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Why Does Multichannel Software Cost So Much?

Howdy,

Three questions for you to ponder:

  • Why does multichannel software have to cost so much?
  • Why do you get oversells?
  • Why can’t that developer just add in that one extra box that you need?

That’s the questions I’m going to be exploring in this article, feel free to jump in and add your 2p worth in the comments at the bottom.

If you have any interest on what actually happens in the background to multichannel software, the software that manages your business across multiple marketplaces like eBay, Amazon or your own website, say Magento, you’ll want to pull your chair closer and grab a cuppa.

 

The Entire Process Simplified

Before we start, let’s simplify the process down to it’s simplest of form.

Listing Process

The process to create a new product listing onto a marketplace, collect the order and then process it, you as a seller have to go through several key stages, these are:

  1. Add a product to a database
  2. List it onto eBay (or insert another marketplace here)
  3. Collect the order
  4. Despatch the order
  5. Update the marketplace

That’s pretty much the entire process in 5 steps, create, list, collect, process, update.

And that’s where the simplicity ends.

Product Data Fields

If we think about step 1 for a moment “Add a product to a database”, this product could be anything, from a microphone to keyboard, a painting to a tent, there will be common attributes about each product, these are:

  • Title
  • Description
  • One or more images
  • Categorisation
  • Price
  • Condition
  • Cost price
  • Stock quantity

As you can see this will get deep very quickly, in fact it is, let’s pick on the products description for a few moments.

A products description could just be a block of text, but more likely it’s going to be broken out into many parts.

Picking on Product Descriptions

Listing a Product onto eBayFor example, let’s pick on a pair of shoes, picking on the bare minimum of requirements for listing a pair of shoes onto eBay, you’ll need to set a Shoe Size and the product Brand.

So that’s now 3 fields just for one product!

No seller in their right minds would just use the bare minimum and looking at the eBay Sell Your Item form for the boots category on eBay, it’s suggesting 10 product attributes  to add and 3 additional fields as secondary attributes and you could add in your own custom attributes  as well if you wanted to.

And we’ve not even considered that the business probably wants to separate their data out, so that they have say 5 key bullet points that they can use on Amazon and on their website, let alone another sales channel too and the main product description.

If we now consider the data requirements that are needed here, we’ve just sprung from 8 or so fields to way over 20. But also to use any software easily, then an interface would need to be built so that it’s easy for a business owner like you to be able to actually enter this information in.

We’re dealing with “expandable” and “unlimited” data, so while in boots category there maybe Shoe Size, Brand, Style etc… if we pick a completely unrelated category say tent’s for example, I’m now looking at a page where we have Type of Tent, Berth, Style, Sleeping Areas, Brand, Season, Model, MPN and the ability to add in extra options too.

There have been several different ways to invent this, there has been the just give the seller 20 fields and let them sort them out and match them up manually, there has been custom fields route where you define what the input boxes could look like and mix in a few different input types, such as an input box, a drop down box or a checkbox.

The Need for a Framework

Oh and as I’m assuming that you maybe a larger business, you would probably want to set these fields up manually first and then use an import/export system to create, update and append information about your products.

To get to that stage a framework would need to be built that can handle that kind of data input, allow it to be searched upon (which is no mean feat over lots of fields of data) and an import/export system as well.

So have we just gone from a simple product description to a squllion fields? For which more than half were dictated by a marketplace to create?

I think so and this is just one of the challenges any inventory management system needs to cope with.

So let’s assume that this was written from scratch, this wouldn’t happen over night, it would take months, if not years to get right.

Changing Tack to Stock Control

10 Pens for Sale on the MarketplacesAgain keeping this as simple as possible, let’s pretend we have just have a plain old pen (unchewed) as a product and we have 10 of these in stock, sat our shelf.

So get that product onto the marketplace, an integration would have needed to be built that allows you to actually send the product “up” so that it can be made for sale (we’ll come back to this later), but let’s assume the 10 pens are on the say eBay. Fantastic!

A customer buys one of these pens, so we have an order for a pen and we also have the customers details, their payment details, and the selected shipping method.

Again we’re assuming that an integration has been made to the marketplace, eBay in this case and also PayPal too to collect the payment (which isn’t a small task for even a seasoned developer).

But hey we’ve sold one, happy days.

When we’re dealing with just one marketplace, then stock control is pretty simple, we have 10 in stock, 1 sold, so we now have 9 available. Or you would have thought so.

What happens if that sale was an auction, the customer has not paid yet, so that 1 pen we just sold is now sat in a holding queue?

That then means you need to track your actual stock quantity and the held quantity and probably another integration to eBay (using eBay in this example as it has a lot of API’s) to handle disputes.

Let’s ignore that for now, we sold one, ace!

Going Multi Channel

Amazon- LogoWhat’s the point of software if it’s only just going to do one sales channel?

We like our multiple sales channels as that means we can sell the same 10 pens across all the available sales channels, reach more potential buyers and basically sell more stuff.

Chucking in Amazon into the mix now, we had 10 pens listed on eBay and we had 10 pens listed on Amazon. And we sold one on eBay.

That now means that we need to let Amazon know that we only have 9 left.

Amazon uses a reports system for their integration, which basically means you send them a file that contains your stock levels, they sit on it for a while (5-15mins normally), don’t actually tell you that it went ok, only if something bad happened (and even then, they pass back a message that basically says “Huh?”), you have to assume that and with both of us crossing our fingers that it was received and processed.

Easy-peasy, we sold an item, eBay was already at 9, no need to update them, Amazon, we lobbed them a file, they didn’t go “huh?” at us about it and we’re all down to 9 now.

Our Magento WebsiteWhile all this was going on, we just took an order from our website.

Let’s say it’s a Magento website (I like Magento websites so we’re having a Magento website) and through another integration to Magento, the order has been collected and we now have 7 pens in stock, because the customer just bought two pens.

So our multichannel software has to kick in again and this time, tell eBay that we now have 7 (which is pretty quick via their API and it tells what was wrong, unlike Mr Huh? have the file back, there was an error “somewhere” in it), we tell Amazon that we also have 7, they don’t go “Huh?” at us and we’re all good.

Timmy on the phone takes an order for the last 7 pens (a real big spender that one), he enters the order manually in and assigns the last 7 pens to Mr Big Spender.

Oh pants, we need to let eBay know we have 0 left, great that will end the listing on eBay, take it off Amazon too and the Magento website.

But when we end it on eBay, we need to remember that we ended it and what the item number was, so that when we more of these super fast moving pens in again, when we list them again, we want to reference the previous eBay Item Number, so that what little best match ranking is carried over to the next listing.

Oh and we send a file to Amazon which may go “Huh?” or give us the silent treatment and we also send an update to Magento to take the item off the site and change the stock status to “Out of Stock”.

Overselling is Going to Happen

sad-face-icon_newTo recap, we’ve just had multiple integrations to different marketplaces:

  • One that we need to remember what we did on it for next time (eBay)
  • One marketplaces that gives us the silent treatment (Amazon)
  • A Magento website
  • And Timmy who took a phone order for Mr Big Spender

Now let’s times that by the other 999 products we had in our inventory system (or insert however many you have right now), is it any wonder that oversells happen from time to time?

Oversells, they suck nuts, but it’s amazing we don’t see more of them every single day.

It’s one of the side effects of the be-everywhere strategy that we see with multi-channel or “omni-channel” catch phrases being bounded around. If you sell on more than one marketplace or even on the same marketplace more than once, you’re bound to have an oversell sooner or later.

And the thing is, the software in the background has just been working it’s little leggies off try to do all the above as fast as it can, so that it’s users (that’s you) don’t phone up their account managers and give them an ear bending about DSR’s, Amazon Scores or some lerry-nut-job whose order couldn’t be fulfilled.

So if you were building multichannel software, then you’d need to add in the ability to track changes to products and update the outside world with those changes.

Piggy In the Middle

Piggy in the MiddleIf we think about what our multi-channel software does on a daily basis, it’s no small feat.

Tens of thousands of hours would have gone into making it work right for near-as-damit 99.9% of the time. But because it is a separate system from the marketplaces that it’s interacting with, in many ways it’s piggy-in-the-middle.

This is just like the school playground game, but this time, the ball is the stock levels, orders and updates and the software is the one chasing the marketplaces around rather than the other school kids.

Let’s now say that you have one product, but you have 2 in stock and two marketplaces, eBay and Amazon

The challenge that we have when dealing with marketplaces are:

  • Constantly updating API’s
  • Constantly changing products (stock, descriptions etc…)
  • No control over the the interfaces uptime
  • And hopefully a consistent stream of orders and their updates as well

Note: API = “Application Programming Interface”.
It’s the Nerd term for how you can connect to a 3rd party system using a set of calls or instructions to add, edit or remove things. Typically the 3rd party such as eBay provide these and document them accordingly (pages and pages and pages of it)

The multichannel software needs to sit in the middle and work out what is happening with the marketplaces, what needs updating, what doesn’t and doesn’t just deal with one interface to speak with the marketplace, probably several.

Piggy in the middle is the best analogy for all this.

If it was for just one business, things would probably run quite smoothly, however the off-the-shelf providers (insert any name here, eSellerPro, ChannelAdvisor, Linnworks, StoreFeeder, SellerExpress and so on….) want to scale their multichannel software to more businesses, it’s how they make money, either through a monthly fee or a percentage of sale model.

And scaling up chaos is crazy (crazy good fun though!)

King Piggy

officesThe one dynamic we’ve not covered to yet is the business itself that is using the software.

The software doesn’t just run by itself, there is oodles of human interaction to it as well, this could be a member of staff adding in new products, updating images, importing a stock update file or processing orders.

And not just one member of staff, probably lots!

If you thought that being piggy in the middle to the marketplaces, with their quirky interfaces or creating an inventory management system that can cope with extendible data that could come in any shape or form was tough, let’s account for the users (that’s you) that are working with the software everyday.

A typical day in any business will involve the following tasks:

  • Creating new products
  • Updating existing products
  • Adding more stock
  • Processing orders

You’ll note that I’m missing out luxuries like reporting & customer services, that’s a whole different kettle of fish.

Up until now we’ve only really covered the first 3 of these, we’ll get on to the processing orders task in a minute.

The thing is that while most businesses complete the same tasks, they don’t all go about them the same way.

One business may prefer to work heavily in excel spreadsheets, another with just the interface of the software, so not only does the front end of the software that the staff actually use need to be slick and easy to use.

This is the layer sat on top of the database that is being used in the background to store all the products and keep track of changes and the database is being hammered to try and keep the marketplaces in touch with the latest changes as well.

Order Processing

giftA topic which we only just touched a few moments ago, order processing, So we’ve managed to collect orders from different marketplaces through their different interfaces, now what?

Those orders need to be processed, this  involves some form of document being created, normally lots if we include emails as documents (such as order received, order despatched etc…).

Those need to be templated somehow and spat out either on demand by a member of staff pressing a button to print out an invoice or via some rules in the background, that send them out automatically.

So let’s say that’s happened and oh, we’ve brought in the payment for the order and matched that up to the right order (a feat in itself I hasten to add as they don’t always match up exactly, for example what happens if the customer paid too much or too little?).

Anyway, we have the order printed out in front of us, that order hits the real world, is picked and packed. But we’re missing something, that something is the courier label.

If we’re just dealing with Royal Mail, then we could have just printed out the PPI logo on the invoice. However a courier, well that’s another kettle of fish.

Unlike the USA where it’s pretty clear cut who the main providers are for actually sending orders (USPS, FedEx, UPS and DHL) with inexpensive integration tools like ShipStation or ShipWorks which costs peanuts, in the UK it’s a friggin mess.

Each courier has their own API and they all work differently, there is only one main software tool that has licked this and that’s Metapack. Metapack uses a SaaS model (software as a service) so that it’s pay-per-use and costs upwards of 12p per label. This is either a complete bargain or a massive expense, it depends how you look at it.

Many of the current software providers (in the UK) looked at it as an expense and built their own integrations into the couriers directly, thus adding another layer of complexity to the software that they built (and bloating it out even further).

Business Rules for Order Processing

courier-logosOne  area we’re missing here is that just because the customer selected Royal Mail 2nd Class, that doesn’t actually mean that it’s how the order is going to be sent. There are business rules that most likely need to be processed on top of the order to work out which method the order should be shipped.

If we think back to the example of the pens earlier, they are really light and have no real size to them, a letter would do. However what happens if the customer also bought some other office supplies at the same time and the weight hit 1.2Kg and the order value hit £35.

Suddenly the method that the customer chose and paid for doesn’t become cost effective, so instead a business rule may be that such an order because it has gone over 1.2Kg and went over £30, to send it via a courier instead.

But what happens if that customer was in the top of Scotland and our normal courier would charge us a surcharge, then a secondary rule would need to be put into place to switch the order so say Royal Mail tracked. It might not be as quick, but surely saves the £12 surcharge.

MetapackSo any software that deals with orders and the despatch process needs to account for business rules that need to be applied to orders and this is where something like the 12p to Metapack becomes more attractive because they have this level of rules ability built in. Different software products have different ways of working with such orders and some have elected not to tackle it at all (ie ChannelAdvisor).

Back onto topic, we have the invoice, the courier label and we then ship that order off to the customer. Happy Days right?

We then have at least a carrier that was used and most likely a tracking number. These details then need to be passed back to the order source, so that the customer can be updated and in the case of Amazon, so you can get paid.

This involves another call back to the marketplace or order source (for example the Magento website) to update the order and change it’s status to shipped. And most likely at the same time, the inventory system has been altered to confirm that item has sold, a record was kept and possibly an email was sent out too.

Not as straight-forwards as it looked originally?

Pricing Multichannel Software

Generally there are two ways that multi-channel software providers will charge you:

  • Fixed price
  • Percentage of sale

Some multichannel software providers go with a tiered system, if you have X number of products or orders then you pay this amount and the cost increases the more products and sales that you make.

Others go with a percentage of sale. It’s this one where the costs can really spiral out of control and it’s no uncommon to find businesses paying £30K, £50K or even £80 or £120k a year to such providers.

Yes, obviously they’re turning over millions, but at these kind of numbers, we’re getting into the territories of buying houses with the amounts being paid to multi-channel software providers.

There is another billing method worth noting here, is that it’s pay per user. So you pay say £80 per user head in the business to use the software.

It doesn’t really matter how you cut it, the more you sell, the more you should expect to pay.

How much you’re actually willing to pay is a completely different topic!

So why does multi-channel software have to cost so much?

The thing is, up until now the current 2nd generation providers have been building their own bespoke systems to cope with inventory, orders, the marketplaces & other business rules. This takes a shed load of time and a lot of money.

As the software grows, so does the complexity (and we’ve already seen some of the complexities including in the basic 5 steps, create, list, collect, process, update) which then adds in the requirement for an on-boarding team, staff that can help businesses migrate to the new software and of course a development team to keep everything working as it should.

I know from personal experience of doing this twice, first time around at Marketworks (eBay auction management software), also doing this myself with my own business, migrating to a software product can be painful, especially if prior to the migration all you’ve been using is the eBay Sell Your Item form or 1st generation or proprietary software like Turbo Lister.

Oh and the second time around at eSellerPro, sometimes it can take months. Every business is different and so are their requirements and it’s not as straight-forwards as it looks.

The more customers that are added, the more depends are put on the software to do feature x, y and z. Some multi-channel software providers just draw the line in the sand (ChannelAdvisor is a good example of this) and “say we do this”, then find partners for everything else. And others try and do everything under one roof.

We’re also missing a sales team, support staff & marketing, oh and a management layer as well somewhere too.

Everything & everyone has to be paid for.

In Summary

Any multi-channel software is good software. I whole-heartedly believe that.

A business even using excel has a competitive advantage over a business that isn’t using excel. It’s that simple.

Remember those 5 stages create, list, collect, process, update from the beginning? Even simple nowadays is complex when it comes to managing multiple marketplaces and this complexity causes overheads, costs that need to be accounted for.

The thing is that some of these multichannel software providers (some with the help of myself) have taken the level of complexity, features and options to a whole new level, levels that were not thought possible only a few years ago and it’s the percentage of sale software providers that can get really, really expensive, the more you sell, the more you pay. It sounds nice, but the thing is, it gets to a stage where the amounts being paid is just plain silly.

A Different Take on Multichannel Software

Howdy,

Two questions for you:

  • What if multichannel software didn’t have to cost the earth?
  • What if you knew of a way to deliver multi channel software that can meet the needs thousands of cool people?

What would you do?

Sit on it? Work out a business plan to bundle it up and sell it as typical 2nd generation software? Or would you go a different route after trying both?

I’d like to share a story of what happened last year, when looking for multichannel software to launch a new business onto eBay, Amazon and to build their own website and the typical options out there, just didn’t work.

 

Backed into a Corner

backed into a cornerBack in March 2013 we were looking for multichannel software to launch a new business onto eBay, Amazon and to build their own website.

The natural option eSellerPro wasn’t an option and neither of us were fans of ChannelAdvisor, plus both of these were really expensive for a start up (you’re talking +£500 a month and £2,000 upfront costs), so we picked the next best option.

After 3 weeks in all the stuff I took for granted was missing.

  • What do you mean we can’t import 61,000 products in one go?
  • What do you mean we’ve got to assign one of the variations as being the parent sku?
  • And where on earth are child sku’s?

As we dug deeper we soon realised that the normal alternative wasn’t going to work (I’m doing my best not to name them), it was so far away from what I was used to. What I took for granted that should be in multi-channel software, well… was missing.

This just isn’t working out is it? What are the options?

I don’t know we’ll try a different provider, after a phone call they also wanted £500 a month and 1% of sale because we had soo many products (61,000 is apparently lot for most companies).

This is just nuts, how could you start a multi-channel business without the software that was so sorely needed? There was no way this could be done manually. There was just too many products to do it with.

What about?

Magento Usage Statistics Feb 2013Magento?

It can cope with that number of products easily, it can handle complex product relationships, variations, multi variations and so on…

After all it’s the most popular open source software to build eCommerce sites with and powers 26% of the top 1 million eCommerce with (see here), so it’s at least got to have a decent founding.

So that’s the inventory & order management part taken care of. Ok what about the eBay & Amazon part?

Why don’t we give M2E Pro a whirl? It can’t be that bad and hell it ain’t going to cost us £500 smackers to get started with is it?

So that’s what we did and what we ended up with something quite different.

Note: If you’ve never heard of M2EPro before, it’s an extension for Magento that allows you to use Magento for the order & inventory management and allows you to sell on to the marketplaces using the same inventory. Oh and it’s subsidised by eBay too.

Sipping Coffee

CoffeeDid we just replicate eSellerPro?

As near as dammit we had.

Yea not everything & all the bells & whistles, but it was close. Scarily close.

An import system that could take all 61,152 products in one hit, a templating system that allowed us to make comprehensive listings onto eBay with keywords, the stock levels were kept up to date pretty much in the same manner as what the Channel Profile does.

And for orders, well the framework was there to automatically deliver the orders to the supplier, then once the order was shipped, grab the tracking numbers and delivery back into Magento which in-turn, M2E Pro would pick up and notify eBay & Amazon.

Holy moo-moo, what if we bundle this up into a business?

So we did, we put the numbers down on paper, moved them, added, removed and that’s where we got stuck.

The numbers just didn’t work.

It wasn’t really until year 2 where after a huge amount of risk a lot of unknowns that such a business would hit any form of black. And that’s where it got curious…

If we couldn’t make the numbers work on software that was basically free, how the hell do the existing providers actually turn a profit? And that’s where things started to make sense, they do but they don’t. SaaS products/services tend to be highly lucrative,  however the life is being sucked out of them by bloat.

So to support N number of businesses you need N number of support staff, N number of developers, N number of account managers and so on… Humans need humans, especially if you’re looking at a high monthly fee product and especially one that takes a percentage of their sale. It just doesn’t scale very well.

Basically, none of us particularly liked the numbers, great idea but we were all out.

Now What?

Icon-round-Question_markI’m sat there with the tools and the knowledge to make a massive, positive difference to the world. But the normal thinking of bundling this up doesn’t work.

WTF now?

Dave, what if we gave it away for free?

Dave looked at me oddly.

Yea seriously what if we gave away the knowledge on how to do this?

It’s not the original business model, but we know that won’t work, the numbers say it won’t. So why don’t we take a completely different tack and share. I know that if you do something with passion, the money part kinda sorts itself out, I’ve seen this time and time again. I know it works.

Note: This is not for the faint of heart, you have to have some heavy form of commitment to even consider doing something like this, a topic for a different day

So that’s what we decided.

Show the world how they could gain access to low-cost multi-channel software, that didn’t cost £500 a month, didn’t come with all the expensive bloat and if you needed something extra then you bought it off the shelf, without paying oodles to support 100% of a product for which you were only likely to be using a mere 40%.

We hammered out a vision that encapsulated this, a goal for us to follow that followed this line of thinking and we came up with this:

“A hybrid of both free and paid for open source software where multi-channel business owners can pick & choose the tools that suit their business, both now and in the future.”

Quite a hefty goal, but that’s where we’re swinging for.

Last Year

And that was back last September.

Since then we’ve been working our little socks off, mainly because I set such a ridiculously high goal that we’d have to think differently. Did we hit the final goal? No, but we got bloody close though.

We called it “UnderstandingE”, a name that I been sat on for a few years, it seemed perfect for what we wanted to do and that’s what we rolled with.

What I needed TEN Years ago

When working at Marketworks & eSellerPro, I always kept in the back of my mind, what did I need when selling online. “How does this port to what the person to I’m speaking to right now?” and crucially “How does that port to the multichannel software that I working with right now?

I think that’s the key reasons why working at eSellerPro was like being a pig-in-poop, if it was a good idea and the demand was there, then it got put in. That was some wild times, but ultimately ended up in a product that has issues dealing with such a veracious amount of development being applied to it.

Basically in hindsight, it was overkill. Really good overkill I hasten to add and nothing has even got anywhere near it since.

Stuck in a rut

The thing is, businesses that are using current software tools they’re used to paying silly amounts each month and there does come a time where the brighter business owners work out that they’ve just paid way over £30,000 (say $50K USD) for software that yes has helped them to get them to the stage where they are at, but for that kind of money it’s starting to hurt and hurt bad.

Some of you reading this you’re just too far down the line, you’re too comfortable with paying this kind of money, as much as you hate it, you’re stuck with it.

And my advice for a long, long time has been not to move software providers, it’s painful and doesn’t happen over night. It’s really up to you to work out how much of a difference it would make to you and your business.

A Different Way

But what we can do is make a difference to the businesses that have not got to this stage of lock-in yet, that can still be nimble.

So thinking back to the original questions:

  • What if you knew of a way to deliver multi channel software that met the needs thousands of cool people?

Yea I’m standing up (Dave too) and are firmly planting ourselves off the fence and are saying there is a different way. It doesn’t have to cost oodles, we’re not saying it’s free, but we’re saying that it’s a damn-sight cheaper than anything else out there and it’ll get you far, wayyy far down the line.

And there is nothing quite like putting money-where-your-mouth is, so that’s what we’ve done.

UnderstandingE went live on January 1st 2014 at around 4pm (kicking & fighting, we had to do an emergency site move the day before).

It’s not finished, it will never be finished. But we’ve started and that’s what matters.

Rabbit Hole

rabbit holeLet’s see how deep the rabbit hole goes.

I don’t know where it leads, but to be honest it doesn’t matter where it ends, as it’s about the journey to find the end.

Fancy coming along for the journey?

Whack the button below and get dug in.

[button size=”large” style=”round” color=”blue” url=”http://understandinge.com/”]Say Hello to the 3rd Generation[/button]

Matt

PS. If you’re looking for me to write anything about eSellerPro over the next year, it’s doubtful. Even with my ability to remember screens and how things interact, that knowledge has been put aside, what’s been left undocumented is just that undocumented. It’s time to move on.

30 Seconds of Silence as the Penny Dropped

We were on a call yesterday with what you could say is your “typical” multi-channel business owner, in many ways he’s probably just like you.

Business is doing well, it’s been a slog this year and literally this weekend has just started to show signs of picking up. One eBay account, one Amazon account, a website that could do better and nothing really that complex to put high demands on pretty much any of the 2nd generation multi-channel software providers.

But why on earth did he go completely silent on us, for what felt like hours?

Read on and you’ll find out why.

 

Typical Business As Usual?

Being in the most demanding categories for the marketplaces, fashion, he has to deal with complex inventory, sizes, colours, mixed sizing, demanding buyers, demanding marketplaces and most of all, the challenge of seasonality.

Fashion has to be the #1 toughest category to do well in online and this chap is rocking it & is set for his highest turnover Christmas ever.

On the other hand, in many ways it’s not a complicated setup they have, we’re only talking one eBay account with a couple of thousand listings, Amazon does really well for them now they’re settled in and from an operational standpoint, the team is experienced.

The booking in system for new lines is fast as they use excel & a couple of macros to create the variations & the order processing system is simple, no real warehouse control per-say, but a simple system that works and can manage 200-400 orders a day with ease.

Curiosity

As the conversation progressed he brought up the project me & Dave have been working on. He had seen a couple of the emails, read some of the articles and was wondering what was keeping us so busy. So we told him.

For the sake of this article and because he’s switching providers in January to the 3rd Generation we’re going to call him “Mohammed”, plus the numbers quoted are vague to protect his business.

The conversation went something like this:

Dave: “We’re building the training guides for the 3rd Generation of multi-channel software”

Mohammed: “So what does that mean exactly?”

Dave: “Well you know you’re using <removed> right now to manage, eBay, Amazon & your website?”

Mohammed: “Yes”

Dave: “Matt found a way of using Magento for exactly the same thing. You’ve heard of Magento?”

Mohammed: “Yea, I want to move our website to that after Christmas. We’ve been frustrated not being able to add anything to our current site”

Matt: “If you’ve looked at Magento, you’ll have seen it can handle fashion products just like yours, sizes, colours, shoe sizes etc… It has basic stock control and does pretty much everything you’re used to right now on your website.”

Mohammed: “Yes, my cousin uses it for his site and it does well”

Dave: “Matt was asked earlier this year to set up an eBay/Amazon & website business for a friend, he couldn’t use the software you were using as it’s too expensive so we had to look alternatives. He had already been working on Magento for a connector for eSellerPro, so knew it well. What he ended up realising was that Magento & an extension called M2E Pro could do pretty-much the same as the software you’re using”

Matt: “That’s right. They aren’t too dissimilar to your setup, but they had more products. Well 61,152 to be precise and roughly 2,400 variations. We were quoted £500 a month + 1% from one of the providers, it was a new business and there was no way that the business could afford that. So we have to look at other options

What I found was as Dave said, pretty much exactly what you have set up right now and we automated the supplier feeds in and the orders go off to the suppliers directly. We downloaded Magento for free and M2E Pro is also free because eBay subsidise it. He’s only just added his website now, as we’re using Magento not for the website part, but for the inventory & order management capabilities”

Mohammed: “Free & Free, I like the sound of this already”

Dave: “Yea we thought you would. The thing is besides the work the that Matt & the client put in, they’re only paying £114 a month for a server”

Mohammed: “What no commissions?”

Matt: “No commissions and the only reason he using such a ludicrously expensive server is because he complained about speed of one of my small servers. They’re not built for Magento, plus I didn’t want the hassle, so I got him a pair of xenon quad core processors, 16Gb of RAM and two SSD disks with hardware RAID 0 and dared him to complain about speed again. After that he never did, probably was a little over-kill if I’m honest”

Mohammed: “So he runs his business using Magento & M2E Pro, the same channels, has more inventory than us and pays £114 a month?”

Dave: “How much did you pay <removed> last month?”

Mohammed: “I’ll get the invoice, it’s here somewhere”

Mohammed: “Got it”

Silence

We heard the chair creak in the background, the sound of paper shuffling and then a deeply exhaled breath.

It must have only been 30 seconds or so.

But it felt like hours.

Finally

Dave finally asked, “did you find it?”

Indeed Mohammed has found his invoice, it had £1,500 on it  (approx $2,400 USD).

What I had set up for a client earlier this year can scale and for Mohammed came in at a tenth each month of what he’s paying right now and is set to save him around £17,000 – £19,000 next year.

UnderstandingE goes live on January 1st, what do you think he’ll be doing that day?

The Pieces are Almost a Picture

We’ll be open with you, the pieces of the puzzle are not all there yet, but we’re getting close, very close.

For Mohammed’s business, he’s going to need a couple of extensions to get all the backend features into place, two order extensions & two courier integrations (Royal Mail DMO was one of them) and a couple of the extensions we’ve been building to get him going. Plus we should never forget the training of the staff (which is where UnderstandingE comes in) and the time to migrate products between systems.

And on that note.

Say Hello to the 3rd Generation

We silently put the UnderstandingE site live a week or so ago. The reason why is simple, it doesn’t matter what you do for a launch party, it’s what you do for the next 6 years that truly matters.

While the guides are not published yet, they’re being released on January 1st, the forums are open and we are listening.

We’re listening to business owners like Mohammed and business owners like you.

Tell us what you need
Tell us what you cannot live without
Tell us how you want to innovate in your business once again
Rid your business of bills costing tens of thousands each year

And the best thing is…. We will show you how for free.

The 3rd Generation, everything you’ll need to know. It’s a click away (click here!!!!)

Come over & say hello to the 3rd Generation.

And we’ll see you there.

Matt & Dave

What is Order Aggregation & How Can it Help Your Business?

Aggregating orders from multiples sales channels is one of the main features in 3rd party software, but what are the benefits of doing this and how can it help your business?

I delve deeply into order aggregation in this article and explain how this can help your business tackle multiple sales channels and still leave you with (some) hair.

I’ve also included a video accompany this article and I would value any feedback you have in relation to the aggregation of orders from multiple sales channels, maybe this is something you take for granted through your current provider or maybe it’s something you’re pulling your hair out with right now. Let me know in the comments box at the bottom, I’d love to hear from you.

 

Order Aggregation Video Overview

What is Order Aggregation?

This is a process that collects orders from more than one source and aggregates them into a single location, this could be into your own system or that of a 3rd party.

Simply put, while you may be able to manage one, even two sales channels and even possibly three with a low velocity of sales and/or inventory, the moment you try to scale the business or add any increase in sales or inventory you’re going to run into a brick wall.

Order aggregation at any level of complexity can help you and your business deal with sales orders from one or more sales channels in a structured manner.

Winding Back to the Order Life Cycle

Let’s consider the typical life cycle of an order before we dig any deeper into this subject. We make one or more products available on one or more sales channels for customers to buy, this could be eBay, Amazon, your website(s) and maybe even a trade counter or retail store or may be many stores.

A customer commits to purchase one or more items and an order is formed. We may take payment straight away (cash over the counter or electronically) or the payment could be delayed (think eBay here) and some common details are taken and we then need to process the order.

For orders taken over the counter in a store or trade counter are orders that require little packaging in most instances, however for orders that need to be fulfilled by a delivery process you will likely need to create any documentation to pick & pack the line items and then possibly bespoke courier labels to prepare the order for despatch.

Once the order has been despatched, then typically with most online order sources, we need to update the channel source with common details, such marking the order as despatched and some other luxury data, such as the method, time of despatch and tracking details. We may also desire to email the customer to let them know that their order has been processed and despatched.

In the background, for the line items on the order, we need to keep track of their quantities, which is super important when dealing with multiple sales channels, so we can notify the other sales channels of stock updates or maybe to identify that the stock level for one or more products has fallen below a set level and a re-ordering process needs to be triggered.

Typically when you first started your business with one of the online channels, keeping just one channel up to date is relatively straight forwards for low volumes of orders, however as soon as we mix in multiple sales channels, a high velocity of orders and/or large inventory base, keeping everything in-tow can be an impossible task to complete manually.

Locating software that can solve all or part of this process can be hugely beneficial to the efficiency of the business, resulting in costs savings and sanity of the staff & business owners. It’s these benefits that I delve into for the rest of the article.

Benefits of Order Aggregation

Even if we just had two eBay accounts, logging out of one account and then into the other is cumbersome and time-consuming, as we’re duplicating the effort placed to process orders. It’s amplified when we have many order sources, in some cases to the point it would be almost impossible to do so.

Single Interface to All Orders

If we imagine that you have several order sources, these could be two eBay accounts, Amazon Seller Central or Marketplace, two websites and the desire to take manual orders in a retail or trade store aggregating the orders together for unified processing can by hugely beneficial and even if you have just one sales channel.

However, if we mix in the other features of the software providers offer, making use of a single orders screen can be an added feature to gain efficiency.

Customer Services

By bringing in orders from two or more sources into a single location can be hugely beneficial. Not only for ease of processing orders in mass, but also as a single reference point for all processes relating to orders, thus lowering the time spent by customer services in resolving order-related issues.

Some applications also include the ability to process payments & refunds from the orders screen. besides the obvious of not having to jump to a different system to conduct such an action(s), a by-product is that you are easily able to administer this and keep a history of the transactions have been made (such as who, when, why and for what amount in a refund).

Platform Specific Functions & Marketplace Integrations

If the order system that you use also has direct integrations back to the order sources, such as eBay, Amazon or Magento, then payment processing issues can be tackled from a single interface. For example if we need to check a PayPal payment or to make a refund, instead of giving all the members of staff the login details, it can be controlled in the orders system so that this is no longer needed and depending upon the system used, an audit history can be maintained for referencing later if needed.

If we pick on eBay for a few moments (as this marketplace certainly has some platform specific functions!), just because we received an order, this doesn’t mean we were actually paid for the order.

eBay have the disputes process that is unique to eBay and when processing large amounts of orders, the amount of unpaid orders can become a concern to your business (turning on immediate payments doesn’t suit all businesses). Some software applications allow the automatic processing of disputes back to eBay, so that stock  that isn’t going to be paid for, can be released with the minimum amount of effort of you or your staff and with minimal time lag. So that the order can either be committed to that customer (after payment) or released back onto the sales channels for resale.

Amazon is not without its quirks, specifically around the fact that unless you mark an order as shipped you don’t have the funds released for that order. So being able to mark multiple orders as despatched from multiple locations and then the system going back to update the different sales channels to confirm they’ve been shipped can not only keep customer service communications down to a minimum (especially if you include the despatch method, time and tracking information), but to also to get paid for those orders.

Amazon also keep track on how quickly you despatch orders, remember Amazon only cares about ITS customers, then if you consistently ensure that your orders are processed ASAP for this channel and keep within their allowed levels (and far higher than these are strongly suggested) then you will ultimately benefit from a stronger relationship from them.

Here are some examples of what such an integrations could offer you:

  • Leaving feedback when orders are shipped
  • eBay dispute integration for unpaid orders
  • Marking orders as shipped when marked as shipped in the orders screen. In the case of Amazon this means getting paid for the order.
  • Updating the sales channels with the despatch method and tracking number, so the customer can see these details within their marketplace account

Business Rules

A by-product of being able to collect the orders from multiple channels is that you are able to process business rules on the orders. You might become confused here with these, this is not as simple as matching the delivery method chosen by the customer to the right order, that’s just matching, I’m talking about business rules and I’ll explain these now.

Business rules might be as simple as if an order arrives and is over 2Kg, then a courier should be used as the despatch method. Maybe if an order has an order value over £30 and as such its deemed by the business that it would be safer to send via a courier or a recorded method of delivery. Not just the shipping method that the customer chose at the time of checkout.

Also couriers are renowned for having exceptions to their services and typically there is either a delay in posting to certain locations or an extra charge. By applying a business rule (or several) to your orders, you could create an exceptions list of postcodes and select a different despatch option.

An excellent example of this is Northern Ireland, almost all couriers charge a premium for delivery to this location. Lets say we receive an order from Amazon and there is two line items and normally these would be sent via a courier, however because the courier wants $10 more to this location, using a service such as Royal Mail tracked would be more suitable. Its still relatively quick and it’s a traceable method, but works out cheaper than the main courier and has the attributes not found with normal Royal mail offerings.

Here are some of the attributes of orders that you may want to apply business rules to when processing them:

  • Order Source
  • Shipping service selected by the customer
  • The value of the shipping selected by the customer
  • Order value
  • Weight
  • Quantity
  • The destination of the order (postcode/zipcode, state, region and/or country)

Unified Processing & Documentation (Including Email Notifications)

Integrated Label ExampleAnother benefit of aggregating orders is that all the orders can be processed in the same process, so that could be the same (or similar) despatch documents, thus saving an array of custom documents to each order source and standardising the entire pick, pack and despatch process.

Obviously I’m guessing that you would desire customisation to the despatch documents, as if we have one part of our business branded in a certain fashion and another part to another, ensuring that the documentation is either universal or customised to the sale source would highly beneficial.

Depending upon the software being used, some allow you to fully customise each document, this could be the picking slip, shipping document and invoices. These documents could also be depending on the shipping method set by the business rules be customised paper stock, for example if the order has been allocated to Royal Mail 1st or 2nd class, then the document printed could include the PPI label, so  there is no need to stamp or add a stock for this.

The paper stock could also include an integrated label, so that once the contents of the order have been checked, you peel off the label, pop it on the front of the package and then spike the sheet or pop the rest of the sheet into the package itself for the customers reference.

Going beyond the paper documents, we must not forget email notifications. It’s quite possible to include a PDF version of the invoice for the order in the order despatched email and also for the email notifications to be tailored to each business identity and order source. Of course if you have the courier details from a courier integration to the orders aggregation software, then including the tracking information (and ideally links to track the order) could be a huge win for your business.

Despatch Process

If you can imagine that you have your orders in a single place of reference and have control over the documentation and business rules being applied to your orders, then we shouldn’t forget the ability to find a process of despatching orders that works well for your business.

Some businesses have really simple despatch processes, this could be a single document that fulfils multiple roles, such as invoice, picking slip and shipping list. Whereas another business may require barcode scanning of orders and products to ensure the accuracy of the despatched orders.

Whereas others may be required to enter or scan a serial number of the product being shipped in the order, for security or tracking. Having a software product where the despatch process can be altered, either globally for all orders or specific order parts can be hugely beneficial when working out a despatch process that works for you.

To add an extra dimension here, it’s not uncommon for a business to be looking at the despatch process and idealising other people’s businesses when it comes to order efficiency. The biggest eye-opener for me personally was during a visit to Expeditors in Avonmouth, Bristol.

This company specialises in warehousing and despatch of orders for 3rd party companies (amongst several other services). When I queried the team over despatch process and whether they used a unified process, the eye-opener was that for each business they worked with, they each had a tailored despatch process. Some had barcode scanning, some had picking lists for later processing and some just had a single sheet for all the despatch functions.

Stock Control

If your orders are being collected to a single location, then if we know what your stock level was before the order was received and the amount sold. We know what your true stock level is and this can be uesed to update the other sales channels where you are selling the same inventory.

This process varies from system to system, but the crux of this process is exactly the same, we know what we had to begin with, we know we have X number less and where from and where the item is being sold to, thus we know where we need to update with the latest stock level, so that we still achieve maximum market exposure of our products, but minimise the risk of overselling.

Note: See this article relating to the eSellerPro Channel Profile which is a process that does just this.

Accepting Manual Orders

One order source that we shouldn’t overlook is manual orders, these could be orders taken over the phone or trade orders. By allowing these to enter the normal despatch process can also be a huge win. Taking an order over the phone, checking stock levels and taking payment can be a tricky task when using multiple sales channels and without this basic information to hand, it can be impossible.

By having ALL the information about your inventory in a single place and being able to process an order with this information at your (or your staff’s) finger tips can make a call with a customer into a few minutes rather than 10’s of minutes and saving awkward situations of taking an order and not actually having the stock available to fulfil the order.

External Fulfilment

Not every company fulfils their orders internally, with the process of fulfilment becoming cheaper and cheaper and whole host of specialised companies out there that are capable of dealing with both stocked and just in time despatch (ProFS and Expeditors are two good examples of these).

With such orders, you can either allow the 3rd party company access to your orders or even in some cases integrate to their EDI or API systems for automated exchanges of the order data for them to fulfil the orders for you.

How Can it Help Your Business?

Bringing orders from multiple sources to a single orders screen will give you an exceptional business advantage. You can see your orders, process them in-mass, most likely be able to integrate with couriers, expedite the time it takes to process issues in customer services, apply business rules to the orders and have a clear picture of what is happening in your business, right now.

Going to the extreme, any and I mean any! order aggregation software will help your business become more efficient.

The processes in even less ‘evolved’ applications will allow you to process your orders more effectively and apply one or more processes to your despatch process. Some applications will go much, much deeper and allow for the full customisation of the processes, documentation and integrations involved with collecting orders from multiple sources.

Your Feedback

Maybe this is something you take for granted through your current software or maybe it’s something you’re pulling your hair out with right now. Let me know in the comments box at the bottom, I’d love to hear from you.

The Amazon Buy Box – You know the Secret Formula Right?

 

If you’ve not read this article before, then you’re in for a treat as the Amazon Buy Box pretty much obey’s the formula and has been proven to do so time and time again.Amazon UK

If you’re new to Amazon, then in short the holy grail of Amazon is the blue buy box and if you’ve not come across the buy box before, you cannot miss it, it’s blue and on the right-hand side of almost every product on Amazon.

Hey, they’re infectious! There is one over to the right :)

When there is only a single seller fighting for the buy box, there can only be one winner, but when there are two or more sellers, then assuming that everything is even, you can win the Amazon Buy Box with the formula in this article.

The Amazon Buy Box Factors

However there is a but… This assumes that everything is equal and we know that nothing is ever a level playing field, especially when it comes to marketplaces and Amazon, well is not always even either (see this article Why do eBay Sales Stay Consistent? for further reading).

There are many factors that influence who gets the buy box on Amazon and ChannelAdvisor points out the obvious in their help file,  as a reference, I have put an amended table below.

Factor What Amazon is Considering Winning Practices
Featured Merchant Status How trustworthy you are based upon account history. Being noticed by the Amazon account managers.As ChannelAdvisor suggest, it doesn’t hurt to ask Amazon support about your “Featured Merchant Status”
Price What is your product price? What is your shipping charge? Low total price, including product price and shipping
Availability How many do you have in stock? How quickly can you ship? Quick and consistent fulfillment
Volume Do you sell many of this product? Consistency
Refunds How often do you issue a refund for seller error? Low refund rate
Customer Feedback How do customers rate your service? Low negative feedback ratings
Customer Support How quickly you deal with customer queries Answering in less than 24 hours, 7 days a week (yes that’s weekends included)
A-to-z Guarantee Claims How often do you get returns? Low A-to-z claims

A Special Note on FBA

But that’s not all, because we have not included the “motherload” which is “Fulfilment By Amazon” AKA “FBA”.

FBA means that the seller has one or more of their products in Amazon’s fulfilment centres and because Amazon has it, have verified it’s condition and knows it can get the product out to its Amazon Prime subscribers, then it promotes FBA held items heavily against seller fulfilled items and routinely it’s going to take a hefty price difference to shake FBA products out of the buy box, or is it?

The Amazon Buy Box Rule?

If you have had a slap from Amazon, whether that’s an account warning or a suspension and very worryingly even if it was not your fault and a mistake on Amazon’s part (we have this documented in a support email back from Amazon) then this can count against you if everything is even.

But course your business exceeds in every area on Amazon, you are the perfect seller, well second to Amazon that is, so for the following to work, we’re assuming that everything is level.

So to the “Amazon Buy Box Formula”:

(Lowest Selling Price – 2.7%)

– £0.01
= The Buy Box, For Longer

By taking away 2.7% off the lowest selling price (including postage) and an extra penny, you receive the Amazon buy box for much, much longer.

It took me ages to work this out, testing, refreshing over many days it’s this worked out to be the lowest % and value I could get trigger the buy box and for it to stick.

The minus one penny is in the formula for the lower priced goods in the sub £20 area, it always seemed to take that extra penny to kick the box into action.

There are a few clauses, on the accounts I tested this out on, they were ALL of a great standing with Amazon, no major issues and all had long track records of great service. The other is none of these accounts were using FBA (Fulfilment By Amazon). FBA is a lethal advantage as I mentioned above, to shake FBA items takes a little bit more.

Also none of the products that were tested on were over £50, I am sure there is alterations in the trigger for the buy box, the percentage is likely to be a lot less than 2.7% at these levels.

Your Feedback

I would like for you to try this on ONE product for ONE day and let us know your results.

I know that several of the readers here have used this formula to great success over the past year since I first published this article, what I’d for you to do is try it for yourself for a day and let me know your results here by leaving me a comment below.

Alternatively if you have been using it, let us know your feedback as the formula does move around in different categories and price brackets, again let me know in the comments box and of course if we lost you anywhere in this article, don’t hesitate to ask in the forums.

Meet Me for Coffee at the Internet Retailing Conference

It’s IRX time again and I’m soo looking forward to attending. Out of the 4 or so ‘public’ conference that I visited last year, IRX in March was by far the best!

The Internet Retailing conference has the largest line-up of exhibitors I know of in the UK, Amazon, ChannelAdvisor, eSellerPro, iContact, PayPal, Reevoo, SellerExpress and a whole host of others will be attending in person. While there is no stand for eBay specifically, you can be sure the select members of their team will be attending. You can see the full line up here and registration is FREE.Internet Retailing Expo 2012

Register for Free

I’m really looking forward to seeing how the team from My1stWish do, as they’re presenting with eSellerPro at 11:30 and I can’t wait to meet Dave Chaffey CEO of SmartInsights after his presentation at 12:00 on day 1. A full agenda for both days is here.

 

Agent Orange

This year I am taking up roots in the Cafe area again and just so you’ll not miss me I’ll be wearing “orange”.

I’ve included a cheesy shot below so you know who to look for. I’ll be sporting a solar panel, a goatee of some form, a smile and as someone kindly pointed out last year a hoody that makes me look like a Guantanamo Bay inmate.

Meet Me For Coffee!

Meet Me For Coffee!

I am attending both days and are staying overnight (thanks to the team at CargoBox). If you would like to meet me, just pop over and say “Hi”, I’d love to meet you face to face.

It appears it’s the same conference hall (3a) as it was last year at the NEC in Birmingham and there is a Cafe area in the middle. I’ll be sat in the middle of it, you’re not going to be able to miss me :)

Are You Attending?

Are you attending this year’s IRX? Let me know in the comments box below and we’ll hook up for a chat.

Will You be at the ChannelAdvisor Catalyst 2012 Event?

ChannelAdvisor Catalyst 2012

Catalyst Register 2012It’s getting closer! I was pretty much veto’d from attending the Catalyst event for the best part of 5 years due to working for competitors, I had always recommended others to go and the feedback was always really positive.

So last year I broke my Catalyst virginity and attended the ChannelAdvisor event at the Park Plaza Riverside hotel in London and I’m really looking forward to attending this years event. Its also a special time for me as I’m getting married to my partner of 12 years a few days after, so if you’re attending and would like to meet up for a beer afterwards, let me know!

I’m also looking forward to meeting David Spitz again and also the new Managing Director of EMEA Seamus.
(I wonder if he has the same dancing skills as James?)

Chris from Tamebay has a special voucher for the event, giving you a £80 discount, use the code “tamebay2012” when registering.

Speakers

This year we have an interesting line up of speakers including:

*coff* they’re all links to LinkedIn profiles ;-)

The event is spread over two days, Monday 28th and Tuesday 29th May. The agendas are below:

Monday, 28 May, 2012

9:00 AM  –  10:00 AM
Registration Open
Location: Foyer Area
10:00 AM  –  10:45 AM
Workshops

1 – International Expansion: Breaking down borders

2 – Becoming Social- Tips on using Twitter, Facebook, Google+ and YouTube to generate leads

3 – The Evolving Customer

10:45 AM  –  11:30 AM
Workshops

1 – Putting the changes in Comparison Shopping to work for you

2 – Time to get mobile- Making your business mobile friendly

3 – Back-Office Integration: How to simplify your processes

11:30 AM  –  12:00 PM
Networking Break

Exhibition Open

Strategy & Support Booths Open

12:00 PM  –  1:00 PM
Workshops

1 – Creating an engaging and user-friendly website that converts

2 – Whats hot and whats not – Channel Trends

3 – How to succeed and make more money online

1:00 PM  –  2:00 PM
Networking Lunch

Exhibition Open

Strategy & Support Booths Open

2:45 PM  –  3:30 PM
Workshops

1 – Our path to success” One company’s insight into their business.

2 – How Retailers Can Succeed Independently with Daily Deal and Flash Sale Campaigns

3 – eBay Best Practices, things to ensure that you do, things to ensure that you don’t do.

3:30 PM  –  4:00 PM
Networking Break

Exhibition Open

Strategy & Support Booths Open

4:00 PM  –  4:45 PM
Workshops

1 – Online Marketing Strategy- Tips, Tools and Techniques

2- Leveraging Salesforce.com CRM to Streamline and Grow your eCommerce Business

3 – Trading online – Making Payments simple

4:45 PM  –  5:30 PM
Workshops
1 – Becoming a Top Rated Seller on eBay2 – How to win the Buy Box3 – TBA
5:30 PM  –  10:00 PM
Catalyst Drinks Party
In The Sky Bar

Tuesday, 29th May

8:00 AM  –  5:00 PM
Registration/Info Desk Open
8:00 AM  –  9:00 AM
Networking Refreshments
9:00 AM  –  9:45 AM
Scot Wingo – CEO, ChannelAdvisor
9:45 AM  –  10:30 AM
The Changing Face of the Global Retail Landscape – Panel Discussion
10:30 AM  –  11:00 AM
Networking Break
11:00 AM  –  12:00 PM
Miriam Lahage, Global Head of Fashion Brand, eBay
12:00 PM  –  1:00 PM
Jacqueline Gold, Chief Executive of Ann Summers and Knickerbox
1:00 PM  –  2:00 PM
Networking Lunch
2:00 PM  –  2:45 PM
Amazon Keynote
2:45 PM  –  3:15 PM
Interview with Peter Briffett, MD, LivingSocial UK, Ireland & Netherlands
3:15 PM  –  3:45 PM
Taking Retail Mobile – Panel Discussion
3:45 PM  –  4:15 PM
Networking Break

Exhibition

Strategy & Support Booths Open

4:15 PM  –  5:00 PM
Gavin Sathianathan, Head of Commerce Partnerships, Facebook
5:00 PM  –  5:30 PM
Practical tips to immediately apply to your business
5:30 PM  –  7:00 PM
Drinks & Networking Reception

Are You Attending?

So will I be seeing you there this year? Let me know in the comments box below.

Urgent: Dealing Amazon Pending Orders

 

Firstly apologies, I’ve know about Amazon’s pending orders for a long time now and they can be dangerous. I should have considered their impact at this time of the year earlier. I never suggest anything as ‘urgent’ that I cover here, but this is the exception…

What Are Amazon Pending Orders?

Amazon pending orders, are orders that have one or more issues with either the customer or the payment for the order. This means that there is an order that has been taken by Amazon, but not yet been made available for download and/or processing.

Taking a direct extract from the Amazon help system, pending orders are explained below:

Orders in pending status indicate an issue with the customer’s payment method. Those orders are not in a shippable status, and should not be shipped, even if the buyer contacts you directly. Pending orders will not have confirm and cancel buttons in Manage Orders, and they will not appear in either the Order Report or the Unshipped Orders Report.

Once an order is in a shippable status, the confirm and cancel buttons will appear in Manage Orders and the order will appear in both the Order Report and the Unshipped Orders Report. At that point, the order should be shipped and the shipment confirmed in Manage Orders or with a feed.

Note that Amazon assumes the risk of buyer non-payment for every order in your Unshipped Orders Reports or that has confirm and cancel buttons in Manage Orders. Of course, just as now, there may be circumstances where payment may later need to be refunded, for example when the buyer does not receive the order, or it is not as described.

Why Are Amazon Pending Orders Dangerous?

Using the Amazon help explanation of pending orders, I’ve highlighted the key points above “orders are not in a shippable status” and “will not appear in either the Order Report or the Unshipped Orders Report“. To clarify such orders are dangerous because:

  • They’re sat in a different queue
  • Stock may or may not be allocated to such orders
  • They don’t appear in the standard (or any) reports that can be exported

Pending orders are both a liability & risk to the business. Such orders can sit in this status for weeks sometimes, however at this time when there is a higher velocity of sales than normal the low risk of these turn into a serious risk.

Stock can be locked in Amazon orders and 3rd parties may not know of them, thus keeping the stock available on other channels and open the business to higher chances of overselling. The orders are not shown in the order reports and any system, whether it’s the sellers own or a 3rd party can overlook these and not account for them in the current stock levels.

The Scale of Amazon Pending Orders

Now this is curious, I checked on four Amazon Seller Central accounts this morning, roughly their account types were like this:

Average Order Value Order Velocity
Very High (over £150) Medium
Medium (below £50) High
Medium  (below £30) Medium
Very Low (below £10) High

Now my logic beforehand would have indicated that both the “very high value” and the “high order velocity” for the “very low” orders would have been the two accounts that displayed issues with pending orders.

However I was wrong, both these accounts had very few pending orders (one had 3 and the other 11). It was both medium order value accounts with moderate to high volumes of sales that had the most number of pending orders, one account had over 150 of them and the other was over 50.

However they ALL had pending orders, some were showing back to late November and the numbers differed from account to account (they’re four unrelated accounts in four different product verticals).

How Do You Locate Pending Orders?

Locating Amazon pending orders is relatively straight forwards, there are several paths and I have also included a direct link to them as well:

  • After logging in to your Seller Central account, on the right column, scroll down to the section called “Your Orders (Amazon.ext)”, under the section called “Seller Fulfilled” there is a line for pending orders and the count is a link
  • From the top menu, hover on “Orders” and select “Manage Orders”, then click on “Advanced search” and select a date range (I’d suggest 365 days for the first time) and set the “Order Status” drop down box to “Pending” and hit search
  • A direct link to the last 180 days of Amazon pending orders is here and if you want to search for less or longer change the value of the “preSelectedRange” attribute

How To Handle Pending Orders?

Firstly the good news…

3rd parties such as eSellerPro, ChannelAdvisor & Linnworks use Amazon’s newer API called MWS (Marketplace Web Services).

Why is this important? Included in the calls is the ability to locate and account for pending orders. This allows them (3rd parties) to allocate stock lines that are held in pending orders so that they’re not allocated for sale on other sales channels (like eBay or websites for example). If you’re using either of these then you have nothing to worry about.

This is of course assuming that you have setup MWS with these platforms. If there is any doubt at all, contact them immediately.

Now the bad news…

If you are using the order reports from Amazon to process your orders either manually, through a 3rd party or through AMTU (Amazon Merchant Transport Utility) then you are likely to have a potential issue.

The ability to integrate to MWS is there but requires time & a developer, this is ruled out. The same goes for integrating to any of the fore-mentioned 3rd party platforms. So you’re stuck in a limbo period.

Also this only affects merchants that either use a virtual business model or are also selling the same products on other platforms/marketplaces. If you only sell on Amazon and work in a stocked business model, then you can ignore this completely.

Dealing With Pending Orders Manually

However if your business does sell its product ranges elsewhere or uses parts of a virtual product model, then I suggest the following:

  1. Check the pending orders 2-3 times per day, once in the morning, then around lunch and once in the evening (this depends upon the velocity of your orders and the amount of pending orders you’re seeing)
  2. You can copy/paste the pending orders list to excel (it doesn’t paste that well, but its workable)
  3. Take a few minutes to highlight new pending orders that have appeared and allocate stock levels accordingly.
  4. Track orders exiting to real orders and orders that are removed

A 5th option which may or may not be an option for your business (and I suggest you do so, because of the complicated risk factors with Amazon as we need to allow as much lea-way for returns and cancelled orders post Christmas) is that you actually order the products in the pending orders and allocate them to one side.

Summary

Amazon pending orders can be tricky, especially if your business is not using the MWS API or a 3rd party that uses this to communicate with Amazon & have that part dealt with effectively.

Stock can be allocated without the ability to let other selling channels know and this opens your business to a risk of overselling and the “fun” that stems from cancelled orders.

If you’ve not read this article yet (there is a video too), I cover some core essentials on how Amazon reacts to marketplace sellers. You never cross Amazon because if it was a human, it would be a woman and she is a ………

If there is only one takeaway from this article, go check your Amazon orders right now for pending ones, be aware of them and you can do this via this link.

What Does Online Gaming Have To Do With Marketplaces like eBay & Amazon?

In this article I pose the following question with an aim to draw a comparison between features found in gaming, to that found on marketplaces like eBay & Amazon.

What Does Online Gaming Have To Do With Marketplaces like eBay & Amazon?

Before I can attempt to draw a comparison, I need to identify some of the core components of online gaming. Being a self-confessed hardcore gamer, I feel I’m at least semi-qualified to attempt to document some of the qualities that online games have to offer, as for the marketplaces comparison I also feel I’m semi-qualified there too.

 

Understanding Online Gaming

Team Fortress 2

Team Fortress 2

My history of gaming goes back to the original days of WON, which was the system that Valve used for multi-player games using the Halflife 1 (HL1) engine before it was migrated to Steam. This now includes games such as CounterStrike & TeamFortress Classic & the variations that spun from these, like FortressForever.

My online gaming has taken a specific slant, multi-player. I’ve never really been a fan of single player games, HalfLife 1 & 2 are prime examples, I’ve not played more than a few minutes with these two, but I must be into the realms of years now of the hours put in for the multi-player versions. Also it’s worth pointing out that I took several days off on the release of TeamFortress 2, so that I could sit down and enjoy the newly released game.

To give an indication of the extent of my lust for multi-player, I’ve dabbled with MMOG’s (Massive Multiplayer Online Games), however because I know my personal weakness for them, I’ve steered away from the likes of Guild wars & World of Warcraft, because I know I’ll have no life after them. I’ve recently been hooked on World of Tanks (WoT) and my gaming community lost me for over 8 months to a web based MMOG called Tribal Wars.

It’s also a good time to indicate that I am not a fan of football, this may explain in part my obsession with online gaming, as I miss the key elements I detail later in this article from bot being a “fan” that can readily port to the game of football as well, not just selling marketplaces like eBay & Amazon.

Tribal Wars is an interesting game to consider, as its not the normal type of game that you would consider as online gaming, as its all based in the browser & is highly focused towards strategy. Starting with a single village, you go plundering other villages to get more resources, the aim is to increase your buildings & troops to a level, where you can educate a nobleman, then go off and over 4-5 attempts, win over another village. This is all done in a web browser, while fending attacks from other villages, attacking other players,  joining tribes and plotting the demise of other tribes in the world that you’re playing.

Tribal Wars ignoring the core requirements that make an experience (XP) MMOG based game, also sunk into another passion of mine, coding & mathematics. Now this is where I seal my fate for that game as I’m now willing to admit that I wrote a masterpiece of over 52,000 lines of code to automate that game and this was the reason why I ended up dominating an entire continent (or K as they’re known). Naughty I know…

Flipping back to some current games, these being TeamFortress 2, CounterStrike Source and World of Tanks. While these games being in a different format (employing role play, first-person shooter, real-time strategy etc…) where you play an humanoid or tank object, rather than being focused on an image in a browser, the cross-comparisons are exceptionally similar.

Core Elements of an Online Game (for me)

Each of these games employ the following features:

  1. Ease of play, even for new players (called n00bs)
  2. Social interaction
  3. A scoring mechanism
  4. Team play, with real people (see note on AI later)
  5. An experience mechanism & Achievements
  6. A token mechanism (this is another form of Economics)
  7. A single or set of characters that you can improve over time
  8. Ability to be totally random
  9. Respawn events or never-ending

It’s critically important that new players are able to join and understand the game quickly, then to build a lust for gaining experience & achieve some or all of the other core attributes. Some games do this by having tiered levels of games, taking WoT (World of Tanks) for example, there are 10 tiers and players only play with other players in tiers up toa  maximum of 4 above them, to keep the game enjoyable for them.

Social interaction is huge for online games, it’s been known for people to get married in games! A really nice story to add here is that out of the gaming community I created a few years back, we now have our first real life baby that would not have entered this world without it. Now that’s the power of social interaction, forget the rest of the normal stuff, chatting, plotting, team work etc… Social can go to real world too and we’ve had some amazing nights out with the lads when we’ve all met up from all around Europe to a single place and take the virtual to the real-world (Big Chief looked pregnant, but he was a bloke).

Team play and the interaction of other real players is absolutely key, they’re needed to keep the game random and also to allow team work. Now this teamwork may be in dual units or as entire tribes of hundreds of people, but its this co-operation that can truly make a simple game, hugely addictive.

Now this is a good time to cover artificial intelligence (AI) and I’ll be back to the core elements shortly.

Artificial Intelligence In Games

You may also be wondering why I have spent a couple of hundred words with this topic, when you get to the marketplaces comparison later, AI has its direct comparison to “automation” and it’s critical you understand AI and how it’s linked to together.

Now this is where I’m going to slate one of my favourite game providers, Valve. Although to be fair they had a brilliant stab at it & I just prefer playing with real people.

Left 4 Dead Characters In two recent releases, Left for Dead and Left for Dead 2, this game is based upon a AI engine that works out the skills of the players and adapts the game to suit. The problem is, the more you play, it doesn’t take much to work out the trigger events and when you’re likely to find a witch (she’s lost a child& sits there crying and goes ape if you have your flash light on, then proceeds to attempt to kill either you or one of your 3 team mates) or a rank (a whopping great big zombie that can rip the floor up & lob it at you, you gotta burn that one with a petrol bomb and it takes some kill I can assure you).

The original incarnation was just a team of 4 players, this was an immediate fail for me, as I need at least 10 people each side to consider it worth my while, any less, the game dynamics start to suck. In later updates a “verses” game appeared, so instead of just 4 players, 8 could play and the first team, the survivors take on the opposite team, who play one of 5 roles as zombie-fied creatures. With random hoardes of zombies appearing, or not so random as you figure out as you play more and more. Yes, there was an hack to allow more players, but the amount of server load caused by the AI engine, made it unplayable.

So, for me AI sucks. I’d rather play with humans, you can never tell what they’ll do next and no game is exactly like the one before, ever.

Economics & the Other Factors

Economics are a curious addition to online gaming, not only can this provide an amazing gaming experience, but it can also allow game creators to find extra sources of revenue or even make it their sole revenue stream.

World of Tanks - American TreeTo focus on the gamers side of this equation, lets take WoT’s, in this game you start with a level 1 tank and you gain experience (XP) with each battle you fight, you get more if your team wins and less if your team fails. You also gain credits for each battle and they follow the same path as the XP, if you win, you get more coins. Its the combination of the XP to unlock higher tier tanks and you need coins (lots of) to buy the tanks. So the more you play, the more XP & coins you get.

Now while this game does not have sharing abilities that I’ll cover in a moment, this game does have the ability to buy gold coins that can be used for several purposes, such as having a premium account that allows you gain 50% more XP & coins each battle, or they can be traded to buy special tanks or ironically even to convert XP or buy normal coins.

world-of-tanks-gold-1As you can tell this can could get expensive, I did a few quick sums and with a small group of us, we’ve easily ploughed £1500-2000 in this game alone in the past few months.

Now flipping this to the game makers, this is where freemium kicks in and the best example is the TeamFortress 2 game I referenced earlier. In this game you play one of 8/9 characters in teams of up to 16 per side and battle it out in one several game formats capture the flag/point, attack defend or death match.

Bots (AI/fake players) were added, these were a feature in the original game Team Fortress Classic (by their modding community, as the game has an API), however again they’re actions are relatively poor compared to humans (although the way-pointing has come on quite a way since the original), however as per my earlier note on AI, these generally suck and the general community of players tend to keep away from BOT servers.

This is where it becomes interesting because this game originally started as a typical game, buy it and play as much as you like, however Valve at the time had started to implement a drop mechanism for extras in the games, such as weapons or items you can wear. These items could be stored and new items could be built, but in a stroke of genius, they allowed the items to be traded and then that’s where the whole game changed. TF2 turned into a free game and the revenue stream is now made from the massive user base sporting customised items, that new players want and can buy from the in game store.

Modding Engine (API)

In the case of Valve games, they have for a number of years now allowed 3rd parties to leverage the gaming engine, either to create new games or to change the way the current games are played.

This has been done via a link to the game engine on the server and communities like SourceMod that sports over 450 plugins that can completely change the way the games work and have allowed longevity to the gaming engine, because of the hundreds, if not thousands of addon’s & extensions that have been created by 3rd parties to the original games.

Achievements

In all the games I’ve covered above, they all sport the feature of experience & ability to improve from what they originally started from, this can be with time input or via paid for addons. Another important factor I have not covered up until now is the ability to “respawn”, this is where the player at the end of a round or game, starts again at the beginning, to play another challenge against the players.

In TF2, its normally a round based game, this could be to capture a flag or point(s), counter strike source is similar where a bomb needs to be planted or hostages need to be saved (or inversely,  a bomb site or the hostages need to be defended) and for WoT all the enemy tanks are destroyed or the cap point is taken.

In almost all the games I’ve mentioned there is the ability to be awarded achievements from the actions taken in the games. For WoT this may be sniper or a medal, for TF2, this could be the number of kills scored with a weapon or other combinations, some are obscenely hard to get, in fact one of the spy achievements due to a bug that was introduced a year ago, cannot be completed.

The most competitive of players will aim to unlock ALL the achievements for one or more player classes, the same as one of the players that I play with on WoT, he’s unlocked every tank & upgrade for an entire country tree.

This has literally taken him months and by his own admission that country tree (USA) & the tanks contained with in it, are crap compared to Germany, to the point that the highest tier tank in that tree is being removed and replaced with another, because its so under powered.

But he knew this & still continued, the game play itself was only one part of the game, unlocking the boxes on the screen was more important to him, than how the tanks actually played and invested months obtaining this level. That I hope demonstrates the power of achievements.

How Does Online Gaming Dynamics Relate to Marketplaces?

I’ve pretty much covered the basics of online gaming in ~1900 words, however how does this relate to marketplaces like eBay & Amazon?

 ebay-feedback-profile-1

Well the most obvious is feedback, when you first start selling on either Amazon or eBay (the game), you start from 0 and work upwards. The feedback system is incremental and ports directly to the experience (XP) model found in games, the more you sell (the game) the more feedback you’re likely to obtain.

Now this is where the game gets interesting, as Feedback is not entirely incremental, it can decrement too. So if you have a dissatisfied customer, they can leave you a neutral or negative feedback, this can be directly compared to the World of Tanks game, because even though you lost a battle, you still got something from it, albeit a negative and because you want more XP & coins (think feedback score & profit) then you do your best [as a business] to ensure that the feedback is positive.

Marketplace Achievements

When we mix in other dynamics of the marketplaces, lets take the eBay PowerSeller status, that has multiple tiers, Bronze, Silver/Gold, Platinum & Titanium and now the ultimate of being a “eBay Top Rated Seller” (eTRS). So that when you reach this level, you are allowed to leverage discounts on your eBay fees and gain extra exposure. This is very similar to the premium model found in MMOG’s and has distinct correlations to the items found in TF2, an item is worn, the same as the eTRS badge is worn.

Now chuck in the eBay “Detailed Seller Ratings” (DSR’s) where sellers (the gamer) can be scored on more than just feedback that had just three levels, buyers can rate sellers on a scale of 1 to 5 for their experience, this absolutely wreaks gaming levels, especially when you consider the business (or gamer) can electively choose to lower its risk to specific DSR ratings by tacking tactical/strategic decisions on the way they list (play the game) on eBay.

Flipping over to Amazon, Amazon is a slightly different game (or business), Amazon is a longer term game where you don’t gain access to the converted buy box for at least 3 months and in most cases is 4-5 months, after proving that you are a worthy gamer, I mean business, as you can see the line is now becoming blurred between business & gamer.

Amazon also leverage the feedback game, with ratings from 1 to 5 and with eBay too, you can play the feedback game by leaving follow up comments or attesting feedback that has been left by buyers. In a gaming scernio this is similar to appealing to the server admin or game providers for a cheat or foul play (think those scummy buyers that try it on) or appealing directly to your eBay or Amazon account manager.

The reviews & guides that is found on eBay is also an interesting gaming feature. As a business you’re able to write reviews for other gamers, sorry I mean eBay members to rate on how well the review is written / its usefulness. You can also sport an extra logo next to your eBay ID (player name) if the sum of your reviews meet specific requirement levels (think XP).

Administration

You can also make complaints about cheaters to the powers that be, this maybe someone stealing your images or breaking one of the marketplace policies or this could be a player with suspect game play.

This can also take an automated approach by either the markeplaces or the game providers, for example listing items that are under the VeRO protection on eBay or by a cheat being picked up by the anti-cheat VAC system that is used by Valve.

What Does AI & Marketplace Automation Have In Common?

I spent a good few hundred words explaining the AI (Artificial Intelligence)  system found in games and I did air a dislike for AI in gaming, this can be directly compared to automation of business processes for the marketplaces. Somewhat ironic that I’ve spent years working on tools to automate marketplaces, however just like AI it has its place, the same goes for automation.

In a recent article I released titled “The Top 8 Pitfalls of Using 3rd Party Software To Manage Your Business” I cover the common issues found when using such tools as eSellerPro, ChannelAdvisor, Linnworks, ChannelGrabber and so on, these are all caused by being removed from the games or businesses processes at ground level. The ultimate failure here is when the 3rd party provider goes down, this is the same as the AI engine failing and no-one can play the game, the business almost stops without it.

Don’t get me wrong, AI has its place, the same as automation tools, but if you rely too heavily on them and don’t report on them effectively, then the game or business is pretty much over.

API Access & Longevity

Another striking comparison between HalfLife engine games & the online marketplaces is the API access abilities. Having access to the core engine of the game/marketplace allows 3rd parties to expand on it further.

This could be as simple as feedback automation or it could go exceptionally deep as examples such as eSellerPro & ChannelAdvisor demonstrate exceptionally well.

The eBay API has to be one of the most comprehensive API’s out there and comes in numerous forms. Amazon Web Services rely heavily on API’s also and this has spawned numerous connected businesses, you only need to look at the eBay solutions directory to see the full scale of what can be achieved and its no wonder eBay Inc went for a new platform called X.Commerce, they know full well, without the integrations that millions of 3rd parties can provide will extend their core marketplace & associated companies offerings.

In all cases, because of API access, this has allowed 3rd parties to take extensions to the original platforms into areas that were not even conceived by the original creators, increasing customisation & longevity of the platforms.

Summary

All marketplaces whether knowingly or unwittingly employ several key features found in on-line gaming to keep businesses & users entertained with the marketplaces.

eBay probably have most of the bases covered, all though the XP model could be leveraged more, the feedback stars are nice, but multi tiered achievements could also prove lethal for competitiveness. A wild idea would be to have achievements for selling X value in one day, week or year, dominating sales for a category, badges based upon time, the options are endless.

Amazon have a few areas covered, but could leverage so much more from the core elements of online gaming to their advantage. In both cases, the marketplaces can be quick to leverage and as more experience is gamed (or did I mean gained?) and more automation is put into place, more coins, achievements or profit can be leveraged from them.

Yes, eBay & Amazon are different marketplaces or games, however the most starkest comparison that can ever be made between gaming & marketplaces is this:

Whether its a game or a business, if you take away focus, that is either working on despatching your orders (amongst other key business tasks) or playing the game, the game is going to cease to be played.

Did you enjoy this article? Did I miss out an element or a factor that you feel is important or have you spotted something I’ve completely over looked? Post your comments in the box below

ChannelAdvisor Powers 25% of eBay UK Fashion Outlets

I’m working on an article relating to competitive advantage for businesses through software usage and I’ve just stopped to share with an interesting observation.

Using the official eBay Outlets list here,  it turns out that 8 of the 31 listed are powered by ChannelAdvisor, that’s a clear 25% (and not the result I expected).

Here is the run down of service providers for backend processing in these accounts:

eBay UK OutletsSoftware Providers
1BenchChannelAdvisor
2Branch 309Own API Integration
3BarrattsChannelAdvisor
4Baron JonUnknown 3rd Party
5Blue InceSellerPro
6BertieDocdata
7DuneDocdata
8Ed HardyUnknown 3rd Party
9Fly53Docdata
10FigleavesUnknown 3rd Party
11House of FraserChannelAdvisor
12JigsawUnknown 3rd Party
13Joe Browns ClearanceChannelAdvisor
14Karen MillenUnknown/None
15KookaieSellerPro
16KalikoDocdata
17L.K.BennettFrooition
18Littlewoods ClearanceChannelAdvisor
19La RedouteUnknown/None
20M and M DirectUnknown/None
21OfficeeSellerPro
22Pied a TerreDocdata
23Roman OriginalsUnknown
24SuperdryAuctiva
25SchuhOwn API Integration
26SoletraderUnknown 3rd Party
27Sports Direct OutletRedstar
28SpeedoChannelAdvisor
29Savile RowChannelAdvisor
30Ted’s ShedUnknown/None
31Very ClearanceChannelAdvisor

Note:

  • These maybe inaccurate and are my conclusions from interrogating the listing data of live listings.
  • “Unknown 3rd Party” there is a common provider to these.

ChannelAdvisor Amazon 360 What this Could Mean for the Future

Two weeks ago I was kindly given a walk around the new Amazon 360 as part of the Autumn Release which also included Buy.com upgrades and comparison shopping merchandiser from ChannelAdvisor.

What struck me the most was what ChannelAdvisor has been and created, could be the foundation parts of a much larger offering which I’ll cover in this article. I decided that it would be easier to explain the points covered in this article in a discussion video and have included this above.

ChannelAdvisor Amazon360

What is Amazon 360?

This is a great question as the Amazon 360 feature includes the follow new elements:

  • Improved seller dashboard
    Displays key information on your Amazon sales, top-performing products, orders pending shipment, and product listing status
  • Amazon seller metrics
    Highlights important seller metrics monitored by Amazon integral in your seller status
  • Detailed feedback
    Imports all negative feedback notes for quick response
  • Product performance view
    Covers seller performance down to individual SKU details
  • Competitive landscape view
    Shows a compact view of your major competitors on Amazon by SKU
  • Rule-based price adjustments
    Configures rules based on margin to automatically change product price

Basically it’s the combination of multiple elements from Amazon, into a single dashboard to empower merchants to have the information that they need know, instantly available to them.

How Do I View Amazon & Why is this Important?

I always refer to Amazon as a person, this “person” has several key attributes and requirements from 3rd party merchants, these are:

  • Have the highest regards for their customers
  • Expects the best possible pricing for their customers
  • Will not be mucked around by merchants that poor results to their customers
  • Is looking for and at the long term relationship
  • Expects that ALL customer queries are answered ASAP
  • Does not tolerate disgruntled customers for whatever reason
  • Doesn’t like competitors (amongst other things)

If Amazon had a gender, it would be a woman.

Firm, but fair and you’d never cross her (ever).

That’s why (to me) a dashboard system like Amazon 360 is so critical. You need to know this information and if you don’t then that’s asking for trouble.

What Could this Mean?

This is curious as it became glaring apparent that what ChannelAdvisor has done is bring in the core information that sole merchant needs to survive on the marketplace, but has also opened the potential for providing key information to a business that has multiple employee levels.

For this example, we’ll assume that we have three people in company XYZ, their roles are:

  • Company Director
    Dave runs the entire business and manages both staffs and provides the direction for the company.
  • eCommerce Manager
    Ian, is Dave’s “man on the ground”. Ian is responsible for ensuring that all the channels are working effectively and efficiently
  • Miss Fix-it
    Zoe, she’s the do-er. Give her an issue and she’ll fix it. When Ian has an issue, Zoe resolves the issues for him.

Now can you realise that each of these people have different business roles to perform. Dave needs to information to help guide his company direction, Ian needs detailed information to identify where attention is needed and Zoe needs to the information & tools to action Ian’s requests.

What we can see in Amazon360 that this is on-the-way to being able to provide these differing requirements to different business roles. Not only can you see the account status, but also identify issues such as products, account status and feedback, but also identify products that require further attention, whether that be to focus upon pricing, data or to look at bringing in adjacent lines to complement the lines that are performing.

An Open Suggestion

Also digging deeper down this rabbit hole [think Alice in Wonderland], let’s think beyond what we can see from the screenshot above. ChannelAdvisor now “has” access to the information that each of these key business roles need to operate effectively.

An open suggestion to ChannelAdvisor is not stop where they are right now, but to introduce a multi-tiered dashboard that can be tailored to each role function and also to not stop at just Amazon, but include company-wide information. Combine all the channels together, but also tailor the information to specific business roles.

Take Zoe in our example above, she does not need to know how well the channels are performing, she needs to know what needs her urgent attention to solve issues. Now!

Ian as the eCommerce manager, needs to know how each channel is performing and also as a group, to identify where the staff should focus their attention and to focus his time upon expanding the business.

Where as Dave needs to know where the business is heading, not only individually on a per-channel basis, but company wide and help steer the direction or follow the direction its following as needed.

Summary

Firstly, nice work!

This was the first time I have seen a 3rd party solution provider incorporate this information into their solution and not only is it fabulous to see, its also exceptionally exciting what could be done with this information, when you look at the larger picture and realise the ramifications of combining data & metrics together.

Why do eBay Sales Stay Consistent?

For new or smaller businesses, this entire article is going to fly straight over your head, however for larger businesses and for me personally, its a question that has been bothering me for quite some time now. Months apparently.

That question is:

Why do sales through a specific sales channel, tend to stay consistent?

In this article I address this question and it wasn’t until I asked for help, that the real answers came through. It’s also raised further questions, such as how do you deal with this, what options do you have and how can you tackle this with your business model. I actually feel I am now left with more taxing questions than I originally started with.

This really is the upper extremity that I am considering here, if your business is new or is not optimised using any of the 3 rules I cover in a moment, then you should not even concern yourself with this article at all. However, if you’re hitting “limits” on different sales channels, then you really need to read this.

Why this Question?

For a number of years now, I’ve seen merchants selling on multiple platforms hitting a limit of what can be done with a marketplace. For example, businesses that are in a specific niche, their sales will rarely go above or below a 20% window on a daily basis.

There may be “spikes” in sales on a daily basis and seasonality does have a positive effect on most businesses. But overall, most businesses stay consistent.

To understand why I’d be asking myself this question in the first place, I have been working on a set of 3 rules as the basis of expansion/profitability, they also spell “ESI” or are pronounced as “easy!”, which is the ultimate goal of where I am going with these and there is a fourth part that I discuss later in this article. Anyway, the for now these three rules are:

  1. Efficiency
    Both internal & external. Internal is everything your customer does not see, like tools, processes etc… and external is everything your customer does see, branding, the application of persona’s etc..
  2. Sales Channels
    By adding more of them or refocusing on a specific channel to “catch up” with others or to break into a new or refocus upon a competitive advantage.
  3. Inventory
    Either wider or deeper inventory. Range selling, new product verticals (widening the current range) or deeper inventory (thus better price points & supplier relationships)

However, it’s common for a merchant to hit a “limit” on a specific marketplace like eBay or Amazon and I was not happy that “operational efficiencies” were the cause. I know first-hand after spending a few months helping one specific company on-the-ground overcome these and was not happy with the standard reply to such a question. There had to be another reason.

Another aspect has concerned me greatly; what if a client I am working with is actually at 95% efficiency of a channel, what really are the options and what can I do to help them overcome this inherent boundary?

Asking for Help

There was only one person that I knew that could possibly hold the answer or even comprehend what I was referring to in the question. This person was perfect for a number of reasons, the first that he has been in this arena longer than I have, seen more merchants than myself on the differing marketplaces and critically seen the sales data to back this up. That person was Marshall Smith from ChannelAdvisor.

Here is the first email, that I sent over to Marshall. Noting that I have been bothered by this for months. In a conversation on Monday of this week, it was pointed out I had been asking the participant the same question in January.

Hi Marshall,

Here is a question, that I think only you can answer.

Its a question that has been bothering me for quite some time, “Why do eBay sellers sales stay consistent?”

To be more precise, I have noticed that specific sellers sales, never move out of say a 20% window, for example seller X has a average sales of £10,000, the daily fluctuations mean that their sales will never (or rarely do) move outside of 2K below and 2K above.

Surely there are too many factors for a business to consistently land in the same “window” of sales every single day. I understand why this maybe engineered to happen, but that raises more questions that it answers as the most obvious one is “how to you break or work this limitation?”

Have you seen this also?

The first reply is below, it clearly shows that Marshall understands the common issues that occur and why I was right to ask him in the first place.

Matthew –

When I see that situation it’s the same as a regular retail business that’s hit a certain volume and ceiling in their current business practices, so that growth is just not an option for them as they’re trying to run things. They might have a software solution that’s put a ceiling on how much they can get done because it’s not as efficient as they need and a lot of time is spent managing the technology.

They might be short on people (or have chosen to stay at a certain size) and they’re doing all they can every day so there’s no room to grow. Even more common is that people get comfortable and aren’t looking for a change – look at all of the people that have complained about eBay’s changes in the last few years rather than embracing them and recognizing that being ahead of the curve means they’ll pick up the business their competitors lose. There have been plenty that are willing to do that, but even more that had gotten comfortable and just want to keep doing what they’ve always been doing.

One of the things that I’ve found hardest over the years when trying to explain the value that we provide to users is getting them to value their own time. Many times there’s a sole proprietorship that’s been running things using something like Turbo Lister and spending hours and hours every day just to manage their sales. They see it as “free” but aren’t accounting for how much time it costs them to manage that information. Even if they just stay on eBay, coming over to us is going to save them time that they can use to grow their business or go do some other leisure activity instead.

If we just cut the amount of work they’re doing from 6 hours to 3 hours every day (and we’re usually a lot better than that) then we’ve saved them 60-90 hours every month. For that fee that we charge, broken out on a per-hour basis, they’d be hard pressed to get someone that could handle that amount of information and that level of capability to guarantee their business keeps running the same as it’s always been for that amount.

They free up their time to expand their business or focus on customer service, areas that usually didn’t get handled nearly as well before. Yet, they see it as a “cost” because they weren’t calculating the value of their time that they were spending inefficiently to run the business before.

So many of those people have gotten trapped in a pattern where they have something that’s working that they don’t want to change because they fear change or don’t think they have any cash to invest into the business. Most of the time those types of sellers never even get to the level that we’re going to be dealing with them as they fall out of the sales cycle for one reason or another.

If they’re a serious business and want to grow then there are things we can do for them, but if they haven’t figured out the business cycle and a mid to long range plan to grow then we’re going to be big and scary to them.

We’ve had people tell us we made changes to their business that took 8-10 hours of daily work down to just 1 hour a day. Then they finally had the opportunity to grow their business, source more product, expand product lines, hire more employees, and finally get growth back into their business.

Marshall

Note: I understand that the above is quite a lot for most of you to take in, what this question did in short was highlight that Marshall was the right person to ask. We both [Marshal & I] had reservations that some of you may just not “get this” at all. If this is the case, then the rest of this article is probably a waste of your time.

Redefining the Question

Ignoring that Marshall has created a dozen articles worth in that reply alone, lost about 90% of the people that may read this [Stay! This really does hit gold shortly], it clearly showed that he was the right person to ask.

However I needed to redefine it, we had missed the goal I was looking for. And trust me, we hit it the jackpot in his reply to the following:

Howdy Marshall,

Ah it shows that you understand!

Now remove the users and the software as variables or imagine they’re 90% efficiency.

Why do their sales stay within a 20% window all the time? No major fluctuations, yea some days less, some days more, but never outside of their “boundary”.

Take Amazon sellers, they get the buy box, the sales flood in, its price dependant for sales volume (ignoring lots of other stuff), eBay its different, there is some form of cap or barrier in place??

Jackpot

Now this is where we hit the jackpot and I strongly suggest you read this at least twice as it’s that important:

There’s no buy box in the eBay experience, so you’re subject to the whims of what people are buying at any given point. At a very macro economic level, the demand for most items is pretty consistent and follows a standard pattern.

People replace their shoes on a certain cycle. At a macro version of the economy, there are always X% of people that are shopping for shoes. That keeps the demand at a pretty consistent stream. Then when there’s not something adjusting the demand direction like the Buy Box, then the sellers are exposed at about the same rate that they always are, causing the sales to be within a reasonable statistical level of average.

To parallel to another environment, think of the casino – any individual user might win or lose on the smaller scale, but at the big picture of all of the people playing all of the games the house knows what their rate is going to be and how much they’re going to make as a percentage of the overall bets. That house advantage is the macro version you’re seeing among these sellers where the growth pattern is to:

* improve their placement in the exposure to capture a larger proportion of the regular buyers (Buy Box)
* expand their product line to make the universe of potential buyers for them to be a larger group
* expand the distribution channels to open up the existing product to a larger overall audience

Since you can’t (really) get the Buy Box on eBay (eTRS and Best Match only goes so far) then really the only way to grow is to expand the product line or do additional stuff off-eBay.

A lot of people get comfortable with their products and what they know of eBay, so they don’t change any of these things and grow up to the point that they’ve captured “their share” and then are stagnant from that point forward.

That was okay in the past when eBay was growing at such a clip that people were seeing 20-30% annual increases because they were just riding on the coattails of eBay growth, but when that slowed down they weren’t ready and just got frustrated and confused.

When they pay attention to the types of things we both talk about, that’s when they’re able to address one or more of these points and expand their business again instead of being stuck on a plateau.

Marshall

Kipper Slap

What Marshall had highlighted were the following:

  1. There is a pretty much consistent demand for some product ranges, like shoes.
  2. With all factors being equal, sellers are exposed to buyers at a consistent rate
  3. There is only so-much you can do in a single marketplace
  4. There is only so-much you can do with a specific product range
  5. If you just tread-water, then you’re not going to see the high increases that you used to see, as eBay’s growth rate has slowed down

You cannot imagine the gravity of these 5 points were to me. I had been pondering over this for several months and in this one reply, which was comparable to being hit in the face with a kipper. It all became clear. It’s also raised bucket loads of other questions, but it was finally answered.

What Does this Now Mean?

In short, as Marshall puts it so aptly, “You can no longer ride the coattails of eBay for growth”. This also extends to every other marketplace there is as well. There is an inherent cap to the number of people looking for a specific product on a specific day on a specific marketplace.

Yes, globally this number may be a huge, however on a macro level each and every marketplace, the number of customers you can reach and convert is limited.

The E, the S, the I and the?

In the 3 rules of ESI, I give equal value to each of rules, that is, that efficiency carries a weighting of one, the same as sales channels and inventory. However within each of these, the weighting is not equal and it’s the combination of them that equate to something higher than just 3.

However, if just one is exceptionally poorer than the rest, then that heavily out weighs the others. In simple terms (I like to use metaphors, get used to them, there are more) its like a Ferrari with elephant as a passenger and coal as the fuel, you got some of the right gear, but you ain’t going anywhere.

If you’ve got a great listing template and no inventory, if you’ve got a world class backend system, but no sales channels, if you’ve got masses of inventory and a limited backend tool and only a single marketplace. You’re not going to get very far and there is no way you’ll ever hit the boundaries that we’ve been discussing in this article.

This is why its absolutely critical to your business that you pick the right tools for the job, because without them you’re not going very far and with them all in harmony, you’ll outpace “The Stig“.

I hinted earlier that I am working on a fourth part to the ESI structure, this is one is special, because this one is a multiplier. While the others cumulatively have a positive effect, this one is ultra special because with this one executed currently multiplies the gains of the first three.

The multiplier is “Why”. Why are you doing what you are doing and what guides you to what you are doing. A business with no drive is pretty much only ever going to tread water, however, if you lob in the magic of a say a CEO like Steve Jobs that will ensure that a company will succeed huge personal cost, then this is a multiplier.

My equation (again I am trying to keep this as a simple as possible) looks like this:

Results = (Efficiency +  Sales Channels + Inventory) x The “Why” Factor

As you can see, even if the sum of the E, S & I are low, if you say have someone or a purpose to add in a “Why Factor” then all these are multiplied and that is why I believe that most small businesses that stick longer than a year, have this very special ingredient.

Determination and grit are absolutely required and its these kind of factors that multiply the results. I am reminded over a conversation in a meeting a few months back, where it was blatantly obvious that my role in the conversation was to highlight that what they lacked for, did not matter. What did, was that they had the determination to make it happen, “The Why Factor” and I think you might have already guessed it, they are winning.

Conclusion

A stark summary of this entire article, is that there is a limit to what you can do on a single marketplace.

The inherent cap, does not impact all business models, if you’re business is subject to multiple customer bases (eg. B2C & B2B) and/or irregular stock levels, then this cap is going to yo-yo and give inconsistent sales on a frequent basis, by its very nature. However if your business is homed-in on a specific niche then if you’re not at this wall yet, then you will be soon (or later).

I’d like to extend a public thank you you Marshall from ChannelAdvisor. It was not my intention to use his replies in this article, but as I started working on it over the course of over a week or so, it became apparent that without his replies, the story of arriving at the final answer, would fall far short without its inclusion. Thank you.

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