Brands Are Waking Up to the Inevitable of Selling on Amazon
“Ecommerce is essentially digital disruption,” says David Spitz, ChannelAdvisor CEO, at the recent Retail (R)evolution 2018 conference. “If you are a brand or retailer and you are in that supply chain, or flow of commerce, digital disruption for ecommerce is like what Netflix did to Blockbuster. There’s a lot of retail disruption. The alternative of being able to click and get products very quickly, where you can now get deliveries in as little as an hour, makes the value proposition of getting in your car and going to the store very diminished.” Spitz says this leaves retailers looking for what they can do to remain relevant.
He says that if you are a brand, manufacturer or CPG type company the path to the consumer is changing very rapidly. “In the US, ecommerce is still only 10 percent of total retail spend,” notes Spitz. “Most companies are still driving 90 percent of their revenue through the traditional retail channels, but the growth is in that (ecommerce) 10 percent. The path to the consumer is changing and it’s creating a new world order with the landscape shifting very rapidly.”
Spitz is focused on the challenges of retailers. “I’ve spent a lot of time talking to a variety of brands such as paint manufacturers, tire manufacturers, apparel companies, etc. They are in this interesting crossroads because the bulk of their revenue still comes from the traditional retail channel and those are partnerships that are important to them and they don’t want to upset those partnerships. On the other hand, if you look at the rate of growth of Amazon, they are approaching half of US ecommerce. It continues to grow at roughly twice the rate of the industry so it’s not hard to imagine waking up in a world where Amazon accounts for 60-75 percent of US ecommerce.”
If you are a brand, how do you reach those consumers? “Consumers are saying this is how I like to shop, it’s an easy app, I click and know I’m going to get the product quickly,” says Spitz. “Last summer, Nike decided to start selling on Amazon, and Nike had resisted selling on Amazon for the last 10 years. I think there was some dawning realization at some point that this is how customers want to shop. So a lot of these brands see it as inevitable, that’s how consumers like to shop and why make life hard for your customers?”
“I think that channel mix conflict is very much real for brands but at the end of the day, the customer is what matters the most. If the customer says this is how I want to purchase your product if you are a brand you have to listen to that.”
New world order indeed…
