The Future of Ecommerce Marketplaces [The D2Z Podcast]

Brandon Amoroso: I am Brandon Amoroso, and this is the D2Z podcast, building and growing your business from a Gen Z perspective. I am a Gen Z entrepreneur, founder and president of retention-as-a-service agency Electric, and co-founder of Scaleless. Today I am talking with Mike Danford, CSO at Adverio, which helps established brands grow their sales on Amazon, Walmart, and Target. Thanks for coming on the show.

Mike Danford: Thanks so much for having me, Brandon. Looking forward to it.

Brandon Amoroso: Before we jump into all the things going on with marketplaces today, can you give everybody a quick background about yourself and how you got into this?

Mike Danford: Absolutely. About 10 or 12 years ago I got into the Amazon space, a little bit of arbitrage, reselling Nike shoes, and then went over into my own supplements and some apparel products. I started posting some of the feedback and success I was having with my advertising campaigns, and folks started seeing that and said, could you do it for me, and the rest is history, turning from advertising into a full-service marketing agency. During that time I realized I had a passion for large catalogs and how to optimize those, and that a lot of brands would expand their catalogs without a strategy, so figuring out how to help them make those decisions, when to cut a product or expand a product line and where to find the data. Now we offer that for mid-seven, mid-eight figure brands.

Brandon Amoroso: It has obviously changed a lot, but since you got started, what are some of the biggest holistic changes in these marketplaces over that time?

Mike Danford: Great question. Pre-pandemic to post-pandemic there is a pretty big shift, but in general it is getting more competitive in the paid media space within each platform, and certain platforms are more advanced than others. Walmart has a different way of negating and reducing to help you improve relevancy and exclude traffic. Amazon is probably the most sophisticated with different types of campaigns, targeting, placements, and multipliers. In general, the CPCs, the cost to run advertising, and the amount of ad space on a SERP or product detail page is much higher now. All the platforms realize they can monetize that real estate, so now you have to pay to play. Five or six years ago a lot of brands could sling out products and, whether they had off-platform recognition or not, it was easier to rank. Now you really need the paid space, even more so for defending your own products. Some platforms do not allow others to target your branded and IP, which is helpful to correct conquesting, so knowing those nuances in each platform is important. Each platform also has its own ideology around seller support, whether managing catalog or advertising, since those divisions are separate on each marketplace. A couple of marketplaces are putting more support on the seller side as opposed to just customer-centric, trying to make it a more enjoyable experience and allow more standardization. In the old days on Amazon you could sling up whatever you wanted, there was not much standardization, but now they are taking a page out of Walmart's book, which always required a certain recipe in your title, brand, product, attribute, and now with AI they can force it, your title may include three extra things we do not approve, we will let you do it in the back end, but whenever a customer sees it on the front end we will remove it. So it has been interesting to see the forcing of compliance.

Brandon Amoroso: Amazon is the 800-pound gorilla and was first to market, with Walmart second and Target third. If you are a brand, do you really need to be on all three, should you, does it depend on your size and maturity? Walmart has been pushing the marketplace aggressively, Target I have seen a little but not a ton. What is the general landscape?

Mike Danford: Think about brick and mortar, Amazon is a little different, but Walmart's target demographic and physical locations versus Target and who they cater to, that in-person shopping experience translates online. There is different price elasticity on each marketplace, and Amazon is a bit of both. Most people go to Amazon for convenience, they have Prime, faster delivery, they trust it. As for whether you should be on all or one, we have brands only on Amazon or some combination of the three, and brands right now starting to pull off a platform. The biggest thing, and I am not trying to knock Walmart, is they are messing up category nodes, and we see the same on Amazon where the AI is overcorrecting and has the wrong impression of what a product is and keeps forcing it with no manual override that persists. So there are catalog issues. Walmart is generally 5 to maybe 20 percent of what you do on Amazon, though certain verticals do better on one versus the other. Target is primarily invite-only, they opened it up, got burned in Q4 2023 with inventory that did not sell, so they are apprehensive to invite new sellers, and it is still invite-only in our experience. For brands that do get a presence on Target, it is a very stable and viable channel. And one we are missing is TikTok, Amazon and TikTok are starting to figure out how to play with each other, and Amazon is going up against Shein and the other low-cost players. Brands with a real brand presence, people actually searching for them, do really well on other platforms because of that recognition, trust, and faith in the shipping. It is dynamic. We have brands that do really well on their own website and go to Amazon and it does not work, or vice versa. It comes down to patience and timing. We typically give it a full calendar year to understand what is going on, and each marketplace needs a dedicated rep to help navigate category node issues. The way we do it is, to be objective, get on the platform, understand the lift, make sure it is not too big, and then look at three to six months in, how much is it to maintain, is the juice worth the squeeze, and what does this do to our other platforms, are we getting an incremental lift or pulling from one platform to another. When you get on five, six-plus channels, sometimes you are not increasing the total global top line, just getting more pieces on different platforms, so which are the best to keep going forward. That is an annual conversation for most brands we work with.

Brandon Amoroso: I have seen brands with a big Shopify investment during COVID pull back and go exclusively Amazon, typically food and bev where the unit economics on DTC are abysmal. If you are a kombucha company selling glass bottles that need cold chain, it does not make sense, and do customers even want to shop that way, it is more we are picking this up at the grocery store or adding it to a basket on a marketplace. But some product categories on Amazon are extremely saturated and will not work for a successful Shopify skincare brand who then tries Amazon and starts from scratch with no reviews, which is painful. Would you say Amazon is still the place to start your marketplace journey if you are a DTC brand?

Mike Danford: We have brands come to us, and if you are not already on Amazon and have a strong volume of reviews on your own website, there is a way on Walmart to syndicate those reviews to your listings. So you can take your DTC reviews and post them on your Walmart listings, a nice way to hit the ground running, free, light lift, a couple of emails. We like brands to do that because we do not know when or if that will change, if they will start charging or limiting it. So let us get your products uploaded, your Walmart IDs established, and the reviews over now, in case Walmart takes off or Amazon does it and you have to come back to Walmart. Most folks really want to get on Amazon, it is just so large. Brands have to be strategic about which products they put there, because what works on your DTC or one platform does not necessarily work on another. We have brands with a product type that does really well on one platform, a stronghold, and you go to another platform and people are not looking for it, or it is more saturated or more price sensitive. It is not even brand to brand, it is product to product, sometimes style to style, size to size, different packaging. That is why we work with larger catalogs, let us go to other platforms but also look at the ones you are already on, why are your B, C1, C2 tiers not performing, when did you last revamp them, test pricing changes, or update copy. Any brand, even one just on Amazon, a lot of them neglect the basics or did it back in 2018 or 2020 and have not updated. Maybe they tried a little advertising but it was not a full or balanced approach, let us revisit that and reallocate some dollars. One of our favorite things is, within 30, 60 days, you are moving products we have never been able to move or that have not moved in four or five years.

Brandon Amoroso: Which product categories work best on each of these three?

Mike Danford: I do not know if it is necessarily a product category, there are always gaps you can fill in each one. It is how saturated it is and what it is saturated with, inferior quality, superior reviews, superior pricing. We do an audit beforehand on the actual market to understand the likelihood of entering and penetrating it, and it is different each platform. We have a brand on seven or eight marketplaces, and one struggle is once you are on that many, your pricing has to match, and some sites like Macy's, Home Depot, and others will randomly run a sale, you get a sale calendar but do not know exactly when, and you can lose your buy box on other platforms because that marketplace is running a deal. So you have to follow that, can I afford a 10 or 20 percent discount across all my channels, is it worth being on that platform. You do not really know until you get in there, and it is easier for some brands to just put the product up, they have a PIM and can add another marketplace and move inventory over. A lot of times let us find out by putting it there rather than spending money on hypotheticals, unless it is expensive or hard to shift the logistics, then we do the due diligence up front, but often let us put it out there, see what sticks, and revisit quarterly.

Brandon Amoroso: You mentioned Home Depot and Macy's. What is a marketplace outside the three big ones that you see as an up-and-comer people should pay attention to?

Mike Danford: That is tough. We work with brands facilitated on multiple other marketplaces, and some require you to actually have inventory on their shelves before you can get on. What you would buy in a physical Home Depot or Lowe's versus online, there is overlap, but a section where you think, I would never have gone to the physical store and bought this, but it is available on their website. Like earlier, I am building my cart doing a home project and add this other product while I am there. There is no single answer, it is per brand. We are referencing one that is in Home Depot that I would never have guessed. It comes down to whoever the consumer is and where they spend their time, if you can get your product in front of your target where they already have trust in the platform, Home Depot versus Lowe's or the old Bed Bath and Beyond, and your product makes sense, do it. The big caveat, another brand is on Macy's, is what is your promotional cadence, and if it is a top seller on Amazon versus Macy's, do we even want that product on Macy's knowing there will be a promotion that impacts my sales on the other platform because of price matching, otherwise you lose the sales for that day or four-day promotion. We do dynamic pricing across the platforms and start with Amazon first, because Amazon is the most restrictive and most reactive to your pricing off Amazon. Each brand's collection of sites is different, and there are only two platforms that run advertising giving you access to multiple marketplaces, so at least we have that consistency. For 2025, our vision is massive on dynamic pricing and how to take the advances in AI and the dynamic, being able to massage your prices, it is an auction of click-through rate and an auction of conversion rate as opposed to ads, so how we take that same philosophy and apply it to pricing to stabilize the buy box and sell-through.

Brandon Amoroso: I did not even think about the promotional calendar from some of those marketplaces. Amazon does not roll out a promotional calendar, but Macy's does, and it feels like there is a sale running every day. Are there automated solutions out there that can help merchants with these pain points?

Mike Danford: A lot of merchants have a PIM, DAM, or pricing platform where they can put rules in place, and inside each platform there are dynamic pricing mechanisms where you can set floors and ceilings. We also use third-party connectors. Sometimes it takes a day or two, you lose the buy box or get suppressed, and you cannot really see everything intraday, and if you have tens of thousands of products it is difficult to catch everything and know what matters when there are hundreds of alerts. So it is how you stay on top of that, having your parameters in place and being prepared, you know when the promotions are coming. The other piece is, should I have that product on a platform where they will run a promotional calendar, or is it too impactful. A lot of brands do not run that analysis, so we help them, we run correlations and models across each platform, hypotheticals and look-backs, but you do not really know until you do it. Sometimes Amazon does not catch it, or you can change the name slightly, have a slightly different SKU, or change the UPC on the same or a similar product. We have brands that sell at Costco where a part does really well, and it is not hard for us to have a different UPC and a slightly different box, or sell one less bar or one more, so the pricing deltas and promotional cadences do not impact one or the other because it is not the same product. That is going to be a big thing for us, helping catalogs with established products, let us make this slightly different so we are not triggering a match, and whoever is shopping on one versus the other may not know the exact difference, maybe a different thread count, a slightly different size, half an inch bigger or smaller.

Brandon Amoroso: I have seen a lot of products on Costco you can only get there but that are essentially the exact same product everywhere else. That makes more sense now.

Mike Danford: Yeah, because on Costco folks will buy it in bulk and resell it against your Amazon listing so you do not have the buy box. So you are saying, I know you are going to buy and resell this, do the retail arbitrage as opposed to online arbitrage, just like I was with Nikes 10 years ago, here is your sandbox, go do this over here, you are not watering down the brand, we know it is a good product, but do not mess with the product we have specific to Amazon or Walmart or whatever platform.

Brandon Amoroso: I appreciate you joining us and sharing all these insights. Before we hop, can you let everybody know where they can find and connect with you online?

Mike Danford: Absolutely, and thanks for having me. Adverio.io, and if you go to the downloads section we have what we call the toolkit, a bunch of tools I have been building over the last five or six years with the team. We give a lot of those away once we have built them on a small scale before rolling them out to larger brands. LinkedIn as well, but the website is where our resources are.

Brandon Amoroso: Awesome. Thanks for coming on, and for everybody listening, this is Brandon Amoroso. Thanks for listening and we will see you next time.