Top 5 learnings from eCommerce Expo 2023 to help with business planning
Last week we headed to the eCommerce Expo at the London ExCel for two days of networking, idea sharing, and learning about the latest developments across online retail.
We’re sharing a quick snapshot of 5 new things we learned that we think will be useful to consider in business planning over the coming months:
1. Understanding the Amazon A9 Algorithm:
You need to do more than just run great ads to win on Amazon
When you search for a string of words on Amazon, the non-paid results that will display are ranked according to a set of variables (of which there are 150).
These variables are weighted, and vary from product to product, with search relevance (keywords) and price often the biggest drivers in Amazon organic rankings.
If you therefore have a 1P relationship with Amazon, they will tweak and test your product pricing as one way to try and improve that product’s rankings for certain search terms. Increasing the sales volume feeds the flywheel: more sales > more reviews > more relevant on-page keywords > higher organic ranking.
As we enter peak, it’s important that any Amazon strategy is considered as part of a wider business strategy, or pricing wars risk affecting all other online retail KPIs.
2. The cut back on discretionary spend, across all categories, is very real
Google search volume has seen a YOY drop of over -70% for ‘dresses’. Inflation is at a 41 year high. 70% of IMRG retailers have seen growth of 0% or less, with 26% reporting growth at lower than -10% YOY.
But in this chaos there is opportunity. Using 1P data to dig into cohorts and improve margin without compromising on customer experience is a much better long-term strategy than shifting to deep discounting.
Adding more meaningful value to customers is more beneficial in the long-run. For example, if current personalization tech has a customer who has looked at a black jacket one, being shown continuous recommendations for only black jackets then this isn’t adding value.
Prioritise innovation, whilst remaining commercial rather than chasing arbitrary numbers at any cost.
3. Beauty brands shouldn’t be ignoring TikTok Shop
Not just a buzzword, for cosmetics brands and retailers Tik Tok Shop’s customer base is now reported to have a higher purchase frequency, higher AOV and higher average yearly online spend than all cosmetics online buyers.
Tik Tok is now the 5th most popular platform for buying cosmetics online in the UK (behind Amazon, Boots, Look Fantastic and ASOS) according to Fox Intelligence, and 47% of TikTok users bought something they saw on TikTok. Meeting your consumer on their platform of choice is increasingly how brands are leveraging new sales.
4. GDPR and cookies are getting an update, and it’s much better news for online retailers
From March 2024 the Data Protection and Digital Information Bill (DPDI) will update existing regulations across GDPR, PECR, DPA and the Electronic Comms Regulation.
Key updates include clarity around “legitimate interest”, amendments to cookie requirements (with the UK government looking to phase these out completely over the next few years as consent banners become increasingly meaningless) and maintaining EU adequacy with new Codes of Conduct.
A particularly powerful opinion on the latter point is that of Advocate General Bobek in the Fashion ID case in Germany, who concluded: “I would agree that marketing or advertising can, as such, constitute such a legitimate interest”.
5. Selling in the EU is entering a second phase of progress, with proposed changes to customs, VAT and the scrapping of the iOSS (import one stop shop) for cross border selling
Starting from 2025, new EU directives should see import and custom duty simplified for retailers, to be accounted for on a monthly basis (fully rolled out by 2028)
Alongside this, currently EU customers must pay import VAT and customs duty on any goods valued over 150 euros and this will also be scrapped by 2028.
Looking at longer term strategies, any potential expansion into Europe as a new eCommerce market will be significantly simpler from 2028.