The Turning Point: E-commerce & Covid

How has the pandemic affected retail and how to thrive in an online marketplace: Head of E-commerce at Amazon.

During the COVID-19 pandemic, as all but essential shops closed, consumers were left with little choice but to shop online. To accommodate the shift in consumer spending habits, brands were forced to market their products through online channels. This has fast-tracked the e-commerce/digital ‘turning point’. These developments have cemented themselves as the new normal despite high streets and malls returning reopening. It is, therefore, more important than ever for brands to develop and maintain their position in this crowded online environment.

An advisor from the Arbolus Network and Head of E-commerce at Amazon discussed these changes with us and explained how brands can maximise their success in this space.‍

How has competition in online marketplaces evolved during Covid-19?

Pre-Covid, many brands paid little attention to (or entirely neglected) their online presence. Primark, for example, had no online store, resulting in a year of practically no sales. Throughout the pandemic, said brands have shifted their attention back towards e-commerce as a primary means of reaching their customers. Even Primark, who at first refused to make the transition despite its dire 2020, has concluded that “As we look ahead, digital has a critical role to play as part of Primark’s marketing mix. A new website will be launched in the next calendar year.” This is hardly surprising given that the top 100 European brands saw a 45% increase in online traffic from March - April 2021.

On Amazon, categories such as luxury and beauty/fashion previously represented less than 10% of the online range - their number has grown significantly since as sellers invest in marketplaces to gain more brand exposure and awareness.

“Over a period of just eight months, e-commerce’s share of fashion sales nearly doubled from 16 per cent to 29 percent globally, jumping forward six years’ worth of growth”

Mckinsey, The State of Fashion, 2021

How to succeed on Amazon:

There are literally millions of SMEs and vendors to choose from on Amazon, all with a constantly expanding range of products. The pandemic has fueled this trend, with SMEs selling 3.4 billion products in the 12 months preceding May 2020, representing a 25% increase on the previous year.

“With there being so much competition, appearing at the top of the search results remains the most influential factor in brand success. The average Amazon customer only views the first page; a behaviour that has led to the remaining pages being labelled the ‘dead zone’.”

So how do vendors achieve and maintain a position on the first page?

Amazon Head of E-commerce:

“First of all, a very strong piece of advice is to have a perfect product listing. It’s essential to have the right keywords and the right content. Amazon provides an A + Content service that allows the brand to add detail and explain why the product is better with a view to gain customer trust.”
“Secondly, strong product ratings are of vital importance to rank well in results. Usually, more than four stars and as many ratings as possible - the algorithm demands both. It takes time to amass the optimal +10,000 ratings, however, the algorithm is designed to ensure that our customers are presented with only the best first.”
“There is an alternative though! Brands can be discovered quickly on Amazon by investing in advertising. Traditionally, advertising on Amazon (AMS/AMG) is a vehicle for getting a product to page one independently of rankings. Vendors who ‘buy’ keywords can ensure that their product is first when the customer searches for those specific words.”

Future outlook

In March 2021 there were more than 100 million regularly active Amazon Prime members. COVID-19 has had an exponential effect on consumer behaviour and shopping habits have undoubtedly shifted towards online channels. Whilst transitioning towards E-commerce can represent a pricey investment, especially for SMEs, it is increasingly clear that brands must provide digital connections to customers: a significant proportion of customer loyalty derives from the quality and convenience of the shopping experience.

Chiara Balsamo

Chiara joined the Barcelona office in 2021 having completed her studies in Italy and China. Here at Arbolus she focuses on supporting our European consultants. Outside of work you will find Chiara listening to opera music, playing the guitar and cooking carbonara.

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