things Amazon's doing right now, which gives advantages to B2B sellers to join Amazon. Look, Amazon wants to the assortment. So, there's an opportunity now for companies to align with Amazon Business, but you want to do it in a way that works for your business. And we'll talk about some of those approaches a little later.

Brian Beck:
I believe that Amazon could be a good fit for manufacturers, particularly, when products stand on their own merits. This is a client of ours. It's a company called Big Ass Fans. They make Big Ass Fans, like this one. If you're ever in an airport or a factory, lookup or a distribution center, and if you see a very large fan it's likely a Big Ass Fan. These things move air tremendously, and they make HPAC systems a much more efficient, fantastic product. And I use them as an example because they have a vibrant Amazon program.

Brian Beck:
What you're doing if you're a manufacturer who is coming to Amazon, is you're capitalizing on the existing brand recognition and category traffic. It's already there for your products on Amazon, and B2B buyer preferences are shifting there as we've seen. In a lot of ways, I think about this as an evolution of your selling channels, another distributor one that has its own uniqueness and characteristics, because obviously, it's e-commerce based, but one that's important to recognize because your buyer preferences are shifting there.

Brian Beck:
When you don't control your presence on Amazon, it leaves you at risk. And it leaves you at risk, not only to your current competitors but also to new competitors coming in and taking business from you, many of which you've never heard of. So, it's important at the foundational level at a minimum, to have control of your brand on Amazon, if you have a brand of any type. But I believe that in the B2B sector, Amazon is a place that manufacturers ought to manage and sell their products and do so in a controlled way. And I'll show you how to do that in just a minute.

Brian Beck:
So what if you're a distributor. Distributors I call on you to have an Amazon strategy. You have to have an Amazon strategy, whether it is selling a portion of the assortment or competing with Amazon, or however you do it, you need to learn from Amazon. Amazon Business is partially about the breadth of offering, and that is largely what distributors have differentiated on for quite some time. You have opportunities distributors to leverage some of the traditional supplier relationships to create differentiated offerings, exclusive offerings.

Brian Beck:
We've worked with several distributors, for example, to launch their private label brands on Amazon. And also to go back to their supplier who may not want to have their own selling program on Amazon, and manage a program for them because you have that trusted relationship and you know how to service the product. I'm going to talk more about that in just a few minutes. At the minimum though, you need to understand what Amazon's doing, perhaps the best way to do that is to sell yourself on Amazon, at least a portion of your assortment. So you can understand the bar that's being set for you and your own e-commerce experience.

Brian Beck:
But for a distributor, the approach here really is critical and important. Amazon Business can represent a very significant revenue opportunity for distributors if you do it well. What about all those Amazon private label brands? Well, Amazon has, the last number I saw was 450 private label and exclusive brands. That number changes a lot as Amazon tries different things. But, do break it down for you. Number one, most of those are on the consumer side of Amazon. Number two, they only account for about 1% of Amazon's total sales.

Brian Beck:
And if you think about what's happening with your own channels. If you're a manufacturer, think about what your distributors are doing. In many markets, the dynamics I see are that, distributors are either buying their suppliers, creating their own private label products. Amazon is doing the same sorts of things. If you think about the consumer segment, grocery category even traditional, Home Depot and Lowe's, and other companies like that, those companies are introducing their own private label or have their own private label and in many cases, it's much more significant than 1% of their total sales.

Brian Beck:
That said, Amazon's private-label business is growing quickly. It's expected to be 25 billion in sales by 2022. Most of that will be in consumers and they have hundreds of billions in sales overall. So, still will be a small portion of their overall mix. Isn't it a risk? Yeah? It could be considered a risk to your business. That said, you're not going to prevent them from being in your category, in my opinion.

Brian Beck:
Amazon looks for places where they can bring better value and service. And if you have a complex product or product that takes a high degree of application skill or other things or technical competence, Amazon is less likely to go into your market anyway. They principally look for a higher volume of monetized products.

Brian Beck:
So you have options. And taking the right approach really provides manufacturers as well as distributors with control of their retail pricing and content. Number one, the first thing, if you have a brand of any sort, regardless of whether you're a manufacturer or distributor, if you have a brand, you need to own on Amazon. Remember Amazon is a search engine. So you want to own that brand by using something called Amazon's Brand Registry.

Brian Beck:
This is done with your trademark, U.S trademark, or if you have an international trademark, sometimes that can be used. And, it can be used by manufacturers, brands, private label from distributors, and using this and then allows you to control the contents, and your brand storefront and another brand content on Amazon. It also allows you to monitor for things like fraud, fraudulent products and helps Amazon to clean that up. That's an issue for Amazon. They know it. They're trying to clean that up.

Brian Beck:
The number two option you have is to sell directly on Amazon. This is where you're utilizing Amazon's e-commerce solutions to sell products to customers. There are two ways to do this, and I'll talk about them in a second. One of those ways is called 3P or a third party, and that allows you to maintain more control than what they call the first party. This can be used by brands, manufacturers, distributors to sell your product.

Brian Beck:
And by the way, you can still use the Amazon Brand Registry, number one, while you're selling on Amazon. In fact, you should. The third option is something called control, which controls your brand, number one, plus leveraging resellers. So if you're a manufacturer, you can sell your product on Amazon through your existing distribution network. We have several clients that do this, where they've enabled their distributors to, what they call, win the buy box on Amazon. In other words, sell the product or get the sale.

Brian Beck:
Well, you as the manufacturer or brand control the content on Amazon. This is something called the Amazon Reseller Playbook. Amazon Business actually has a playbook for this, and it can be used by brands and manufacturers, anyone who owns a brand or product. So, you have options. It's not all or nothing in terms of selling on Amazon or not. So this is one thing many companies don't realize.

Brian Beck:
If you do choose to enable your resell channels, I mentioned this Reseller Playbook. What you're doing here essentially, is it allows you as the brand to manage the resale network inside of Amazon. Manage your cataloge, selling territories, inventory levels, et cetera, ordered information pricing. You're managing all those things while you're allowing the reseller to earn the business. So you're basically honoring your traditional channel and it reduces the expense and friction for resellers to sell. In other words, the resellers, or you as a distributor, are getting the benefit of the improved content that's going up on Amazon and it allows the manufacturer to really control the channel dynamics on Amazon.

Brian Beck:
If you're a distributor, think about this in a reverse way. I'm going to use this playbook to go back to my supplier and have them help me align with them and make me one of their resellers on Amazon so I can take advantage of the benefit of the volumes, at the same time working with the manufacturer and sort of controlling the overall resell market inside of Amazon, so that the folks who are selling on Amazon are all significant distributors or dealers that add value like servicing the product, et cetera.

Brian Beck:
So, that's the Reseller Playbook, and here's kind of how it works from a flow. I won't go through all this due to time today, but you can see here that the manufacturer wholesaler that, one, is really updating the product catalog, other things, inventory, et cetera, while the reseller too is managing the customer order flow and fulfillment. So, if you email me, I can send you a copy of this deck, by the way, it's Brian, B-R-I-A-N@enceiba, E-N-C-E-I-B-A.com.

Brian Beck:
Then the other, if you remember the two and three, really, this is the two of the three options, should you sell on Amazon or not? And this is a big decision. I think it's a fairly straightforward decision for manufacturers. It's one that I think manufacturers need to do. One way or the other. Number one, revenue, if you're going to pursue this, what are some of the pros? Revenue certainly is one of them.

Brian Beck:
Very large brand exposure and staying relevant to your customer in that search engine, brand control and the number one search engine, potentially higher gross margins. What a lot of companies don't realize is that, Amazon selling in, what they call a third-party selling mode, and I'll get into that in a moment, is actually often much more profitable than selling through other wholesale channels because you acquire the whole retail price. I'll show you the math in a few minutes.

Brian Beck:
It's also a faster way for companies to market with e-commerce. If you don't have e-commerce today and 50% of B2B companies do not, it's a faster way for you to get yourself into e-commerce and to kind of build the muscle of your e-commerce organization including things like data. You're preparing data for use on Amazon in ways that you can then leverage later for your own e-commerce efforts if you don't have an e-commerce site. So what are some of the things you need to think about?

Brian Beck:
Well, ultimately it's not your customer, right? Amazon's customer is Amazon's customer. It's not your customer. They're the one taking the transaction. They're the merchant of record. You get some information about who that customer is, but again, Amazon owns it. But think about these manufacturers, do you get all your customer information from your distributors today? You probably don't. Most companies do not. Some do.

Brian Beck:
Ultimately though, you do get a good amount of data and visibility, particularly in the third-party selling method, that allows you to understand where your product's going, trends within your product market. You could even do things like commission, your sales team, or commission dealers on sales completed on Amazon if you use this third party method. So there are some real channel alignment methods you can use. I don't have time to cover that today in too much detail.

Brian Beck:
Other reasons to think through this carefully. Pricing pressure. If you allow Amazon to sort of run wild, there can be a lot of pricing pressure on your product, a competition on your product. Full brand presentation control. Look, ultimately, this is still Amazon. This is not your own site. You can't create a full sort of bespoke experience with all kinds of content and other things. Amazon gives you a lot of tools to add some of that, but not as much as you'd have on your own site. You also have to invest resources to make this effective. And then with some selling methods, you really do surrender control, and I'm going to get more into that.

Brian Beck:
So here's where I was talking about paths to selling, and I was mentioning 3P. Let me define this for you. On the left hand side, you have something called Vendor Central. This is where you sell directly to Amazon. They buy from you on a PO, you ship to their fulfillment centers, and then you're done basically. It's like you're selling to a distributor. Amazon ships to the end customer, you have some opportunities for merchandising and marketing, in essence, it operates like your traditional channels do.

Brian Beck:
They call this Vendor Central, 1P or first party. On the right hand side is something called Seller Central or Third Party, 3P. And this is where you set up your own storefront on Amazon. Amazon still processes the order, but they never actually buy the product from you. They operate as a consignment, a marketplace in a sense, and they pass through the order and either you ship it or you use something called FBA, Fulfilled by Amazon, to fulfill the order. You have similar merchandising and marketing opportunities here.

Brian Beck:
The key difference is, on the right hand side of this chart, you're really the merchant. You control this experience. And, as I'll show you in a moment, there are some real advantages to that way of selling. Let's look at the math. The profitability of Selling Approaches. This is an example from one of our clients. I'm going to walk you through this. On the left here is selling via resellers or First Party, Vendor Central, as I just showed you. On the right-hand side is your own Third Party marketplace account using, Fulfilled by Amazon.

Brian Beck:
Let's say for a moment that your product costs you $58 to make and to ship it in to Amazon in bulk. That's your cost. On the first column here on the left, you're not going to pay any FBA fees because you're selling to Amazon as a bulk purchase. Amazon is going to charge you some selling fees. This might be advertising allowances and other types of allowances related to fulfillment or packaging, that generally comes to about 18% of your wholesale price.

Brian Beck:
You sell this product to Amazon that you made for $58, you sell it to them for $116. Amazon turns around and sells it for $231. Okay? And you make $37 and 12 cents on the transaction. That's 116 minus 20.88 minus 58, 37.12, or 16% of the retail price, follow me. That's 37 divided by 231. Okay? So now let's compare that to 3P. Still cost you $58 to make it and ship it to Amazon. You're going to pay some fulfillment costs. So in this case, this is a smaller light item costs you $4 and 79 cents in FBA fees and FBA, by the way, handles, picking, packing, shipping customer service and returns on the order. Amazon's going to charge you a percentage.

Brian Beck:
The selling fee is a percentage of the retail price. Typically, it's 15%, although it varies. In this case, has $34 and 65 cents. Here's the key difference. You get the whole retail price, $231. Okay? So if we do the math, 231 minuses 34.65 minus 4.79 minus 58 is 133.56, or 58% of the retail price. Now you can see why this math is so powerful and why the third-party approach from a profitability standpoint is generally, much more profitable. And this math I've seen workout in dozens and dozens of cases. There's a rare case where it doesn't become more profitable and the third party site, but that is more the exception than the rule.

Brian Beck:
So, this is an important piece of it, but there are other ways or other reasons why a third-party selling is a preferred method. It's your storefront. You control it. It gives you control over inventory, bringing a new products into Amazon. You don't have to wait for Amazon or a reseller to buy it from you because you control over price. You control the retail price, guess what that equals? More control over channel conflict.

Brian Beck:
Brand content, you control that as well, new product launches, and you can also obtain what they call Prime eligibility, which again, you Amazon Prime members know, that when you look on Amazon and you're looking for things with the Prime badge, well, with 3P, Fulfilled by Amazon gives you that Prime eligibility. And it's usually much more profitable as we just talked about.

Brian Beck:
And so, we see a lot of manufacturers shifting their approaches to take control of Amazon using third party. Many of them are either shifting away from using resellers or they are shifting away from the wholesale model, the first party model, and moving more towards a third party model. And there are blended programs that can be used. Amazon has some rules around this, but, ultimately you can create a blended First Party, Third Party program.

Brian Beck:
And for distributors, you might look at the slide and go, "Oh my goodness, this is scary." Well, you need to confront the reality of what's happening. And you have some strategies to approach your suppliers now, that won't exist forever. Because increasingly manufacturers are going direct to Amazon and selling themselves versus allowing the resellers to manage the programs. So it's something that you need to think about if you're in the distribution market.

Brian Beck:
So what do you need to do to succeed? So you decided to sell on Amazon or to have an Amazon strategy. Maybe it just controls your brand, remember your one, two, three strategy options. Whatever you do, there are some commonalities you need to succeed in this business. And one of the first things I encourage you to do, just go to Amazon right now and type in the name of your brand or one of the brands you represent, or perhaps your private label a product name.

Brian Beck:
And, as you look at that and see the results, it can be pretty scary. For many manufacturers, they don't know most of the people selling their products on Amazon. Do you know the sellers selling your product? So we did a study about four months ago in the spring of 2020, where we surveyed manufacturers, a broad swath of manufacturers. And we asked them, "Do you know, who's selling your product on Amazon?" We found some interesting things. "Are resellers selling your products on Amazon? 70% of those manufacturers said, "Yes."

Brian Beck:
Then we asked them, "Do you know who all these resellers are?" 70% said, "No." So, what is this saying to us? It's the Wild West on Amazon still for a lot of product categories. And this is what really is driving a lot of urgencies, this plus COVID, for manufacturers and distributors to gain control of Amazon for their brand. And the foundation of channel control is really important. It's a situation that dozens of unknown resellers are selling your products.

Brian Beck:
Here's an example of an orbital sander on Amazon. And what we see here is, there's I think, 30 something sellers of this product on Amazon. And what you'll find is that many of those sellers, you don't know who they are. They don't have good seller ratings. They're not doing a good job, fulfilling your product. And it's really an issue around pricing as well, because a lot of these sellers, the only way, what they call to win the buybacks or get the sale on Amazon, is through price. And so they're driving your retail price down.

Brian Beck:
So how do you get control of this? Well, it can be obtained, so don't lose heart here. There are a number of tactics that can be used. It includes things like distribution agreements, map policies, intellectual property protection, the foundations of that, trademarks, copyright, leveraging Amazon's Brand Registry, also selling directly. Some companies are doing this. Some manufacturers are. Designating authorized resellers, and then ongoing brand monitoring enforcement. There's a lot in what I just gave you and there's a lot that goes into it.

Brian Beck:
But the key thing to remember here is, if you're a brand looking to control your presence on Amazon, it needs to start outside of Amazon with a foundation of channel control. And that ties to your legal setup and how you're managing your distribution outside of Amazon. Amazon itself is not going to control this marketplace for you. You have to do it. Amazon has some tools to help you and my company, Enceiba, does quite a bit of this work as well. But, suffice to say, it starts outside of Amazon, not within.

Brian Beck:
You can use something called Amazon's Brand Registry. And what is this? It helps you to protect your registered trademarks and create a better experience for your customer. So essentially, you've probably heard about this. It's a great tool, but it doesn't stand on its own, as I've mentioned. You want to make sure you use it though because it gives you access to enhanced content and other things that are important for your brand.

Brian Beck:
Great content is another very foundational portion of Amazon. Amazon has this thing called A+ Product Pages. We did some work with Owens Corning, where we helped them with their product pages and sort of the overall channel control and presentation. What is an A+ product page? It has descriptive titles with benefits. It has great images. It uses video. You can see the examples of the Pink Panther right here. It has detailed information about product design and usage, rich bullet points. It's Prime-eligible and has reviews. Reviews are very important, but more into that in just a moment.

Brian Beck:
Another element that you want to make sure you're using as it relates to Brand Registry is the storefront. Brand Registry, Number one, protects the brand in Amazon, but it also helps you communicate your brand value and story. These are some of our clients here and it exposes the full catalog within the storefront. So you can create categories. If look at Big Ass Fans here, you see, that'd be hard to see here in the screenshot, but home fans, Haiku, all the different product lines are listed there. You can dive down in, you can see videos, you can understand why this product is different.

Brian Beck:
The other thing it does is it helps you with your overall presence on Google. Even outside of Amazon. Amazon gets a lot of indexation in Google. So, there are multiple benefits to having an excellent set of brand tools on Amazon, including a storefront.

Brian Beck:
The other thing that's important, I mentioned almost 600 million products on Amazon is visibility. Remember, this is a search engine. There are 560 million products on Amazon. I think it's probably closer to 600 now. 70% of Amazon shoppers only purchase products from the first page of results. Okay. People don't browse on Amazon. Think about your own behavior.

Brian Beck:
I know when I'm using my mobile phone, I'm going right to the Amazon app, I'm going right to the search function. And I'm only buying things that show up on page one. So, what can you do to ensure visibility while those content things I was talking about a moment ago are very important, but similarly, you can use something called Amazon advertising to show up higher on key search terms? And the screenshot here, you can see some aspects of that sponsored products, sponsored brands. It's not called headline search anymore. It's called sponsored brands, banner at the top.

Brian Beck:
Sponsored products allow you to show up on top of the search results, based on a bid you placed for keywords. It's very complex. I don't have time to go into it today, but it will give you... Suffice to say, it's similar to how you do Google advertising. And we have experts for example, on staff that know how to do this. It's a very data-driven exercise. The other things that you want to optimize for, what's called organic search, which is what I've shown here, sort of the center downward.

Brian Beck:
These are not positions you pay for, but you earn over time through great product reviews and sales velocity, and then promotions can also be leveraged to gain position inside of Amazon and visibility. A lot under the surface here, this is just scratching it.

Brian Beck:
The other thing that's important to know is that you need resources. So, I wish I could tell you that this is something that just happens on its own, it's a setting to forget it, but it's not. These are the five areas you need resources. Amazon leadership. You need to have someone that owns a P&L for Amazon and the overall presence.

Brian Beck:
That can be a portion of one of your executive's time. For example, we have many clients that will have... ahead of marketing or head of sales or head over e-commerce or head of retail, especially retail or what have you. As the executive in charge of the Amazon Business and they have a P&L, but below that person, there's a number of other requirements like content planning and production.

Brian Beck:
You need to get products onto Amazon and create A+ product pages. The brand needs to be... The story needs to be told and enhanced. Web Merchandising, that's a foreign concept to many B2B companies. This is bringing your products to life digitally for brand presentation and store improvements. Paid Marketing, what I was just talking about a moment ago, using Amazon advertising to drive visibility on your products.

Brian Beck:
Operational planning, and execution. This is different, shipping a product on a PO if you're using the third-party selling method, you actually have to get into forecasting your product to become more like a distributor dealer or retailer. If you're a manufacturer, this comes more naturally to the distributors, dealers and retailers of the world, because they've been doing this sort of forecasting for smaller orders for a long time. Our company Enceiba helps with all of this. We don't own the P&L, but we share the P&L and we can do the rest for you on an outsource basis.

Brian Beck:
So what is your Amazon Playbook look like? Well, first it's important to understand that this is a reality. Amazon for B2B is here right now, and they're growing. They're going to be $52 billion in just a few years across multiple categories. We have clients in dental. We have clients in medical. We have clients in all kinds of categories. You wouldn't suspect they're driving volumes on Amazon, but they are.

Brian Beck:
10 years from now B2B is going to look like the B2C market does today. I often challenged B2B companies not to be the Sears of the B2B market. No offence to Sears, but there's a lot of reasons why I cite them as my first example in my book about making sure that you're taking action and confronting the reality of what's happening. You can make moves now. It is not too late. The good news is with Amazon Businesses, it's still relatively early and you can get started and have a position in the marketplace now to help you later.

Brian Beck:
You want to get experience and expertise on your side though, while you're doing this, and that expertise needs to help you with your strategy. So we're obviously available to help you do that. The 3P model does offer significant advantages, but there's also the playbook as another model. And by the way, if you're selling in Amazon as a first-party vendor, there are also ways to improve your existing listings there. There's some control you can have. You want to put a channel control policy in place and then prepare your content, your brand, and then execute.

Brian Beck:
So I just threw a lot at you. It's a great way to get started in e-commerce. I talk a lot in this session about Amazon and our other eight sessions, we talked a lot about other ways to get started in e-commerce. Amazon can be a great way to build your sort of muscle. It can help you accelerate your digital efforts across channels. And that's because number one, you can get it started more easily with less capital and can be faster as a way to market.

Brian Beck:
Remember that Amazon has a selling structure already built, marketing vehicles already built. They have traffic already on the site. These are things that you would need to build yourself with your own e-commerce. Your content, as you're preparing it for Amazon can be used in your own e-commerce site. It builds your organizational competency around digital commerce.

Brian Beck:
And for many of you, particularly you manufacturers this is a new way of doing business for you, selling to smaller businesses, selling through e-commerce, selling through more of a direct format. It's a different model, and it's not one that you've had in your business in the past, most likely. So it takes some getting used to, Amazon can help you do that. But I strongly believe Amazon is not it's own... shouldn't be at your whole e-commerce strategy.

Brian Beck:
And in fact, if you talk to folks at Amazon and Amazon Business, they'll tell you the same thing. What's your e-commerce strategy and how does Amazon fit within it? And I encourage you to think about that. Amazon is again, a great way to start, but it's not the whole enchilada. So here's my book, it's available now on Amazon, in multiple formats as I described. Chapter seven in the book shares a lot of what I just went through in much more detail.

Brian Beck:
So you can pick up the book and really have that as your guide book and your playbook for Amazon and for your e-commerce in general. Here's the website again. I wanted to just recap kind of where we are the virtual book tour. This is the last session, the bonus session. And I appreciate you joining me on this journey. All of these sessions will be available on-demand, including this one after we air it.

Brian Beck:
So by signing up for the series, you can go back and watch and reference these at your will. And, I encourage you, if you have questions to please go ahead and email me, my email is at the bottom. Our sponsor Elastic Path, Meg, she's been a great partner in this, and she can also be reached if you have any questions about Elastic Path. So, I want to thank you very much for your time, and I look forward to seeing you in the digital world shortly and good luck with your digital transformation.