When are outside Amazon experts better than inside ones?

Discussion
Photo: @kirsty via Twenty20
Dec 18, 2018
Tom Ryan

Walmart “experts” began popping up in the eighties to help brands manage the ups and downs of selling to the discounter. Today, with a wider range of complexities, Amazon experts come in all shapes and sizes.

Some outside firms that support selling on Amazon focus solely on protecting brands from counterfeit selling or MAP (minimum advertised price) violations from third-party sellers. But most focus on optimizing sales.

Given Amazon’s complex, constantly changing algorithms, outside firms have proliferated offering advice on search optimization and boosting product rank. Firms also provide assistance monitoring reviews, planning organic and paid advertising, pricing and promotion, fulfillment and other areas.

Of course, many brands handle these functions in house.

A recent Digiday report noted that some brands are looking to hire internally to gain more control over search and overall advertising on Amazon. Agencies are often still used for execution, such as the ad buy.

In a RetailWire interview, Kiri Masters, founder and CEO of Amazon agency Bobsled Marketing, said one reason brands might want to keep Amazon functions in-house is the perceived cost savings. Brands also retain institutional knowledge. Ms.  Masters said, “Amazon is an important platform and many brands want to have their own capability here rather than fully outsourcing to a third party.”

On the other hand, at least with advertising, it generally takes at least six months for a candidate with a pay-per-click (PPC)-background and limited Amazon exposure to become fluent with Amazon, she said. Seemingly irrelevant factors, such as  inventory availability, pricing, the presence of competitors and product safety issues, can impact PPC rates.

Ms. Masters added, “A detailed understanding of these factors, and the skills to navigate them, are not commonly found amongst advertising practitioners fluent in other ad platforms.”

She further noted that Amazon’s advertising platform continually changes, and best practices can likewise shift overnight. Reporting and targeting techniques are also still being developed. She said, “Since brands are looking for the full picture of how advertising ties back to actual sales, this requires specialists to understand nuances around Amazon’s attribution windows for sales, and how to bring separate pieces of data together to properly analyze ROI.”

DISCUSSION QUESTIONS: What advice would you have for brands on handling advertising and other aspects of their Amazon relationship in-house versus working with outside experts? Is working with Amazon more complicated than with other major retailers?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"We recently went from managing Amazon in-house to hiring an agency. I couldn’t be happier with the decision!"
"Amazon is indeed more complicated to deal with than other major retailers; most decisions are automated, and the automation is opaque and always changing."
"The better question is: Do I gain any competitive advantage for bringing all of the Amazon relationship in-house?"

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11 Comments on "When are outside Amazon experts better than inside ones?"


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Mark Ryski
BrainTrust

Amazon has created an ecosystem that most retailers can hardly ignore. Any retailer who is working in or intends to work in the Amazon ecosystem needs to understand how it functions and how to get the most out of it. It is complicated and while it may make sense to develop internal expertise, for many retailers hiring an “Amazon expert” could help them get further, faster. I’m not sure that Amazon is more complicated than working with other retailers, but it is complicated.

Ryan Mathews
BrainTrust

The Walmart model might actually be instructive here. While Walmart experts were once in high demand to instruct in the beginning stages of a relationship, major vendors ended up creating internal teams to deal directly with Walmart, most of them located in Bentonville, and the need for outside expertise disappeared in the face of superior internal competencies. We may never see ad agencies or supply chain folks embedded in Amazon headquarters, but my guess is that — over time — internal teams will be the most common model adopted by scaled agencies and suppliers.

Keith Anderson
BrainTrust

Amazon is indeed more complicated to deal with than other major retailers; most decisions are automated, and the automation is opaque and always changing.

Additionally, demand for experienced talent significantly outstrips supply, and training and development options have historically been lacking. So beyond the rationales for and against in-sourcing, there are practical challenges.

Outside partners can accelerate performance, absorb some of the volatility of doing business with Amazon and, over time, help internal teams level up and become more self-sufficient.

As the article notes, it’s a fragmented landscape of potential partners. We recently identified more than 80 agencies, brokers, and consultants offering wide-ranging services related to Amazon and other online retailers. (We published this as an asset for the industry here.)

Given the above complexity, it’s essential for brands selecting and working with partners to define success up front (and how it will be measured) and confirm that each partner has specific capability and competency in the areas that require the most help.

Liz Adamson
BrainTrust

Full disclosure, I run an Amazon agency, we provide both full service Amazon management and consulting for brands doing it in house.

I agree with Kiri that Amazon advertising specifically can be very difficult to manage of you don’t have experience. And it does change very quickly. I often recommend to brands that at the very least they use an agency that specializes in Amazon advertising platforms. Experience in other platforms doesn’t exactly transfer over to Amazon ads.

For brands that want to develop Amazon expertise in-house, we recommend hiring an expert to coach and train their team. This gets them off the ground faster with fewer mistakes than they would experience otherwise. It can be such a critical platform you don’t want to jump in without some guidance.

Dave Bruno
BrainTrust

Whether selling on Amazon or only competing with Amazon, they are so ubiquitous and complex, I would strongly encourage retailers to hire an outside agency with deep subject matter expertise. Amazon can be conquered, but only with well-crafted and highly informed strategies.

Camille P. Schuster, PhD.
BrainTrust

Outside teams may understand Amazon’s operations better than current internal employees. However, internal employees understand your brand, operations, history, and goals better than Amazon experts. I would expect that a collaborative team of Amazon experts and internal employees will lead to in-house experts only.

Doug Garnett
BrainTrust

The better question is: Do I gain any competitive advantage for bringing all of the Amazon relationship in-house?

The answer is: No. There is no way that it builds a competitive advantage — everyone in the market can do the same things.

That means it’s a pure cost issue. And one to be careful with. Perception of cost savings from bringing things inside is almost always a myth (and companies have brought similar things inside for decades).

The issue is this: Whatever the cost savings might be needs to be compared with the lost opportunity of working with someone who sees a range of clients and situations on Amazon (or buying media or…).

Usually the cost savings is small. But the opportunity for either lower Amazon ad costs (for example) or higher negotiated prices or higher revenue offset any savings the company might have.

It’s important to note that Amazon is not “like a retailer” (an account to be managed), Amazon is an advertising environment where exactly HOW you list your products is communication about those products.

David Naumann
BrainTrust
David Naumann
Vice President, Retail Marketing, enVista
8 months 6 days ago

Amazon algorithms constantly change and having expert advice on these processes is imperative to successfully selling on Amazon. If a retailer has the funds available to support a full-time Amazon expert on its payroll, that might be the most economical approach. However, leveraging a team of Amazon experts through an agency relationship is often a feasible alternative. Either way, Amazon experts are needed.

Ananda Chakravarty
BrainTrust

The question is classic Build/Buy/Partner. The problem is complexity and relationship nuances to ensure the best possible outcomes from the distribution source (Amazon in this case) for ads and product. Just as Google, eBay, Walmart and marketplaces have engagement rules, experts who understand these rules including the changes will be able to provide results faster. Note: that doesn’t mean retailers can’t do it themselves or hire employees who’ve worked in these environments, but they’ll be faster with an agency or SME. Regardless, these things can be learned, and a dedicated employee to understand the nuances can always be hired. The real question is whether it’s worth it — complications will arise regardless of the distributor — and usually the level of complications is retailer specific.

Allison McGuire
BrainTrust

We recently went from managing Amazon in-house to hiring an agency. I couldn’t be happier with the decision! The things an agency knows about the ins and outs of Amazon could only be duplicated in house if you hired someone away from Amazon. From handling technical issues to just knowing the right questions to ask support, everything is less frustrating. I’m happy we can now turn our focus to internal strategies and priorities.

Dan Frechtling
BrainTrust

Along with many of the commenters, I agree that outside help is mandatory. But consultants and agencies are only part of the answer.

There are myriad companies that help brands grow their businesses. They optimize how to get found, how to get chosen, and how to get placed in the buy box.

There are also myriad companies that help brands protect their business. They hunt for pricing violations, unauthorized resellers, duplicate listings, IP theft and other hazards.

While human experts will never go away, today’s agencies will beget tomorrow’s technologies. The digital nature of Amazon means a tremendous amount of insight can be derived from Amazon APIs or simply scraping the site and benchmarking with software and longitudinal datasets. The value of this data has only begun to be tapped.

wpDiscuz
Braintrust
"We recently went from managing Amazon in-house to hiring an agency. I couldn’t be happier with the decision!"
"Amazon is indeed more complicated to deal with than other major retailers; most decisions are automated, and the automation is opaque and always changing."
"The better question is: Do I gain any competitive advantage for bringing all of the Amazon relationship in-house?"

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