As reported on Business Insider – Retail:
It’s no secret that Amazon has been successful as of late: The retail behemoth’s 2020 third-quarter earnings report outlined a 39% jump in North American revenues as consumers stayed home and ordered more products for delivery. Non-Amazon products — goods sold by third-party sellers — represented 54% of items sold in the third quarter, the company reported.
For these sellers, Amazon functions much like a search engine, and the competition to rise to the top is fierce, said Lori Barzvi, CEO and founder of footcare company LOVE, LORI and inventor of Amazon bestseller My Solemate.
"I started selling on Amazon in 2014, when there wasn’t much competition — but you still had to understand how the site’s algorithms worked, how to identify and source the right products, and how to reach your audience," Barzvi said.
"Learning how to do that and do it well took me about two years of taking courses and talking to and learning from other Amazon sellers. You have to stay on top of the changes and continue to learn, otherwise you will get left behind," she added. But today she works with a company that specializes in sponsored ads.
Barzvi’s revenues, and those of thousands of other sellers like her, are boosted by accentuating the visibility of their products through such ads and other means.
Amazon’s success has turned the companies who help sellers into juggernauts of their own: According to company data, Amazon advertising platform Quartile, for example, manages more than $1 billion in sales for more than 2,300 brands.
Advertising revenues are a growing source of income for Amazon itself: In the third quarter, the category largely composed of these funds grew more than 50% to $5.4 billion.
Amazon offers a wide range of advertising products for sellers to choose from. However, for most small and medium-sized businesses, the process will begin much as it does on Google — with keywords that have an enormous impact on how all the rest plays out.
Here’s a look at some of the top companies steering brands through the Amazon selling experience, and the venture capitalists that fund them.
Pattern: an international Amazon marketing team for hire
Total funding: $52 million, according to Crunchbase
Investors: Ainge Advisory, KSV Global, Duchossois Capital Management, Carlson Private Capital Partners
For sellers who are tired of the day-to-day grind but aren’t ready to exit their business completely, Pattern represents the middle ground. The company buys out brands’ inventories and handles marketing on Amazon and fulfillment, while the seller retains ownership and creative control of the company.
This model is a win-win for many. John LeBaron, chief revenue officer, told Insider the company’s Amazon’s number-one seller of health and personal care items.
"Our acceleration platform and industry experts manage a brand’s ecommerce from soup to nuts: We buy their inventory, sell their products on global marketplaces, tackle fulfillment, and help brands achieve profitable revenue growth and price control," LeBaron said.
LeBaron said this formula has helped Pattern attract some of the world’s most recognizable brands, including Nestle, Skechers, Pandora, Kong, and Panasonic. Existing partners report an average revenue growth year-on-year of 40% over the past three years, he reported.
Pattern’s strength isn’t only its stem-to-stern approach to sales management, but also the fact that it can carry global brands into global marketplaces. The company maintains a strong international presence — Pattern reported that its Asia office experienced 960% growth in 2020. Additionally, the company helps brands not only navigate Amazon in international marketplaces, but also the homegrown ecommerce marketplaces native to various countries.
SEMRush: a safe way to get visibility without breaking Amazon’s rules
Total funding: $40 million, according to Crunchbase
Investors: Siguler Guff & Company, Greycroft, e.ventures
Founded in 2008 by Oleg Shchegolev and Dmitri Melnikov, search engine marketing leader SEMrush put the data-driven mindset that made them a success in driving results on Google and Bing to work for Amazon sellers.
It launched Sellerly in May 2019. The company initially provided a tool that optimized Amazon listings through split testing; then, in 2020, Sellerly expanded to provide more data-driven tools designed to improve Amazon listing performance by auditing and optimizing content, monitoring changes within listings, and analyzing traffic channels of competing products.
"We believed that our knowledge and experience in digital marketing and SaaS development would allow us to create something different from other tools," said Chief Strategy Officer Eugene Levin. "Our tools are designed to influence visibility, traffic, and conversions — providing simple metrics that can have a measurable effect on the revenue of each product."
Among other things, Sellerly helps its clients stay in accord with Amazon’s sometimes byzantine compliance rules and steering clear of the kinds of potential suspension threats that can dog third-party sellers.
These tools have netted Sellerly 314% revenue growth from 2017 to 2019, according to the company, which develops its ideas from the user base up.
"The sellers’ community has been a great source of ideas for our development," Levin said. "We really appreciate all the feedback that we have received, and we intend to continue involving our users in future releases and content creation."
Feedvisor: AI tool to help automate keyword ads and pricing
Total funding: $32.7 million, according to Crunchbase
Investors: Titanium Investments, Square Peg Capital, Oryzn Capital, JAL Ventures, IMAF-Western, General Catalyst, Chris Hitchen
With an emphasis on continuous improvement, Feedvisor tweaks a brand’s listings using AI to constantly process information about sales, real-time market data, and a proprietary, evolving knowledge base about Amazon’s algorithms.
For sellers who spend hours agonizing about which keywords to advertise on or how to price their products correctly to satisfy the demands of those algorithms, Feedvisor helps automate the process.
Founded by CEO Victor Rosenman in 2011, the company pioneered the market’s first algorithmic repricer a year later.
"Victor recognized the similarities between the Amazon marketplace and the financial markets," Feedvisor’s president and COO Dani Nadel said. "Victor applied the philosophy of algo-trading to repricing in the Amazon marketplace to help merchants drive increased profit and revenue from their catalog."
Today, the Feedvisor AI delivers pricing support with patented technology, strategic advertising campaign optimization, brand and content management, and intelligence, backed up by strategic guidance from Feedvisor’s in-house team. The company said that its clients have attained results including up to a 28% increase in sales and a 37% increase in profit margins.
Among its plans for 2021, Feedvisor plans to add support for additional marketplaces, while also building out additional international Amazon marketplaces to its footprint in that area.
CommerceIQ: helping sellers predict demand
Total funding: $8.5 million, according to Crunchbase
Investors: Trinity Ventures, Madrona Venture Group
CommerceIQ’s approach to helping brands deal with Amazon’s inscrutable and ever-changing algorithms is a machine learning platform that combines sales, operations, and marketing and advertising. Integrating the front end and the back end of the business for sellers helps them avoid issues like running out of stock on a product that’s being promoted, which in turn means that product will be dropped to the bottom of search rankings.
"With thin margins, the goal for sellers is always to increase incremental revenue — and that requires concerted integration between all of the moving parts: sales, inventory, and promotion," said CEO Guru Hariharan. "CommerceIQ is used as a single source of truth to resolve the disconnect that exists between these three primary, traditionally siloed departments."
Founded in 2012 by Harihan, a veteran of eBay, the company said that its customers experience metrics including a 40% increase in incremental sales, a 20% improvement in profitability, and a 32% reduction in out-of-stock rates on Amazon. It specializes in assisting larger brands — those with more than $6 billion in ecommerce sales — manage their activities on the platform.
CommerceIQ has a feature called Growth Navigator that helps seller respond to huge spikes in demand, inspired by COVID-19 stockpiling, and is working on more demand pannign features as well.
Amify: a full-service partner for sellers staffed with humans
Total funding: $5.8 million, according to Crunchbase
Investors: Mercury Fund, SaaS Ventures, Nigel Morris, Dundee Venture Capital, Cincy Tech
Many companies in this sector specialize in machine learning or AI-based tools, but Amify emphasizes its people-based approach to maximizing its customers’ Amazon revenues.
The company combines a human touch with a holistic approach to the challenges of selling on the platform.
"Most of our ‘competitors’ are focused in just one area or only have small teams of about five to 10 people. Amify focuses on end-to-end services and has a team of almost 80 people," said Ethan McAfee, founder and CEO. "We are venture capital funded, which has allowed us to hire top talent and invest in automation and analytics."
McAfee founded Amify after spending time on Wall Street as an analyst at T. Rowe Price. He covered the internet sector for 11 years during the early years of ecommerce and watched as delivery times declined. Looking for an opportunity to get in the game, he originally founded Amify as a reseller, taking over other companies’ inventories and optimizing their positioning on Amazon in order to make a profit.
"I wanted to go out on my own and needed a place to start and learn. It was very easy to start selling products on Amazon, and it also allowed me to understand how the system worked," McAfee said.
The company eventually pivoted in 2018 to become a fully outsourced model.
"We took our knowledge as a reseller and applied that to being a full-service partner for small, medium, and enterprise-level Amazon brands," McAvoy said. "By outsourcing their Amazon strategy to Amify, they can do many times better than doing it themselves, save 50%+, and get up and running quickly."
Downstream: a comprehensive view of selling
Total funding: $4 million, according to Crunchbase
Investors: Alumni Ventures Group, Haystack, Liquid2, DNX, Revel Partners, Founders’ Co-op, Techstars, Tuesday, Math Capital, MGV
Likening the Amazon environment for third-party sellers to "a complex video game" during his time working at the commerce giant, Downstream Cofounder and CEO Connor Folley struck out in 2017 with CTO Salim Hamed to find a better solution.
According to Folley, the pair saw that brands were "fundamentally ill equipped" for the challenge posed by online retail.
"Most brands needed to invest in expertise and software to better measure, manage, and optimize their presence on the platform," Folley said. "Additionally, with ecommerce, no departmental function can be managed in a silo, advertising included. For example, you’d never want to invest hundreds of thousands of dollars in advertising to drive traffic to a product detail page only to have that product go out of stock."
Downstream built an engine to capture data to give Amazon brands a comprehensive view of their businesses, and made it accessible via an AI-powered, automated platform to help them grow on Amazon as well as other ecommerce venues like Instacart.
Downstream also works with power sellers and agencies. Folley said that the company has picked up considerable momentum despite obstacles presented by COVID-19. With more consumers shopping online, "This mixshift has reprioritized ecommerce for our customers and thus reprioritized Downstream, which has resulted in a strong tailwind for our business," Folley said.
For 2021, Downstream is focused on scalability and sustainable growth, while also expanding its offering to additional ecommerce retailers.
Seller Labs: one of the first, and most established, Amazon ad tools
Total funding: No venture funding reported, according to Crunchbase
Founded in 2013 on the strength of its tool Feedback Genius, a product aimed at authors and booksellers and designed to help them collect more feedback and reviews quickly, Seller Labs takes a holistic approach to Amazon sales.
The cornerstone Communication Center piece (powered by Feedback Genius) in Seller Labs Pro, the company’s suite of AI-powered tools, is now augmented by an Advertising Center, a Keyword Center, and a Performance and Notification Center that gives sellers control of the suite of tools and provides data and reporting information. The four apps were merged into one suite in 2019.
In fact, Seller Labs was one of the first software companies to release an Amazon advertising tool when its Ignite module went public in 2016.
"Our deep relationship [with Amazon] allowed us beta access to the early advertising API’s," said VP of Marketing Jeff Cohen. "We knew that Amazon ads were going to be critical to a brand’s success and sellers who could take advantage of them fast could get a first mover’s advantage."
Over the past year, the company has expanded with its acquisition of X-Cart, adding an ecommerce platform to its offerings for sellers who want to diversify.
Seller Labs has experienced "an acceleration" during COVID-19, according to Cohen, powering through customer adjustments in March and April to excel in the back half of 2020. The company’s plans for 2021 include a new seller interface that will be unveiled in early January — Seller Labs is releasing what’s essentially the next generation of its suite of tools, with entirely new features for its customers.
Content26: content ads for Amazon, Walmart, and other marketplaces
Total funding: No venture funding reported, according to Crunchbase
Founded in 2004 by Mark White and Tony Martinelli, the company started out by helping brands flesh out their presence on the platform’s product detail pages, which also helped Amazon scale faster. For five years, the pairing proved mutually beneficial.
"Between 2007 and 2012, Amazon introduced us to over 600 brands, creating tens of thousands of pages of product content for the Amazon catalog," said CEO Tony Martinelli. In 2013, Content26 stopped working directly with Amazon and started growing its business directly with brands.
In 2016, Content26 premiered its advertising solution, which the company said is now the fastest-growing part of its business. It also works with Walmart, Instacart, and other key online marketplaces, and is preparing to roll its advertising solution out to these marketplaces.
Martinelli said that COVID-19 has actually increased the pace of sales at his company, and he envisions a bright 2021, especially given its expansion into Europe under Brand New Galaxy’s umbrella.
"With online shopping at an all-time high due to COVID-19, brands are quickly realizing the importance of working with a global media agency that can provide end-to-end digital, content creation, and creative capabilities to help scale their business and stand out from competitors in ecommerce media and content," he said.
Netrush: helping sellers tell their products’ stories
Total funding: No venture funding reported, according to Crunchbase
Although Netrush partners with sellers to make their brands successful on Amazon by purchasing their inventories and performing all of the marketing, fulfillment, and other functions needed, spokesperson Connor Parsons said the company is actually about relationships.
"There’s tons of potential on Amazon, but as a brand, it can be difficult to create meaningful connections with shoppers, especially when it comes to storytelling," Parsons said. "Our team’s goal is to help brands form those connections and relationships with their fans on the marketplace."
Founded in 2006, Netrush seeks out brands with "mission, story, and heart" behind their products, then provides the teams, technology, strategy, and infrastructure needed to succeed in ecommerce. Partners range from emerging sellers to large brands.
According to the company, Netrush retained positive growth throughout the pandemic. The company is rolling out a new partnership model designed for high-growth startups, along with a more robust direct-to-consumer offering and a rollout of Walmart.com capabilities.
Source: Business Insider – Retail
Author: Julie Peck
Date: 2021 01 22
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