Modern Retail had the pleasure of speaking with Nicola Hollow, General Manager for Europe at Pattern about the future of ecommerce and marketplaces, as well as exploring the best ways for retailers to capitalise.
How is the world of ecommerce changing and what do you expect to see in the coming years?
There are three interesting ecommerce trends that Pattern has noted.
The first is disruption in the established Vendor model for how big brands sell their products on Amazon. Amazon is purposely increasing the percentage of sales that come from third-party sellers and being more selective about how much of a brand’s range it is prepared to buy. Brands are seeking alternative models for Amazon in Europe to mitigate risk, and also to explore whether they can lower their total cost of selling on Amazon. Alternatives include running a third-party account themselves, partnering with a business like Pattern as their authorised Amazon seller, or hybrids of the other models so that they don’t put all of their eggs in one basket.
The second is an increased focus by brands on channel differentiation, and ensuring their product is not over-distributed online. We’ve worked with quite a few brands who benchmark and categorise their retail partners; to focus on the ones delivering the best experiences for customers and rationalising the rest. At the same time, brands are thinking more strategically about their own DTC websites – ensuring that they add value over other channels and ensuring that they meet the needs of their most loyal (and profitable) customers.
The third is that marketplaces, retailers and brands are all having to look carefully at cost to serve. Rising costs associated with storage, delivery and returns will mean range rationalisation to exclude unprofitable lines, and costs pushed on where they can be. For example, in May 2022 Amazon added a 4.3% fuel and inflation surcharge to the fees it charges to sellers who use its Fulfilment By Amazon service and it’s just raised the cost of Amazon Prime in the UK by £1 a month. Fast-fashion etailer Boohoo has also just announced that will start to charge £1.99 for returns, after Zara made a similar move.
How important is it for retailers and brands to make the most of marketplaces such as Amazon?
We believe that it is crucial for brands, and can also be very beneficial for mono-brand retailers; even if you have other strong online and offline channels to market. A presence on Amazon ensures that you have visibility on a platform that the majority of online shoppers use at the start of their purchase journeys.
Your presence there helps to develop their expectation about your product range and prices. Our research also shows that Amazon is an important platform for product and brand discovery, facilitating new customer acquisition for brands.
At the same time, an active Amazon strategy ensures that you can protect your brand presence on the platform. Without it, unauthorised sellers will fill the void if there is demand for your products on the platform. Then you have little control about the product content and imagery that is used, and messaging to support your brand story.
What would be your top tips for retailers looking to improve their ecommerce offering?
It’s a very simple one but regularly benchmark the experience you provide compared to key competitors and through the lens of your customers. This complements data-driven insights you’ll derive from web analytics and can assist with explaining patterns in your web and trading data.
It’s easy to overlook as an insider that understands your ecommerce site and proposition. When we run ecommerce benchmarking exercises on behalf of brands we look at the site as though we were a first-time customer. It’s also important to look at what other websites are doing, as they also set expectations about how customers will be able to use your website too.
Talk us through the most important considerations for retailers using marketplaces such as Amazon
Shoppers like the choice, convenience and focus on price that Amazon offers. For brands and retailers who want to sell on the platform the key consideration is does your presence on Amazon support at least one of those requirements.
Choice is supported by the range you offer on Amazon and whether your products rank in search results for generic terms.
Convenience is supported by factors such as whether your product is Prime eligible, whether your product information and imagery gives consumers everything they need to make a purchase decision; and whether your Amazon storefront and listings make it easy for consumers to understand your range and price architecture.
The focus on price doesn’t mean that your products need to be cheaper on Amazon than elsewhere. You can support this requirement by making sure that your products are Prime eligible – so customers aren’t paying for delivery or returns – or that they are part of the Subscribe & Save programme.
Tell us more about Pattern and how it works from a brand’s perspective
Accelerators such as Pattern offer an alternative model to brands who don’t want to operate on Amazon’ Vendor wholesale model or operate a Seller account themselves. We are a highly sophisticated marketplace seller backed by data, technology and infrastructure, who partners with the brand to optimise their presence on Amazon (and other marketplaces) around the world.
For Amazon in Europe, this means brands sign a partnership agreement with Pattern for us to become their authorised seller in mutually agreed markets. We buy their stock at a discount from RRP and take care of every aspect of their Amazon presence, including their product listings, brand content and storefront, Amazon advertising, fulfilment, customer service and Amazon compliance.
This reduces the burden on the brand to manage its Amazon presence compared to running its own Amazon Vendor or Seller accounts.
We describe ourselves as an accelerator rather than a seller because our operation is backed by a platform of data, technology and infrastructure, to maximise opportunities for profitable growth.
How can technology, data and logistics be used to grow brands?
Our in-house software tools allow us to track the performance of every product we sell on Amazon, providing data to make trading decisions, optimising promotions and pricing and minimising out-of-stock situations. Similarly, our programmatic advertising tools allow us to continually optimise campaigns to generate the best ROI for the brand.
Logistics can also be key. We are able to turn on and off Fulfiled by Merchant services for certain products we sell on Amazon. This means that if a shipment into Amazon’s warehouses for Fulfilment by Amazon is delayed for whatever reason, we can prevent the product from becoming out-of-stock on the marketplace by using alternative fulfilment services.
What’s next for Pattern and how can our readers stay up to date?
We are regularly adding new brands to our portfolio, both those that we sell on marketplaces in Europe, and European brands that we represent on marketplaces in the USA, China and other key markets around the world. We’re continually hiring in Europe for both our London and Munich offices to support our growth.
We are also on a mission to educate brands on the most successful strategies and tactics for marketplaces and to help them understand the differences in marketplace customer behaviour around the world. As well as offering free research and other content for download from our corporate website, we also run regular events for the benefit of brands who are keen to accelerate their growth.
You can stay up-to-date with our news, content and job opportunities through the LinkedIn page run by the European team https://www.linkedin.com/company/pattern-international/ as well as our website www.pattern.com/uk
