Episode 16: John Ghiorso

John’s spent the last 12-years building his Amazon agency and brings with him a seasoned, well versed head to our discussion on how brands can build sustainable success on the marketplace today.

In this episode we discuss:

  • The importance of data and how to utilise it
  • How so many brands lack operational excellence and why they should care
  • Change in the overarching Amazon strategies in the last 10 years
  • The challenge large organisations are having structuring their teams for Amazon
  • If tech is essential to succeed now

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Click here for the RAW unedited transcript
[0:00:00] George Reid: Welcome to It’s Always Day One. My name is George Reid, a former Amazonian turned Amazon consultant. Each week on the podcast, you’re gonna hit industry experts. Brand owners on Amazon employees share their answers to the basic yet fundamental questions. You should be asking yourself about your Amazon business. Now, let’s jump in. Hey, John, Thank you so much for coming and join me to down the podcast. First and foremost, you wanna give us a quick 32nd overview off who you are small, bigger background and how you’re involved in this Amazon world?

[0:00:33] John Ghiorso: Yeah, thanks, George, for having me. So I’m the founder and CEO of agency called Orca Pacific. We’ve been around for about 12 years and are set up is a full service agency with an exclusive focus on Amazon eso. We offer services in really every facet of the platform. You know, front end advertising, search and display content. S e o merchandizing marketing back in operational support to deal with everything from charge, backs the FDA to direct import all of that, you know, not so sexy, but supercritical stuff thio business on Amazon. And then we do a lot in the strategic realm as well. We have over 50 people on staff were located here in Seattle. Eso just kind of down the road from Amazon on actually, just recently announced a merger with s for capital and mighty Hives is part of a kind of, ah, next chapter in our journey. So yeah,

[0:01:34] George Reid: congratulations. Only just read that whilst clearing up a little bit before we sat down. Big news for you guys is that one that’s been in the works for some time.

[0:01:43] John Ghiorso: Yeah, Yeah, I mean it zits been. You know, it’s been something that we’ve been focused on for a while here. I think we announced it maybe 30 days ago or so. So it z good thio kind of, you know, be able to talk about it and and actually get going

[0:01:59] George Reid: and mighty Hi, I’m correct in thinking they’re heavily focused on the data side of things. Is that right?

[0:02:06] John Ghiorso: Correct. Yeah. Data and programmatic. And then mighty high is now part of asked for capital. Thea, other big kind of flagship brand under asked for is media amongst and they’re really focused on the content production, creative side of things. So, you know, with those two companies combined. And some of the other companies that have that have been, uh, hold up. It’s about 2500% global company

[0:02:28] George Reid: E guess sticking on that data topic for for a moment, then, Aziz, you and I both know data is increasingly becoming so important to Amazon. Um, for you, is this kind of a move to go? The more data we can collect and formulate and visualized, it’s gonna allow us to provide better service for customers. Is that some of the mindset behind that?

[0:02:50] John Ghiorso: Yeah. I mean, there’s definitely, like a one plus one equals three scenario in kind of a lot of different avenues of what might he have is up to and what we’re up Thio, you know, even even in just the Amazon lane? No, just that the data side of just an Amazon practices still, um, I would say in its infancy, in a lot of ways, I mean, there’s just so many different data streams. Some are kind of easy to get access to. Some are more difficult to get access to. Um, there there are not a T least in my experience, there isn’t really a great kind of one stop shop. So So we’ve tried to build out in just the orca Pacific side. Specific to Amazon is, um, is really kind of a unified, comprehensive data practice within our agency

[0:03:35] George Reid: on How important do you forsee data becoming for Amazon sellers who are looking to really bridge the gap between themselves and some of them larger sellers who have always had inbuilt capabilities or in house capabilities, I should say, because that’s always kind of giving them an advantage. You think that’s going to change over the next two plus years?

[0:03:56] John Ghiorso: Yeah, I dio. First of all, I think it’s becoming Mawr important, and I think in some ways you’re going to see it become more democratized, meaning those advantages that some of the larger sellers had in terms of kind of, you know, specific access, etcetera. It will start to become more accessible, I think, in some ways so so some of the kind of you know start up new brands will, um will be able to potentially leapfrogged their competitors. That being said, um, I think a legacy data set around actual like fans of your brand and, you know, and customers that have that have engaged with your brand. That is very hard to replicate overnight. I mean, that is something that you know, these larger legacy sellers do have an advantage. And I think we’ll continue have an advantage as long as they continue toe, create good products and offer value to their customers. So who do you

[0:04:54] George Reid: think is gonna benefit most from this democratization off the data that’s gonna be available and accessible and easy to visualize? Is it gonna be the smaller brands? Or do you think it’s just gonna be the bigger brands going? We just got more money to throw it. Things weaken.

[0:05:11] John Ghiorso: You know, I think it’s going to align. And this is, um, it Z. Probably not the answer you’re looking for, but I think it’s going to align mawr around how seriously these brands take Amazon in general. Um, you know, a big brand where they have Amazon is you know, number seven on their list, uh, is not going to do as well as a smaller brand whose hyper focused, you know, they have a team just focused on Amazon. They have tech just focused on Amazon. It is not a passive platform It is not something that you could just sit back instead of items and kind of watch them take off. I don’t care if you are, you know, insert Giant brand here that’s been around for 100 years. I don’t care if you’re, you know, PNG or Hershey’s or whoever. Um, yes, your products are great. Yes, they have, you know, incredible brand equity and all of those things. But you still have toe out Amazon the competition. The same, of course, is true for any kind of smaller startup brand as well

[0:06:16] George Reid: on. Do you see that data isn’t just gonna be Amazon. Focus for May. I’ve continuously kind of be reinforcing the importance off kind of a bigger picture here and thinking, how does your Amazon data times your social data, particularly if you kind of lean on the topic of advertising? You understand what your dollars most valuable? Obviously, if you have accurate data coming in from social, is that gonna be such a big play now, cramming all that data together of Okay, here’s what’s going on in my social. Here’s what’s going on on my Amazon advertising data. I need to be able to kind of break this stand and understand where I should put this dollar today where I should put it tomorrow, right?

[0:06:57] John Ghiorso: Yeah. Yeah. I think those connection points become mawr important in the coming years. Um, there is for a lot of brands. Most friends, I would argue. Still a lot of low hanging fruit just in the walls of Amazon alone. Eso I think. And there certainly exceptions to this. But I think in most cases, a lot of brands still need to get kind of their Amazon house in order before they look to, you know, driving external traffic and those external connection place. Because, yes, those are important. But like many things in life, it’s more about prioritization and opportunity cost. And it is about yet this is important and this is important and this is important. But you can only do five things. You can’t do 50. So what are those five things? And for a lot of brands, those five things still need to be on. It’s not like the most exciting answer, but they still need to be making sure all your product is in stock, making sure your detail pages look good. Making sure twit things or Twister properly making sure you know you’re defending your brand and then running Incremental R Y positive advertising like some of these, um, kind of easy to talk about, but still potentially hard to actually do the right way, things that are really critical of the foundation of the business.

[0:08:09] George Reid: It’s Matt, you and I, who obviously see and witness so many different brands and Amazon on a daily basis, how they still cock up with that low hanging fruit, those five basic points and that being said, I guess you’ve touched on a couple of them there. But what one thing would you be doing right now to create sustainable success on Amazon?

[0:08:32] John Ghiorso: Yeah. I mean, I think, um e think if I, like, look at kind of a macro view of the two things that brands large and small get wrong the most frequently on Amazon. The first is is lack of operational excellence. There’s leaving money on the table by having, you know, rap out of sock rate of 8% but it should be 1%. Um, you know, kind of stuff. It seems basic, but actually may be quite hard to achieve. I mean, that’s That’s a tricky problem once you get into it. But super critical of the business and then the second one is not spending enough on advertising. But let me give you context on this because I think it’s easy for the agency guided to say, Oh, just spend more right Like that’s an easy answer for everything but not spending enough on advertising because they’re not considering the full effect of advertising on their business because they’re just looking at very short term kind of real time attribution metrics, which are important. Um uh, you know, row as a cost the inverse are important metrics, but they don’t tell you the entire story. I won’t take credit for this because I think there’s someone else in our industry that said it, but I really liked it, they said. They said a cost is an important metric, but it’s like trying to win a race by Onley looking at your speedometer like, yeah, you know how fast you’re going. But that doesn’t mean your race, like there’s a lot of other factors. And so taking those other factors into account to determine true return on your ad spend. If you don’t do that, what happens is most brands have too much of a short term, kind of like right in front of their face literal view. It was of what’s happening and and they miss the bigger picture. And they understand. Under spending in and of itself is not horrible except that your competitors air probably spending more. So it’s all relative. So success then is relative. And do you

[0:10:24] George Reid: think this understanding about how completely agree with your points there and a lot of previous guests have said the same thing the short term mindset, this lack of understanding around what those KPs actually mean? Why, sometimes you can just ignore across in certain capacity. But do you think this also comes down to potentially a lack of data as well? Like, even if it’s something is simple, of kind of new to brand orders on people, just not having a clear enough visual or not even know where to look for that sort of information to go. Okay, we’re spending a load at the moment. It’s just a good idea. Let’s calm it down. There was another business is going. We’re taking on so many new customers, and I repeat, purchase rate is monstrous.

[0:11:07] John Ghiorso: Yeah, Yeah, you know this. So the biggest, the fundamental problem, the reason more brands don’t do this is what I’m describing. Sounds really good on paper. Oh, we just consider all these other, you know, effects. The problem is, there’s not There’s not enough transparency. There is not a new, um, instantaneously accessible data set that tells that story. Now you can go out and get the data eso there. There is data available, but it has to get You have to get it from different channels. You have to correlated inappropriate way. You basically have to have a new internal database, you know, built out by data scientists to do this the right way. So it’s not something a brand and just, like, snap their fingers and accomplish um, so you’re either kind of left with this sort of fuzzy idea of Okay, well, we know there’s rows and then we know there’s other things that happened as a result. Like we know, relevancy increases. And we know we get put in more widgets and we know, you know, we probably get more reviews this result, but we can actually quantify any of that. So we kind of just have to go on faith alone and like, see what happens. But by the time you do that, you know you’re looking at your sales, but you’re effectively looking in the rear view mirror. I mean, it either worked or didn’t work, and it’s just it’s hard to know what worked and what didn’t and was that the actual impact. So that takes a lot of faith and hard to justify, you know, to a CFO, or you have to go and do things the right way and get an actual robust data set around this. But that is that is a hard thing to do. That’s not something that the industry has made it, you know, super simple to do that. So and it’s not just going to

[0:12:42] George Reid: create eggs haven’t really given this too much thought until we’ve now said it in terms of, Is this going to create just more of a divide, though, like those already clearly divided you, looking kind of who’s bringing in most the revenue like Brooklyn alone? I think there was like part of Brooklyn represented a particular percent of all Amazon sales. It was mad. Do you think this divide is just going to get bigger and bigger as those with deeper pockets? Those with better data people are gonna be able to just go. We’re happy to spend most money. If you look at the like, the import of the Chinese coming in now like they’re playing a completely different

[0:13:17] John Ghiorso: game, right? Yeah. Yeah, they are. I think so. You know, it’s always risky toe to make predictions. I actually think it could go one of two ways and essentially in polar opposites. And I’ll explain why I think there’s definitely a case to be made that the kind of the have and the have nots get further separated from one another. The big bigger because they have more resource is more access. They have internal tech. They have scale, you know they have. They have the ability toe hiring agency, whatever it is who can do these things for them. Um, and that they get further further ahead. But you could also make the argument that there is such an incentive to figure this out in the industry. And I haven’t seen this like today, but it is very feasible. Our industry moves quickly that, you know, in 23 maybe five years. You have players, you know, software providers, etcetera. That kind of are able to commoditize this data set, and it actually goes the opposite direction. So that’s what I said before. I think, you know, eventually, maybe democratize. But it could cut both ways. And the other kind of unforeseen thing is that is assuming you have the data set today that exists. It doesn’t anticipate future state stuff that Amazon hasn’t even built yet. You know, for example, that all of a sudden you need a data set for Amazon to brick and mortar retail offerings. There’s only like 15 locations now, so it doesn’t really matter. But when there’s 4000, all of a sudden, that data set becomes supercritical of tying that back to e commerce becomes really important. And what is the customer doing? It’s the same person. They’re just sometimes in the physical world, sometimes digital. So I mean that you know, it doesn’t anticipate any of those changes, and I think that also is where potentially continues to kind of divide the market.

[0:15:06] George Reid: Yeah, I think that’s what makes it such an interesting business to be part of from our perspective, because is continuously evolving, like Amazon’s new grocery store, which looks insane. Um, that itself is gonna bring. Bring more data to it. I think, from my perspective, like if you look at just the changes that Amazon are brought out on what they’re releasing, I think they do give you a decent amount of data. Lots of people complain about it, but I was chatting with my friend Joshua today is that they give you loads. It’s just you’re not looking in the right place, even if it’s like new to brand orders or repeat purchase behavior. There’s plenty of that There it’s just people are, aren’t utilizing it. I think, um, those bigger brands, perhaps nowhere toe look and nowhere to pay the agencies, and they’re always gonna have an advantage. But on the flip side, will there be a backlash from consumers going? We don’t wanna buy from big brands. We wanna die from those small stay at home kind of shops, perhaps, I don’t know. But for May, I’m just thinking, kind of if you’re still a small person playing in this kind of big wide was an ocean. You’re always kind of swimming against the against the tide because you haven’t got the resource is or the know how to employ an agency to get the data people. I think that’s gonna be a continuous challenge no matter what new software comes out, right?

[0:16:33] John Ghiorso: Yeah. I mean, I think, you know, for a number of years, if I had the pinpointed, I’d say, like between maybe 2000 and 10 and 2000 and 16 there were some really significant kind of arbitrage opportunities for, you know, upstart Sellers. And there was arbitrage. And there was also just so much white space because no, like a lot of the big brands and a lot of the categories just weren’t paying any attention or they were just not paying as much attention as they should have. There was so much opportunity, Andi. I think that that as a comparison point like that, that door is started to close. But I don’t think it’s closed entirely. I think it’s just looks closer to what, like Walmart looks like or Kroger looks like, or whole foods or whoever name, you know, any other kind of big retailer Wal Mart, Whole foods, Costco, You name it. They take on, uh, dozens, hundreds, thousands, potentially of upstart. You know, new brands in different categories. Just like you could be successful on Amazon as an upstart new brand. I think you’re just gonna have to fight a bit harder for it. And like, back in the day, you know, 2012 you could be, um you could have really an inferior product. I am win because no one else was there. So, you know, brand really didn’t matter that much. Quality didn’t matter that much. Even Price point maybe wasn’t like supercritical as much as it would be like a walmart or Costco or something. Um, because there’s none of the big guys were paying attention. It was sort of wide open. That’s changed. Like you have to do what consumer product brands have traditionally always had to do to succeed, which is you have to have some value proposition that makes you better. Either you know, better features or cheaper, better I p or better experience whatever it is than your competitors. Er because now you’re mawr on a level playing field on, then you still have toe do Amazon really well to make sure you maintain that kind of at least level playing field. Hopefully, you can get a bit of an edge over the competition. But you know, the days of coming out with an inferior product and just sticking it on this site because there was nothing else there to buy in that category are those days are over

[0:18:49] George Reid: for sure? Yeah, exactly. I think you know, we did with lots of members inside our academy, and certainly some of them are still clinging onto onto that dream. But ultimately, you do need to be turning up with slightly bigger budget than what previously you would have needed. Um, slightly more kind of creative skills on kind of better resource around you. That being said on the resource point, quite enjoy asking this. If you could hire just one individual to help a brand, what would their skill set be and why? Mhm,

[0:19:21] John Ghiorso: Mhm. That’s super interesting, because the way we structure our teams or we’ve we very intentionally have, like different people with different skill sets on every on every client team. So I’m trying to think if I had to pick one because we’ve, we’ve made that. You can’t basically just have one person. You know, I would probably if I had to choose. I would probably have an Amazon advertising expert because it’s such a specific skill set. It’s very technical. Um, it’s somewhat rare. I mean, there’s plenty of people, but, uh, the skill set is less transferrable. We’re like with if you have someone who knows e commerce well but maybe doesn’t know Amazon as well, Like they can figure out Amazon faster than someone who doesn’t know Amazon advertising gets thrown into Amazon advertising. So, like, that would be I would probably use if I had to hire like a single person. I’d probably hire that person, and then I would have, like, have them get trained up on, um, on the other elements of the platform. I mean, if, like, the lame answer questions, well, I would just hire someone who, like, knows how to do everything which may be that person exist. I’ve never met them. I don’t I’m not that person like there’s just it’s gotten sto broad that you can eat at someone, you go wide or you can go deep. Amazon now is so complicated and so multifaceted, it’s actually very difficult to be able to do both. So

[0:20:46] George Reid: I think, yeah, no matter what, people are kind of pitching on the linked in profiles these days. You certainly can’t be naive enough to assume that you know everything about everything on the advertising pieces so important. Now I on. Do you just see that similar to the data accelerating as well, Like just how much focus needs to go on that, because it’s going to become even more fiercely competitive. The U. S is mad at the moment, But if you look at Europe, that’s just going to get more and more aggressive and just replicate the US, right?

[0:21:18] John Ghiorso: Yeah, and it’s Amazon. Advertising is a very different beast than it was even a couple of years ago. Um, it is now is very technical, and it is very competitive. So you need We always use this analogy of, you know, Thio win A You know, the win an F one race. You need the best driver. But you also need the best car like you can’t. That’s driver in a sub harm vehicle is not gonna win vice versa. Not gonna win So, um yeah. I mean, you really need a true expert, Uh, actually driving the car and then the car is the technology you really need if you’re doing at scale. Listen, if you’re if you’re spending two grand a month like you could just figure it out, you know you can you could get us probably solid are y You can figure it out. But if you’re doing it at scale, you really have to have a specialist human, and then you have to have specialized technology.

[0:22:11] George Reid: It’s interesting you say about the technology there, and I’ve had this discussion a few times. Well, where do you forsee the advertising tech going? Do you see that split between the human on the tech At the moment? It’s probably I would argue around about 80% should be human and 20% is kind of tech. Do you see those percentages differently? And do you see them changing over top?

[0:22:37] John Ghiorso: Yeah, I see this probably closer to, like 60 40 60 being the human 40 being the technology. Andi, I would say, actually, I would have agreed with you maybe a year or two ago that it was like 80% human 20% text. So I think the technology is becoming more important. It’s starting to really become more of a differentiator on the platform. Onda There’s, you know, there’s a There’s a few tech companies that I think are starting to really break out that have serious development teams that have serious budgets that are really you know, they’re taking Amazon advertising. It is not some little like side project for them is it is a serious endeavor with dozens of developers and just focused in this one lane. Um, so I think it’s it’s becoming. It’s becoming critical. The software companies have really, um, outpaced Amazon’s own internal development on their on their tool set. Eso uh, you know, and in some ways like that was intentional, right? That was Amazon’s ideas, like let the market operate, you know, open up in a P I. Let’s see what people build on DSI. What, what they’re able thio provide to the marketplace. So I mean, I think that is going to continue. You’ll continue to see Amazon rolling out new features in their own tool, but But I think you know, tech layer on top of that is becoming an increasingly important differentiator.

[0:24:00] George Reid: E had another great chat with somebody. The dad. I think it’s gonna be on the show soon. Was around. Do you see? They’re kind of being a big race at the moment from these software companies, kind of scrambling to get Thio. We’ve got the best Amazon advertising software on Daryl, throwing out kind of machine learning ai and all the other big kind of groovy terms to go. This is what we can do. And do you Do you believe the hype of all of these people? Because there is certainly a lot of pipe on Bond. Do you think there’s gonna be hundreds of them in the future? Do you think is going to be a selection about 3 to 5 who are like they’re the top people, similar to kind of your helium 10 or your something similar for keyword research? And that etcetera?

[0:24:47] John Ghiorso: Yeah, there’s been a huge kind of there’s been a huge amount of new entrance into that space recently, and there is a lot of I want e don’t go asses faras to say like vaporware, but there’s a lot of way overhyped stuff, you know, everyone is blah, blah, blah, proprietary algorithm, blah, blah, blah, blah. What’s in their heads like? Okay, fine. So, like, I mean, I could write an algorithm on my computer on and, you know, trained machine learning on it, you know, in a couple hours, that doesn’t mean that it’s like some sort of genius thing. I mean, that term could be way overused. My point is not that I’m I’m brilliant at that stuff, but anyway, eso to answer your question. I do think that I do think that what will happen is the big guys, the guys that currently, unless someone really comes out of nowhere at this point, which is possible, you never know, you know, gets a bunch of venture capital hires a bunch of developers, comes up some kind of like killer app, always possible. But I think what you’re going to see is the guys who are already established in big and, you know, have plenty of momentum will continue to get bigger. And it won’t be winner take all, but it will be like top five take all on and then the rest the rest. The companies just won’t be able to keep up and they’ll just go away and then you’ll be left with, you know, four or five or so options of like, these big guys and maybe some of different rates and some of different feature sets yada yada. But they’re all like, you know, they’re all they’re all worth paying for because I think there’s some. There’s some tools out there today that are pretty gimmicky, I would say, even to the point where, like, it’s probably just not even worth pain. You know, you would be better off just using the Amazons own kind of endemic

[0:26:35] George Reid: platform. So I don’t think a lot of people are using some tools, is kind of a They’re just looking for a quick winds. Still like they’re still. Look, I just want to throw some things into this tall on this recommendations all over the shop, but a lot of time advertising, it’s still 60% human. Like you said, I said 80 I would argue it’s higher for that. For those smaller brands. When you’re a big brand and you got monstrous range, that’s when the tech really starts to

[0:27:04] John Ghiorso: work. Yeah, I I agree with that. I think tech really becomes more important in scale on guy. I mean any just as a as a cautionary tale, like any any tech company who’s saying that you could just, like, turn it on and give it a row as target and then just walk away from it like maybe you can. But that is not gonna be a good thing for your business, like there is no AI that is sophisticated enough in our industry where you can just plug it in and it will just run advertising for you and maximum of your budget. You might get you a great return on paper, but most likely what it’s doing is it’s just driving ads to people who are going to buy your product anyway. And you know, so it just it just has those. Those fully automated tools have a tendency of just kind of, you know, uh, kind of just jacking up the stats without actually like driving in a business. Now, as part of a strategy of a sophisticated, sophisticated at AI and machine learning there. There’s really value there, but it has to be again. It has to be. You can have the best technology in your in your race car, but you still have gotta have someone to drive it around the track. So,

[0:28:21] George Reid: yeah, but certainly someone I think you who understands the brand understands what you’re really trying to achieve is in that meeting each week or is in the slack channel or whatever that information is just feeding through on the machines. Never. In my opinion, it’s just never going to replace that, because it’s like it’s like the head of a company, right? It doesn’t matter what brilliant stuff that got around them or even Britain employees around them. They still there. The vision there, the person they’re making those decisions. It’s like if Jeff cropped it, for instance, Amazon is gonna be a different business, like because he’s a driving force. If you don’t pay any attention to your advertising and put into a machine, you’re not thinking brand. You’re not thinking long term, you’re just letting it do its thing. That being said, though, we’ve spoken a bit about Amazon advertising. But what about off Amazon? Is this something that you’re looking at quite heavily with your clients? Or is this something that are asking a lot more about? Because in my opinion, I think it’s becoming evermore important because it’s all part of building that moat. Do you think it’s something that people should be giving a lot of attention to right now?

[0:29:33] John Ghiorso: Yeah, I dio I mean, I think it’s it’s super important to think of. Amazon is a part of, um, or kind of holistic, uh, concept when it comes to advertising, marketing, branding. Amazon should be an important part of that, but they’re not the entire Internet like there’s a lot of other things going on. There’s a lot of stop the customers are doing in their day to day life. Uh, that does not directly involved Amazon. So yes, I do think on integrated strategy, you know, with Google with other DSPs with social, um is important for sure. I think you know, I think a lot of that again just kind of depends on where it should be on the priority list. Um, you know, it’s interesting because at some point you’ve always gotta have somewhat of a handoff, like at some point, where does Amazon fit in an agency internally at a brand like as a practice as a skill set versus you know Where is the handoff? Or is there a handoff with Google with Facebook, or is it the same person or is it the same team? But then what about like the retail side of the business? Because they don’t have as much to do with Google or Facebook. It’s It’s a tricky thing for brands to address. In many ways, it’s actually much easier for smaller brands to address it, because it’s like, Well, we have, like, two guys and, like, you know, this guy kind of does like, you know, social and, like programmatic. And then this guy like does Amazon and our retail and they, like, sit next to each other and talk to each other. Um, it gets much more difficult when you when you think about mid size and larger companies, enterprise level companies, which, by the way, is actually potentially a real advantage that some of these smaller upstart guys have that they could be so nimble. I mean, that’s I think, why you see a lot of these digitally native direct consumer brands continuing to win. They don’t have an inherent advantage, like they have less capital. They have less brand equity. They have you know, less capability when it comes to R and D and manufacturing and all these things like they shouldn’t be ableto win. I think the reason they have won over the last, you know, five or six years, um, is they’ve just been a lot faster and a lot more nimble, and they’ve been able to just jump on opportunities when they’re in front of them and not get caught up in, you know, kind of bureaucratic swirl like you do with with these larger enterprise brands.

[0:31:58] George Reid: Yeah, feeds into a comment from David Glick tea of the day. He was saying, Scrappy sellers typically perform very well because they can really hop on opportunities. Perhaps they’re not overthinking the structure of the business. Um, like some of the big, big enterprise level clients are, It’s kind of so many factors go into it, whereas the scrap you want to just like Oh, that’s working Well, let’s just you go work over there and do some of that stuff there because it’s going well at the moment on what

[0:32:29] John Ghiorso: are you

[0:32:30] George Reid: seeing from some of the larger Clark’s? Your work with how they’re structuring, how they’re viewing Amazon on looking at their advertising teams. Are they? Are they going? Well, you’re the Amazon, And then you just focus on Amazon. Or are they going? Well, you’re the search team. What are we doing here?

[0:32:47] John Ghiorso: Yeah, So it used to be that all of the Amazon capabilities lived on the sales side of the brand. So, you know, they sat next to the Amazon. Folks were like in the e commerce Oregon that sat next to the you know that maybe the brick and mortar channel or the wholesale channel or whatever you call it. So like the Amazon folks were kind of the same as the Walmart folks were saying is the program, folks, they were just like that was their focus. And that works. Or it worked largely until Amazon advertising really became, um, important part of the platform, maybe like, five or six years ago. And then the problem is, you start having now totally separate part of the company, typically, which is like your marketing advertising side of the business. And they’re focused on working with agencies and driving, branding and national advertising. Um, and they all of a sudden now are playing in the same exact sandbox as the as the sales team is. So the sales team spending trade dollars. The advertising team is spending, you know, national advertising dollars. Seems like Okay, the more the merrier. Except they’re both spending them on the same platform. And so, like, you can’t have two people running sponsored ads for you for different reasons. You’re just gonna yourself. So then it’s like Okay, well, we have this agency doing it or this person doing it. But they have, like, two bosses and two different incentive sets in two budgets, and that, like that doesn’t work. It creates a tremendous amount of conflict is probably worse than just doing one or the other. Um so a lot of brands have just because Amazon, because Amazon is a large advertising platform and a large retailer at the same time, that has never happened, for it just never happened in the history of the world. There’s never been an entity that was both of those things at scale throw. These organizations never had to deal with this issue before, and now they are, and they’re having to figure it out. And there, you know, different organizations are are facing it in different ways. There’s also overlapping that kind of just the overall concept of digital transformation and the fact that, you know, maybe E commerce, like two years ago, was kind of number nine on the list for the CEO. And now all of a sudden it’s number one on the list for the CEO, which is not, You know, that is an order of magnitude now. More important, more pressure, more everything. So it’s become this little siloed kind of e commerce practice internally at a larger organization, and now everyone wants a piece of e commerce, and everyone wants to kind of understand how it impacts the rest of the channel. So, um, there’s a lot of really kind of interesting discussions going on. There’s a lot of change going on at the big enterprise brands. There’s a huge discrepancy between I would say, ones who really done a good job figuring it out and then somewhere, really far behind and kind of everything in between. There’s not, you know, you think of all the Fortune 500 c. P. G s or they’re all kinda in the same place. They’re not like some are like best in class, you know, Harvard case study on, then some are, like, you know, in the nineties

[0:35:51] George Reid: s e. No, we saw that a little bit in Australia, where some of these big big brands were late to the Amazon party. And then they just couldn’t get themselves shelf space on page one for some of their laptop Selves. Because, like, a little niche brand that just squeezed its way in and a lot of them, they had to, like, buy these brands out there, used to literally had to buy the brand. And we’ll just give you some money to go away so we can have our flashback That being said that I’ve got a couple more questions than contributed time were rattled through them quickly. What mistakes do you see? A lot of these brands making. Then you’ve said that about structures being an issue are you seeing? And you kind of just big mistake. So just keep falling on the sword.

[0:36:33] John Ghiorso: Yeah. I mean, eso I would go back to, like, um, uh, sort of the advertising piece, But let me give you another perspective on that or another one. So I don’t repeat myself. I think I think a mistake that I see a lot of brands making is putting digital marketing people in charge of a retail channel. Um, digital marketing is a super important part of Amazon. Um, it is the most important growth driver of the channel, but and you can get some really smart people that have a good understanding of, you know, the programmatic and digital marketing. But like they have no idea how to get a product from one place to another, or how out of stock rates work or how packaging works or how direct import works or any of those things. So having them on your team, yes, absolutely. Having them run the business typically not a good idea. So that’s yeah, that’s one of the mistakes we see pretty frequently. You could say the same thing about agencies. So brands that hire agencies that just have their their basically advertising agencies and they want them to run or be kind of the point person on their Amazon Channel. Also not a good idea, because yeah, they may understand advertising, but, like they’re all of a sudden there running ads on items that are out of stock and they don’t understand whether it’s duplicate listings that are competing with one another. All these kind of really specific Amazon issues, because, yeah, they might be really good programmatic. But they just don’t understand, like the channel and the fact that, first and foremost for a consumer product brand your number one goal is still to sell stuff on the platform. So you know your your number one goal is not to get a good row has your number. One goal is to sell more next year than you did this year. So e

[0:38:20] George Reid: think it is picking that agency wisely. There’s lots of agencies out there, but I think I’d be perhaps steering clear from anyone who traditionally being a social agency, just let them be your social side of things that I wouldn’t let them dipping their toe into the water over on the Amazon side. Alright, my final question and I’ll let you run would be What do you think? The biggest threat to an Amazon businesses right now,

[0:38:48] John Ghiorso: Like an Amazon, like a consumer product business on Amazon.

[0:38:51] George Reid: Yeah, not like a W s. Yeah.

[0:38:54] John Ghiorso: Um, so, just to be clear so to Amazon, like Amazon’s biggest threat. Or like you’re a brand selling on Amazon. Your threat.

[0:39:02] George Reid: You’re a brand selling an Amazon. What’s the biggest threat to you right now?

[0:39:07] John Ghiorso: Um, you know, I would say probably like Chinese direct import brands, basically the factory that you’re using to make your stuff just competing directly with you at Chinese margins. Um, that’s a big one, for sure. That is, that is, that is a very tough one, especially knowing that they can, You know, they can knock your product off. And even if they’re doing that, it’s hard to enforce. You know, you have a trade, you have a patent. Okay, it’s only as good as the enforcement, like there’s others, but that’s the one. That is probably, I

[0:39:47] George Reid: think, Yeah, there’s were 12 or 13 episodes, and at this point on, people have fallen into two camps or maybe three camps, like ones Amazon, the others China on. I think that equally dangerous, Um, yeah, onboard those who are unaware or hiding for it, pretending it’s not a threat, pretending like it’s going to go away. I’m gonna be really questioning their decisions in five years time, in my opinion, particularly with China, because there are a little bit naughty with some of the things they do. And that

[0:40:23] John Ghiorso: s o e. I mean, when you say Amazon, you Amazon private label competing with your own product, right? Yeah. Yeah. Listen, is that is that a competitive threat? Yes, but my strong opinion on this because this actually just comes up a lot for me to My strong opinion is, you know, you may have Amazon private label come out two or three skews basins in your category. But there, one entity competing with pretty serious restrictions around what they can and can’t do. And by the way, they also have toe like abide by laws that govern. You know, I P For the most part, um, China is just you have unlimited. You have You have 1000 10,000 potential competitors and factories who can knock you off. Who will do it without much regard for, you know, intellectual property or legal restrictions or ethical restrictions. And they could all do it at once on Chinese margins after world. To me that Yeah, yeah, that’s a much bigger. That would be much more worried about then than Amazon. Private

[0:41:28] George Reid: good man, All right. Well, I’m sure I could discuss this for hours, but we’ve both got more important things to be doing than rattling on about Chinese Eso. Thank you so much, John, for coming on. Really Appreciate your thoughts. Been a good little session. We had a slight tactic up, but I’m sure it’s gonna be fine. Onda look forward to kind of keeping in touch Suit.

[0:41:47] John Ghiorso: Yeah. Thanks so much, George. I’ll talk to you soon.

[0:41:49] George Reid: Cheers, pal. Grow you dio. Thanks, John. That was very good, pal. Hopefully the session recorded recorded fine with us. Like Hiccup, But yeah, that Chinese want. I love asking the question. Just seeing where people pivot and where they go. Um,

[0:42:08] John Ghiorso: yeah, yeah, it’s It’s It’s an interesting when I think I’ve just always been of the mind set that I think Amazon private labels overhyped. I just dio like Yeah, well, we like we work with them, right? Like we have bright that go like Well, we know they’re gonna knock us off. Delicious. Make it for him. Like way. We have a national. We produce private label stuff. We work with that team, so I’ve kind of seen it from the inside and you know, they’re big and scary from the outside looking in. But I’m telling you like they’re just they haven’t been that successful like, but they should be. 10% of Amazon’s volume right now should be private. If they were hit their own targets they set up five years ago, they would be tempers. They’d be, you know, 40 year and they’re like, still less than 1%. They just haven’t trained,

[0:43:00] George Reid: isn’t it? Because, like, they’ve got alot resource is they’ve got a long term mindset. Thio run it as a loss leader for five years if they want, like they’re just got into that active where I saw that they can literally said it. It cost if they want, blow everyone out the water. Have the best placements not worry about appetizing, create a brilliant product in their experience. Why don’t they double down on it? It doesn’t really make sense.

[0:43:26] John Ghiorso: Well, because they can’t really operated at a loss. I mean, they have to they have to make money on it like otherwise. There’s no reason to do it there. There’s just sort of obviously fair. Yeah, but even that I mean, so you know, like on a just a unit economic standpoint, like getting to scale with a private label brand. It doesn’t really do anything. You already have the scale there. I mean, it takes like, for example, right. They sell $300 million worth of diapers a year. They have that scale. So selling now 100 million in Amazon private label diapers? Well, if you don’t make mawr margin than the national brand, all you’ve done is just traded your customer down to a lower margin products. So you have to actually make more money, and you have to spell it for less. And like it’s hard. It’s just hard to do like, you know, you think, Oh, diaper. It’s just I think I just had a baby something, a lot about diapers. But it’s a technical problem, right? So there’s a lot of these products you think ketchup, for example. Ketchup is just your red Gucci part. It’s not like there’s a lot of R and D and, you know, testing and consumer feedback and branding and all these things that go into making ketchup. It’s like not that easy. So to do that across every product category at scale like, I think they’ll continue to push it. But I just think it’s a much harder, longer slog for them than than I think they realized. They’re just not product people. There’s not like building a consumer product brand is that, And they’re just

[0:45:06] George Reid: the same token. They weren’t add people until not too many years ago. There weren’t logistics people until 2000 and 13

[0:45:14] John Ghiorso: e don’t count them out. I think they probably will get there. Like, I mean, Costco Kirkland signature is 30%. Wow. Yeah. Yeah. So an Amazon labels 1%. So at Walmart, it’s like 20%. I mean, so you know, they have orders of magnitude more to go before they’re even comparable to another.

[0:45:39] George Reid: So you go enjoy the rest of your day, my friend, and I’ll um, I’ll speak to you. Same chairs, but it sounds good. Hey, guys, just a quick one. If you are enjoying the podcast on either have some actionable next steps or new ideas, I’d really appreciate if you could one subscribe to the show and leave us. Review Thes are really, really important to us. As you probably know, being in the Amazon world aunt to If you’re looking for additional support with your brand, head over to the website. It’s always day one dot co dot UK where we’ve got links to other resource is as often our guys speak soon.

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