Insider Tips: Multichannel Fulfillment & How To Succeed in ECommerce
May 21, 2023
We sat down with Incrementum Digital’s Liran Hirshkorn to talk about Multichannel Fulfillment and what online sellers can do to stay ahead of the curve. Liran specializes in selling on Amazon and building brands on Amazon. He has a trove of eCommerce experience and shared some of his best insider secrets with us.
Table of Contents:
- What Is Multichannel Fulfillment and What Are Its Up- and Downsides?
- What Primary Platform Do You Recommend and Why?
- What Kind of Seller Would You Recommend Multichannel Fulfillment To?
- How Can Sellers Avoid Competing With Amazon Basics Products?
- If You Are Selling on Amazon, What Secondary Platform Do You Recommend?
- What Is Buy With Prime and What Should Sellers Consider When Deciding To Use It or Not?
- What Type of Seller Would You Recommend Buy With Prime To?
- What Changes and Trends Are We Going To See in eCommerce Going Forward?
- How Are Amazon’s Competitors Responding to Buy With Prime?
- What Is Live Shopping?
What Is Multichannel Fulfillment and What Are Its Up- and Downsides?
Liran explains that multi-channel fulfillment happens when a non-Amazon merchant utilizes Amazon’s fulfillment network in order to handle, store, and ship their goods. This eliminates the need to contract a 3PL (third-party logistics provider) while consolidating all your fulfillment needs in one place. One of the downsides is that it might end up costing you more than going with a 3PL.
What Primary Platform Do You Recommend and Why?
In Liran’s view, the best platform to launch a brand on is Amazon. It provides a built-in audience and customer base, meaning there are less things that need to be managed well. Sellers don’t have to work as hard on optimizing details pages for SEO-related keywords. Amazon provides a template for many parts of your store. When selling elsewhere, you need to be good at social media, marketing, ads, email marketing, conversion rate optimization, and building your site.
However, in some cases, it’s better not to launch on Amazon. This can be if you have a product that doesn’t get a lot of search volume demand. For example, a highly niche product like FryAway. It’s a powder that solidifies cooking oil so it can be easily scraped off a pan and thrown in the trash instead of being poured down the drain, which risks clogging pipes. The company fueled its early sales through strong PR that got it a lot of attention.
This kind of product would not have benefited from Amazon’s search volume because it requires someone searching highly specific keywords (just try finding it on Google without using the company name). Listings with these conditions can be sold on Amazon, but will require strong external marketing. Advertising on Amazon would be very hard as well since it is tied to related keywords and products, which are few and far between in FryAway’s case.
What Kind of Seller Would You Recommend Multichannel Fulfillment To?
Liran believes that sellers who don’t have a large sales volume can benefit from multichannel fulfillment. This is because third-party warehouses that manage fulfillment prefer customers that process thousands of units a month. So conditions might not be as advantageous as with Amazon. However, if you’re turning inventory slowly, Amazon’s high storage fees might be an issue. In this case, it would be better to go with a third-party warehouse.
How Can Sellers Avoid Competing With Amazon Basics Products?
Liran has seen many examples of Amazon deciding to launch its own version of a certain product under the Amazon Basics label. This can be rough for sellers of such products since Amazon can afford not to be profitable for several years to break into the market. While he sees no foolproof solution, Liran finds that the bigger the market, the higher the likelihood of Amazon coming in. For example, it may target large sectors like gym bags, cellphone cases, or chargers. The more you differentiate your product with things like unique designs or bundling items together, the more protected you will be.
Another way to protect your sales is to build an audience on Amazon. There was a great example of a company called Peak Design, whose camera bag was copied by Amazon. They turned it into a PR opportunity and made this video, mocking Amazon’s copy of their product. This created a lot of awareness and positive feedback, with many shoppers preferring to support them for their original design. Similarly, Allbirds put out a letter when Amazon copied a shoe of theirs, highlighting their use of sustainable resources. In fact, they even invited Amazon to emulate their use of sustainable materials.
If You Are Selling on Amazon, What Secondary Platform Do You Recommend?
Liran has seen a lot of people going to Walmart in the last couple of years. However, he suggests going on a platform you can manage more thoroughly. For example, Shopify offers great sales potential while also giving you access to customer data, which means you can create an email list to remarket to past buyers. Liran also recommends going to new markets within Amazon, for example by expanding to the UK or Canada. But some of the clearest advantages come from going with a platform that allows you to build your own website and brand.
What Is Buy With Prime and What Should Sellers Consider When Deciding To Use It or Not?
This service allows sellers to use Amazon’s fulfillment network while presenting a ‘Buy with Prime’ button on their own websites. To Liran this was a great idea since buyers will be enticed by the fact that they can get 1-2 day shipping. It also guarantees they are dealing with a trusted seller since the payment is processed by Amazon as well, for which it takes a 3% cut of the sale. With over 100 million Prime customers in the US, that means a lot of sales opportunities.
It’s also a great opportunity for businesses since they get to run their own store, benefiting from access to customer data, while also using Amazon’s fulfillment services. Liran believes that this stems from a new path that Amazon has taken since Andy Jassy took over as CEO. The company now appears to be more open to sharing data with sellers. The emergence of Buy with Prime means that any store, even an Amazon competitor like Macy’s, could offer Prime Shipping to its customers.
What Type of Seller Would You Recommend Buy With Prime To?
Liran doesn’t recommend Buy with Prime to every eCommerce seller at this point. If you already have traffic to your website and you’re getting good sales numbers, it’s worth testing it. He recommends trying it on one product, instead of all of them. This way, you can test whether it improves your conversion rates. Another good methodology would be to create one landing page intended for your Buy with Prime sales. Then you can test running ads to this landing page and see what impact they make. However, Liran believes that if you don’t already have significant traffic on your site, adding a Buy with Prime button during checkout won’t do much.
What Changes and Trends Are We Going To See in eCommerce Going Forward?
Liran foresees that Buy with Prime will have a big impact on eCommerce. He also notes that many sellers are focusing on profitability now. ECommerce leaders like Casper and Allbirds were able to run without being profitable for several years since they had raised a lot of money. With lending less easily available, there is a much bigger focus on profitability.
Amazon is offering its sellers a lot more tools to really build a brand on its platform. For example, in your store’s A+ content, there is now a section for your brand story. Video options are expanded with interactive models that shoppers can engage with. Such additions mean you can build out storefronts that are a lot richer in terms of content.
TitkTok is another major rising force in eCommerce, in Liran’s view. Many users are making their purchasing decision and doing product research through the app. In fact, many users post about how they were convinced to purchase items with the #TikTokMadeMeBuyIt hashtag. The company could launch its own shopping platform. Liran thinks it would be a meaningful threat to Amazon’s dominance if it did.
How Are Amazon’s Competitors Responding to Buy With Prime?
While Shopify’s CEO first responded to Buy with Prime positively, Liran thinks that his team advised him to walk back those comments, which he did. It has certainly made waves already. Amazon gave sellers a code to add to their Shopify stores to use the service. At one point Shopify sent out a statement, saying that using Buy with Prime was against its terms of service although Liran didn’t notice them enforcing this. He thinks that Amazon and Shopify will work out a deal behind the scenes that allows the latter to take a cut from Buy with Prime sales.
Other platforms like BigCommerce, for example, embraced the service. Since they didn’t manage merchant processing to begin with, they had the incentive to do so. BigCommerce added a Buy with Prime section to its app, which it may be using to differentiate itself from Shopify, according to Liran.
What Is Live Shopping?
Amazon launched a feature called Amazon Live. If you go to amazon.com/live you can see Amazon influencers who are running something like a home shopping network. In it, they feature different products that they like, which customers can buy directly. The influencer gets an Amazon affiliate fee when purchases are made. They can also partner with brands directly. While this hasn’t taken off in a big way yet, it looks very promising, according to Liran. Live shopping is already very popular in China. Some DTC brands have already added it to their websites. It has a lot of potential for certain products. For example, if you’re selling food, you can showcase different recipes to make with it.
If you want to watch the rest of Liran’s interview, you can find Part 2 here.
Julian writes about the ins and outs of eCommerce at 8fig. He is passionate about exploring and covering the dynamic and fast-paced world of online retail.