Commentary

2021 Lessons That Should Inform Your 2022 E-Commerce Marketplace Strategy

January 10, 2022January 8, 2022 by Dani Nadel

Advertising through a new lens

It is impossible to discuss convenience and discoverability in e-commerce without mentioning Amazon. From searching for new products to checking prices and scanning reviews, Amazon is the essential resource consumers rely on throughout their purchase journey, and it remains the dominant e-marketplace, with 47% of consumers buying on Amazon at least weekly and 62% beginning their product search there.

In looking at U.S. ad revenues, Amazon is now the second largest search engine, trailing only Google. With an astounding 100% of brands surveyed seeing value from Amazon’s ads and 60% of consumers saying advertising influenced them to purchase from a new brand, it is no surprise brands are shifting their budgets. A highly competitive and dynamic environment has emerged as ads dominate search results and brands aspire to the top placements. Strategic advertising has never been more crucial, and a full-funnel approach is necessary to win.

In planning for 2022, brands should think of the purchase funnel in three connected phases: lower, mid, and upper funnel, together moving customers toward conversion. Investment should begin bottoms up, with lower-funnel Sponsored Ads, to intercept customers in shopping mode and generate high incremental ROI. It is crucial brands continually bid to achieve visibility on the most relevant, popular, and highest-value search terms and products. Strategy combined with technology and data provide the advantage to create a highly effective and efficient optimization engine.

The next priority is mid-funnel efforts that leverage retargeting pools of audiences in consideration based on viewing behaviors. Equally important, top-of-funnel optimization captures consumers initiating product searches or seeking inspiration.

To understand which audiences represent the most attractive fit, brands should ask themselves: who are my best customers, what are their interests, purchase behaviors, demographics. Brands should then use this data to create audiences across lifestyle and behavioral segments to zero in on clients’ bulls-eye targets, in addition to uploading clients’ first-party lists to create look-alike models. The more data the retailer has, the more intelligent the optimizations can be.

Engaging consumers through innovation

The race to generate advantage will be fiercely competitive in this next phase of e-commerce expansion. Brands should prepare by analyzing trends across their catalog, competitors, and customers to forecast budgets and goals, and prepare their marketing, content, and promotional calendars. An agile mindset should be applied to allow for responsive pivots and experimentation.

In 2022, brands looking to drive engagement should prioritize exploring new creative formats, media, and video at scale. The Amazon DSP, in particular, provides exclusive video inventory across Amazon.com, IMDb, and Twitch – allowing brands to reach customers on and off platform. Live streams, shoppable video content, and audio ads to reach listeners on their Alexa-enabled devices are new ways for brands to experiment with engaging creative, new media, and to learn what resonates with target audiences.

An array of opportunities exists for brands to tell their product stories in 2022. Still, the key will be how well they incorporate relevant data, insights, and personalization into their strategies to intercept and connect the right customers with the right products most effectively and efficiently.

Fostering customer satisfaction with well-managed inventory

Federal Reserve chair Jerome Powell believes the global supply chain will remain in crisis throughout 2022. Inventory issues will not recede any time soon, and inflation remains a growing concern. As a result, enhanced distribution and fulfillment planning should be expected across the industry.

For brands selling on channels such as Amazon and Walmart, securing products, diversifying supply chain and fulfillment capabilities, and expanding e-commerce channels will be critical to avoiding stockouts and delivery delays that could hinder customer satisfaction. To set themselves up for success, brands should examine previous years’ performance to identify seasonal trends, understand SKU-level metrics such as to- line revenues and profit margins, and update cost information and pricing considering supply chain constraints and increased shipping costs. In early 2022, brands should also prepare for “returnuary,” the typical post-holiday returns rush, to avoid reverse supply chain bottlenecks and to ensure the business is not promoting “false” top sellers.

Maintaining positive inventory health must be a focal point for strategic planning, and it is critical to understand the interconnected relationship between inventory, pricing, and advertising. For example, pricing decisions to drive velocity should be taken for items incurring long-term storage fees, and advertising should be invested to drive demand for priority products with inventory to move. By understanding these correlations, brands can make the most informed business decisions and take profitable actions.

Learn from the past, and keep moving forward

Strategies that worked in years past will not hold up today, and the same applies to tomorrow. To adapt, brands must continuously monitor:

Consumer behavior
Market and technology trends
Fulfillment advancements
Competitor presence

There are many opportunities for exploration in 2022, including retail media networks, virtual worlds, and social commerce advances, each of which could offer advantages. The key to the future is to maintain forward momentum, optimizing the foundational pillars of the business while incorporating an agenda of experimentation – making sure customer needs remain the central factor of every decision.

Dani Nadel is President and COO of Feedvisor.