How this brand is tackling the Amazon retail problem
- 19 July, 2017 07:33
While many Australian brands struggle with what impact Amazon’s arrival in Australia might have on their sales channel, at least one has had first-hand experience with the American online behemoth for years.
STM Goods has been designing and manufacturing bags, cases and other accessories for high-tech goods such as laptops, phones and tablets since 1998, and now works with 3000 retailers globally. One of them just happens to be Amazon.
Founder and global CEO, Ethan Nyholm, has some blunt advice for other manufacturers in the age of Amazon.
“It’s putting higher demands on everyone within the channel, and if you are not going to do a better job, then someone else will,” he says. “There will be another company with another product that will go to that next level and try to be that partner of choice. So you really need to change, modify, and improve almost all aspects of your business.
“We like to think we are a little bit ahead of the game because we try to do these things already. We deal with Amazon globally, so we are well versed in that language.”
What it takes to partner with Amazon
For STM Goods, meeting that challenge has meant constantly raising standards in terms of customer service, product quality and speed of delivery. It has also meant adjusting how it organises its sales channel.
“When you are working with a retailer, you are initially selling to a buyer, so your initial point is to a single person,” Nyholm says. “That same message has to be able to flow through packaging and through other communication directly to the end user, so that they pick your product off the shelf and buy it.
“With Amazon, you are constantly selling to an end user, so the feedback loops are a lot quicker. The information you receive and the requirement to be good at what you do is a lot higher.
“Just getting it listed isn’t good enough. You have to also communicate against all those other players that are essentially on that shelf as well, and really the barriers to getting on that shelf are very minimal.”
When selling through the marketplace, Nyholm says STM Goods works to ensure its rating is as high as possible, so it lands in front of would-be consumers.
“The amount of information the consumer looks for and consumes online is a lot greater than what they demand in the retail store, because there they able to touch and feel it,” he continues. “Trying to provide that information, whether is detailed specs, information about the materials we use, video – just trying to provide a lot more information than what we could in a normal retail setting – seems to help.
“From a customer support perspective, we’re there. When people have issues, we address them. We try and answer questions, we try and make sure our star reviews are up.”
STM Goods also pays for Amazon A+ Content, which offers enhanced content to first-party sellers, such as highly-detailed item descriptions, improved images, comparison charts, videos and other benefits.
“It gives the consumer more of a brand experience on that product page,” Nyholm says.
As well as its retail partners, STM Goods sells direct to the public through its own website. But selling through Amazon also potentially puts STM Goods in competition with its own channel on the same marketplace platform. Nyholm is pragmatic about the situation.
“We sell through multiple channels, so in theory a retailer could have our products on the marketplace the same way we do,” he says. “Inevitably, we sometimes compete with them, but that is just the nature of the beast.
“It seems like the trends in the US are a little bit ahead of what we are finding in Australia, so we picked up that marketplace aspect of what we do a little bit earlier, and have tried to manage it to the degree that we can.”
One of the most critical adjustments STM Goods has made is to its speed of fulfilment. This is something Amazon has used to capture the imagination of consumers, through services such as Amazon Prime Now, which offers two-hour delivery of household items and essentials in some markets.
Nyholm says this reflects the general expectations of consumers today for instantaneous response.
“You see that across the board – someone sends you an email, they expect a response right away,” he says. “What’s reflected in retail is what is being reflected in society. It absolutely has made the requirement for us to forecast, deliver, and make sure we have the right product in the right place at the right time extremely important, and changed our logistics completely.”
The technology component
One of the critical factors that has enabled STM Goods to keep moving forward has been the quality of its back-end systems, based around NetSuite.
“One of our key objectives when we put this system in place was to provide visibility, because the velocity of business and the velocity of change in what we are doing requires a greater global understanding of what was going on in individual locations,” Nyholm says. “NetSuite helps provide a global view of everything that is going on, and allows people in the US to understand what is coming through from a production perspective.
“It is about making sure that the right product is in the right place at the right time at the right price.”
But success for this objective is about more than just technology. Nyholm says there must also be a genuine willingness to share information across the business.
“There is a change in the frame of mind of what people need to have access to,” Nyholm says. “It is not good enough to know just what you have in stock in one place. You need to see what you have in stock everywhere, and when the next lot is coming, and how quickly they can get it.”