We are now in the midst of the 3rd e-commerce revolution. Those that navigate it successfully will grow and thrive, getting larger and more profitable than ever before. Brands that fail to adapt risk stagnation or worse, decline, irrelevance, and death. In this post, we’ll explore the three e-commerce revolutions and how brands can thrive in the current landscape.
THE FIRST E-COMMERCE REVOLUTION: THE RISE OF PLATFORMS
The first e-commerce revolution was the rise of e-commerce platforms such as Amazon, eBay, and Alibaba. These platforms created the concept of unlimited shelf-space and in doing so, enabled millions of business owners to build their own businesses and sell both nationally and globally. Many brands remain on these platforms to this day, but increasingly feel like they have given up control, lack direct access to their customers, and pay increasing fees to these platforms which make sustainable growth increasingly difficult.
THE SECOND E-COMMERCE REVOLUTION: THE RISE OF DIRECT-TO-CONSUMER BRANDS
The second e-commerce revolution was the rise of direct-to-consumer (DTC) brands, powered by platforms such as Shopify and enabled by highly effective ads on social media, typically Facebook and Instagram. These ads were so effective because of high-quality, inexpensive inventory, but also because brands were unknowingly giving up their data to power these platforms’ behavioral targeting and lookalike models. This made these ad platforms incredibly effective and drove success both for brands and their competitors. This came to an end with Apple’s ATT framework and increasing privacy restrictions which limited ad effectiveness modeling, and performance measurement through social media advertising. Stagnanting audience growth in North America does not help either. As a result, DTC brands now find their ads more expensive, working worse, and are struggling to grow. They don’t know where to go for alternatives.
THE THIRD E-COMMERCE REVOLUTION: THE INTEGRATION OF DTC, ONLINE MARKETPLACES, AND RETAIL
Now we are in the midst of the third E-Commerce revolution. Some DTC brands are moving into retail and online marketplaces, while some brands currently selling on Amazon and other websites are building their own DTC websites. Most are still managing these channels independently and struggle to tie them all together, Those who do will thrive, but the path forward isn’t easy.
THRIVING IN THE THIRD E-COMMERCE REVOLUTION
The most successful brands are learning to use Amazon’s advertising technology to drive sales and measure impact across DTC, Amazon, and in store sales. In addition to what they do on their own websites and through other advertising tools, they can now reach almost 60% of e-commerce traffic in the US through Amazon’s advertising tools, and tie it all together using Amazon Marketing Cloud. Admittedly, this work is complex. It requires experts across these platforms, and in particular, a team comfortable with Amazon’s DSP, Amazon Retail, and how to customize Amazon’s ad solutions, which normally focus on sales on Amazon, to instead work with DTC brands and their various toolsets (Google Analytics, Shopify, etc.), along with their ad other ad tech partners. Few companies know how to do this. DPG is different. We are experts in these areas because not only did we build these tools and strategies while at Amazon, we implement them everyday for our customers. Contact us to learn more about how we can help.