Since the lockdown began last year, more than three quarters (77%) of frequent Amazon shoppers, an estimated 15m people, used Amazon to buy a product they'd not purchased on the platform before. As lockdown ends, 97% of online shoppers will continue using Amazon for these new categories. In the UK alone, consumers spent £113 billion online throughout 2020, a rise of 48% on the previous year.
The shift towards eCommerce is nothing new: traditional retail has been under extreme pressure for years. Pre-pandemic, there was always talk about how retailers needed to create in-store experiences to slow down the tide. But many consumers have resolutely disagreed: they want choice and convenience. And this is where eCommerce excels.
The eCommerce landscape is almost unrecognisable from one year ago
Today's eCommerce landscape is almost unrecognisable compared to how it looked just over a year ago. The pandemic has caused online retail to step into the spotlight and become a necessity for many brands. Online retail sales as a percentage of total retail sales were sitting at around 19% in February 2020; a year later, it skyrocketed to close to 35%.
While global lockdowns forced brick and mortar stores to close, shoppers began panic buying trampolines and bakeware, and online retailers like Amazon were busier than ever before. Traditional retail was on pause, but eCommerce was on fast forward.
And it's a trend that's likely to stay. Early indicators suggest buying behaviours will not go back to pre-COVID patterns. eCommerce experts expected to see a drop in traffic and some decline in sales after all the restrictions started lifting. But these declines didn't materialise last year, following the first lockdown easing, and they're not reverting now.
Supply chain challenges limit growth
But it’s not all been smooth sailing for brands. No part of the supply chain was prepared for such a surge in orders, and brands began to experience stock shortages and reduced production capacity. The reality is, although many brands will have made huge Amazon gains over the past year, very few will have captured the full potential they could have experienced without the supply chain hiccups.
At the same time, a fascinating trend over the past year has been the vast amount of money thrown at companies that focus on fulfilment by Amazon (FBA) businesses. Thrasio made the concept popular. But since then, almost every week, another company has been replicating the same model and relatively quickly securing 8-figure sums to start making acquisitions.
But it's not as simple as raising money and hoping to ride on Amazon's coattails. The Amazon platform can be an enigma even to experts; it's overwhelming for inexperienced users. Part of Thrasio's success stems from their investment in specialist teams that can grow the businesses they buy. Meanwhile, their competitors are rushing to build teams that aren't quite fit for purpose.
The past year has brought into fruition countless companies attempting to capitalise on Amazon's booming success, but unless they build a genuine knowledge of the platform, they risk quickly disappearing.
Established brands and newcomers alike can both struggle on the path to growth
It's not only newcomers to the channel that can struggle. A global electronics and computer manufacturer, who had been trading on Amazon UK for many years, suddenly saw significant declines in UK revenue.
Their in-house eCommerce team was struggling with the time it takes to update, monitor and report on tasks like Amazon advertising and catalogue management, causing them to become overwhelmed by competitors and quickly lose their share of the digital shelf. It took a new, sustainable growth strategy and support by an experienced partner to stabilise their Amazon account and grow UK sales through both organic and paid search.
Within four months of working on the new strategy, the global TV brand grew quarterly Amazon revenue by over 400%.
What's critical here is unpicking the nuances required for sustainable growth. Anyone can list products on Amazon. But will the listings achieve significant rankings (the first page is essential), and will they convert? If they convert, are you in a position to quickly replenish your stock to maintain the Buy Box, and can you fulfil the demand without incurring chargebacks and shortage claims?
Sustainable growth relies on understanding the complete Amazon flywheel. It's not just thinking about ads, content or promotions. Instead, it's about planning, implementing and executing a holistic strategy that incorporates content optimisation, advertising, market insights, data analysis and efficient supply chain management. Sustainable success relies on this integrated approach to deliver growth.
Chris Mole, CEO