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Transcript

Robert: Welcome to the eCommerce Marketing Podcast. Today we’re going to be talking about competing with Amazon, the big giant. Is there kryptonite? Can you really compete with them? Today we have a special guest. Our guest today is Kunle Campbell. He’s an eCommerce growth consultant and an advisor that coaches a lot of eCommerce businesses and entrepreneurs on how they can drive profitable revenue, growth, and how they can just improve their customer acquisition, their user experience, their conversion optimization. He also works with different vendors, he helps with their platform selection.

You can find out more about him if you visit his website. He also had a podcast. You can find all of that at 2XeCommerce.com. Welcome to the eCommerce Marketing Podcast, Kunle. How are you doing?

Kunle: Thank you very much, Robert. I’m very, very, very well, thank you.

Robert: Yeah, so I’m really excited about today’s topic. Amazon is really overwhelming a lot of eCommerce businesses out there, and this is actually a conversation I’ve had with my friends, is like can you really compete with Amazon? Does Amazon have an Achilles heel? Is it possible, can you really compete with them?

Kunle: Right. That’s a very, very good question and I’m happy to answer. Amazon, as we all know, is an 800-pound gorilla. They’ve been around for over 20 years, not 800 years. Genius actually who runs it, Jeff Bezos is a genius, you have to admit. He has a master plan, right?

Robert: Yeah.

Kunle: Basically Amazon offers a near endless, well, range of products. Two things actually, well, just get Amazon to be that size. One is their endless range of products, and two is Amazon Prime, right?

Robert: Yeah.

Kunle: The incentive for bringing people into Amazon is just range and what is perceived to be the best prices. Then the second thing is they have this membership club which is their retention engine. Now from a retailer’s standpoint, my opinion is there are three kinds of eCommerce businesses, and two out of the three kinds of eCommerce businesses can actually thrive and compete against Amazon. I’ll give you the three kinds of eCommerce businesses. One are the merchandisers. Merchandisers basically take other people’s brands, that’s what pretty much Amazon does, right?

Robert: Yeah.

Kunle: Competing as a merchandiser against Amazon, that’s like the mass merchandiser, will just get you out of the business most of the time, unless you’re a Walmart, or if you’re in the U.K. you’re a Tesco, you’re an Argos. Now the second type which I’m finding really interesting are direct to consumer brands. Direct to consumer e-tailers have an advantage. First, they can cut out the middleman, and second, they own their own brand, they own their own supply chain, and they should have a unique value proposition which you cannot get on Amazon. Then we have the hybrids which pretty much are merchandiser of other brands and they also stock their own brand, they’re somewhere in the middle. They’re obviously getting a lot of profit from selling their own brand.

I don’t have any eCommerce brands that are hybrids as examples, but if you think about when you walk into a Walmart, what happens, and you want to buy cereal. You could buy the normal Frosties from Kellogg’s or you could buy the Walmart brand of Frosties which might taste slightly different but it’d be cheaper. Owning your brand is really important. I think from a direct to consumer standpoint there is certainly opportunity to compete against Amazon.

Robert: Okay. What you’re really saying is you first have to understand what type of business model you’re following, and the three options you’ve seen that you have to understand and focus on are the merchandiser, the direct to consumer, and a hybrid of both. Once you understand your business model are there certain advantages and disadvantages depending on that model on how you can perform against Amazon?

Kunle: Yeah. That’s a good question. The key emphasis here is differentiation. Now this piece of the business fundamentals, a lot of people don’t want to touch on the business fundamentals because we’re pretty much just involved in the marketing and we just think, okay, we’re going to hack this marketing. Sometimes the business fundamentals are really important. How do you differentiate yourself as an e-tailer? Now I’ll start out with a merchandiser. If you’re a merchandiser, how can you sort of compete against Amazon? There are still opportunities there. One is you could be a specialist retailer. Okay, so in the U.K. we have wiggle.co.uk. They’re specialist in cycling, running, swimming, and triathlon gear.

The reason why they’re that is because if I’m an enthusiast, I run or I cycle, and I take this very seriously, I want specialist to help me out. If you can own a category as a merchandiser, just that is it. You think about Bonobos and what’s their play in America, the better fitting men’s wear. They just offer better fitting men’s wear and they do it pretty well from the user experience at the front-end to the delivery. Okay?

Robert: Okay.

Kunle: You look at Naked Wines in the U.K. They own wine subscriptions or wine clubs. They do it perfectly. Amazon, they’re not competing against Amazon. Now the second way a merchandiser can actually sort of compete against Amazon would be product curation or storytelling with strong content. You more or less take a content first, where you’re this trusted sort of guide in a certain niche. You take Huckberry, for instance, huckberry.com, their entire ethos is around storytelling. They work their fashion brand. They don’t sell their brand, they sell other people’s brands, but they’re curators in a way where it’s a lifestyle. When you read stuff from Huckberry, it’s like reading Gentlemen’s Quarterly, GQ, or reading an Esquire as a man, but it’s for the urban man that has style. They’re that definitive resource for style and they happen to sell clothing, right?

Robert: Yeah.

Kunle: And they happen to sell other things. Amazon can’t do that, they’re too big to get into that. Then the other one would be to completely just gate off everybody and create kind of like membership sites. The challenge for membership sites is acquisition, and you need to play with the press, you need to play with social media, paid social, you need to pay to play to get into gated community flash sales membership type websites. When you think about gated communities like Flash Sales, there is a website called that, achica.co.uk, and what they do is like furniture and it’s gated pretty much. What they say is basically when you’re a member, you wouldn’t get these prices anywhere else because they pretty much help other brands sort of liquidate.c

Then there’s subscription commerce. Dollar Shave Club did it. [inaudible 00:08:13] Club, Graze, Naked Wines, Manpacks, you can go into subscription commerce, but you have to be careful because they’re replenishables and then there’s lifestyle type subscription commerce or enthusiasts. I know someone who just launched something about cocktails, another person who’s doing like a fishermen, I’m going to be interviewing someone about fishermen like gear and so there’s a surprise and delight element in there for subscription commerce. I think the core thing really is retention, thinking about not the first sale, but thinking about how you’re going to keep customers long term.

Other ways merchandisers can sort of compete against Amazon now I would say are, I wouldn’t really say price, I would say more or less the customer journey, so the user interface people interact with, the front-end. There’s a website called made.com, they sell furniture in the U.K. Their ethos really is just quality low-priced goods because they cut out the middlemen. They pretty much represent designers, furniture makers. They have a very, very strong relationship with furniture makers, but the experience and the way they present it, you can’t sort of double or replicate that anywhere else. They uniquely do that, made.com. Then the delivery, so the unboxing experience, to people it’s a delight.

We went for a dinner date, my wife and I, to one of our neighbors. They just had a refurnish, and we were like “Where did you get it?” They were like “made.com.” We were like “Wow, made.com.” They just went for 5, 10 minutes talking about the website. There’s this thing I call the dinner party effect or should I say the dinner party test, is the user experience you’re driving worthy to be spoken about at a dinner party? If it is, then you’re on the path to beat an Amazon in your niche.

Robert: Okay. Really Amazon’s strength being big is also slightly its weakness because from everything you’ve mentioned on how to differentiate yourself is things that Amazon really can’t necessarily focus on which is trying to be a specialist and just spending more on resources that Amazon really doesn’t have the time because they have to focus on being big and getting back to people with like Amazon Prime. Really it’s just because it’s big that’s also its weakness, and that’s where you have an opening for other eCommerce entrepreneurs to get in and differentiate themselves.

Kunle: That is precisely the point. They’re like elephants really, and when they come in a territory everybody notices it, but there’s a lot of space in the safari for other animals. The other thing-

Robert: What the direct to consumers? You mentioned the merchandisers-

Kunle: Yes.

Robert: and you talked about how they can differentiate themselves. What about the direct to consumers and the hybrid business models?

Kunle: With the direct to consumers the same principles I mentioned earlier apply. The key thing is vertical integration is not enough. By vertical integration I mean, okay, say you make the stuff you sell, like you’re Warby Parker. You make it and you sell it. That’s not enough. The key thing is how do you focus on retention? How do you create new experiences? How do you drive that word of mouth marketing? Because if one customer can tell 10 other people, their friends and their family, about their experience with you, that’s going to scale your business. That’s how Amazon actually scales their business, because they have the word of mouth. Jeff Bezos said something where, I can’t recall now. He said something about word of mouth marketing, I forget now.

It was more or less around the fact that your customers, when your customers start to talk about your brand then you have a business, you have something concrete. Within the context of the DTC or direct to consumer, you need to figure out how to optimize that customer journey. You think about casper.com in America, a lot of people don’t know this, but they don’t make the mattresses. They have an exclusive with the factory that makes their mattresses, but they have other layers in their customer experience that makes people to talk about them more and more. You look at Hem you look at Naked Wines again and what you see, the trend you see is these guys focus on retention, on the long game, one, and they also focus on delivering new experiences which drives word of mouth marketing. Those are the principles that will apply to a direct to consumer brand and a hybrid.

Robert: Okay. Once you’ve understood your advantages and disadvantages with the merchandising business model, the direct to consumer, and the hybrid, and you know the different ways that you’ve already mentioned on how to differentiate yourself, are there other strategies that you can work on to help you better compete and beat Amazon?

Kunle: That’s another very, very good question. Yes, there are. I’ll start off with one. You need to take an inch-wide mile deep approach and be a specialist. A lot of the time be a specialist and sometimes operate in a niche that’s too complex for Amazon to bother about. I run a podcast, 2X eCommerce Podcast, and I remember in one of the episodes I interviewed the founders of Car Parts King. One of the things he said was pretty much the complexity and the permutations and combinations of cars and parts was just like an Excel spreadsheet, and they were in catalogs, had catalogs. It was just impossible for some Bob down the road who just wanted to build something up from his garage to build out spare parts of really, really in-depth spare parts and website or store.

They would drop ship and they built their business off the back of drop shipping. What they’ve been able to do is bring these complex combinations and permutations, you can imagine the number of cars in the U.S., and the car parts, and the car numbers, they brought that and made it very easy in their front-end. Now Amazon could do it, but before they do it, they’ve already sort of controlled the market for now. They have that first mover advantage. Another would be I have a client, they sell tiles, and a lot of people, well, they want to visualize tiles, they want to visualize their homes with the tiles. There are many calculations that get involved.

Sometimes you just put the square foot area of your room and the size of the tiles actually, they’ll then sort of calculate the number of tiles, the grouts needed, and all these materials needed. There’s a lot of specialism there because they’re focusing on a particular niche from a business model standpoint. Second is focusing on retention. I talked about it earlier. It’s more or less customer lifecycle marketing. I spoke with a chap from Ometria and what they do is they track every single interaction every customer has with your website and then they segment them to understand who are your advocates, who are your hero customers, who are your laggers, and then off the back of that they send them really targeted messaging. You’re trying to squeeze as much from existing customers as possible.

The third way would be customer experience. Again, the dinner party test. Are you delivering an experience out, you know, deliver a conversation starter at a party? What kind of experience are you delivering and is it noteworthy, and from that standpoint you need to think outside of the box from that. Things that your industry are not doing, you might look at other industries and borrow from them. The fourth way is SEO and inbound marketing. Now my opinion about SEO is, right, so a lot of people say SEO is dead. SEO is not dead. There’s technical compliance with Google. You need to get your website to be compliant with how Google likes. You also need to do keyword research.

In my opinion, SEO is now very technical and the rest of it is marketing, the rest of the game is marketing. That’s why you found a lot of SEO companies in the last three years, five years after the Pandas and the Penguins rebranded themselves as content marketing or inbound marketing agencies basically. The core thing really is you need to send signals to Google that you’re a brand. SEO is still relevant, I have to say. If you’re ranking top three in your niche and it’s a big enough market for core terms in your business, you will grow, but if you’re ambitious, you need to think about other things beyond SEO. Another thing is, and speaking of that, Facebook pixels, remarketing, you need to retarget traffic on your website, all of that stuff works.

All of that needs to be implemented in terms of strategies in place. You need to harvest traffic on your sites, and the two ways you harvest traffic on your site is, one, through Google remarketing, and then the second is through Facebook. Twitter also has their program but those are the two core remarketing options really. Then you need to constantly optimize your user experience and the way you present your website. The technology is there, the experts are there, you need to deliver a user experience. The user experience also extends to customer journey. What they interact with initially and the times in which you deliver and the messaging all has to get in sync and be memorable so they can think about you and you’re top of mind, so you’re not just that one-off website.

Even if they’re not going to come back to buy from you because they don’t have the need to, when someone is in need they just recommend you because you’re top of mind, in their experience you delivered. I think the at the end of the day, from the business model standpoint again, if you go full stack, that is you own your entire vertical integration and you do all of what I said, then there’s product market fit.

Robert: Wow. There it is. We have slayed the Amazon giant. Yeah, so I mean you’ve given a lot of strategies. I guess the main takeaways are differentiating yourself, specializing, and then using all the other online marketing and digital marketing strategies to actually make yourself stand out, and yeah, it can be done. Kunle, you’re really showing us the way how people can really bring down, or at least not bring down, we can think more of they can make themselves successful with their eCommerce business, achieve their goals and-

Kunle: Yeah.

Robert: live the lives they want to live.

Kunle: Yeah, Robert. The thing is no one has funding like Amazon. You’re not jet.com. The next contender for Amazon space which I doubt they’d make a dent on Amazon is jet.com, their finance, but what you could do is you could own a space if it’s big enough and take Amazon off that space. Just grab it, grab that space. So long as they’re not like replenishables and commoditized there’s opportunity.

Robert: Just to move on, you’ve given us strategies the listeners can use to make their eCommerce businesses more successful, but are there some tools that people need to be using to achieve these goals?

Kunle: Right. I’m not a big person with tools.

Robert: Okay.

Kunle: Because I think strategy dictates the tools-

Robert: Okay.

Kunle: depending on your size. Now I work at the mid-tier, and yeah, I work with a few start-ups, but the key thing is you need to think about it right across the board from an acquisition, retention, word of mouth, then a measurement on a dashboard standpoint, your business intelligence dashboard. I would just give you a few tools I’ve used from that perspective. For acquisition from an SEO standpoint keyword research I’d recommend SEMrush, they’re really good, along with the standards which are like Ubersuggest, Google Keyword Planner, there’s keyword.io, but I think it’s paid. Ubersuggest does the job. From a trend standpoint in SEO you want to look at Searchmetrics, really, really good.

From a technical audit standpoint there are two tools, Screaming Frog which crawl your site. It’s a desktop app. I think it’s about £100 a year or something. Then there’s DeepCrawl which is more enterprise and it’s SaaS-based. Facebook marketing, I don’t really use that much with Facebook marketing. There’s also Moz. Moz is quite good for managing your SEO. Searchmetrics perhaps due to a brilliant better job [inaudible 00:23:29] because they’re more enterprise. From a retention standpoint, so when you’re thinking about how are we going to keep our customers, get our customers to come back or just stay back, I think retargeting, well, when you lose customers and when you’re trying to get back your customers, retargeting is the key thing.

As I said earlier, that harvesting stuff where if you don’t have Facebook pixels and the Google AdWords, what’s it called, the cookies, I forget the name, but similar to Facebook pixels for retargeting, you should have it. Yeah, that’s really important. From a retention standpoint one tool that I like is Ometria. They’re a customer lifecycle platform. They pretty much will track every single customer’s journey. As in you’d see a customer and you know what they’ve done from start to finish, kind of like hop spot for eCommerce, if that makes sense. Then from a word of mouth standpoint these chaps doing a good, really, really good job, addshoppers.com and talkable.com. Those are two really good platforms.

What they do pretty much is when people have made a purchase, you could incentivize them to share and then get discounts off their next purchase or what would be good for either of them is prior to making a purchase they can share the experience, your experience so far so you get you earn the discount that would be really good for anyone who’s a software developer listening. Then from a measurement standpoint, Kissmetrics, really, really good. Which is one level above analytics, Hotjar for heat maps and video recording of sessions, actual sessions on your website. Because the thing is that when you put people in a lab environment, they don’t act naturally the way they will act.

If you just have recordings of actual sessions, you would actually spot trends which you need to fix from a CRE standpoint. Heap analytics is really good for eCommerce. Heap analytics. It’s more like an enhanced funnel analysis. I don’t think analytics, Google Analytics still do a good job even with their enhanced eCommerce on funnel analysis and Heat Analytics actually do a good job. Then from a dashboard standpoint, the tool I think is good right now is RJ Metrics. I haven’t tried them, I’ve only had a demo access to it, so they’re more or less for SaaS businesses, but they also have eCommerce support, so it’s worth checking anyway.

Robert: Okay.

Kunle: Those are my tools.

Robert: That’s a lot of tools, thanks for sharing them. If listeners want to reach you, where can they find you?

Kunle: 2XeCommerce.com, and if you like what you hear, then come on to 2X eCommerce Podcast Show. It’s on iTunes. Just type up 2X eCommerce or you can type in my name, Kunle Campbell, on iTunes or on your favorite podcast app and it should pop up. Either way I think I do more podcasts now than blog posts, and I think come 2016 I’m going to start to do more blogging because, yeah, I’m going to be writing a lot more in the website, but just come on to 2XeCommerce.com.

Robert: Thanks for being on the podcast, Kunle, but before I let you go, I always ask this question at the end of the podcast to all the guests. What is the one thing an eCommerce business can do right now to help them grow or to help them get to the next goal? Yeah, just to get to the goal, to achieve their goal?

Kunle: Okay. Well, I think that’s a good question. I was going to talk about the eCommerce group Triangle, but if it’s one thing I’ll just say laser sharp focus. What I mean is you might have one of these three problems. You might have a problem with retention, keeping customers to come back more and more, you might have a problem with word of mouth marketing which is pretty much get some referrals from existing customers, or you might actually have a problem with your products. Now if you can fix two out of those three, you will grow. If two of those three, your products, are not full stack, and maybe you’re not really going on retention and you’re only relying on word of mouth marketing then you’re not going to have a long term business.

Now I ignored the fact that customer acquisition, customer acquisition is customer acquisition, but in my opinion if you buy a customer or you acquire a customer and you cannot keep them or get them to talk about your company, then you don’t have a long term proposition. There has to be a word of mouth marketing proposition or a word of mouth marketing sort of lever or some sort of retention going on. Focus on two out of three, which is full stack products if you’re a direct to consumer, that’s good, really good. Then there are two other things you can focus on, word of mouth referrals and retention.

Robert: Okay, Kunle. I really appreciate you coming to the podcast and sharing the strategies you’ve shared, and thanks for being on the podcast.

Kunle: Thank you, Robert.

Robert: Okay.

Kunle: It’s a pleasure to be on the eCommerce Podcast. Cheers.

Robert: Cheers.