Record Sales Lead To Record Returns
Who Is Taking The Brunt of Apple's Upcoming Changes? YouTube Expands Their Streaming TV Advertising Dominance. And is Amazon Officially Pay-To-Play?
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Between the holiday hangover and...activities...in the US Capital, most of this week's eCommerce news was political by nature. As you know, I tread lightly on the political front. It is not my area of expertise, and it is not why you subscribe to this newsletter.
I want to acknowledge my sympathy for those who were injured in DC this week. There are obviously things on our minds that are more important than eCommerce. But alas, there are a few important stories I want to share.
This helps ensure that with Smart Bidding in Google Ads you will use the most "accurate data to set the right bids," Google said. When would you need this? Google said, let's say that your website conversion tracking breaks and underreports conversions for 3 days. With data exclusions, you can now exclude that date range from being used by Smart Bidding.
The analysts said based on these parameters, Facebook and Snap have the highest potential headwind due to IDFA changes, followed by Twitter and Pinterest. They said Google and Amazon have the lowest relative exposure.
YouTube is the single biggest source of supply in US connected TV (CTV) advertising. The digital video platform’s outsize role in the US CTV space is particularly striking given that advertisers can’t access CTV inventory on YouTube on non-Google platforms (e.g., Roku).
We expect YouTube’s gross US CTV ad revenues to reach $2.89 billion this year, accounting for more than one-third (35.7%) of total US CTV ad spending. By 2022, YouTube’s US CTV ad revenues will reach $5.45 billion, and its share of US CTV ad spending will increase slightly to 38.7%.
A substantial portion of US consumer time spent with streaming video on CTV screens already goes to YouTube. Of the 25% of TV time spent with streaming video, 20% goes to YouTube, making it the second-most-watched digital video platform after Netflix (34% share), per Q2 2020 data from Nielsen. This data comes from Nielsen’s Streaming Meter, a subset of streaming-capable homes from its National TV panel, and only refers to the amount of time people spend “in front of the TV screen.” So, this metric doesn’t include streaming from other devices.
Some critics argued that Amazon’s sponsored results were effectively a listings tax, an additional cost of doing business on top of the commission the group already takes — which itself was more than $20bn in the last quarter alone.
“Amazon is becoming more and more a pay-to-play platform,” said Mitchell Bailey, from Kaspien, a company that provides advertising services for brands on ecommerce. “Unless you’re willing to invest in their advertising platforms, it’s much more difficult to compete.”
Sponsored posts are a source of continual friction between Amazon and major brands because it allows competitors to pay to appear above rivals, even if a customer has searched for a specific brand name. A recent query for “Sennheiser headphones”, for example, presented an unknown Chinese headphone brand, a drum kit and a rival Japanese brand — Audio-Technica — before any Sennheiser products.
Despite this — or perhaps because of it — more brands than ever are willing to pay, especially during the pandemic. A survey of 1,000 major brands conducted by Feedvisor suggested the number advertising on Amazon has risen to 73 per cent this year, up from 57 per cent in 2019.
Amazon is also attracting advertising from brands that do not sell their products on its website, such as carmakers and insurance companies, which are keen to use Amazon’s purchasing data to target the right people. A buyer of baby clothes, for example, may also want a new family car.
The Journal reported that Amazon has created a “top-secret task force” dedicated to studying and copying parts of Shopify. Amazon appointed Peter Larsen, its vice president, consumer, to lead the initiative — dubbed Project Santos. In October, Larsen’s team presented its findings to CEO Jeff Bezos who was enthusiastic about the prospects for stemming merchant defections to Shopify.
Amazon delights in using merchants as an R&D outlet that helps identify successful products that it can clone and sell at huge discounts. If Amazon’s consumers lap up its merchant knockoffs and the merchant does not survive, so be it.
If consumers flock from the Allbirds’s $95 shoe to the $45 Amazon knockoff, then Allbirds is in trouble — and if such Shopify merchants are similarly targeted by Amazon’s low cost producer strategy, then Shopify is in trouble.
Are there enough consumers willing to pay a price premium for Allbirds’s shoes? If so, Allbirds should be fine.
As Geekwire wrote in November 2019, “You get what you pay for. If you want better materials, the brand name, and care more about sustainability, the Allbirds are for you. If you really just want that wool look, don’t want to spend an extra $50, and don’t mind some minor flaws, Amazon 206 Collectives are the way to go.”
Shopify’s customer is the merchant, Amazon’s is the consumer. The corollary is that Amazon will continue its shabby treatment of its third-party sellers. Therefore Shopify will keep growing faster than Amazon.
UPS expects to induct 1.75 million returns into its system every day this week, which would represent the highest weekly total of returns in the carrier's history, a spokesperson told sister publication Supply Chain Dive via email. The expected 8.75 million returns this week is a 23% increase over the highest week of returns for the 2019-2020 holiday season.
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