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Digital Velocity Podcast Hosted by Tim Curtis and Erik Martinez

07 Profitability Drivers in Marketplace Ecommerce - Kiri Masters

Kiri Masters, founder and CEO of Bobsled Marketing, joins Tim and Erik to share her research about the four key drivers of Ecommerce profitability and why they are important across the digital shelf.

Kiri explains her research and how she recognized four major drivers of profitability. She explains, “So, what I did was I sat down with 10 of those executive leaders who are accountable for the digital aspect of their companies. All those companies are over 250 million in revenue, fairly large, right up to sort of fortune 500 companies. Through conversations with them, established four key drivers of profitability within organizations and 21 potential solutions and thought experiments for brands to consider within those four key drivers. So the feedback's been really good because it's not a checklist of things to do to improve profitability necessarily, but it provides a little bit of context for each brand to look at for themselves of these drivers.”

While profitability is essential, it isn't the only consideration. Kiri says, "...look at where are your products being sold and where are people purchasing and researching your brand, and then also what's the objective of this channel for the business. Profitability might well be a focus, but usually that's not the only priority.”

Gain new insight and understanding about profitability drivers with Kiri on this episode.

About the Guest:

Kiri Masters is the founder and CEO of Bobsled Marketing, a digital agency that helps established consumer brands grow their Amazon sales channel. Founded in 2015, the company is renowned in the space for its thought leadership, experience-driven processes, and powerful results.

Kiri is a contributor to Forbes, where she writes a weekly column about Amazon from a brand's perspective. She hosts the Ecommerce Braintrust podcast, co-hosts the Amazon for CMOs podcast, and is the author of three books about Amazon – The Amazon Expansion Plan, Amazon For CMOs and Instacart for CMOS.


Erik Martinez: [00:00:00] Welcome to this episode of Digital Velocity. I'm Erik Martinez, along with Tim Curtis and we're here today with Kiri Masters, who is the founder and CEO of Bobsled Marketing. Bobsled Marketing helps established consumer brands grow their Amazon sales channel. Welcome, Kiri.

Kiri Masters: Thanks for having me.

Erik Martinez: Yeah. We're very excited to talk to you today and learn a little bit more about the research that you have done on the Amazon channel and profitability. I'm going to hand this over to Tim Curtis, who [00:01:00] is going to start off the questioning.

Tim Curtis: So, I have the privilege of having known Kiri for a couple of years and we've spoken together. We've had some little panels, some fun things. She's an excellent speaker for those who don't know, but also she has really had a meteoric rise with Bobsled, so I think there's sort of a fun story there to talk about, but Kiri, why don't you tell us a little bit about yourself and your background, so people can get a better sense of your story.

Kiri Masters: Well, thank you for having me again. So, I started Bobsled Marketing back in 2015, coming up to our seven-year anniversary. Bobsled, which is, as Erik mentioned, an agency and advisory firm focused on Amazon, but also more recently Walmart and Amazon sales channels as well for mid-sized brands.

How I got into this space, I come from a completely different career background in banking, and at my corporate job at JP Morgan Chase, I started a little Ecommerce business on the side and through that learned about the Amazon ecosystem and realized that a lot of larger brands didn't understand Amazon [00:02:00], as well as I, did as a very much a part-time Ecommerce person on the side.

So, in 2015, I left my job and hung out my Bobsled Marketing shingle, and here we are today 2021 with a team of about 40 people working with around 90 clients on, some of Amazon's international marketplaces, Walmart online, and Instacart advertising.

Tim Curtis: You're spread out now over several countries.

Kiri Masters: Yes, and time zones. Due to COVID, I'm currently back in Australia, but most of the team is spread across the US and Europe. One of the sort of more unusual things, at least up until 2020, was that we're a fully distributed team where everyone works from home. Obviously, everyone's got a taste for that over the last year or so, but we started out back in [00:03:00] 2015 as a fully remote company, which has been great because the people who liked to work at home love to work at home.

We will remain that way forever, hopefully.

Tim Curtis: Well, you were certainly ahead of the curve. Tell us something a little bit interesting about yourself. So, one of the things we like to do is get a little bit of the personality and their story. So, what's something that people maybe don't know about you in particular.

Kiri Masters: Yeah. So, I was diagnosed with Type 1 diabetes when I was 27, which is fairly late for that kind of diagnosis. Not completely unheard of, but Type 1 diabetes is not a death sentence, but it's a terrible disease and something that requires really close management over your whole life.

That was one thing that brought into focus the priorities for me and what was one of the catalysts to help me decide to leave my job and start my company. Yeah, certainly not a death sentence, but I realized I don't want to wait to do these things that I want to do.

Although, it's a terrible disease and very time-consuming and quite [00:04:00] stressful sometimes, it has helped me to be a pretty resilient person. I need to be very careful about what I eat and tracking my health data all the time, so if you're listening to the podcast I've got a watch that actually shows my blood glucose reading, that has this whole system rigged up of a sensor on my arm with a transmitter that sends my readings to my phone and then to my watch.

So, I'm very data-driven in my personal life as well, tracking what I'm eating and seeing what kind of effects exercise and sleep and I think other factors have. So yeah, that's a part-time job, honestly.

Tim Curtis: I bet it is. A lot of truth there that oftentimes those crucibles really kind of focus us and a lot of the superfluous stuff in life kind of falls away and we really have to zero in on the things that are important and what really matters .

Kiri Masters: Yeah, absolutely.

Tim Curtis: What's one thing you wish you had known as you began your career, [00:05:00] you're looking back and you think, if just I had known this.

There's not a whole lot I would change. I think that even before my entrepreneurial career, I learned a lot from being in the corporate world about communication and working with other people. So, even though it was quite separate in subject matter and structure to what I do now, I would still go back and have those experiences again. One thing that I've discovered a little bit more recently, over the last 12 months or so, is how helpful it is to know what your personal values are in life.

This can sound a little bit wishy-washy, but for me, once I sat down and really went through a process of discovering my personal values, I could see where previously in my life, if I was really dissatisfied or unhappy, or things aren't going so well, often it was because I was in a situation that didn't really align with my values in a work [00:06:00] setting or with a relationship or something like that.

Understanding what are the things that are really important to me in life and what really lights me up and understanding that aspect of myself, I think I could have avoided some negative situations or just understood why things weren't really working out a lot earlier if I'd had that understanding of who I was.

If only we could have that wisdom in our early twenties.

Kiri Masters: Yeah. Well, I think that's part of the process as well as, like when were things really kind of bad and why did that person really rub you the wrong way? So, those negative experiences can also help to identify what those values are.

Erik Martinez: So, Kiri, when you have one of those situations arise today, now knowing that, what do you do differently than what you would have done in the past?

Kiri Masters: Yeah. So, I use values to make decisions and sort of run through a filter. Not what I'm going to have for breakfast, but you know bigger life decisions.

Run it through that filter [00:07:00] of is this decision in line with my values? For example, one of my values is adventure. I like new things. I like growth and new experiences, so being stuck in the same place for a long time really drains me. I want to always be out there learning.

So, that's one of my values that can help me to make decisions, for example.

Erik Martinez: That's great. I wish more people would take that to heart when they're making decisions. I know I struggle with that particular issue myself. So, as you think about your career and your life, what was your biggest failure and what did you learn from it?

Kiri Masters: It would have been that misalignment of values. So, just thinking back to previous jobs that I had, and it was just really the wrong fit. I mean, if I was managing me back then, I would have maybe tried to redirect me as a younger person into something different.

 One of those roles in [00:08:00] particular, I felt like a cog in the machine. I didn't feel like I had any real significance and I couldn't really make a difference, and so that was just so draining to me as a person. I think if I'd understood a little bit more about myself at that time, I would have seen very clearly this job is in contradiction with my personal values.

Tim Curtis: So, kind of following up on that. Let's just kind of talk hypothetically here. So, you're talking to yourself 10 years ago, or you're talking to someone who's newly entering the workforce and they're wanting to align and do something similar in terms of your career path, what do you tell them? What's your piece of advice to them?

Kiri Masters: Currently in our culture, there's an idolization of entrepreneurs in a lot of ways. Everyone wants to start a business, not everyone, but it's definitely glorified. I honestly believe that being an entrepreneur is not for everyone, not for most people. You need to really, really want [00:09:00] it.

There's a lot to unpack there. I think for some people it's worth a shot, but I think that the glamorization of being an entrepreneur is not really helpful because it's not for everyone.

Tim Curtis: Having done that, it's not always glamorous either.

 Kiri, going back to your personal filter, your first ethos, and knowing your values, and let's say, you place value of quality time with family and balance in life.

Well, that oftentimes is in conflict with being an entrepreneur, and sometimes when you're following the idolization or you're caught up in that, we don't necessarily see that, and so that falls out of balance. For me in my life, I'm at the point in my career where balance is what's important to me.

So, yeah, I get that.

Kiri Masters: A hundred percent. Well, you can also go through seasons in life as well, especially with a family, those stages that you're not prepared to work 80 hour weeks, and the stages of your life where you would be.

Tim Curtis: Let's pivot a little bit here, cause I'm just dying to get into this research that you've authored here. [00:10:00] So, the research is Executive Insights: The Primary Drivers of Ecommerce Profitability Across the Digital Shelf. So, Erik and I got some copies of it and were able to really dive in and go through it.

He and I were chatting about several things that were really of importance to us in our career and gems that we found inside the research, but I thought we might start off by talking about those four profitability drivers and why they're important.

Kiri Masters: Yeah. So I'll just share a little bit about the research process. So, there's an organization called The Digital Shelf Institute, which is a think tank of retail executives and Ecommerce practitioners, and I've been fortunate to be involved with their executive group for the last year and a half.

I was asked to lead some research into a hot topic amongst, especially this executive group, which is around profitability in Ecommerce and [00:11:00] the challenge being that for many, not all, but for many retail manufacturers, the Ecommerce channels are less profitable than their traditional channels.

We'll get into the exceptions to that as well cause there's certainly many of those, but this was something that profitability is, especially for large companies, very confidential. You can't really get many benchmarks around it. You don't know what your peers are doing at other companies.

It's a sort of hush, hush kind of thing going on and a lot of, even these executives of enterprise companies, there a sense of being in a silo in their own organization around what's acceptable? What actually drives profitability? How could we improve it? What are some of the ceilings that we have inherent in our business that are gonna prevent us from getting there?

So, what I did was I sat down with 10 of those executive leaders who are accountable for the digital aspect of their companies. All those companies [00:12:00] are over 250 million in revenue, fairly large, right up to fortune 500 companies. Through conversations with them, established four key drivers of profitability within organizations and 21 potential solutions and thought experiments for brands to consider within those four key drivers.

So, the feedback's been really good because it's not a checklist of things to do to improve profitability necessarily, but it provides a little bit of context for each brand to look at for themselves of these drivers.

What's the situation in our business, how can we apply some of these learnings and makes the topic a little less scary and a little less opaque for brands who are operating an omni-channel business. So your question, Tim was, what are the four key profitability drivers? I just wanted to lay that context down [00:13:00] first.

So the four key profitability drivers are the definition ,of profitability in a company. Companies are using different definitions of profitability, and that makes it very different to do an apples to apples comparison of what's an acceptable profitability number in your category. The next profitability driver is your product category and price point.

This is a relatively immovable factor. You can't just go out and change from diapers to pencils as a company, but understanding what the inherent limitations in your category and at that price point as well. So, in general, in my discussions, I found that the brands with products where average selling price of over $200 generally did pretty well with Ecommerce. There's enough margin in there for Ecommerce to be fairly profitable.

That's one factor and the other category that can do quite well with Ecommerce below that $200 price point is beauty and personal care [00:14:00] products, which generally have a fairly high margin baked into them as well. So within this driver, it's not just throw your hands up and say, well, because we sell shoes we can ever be profitable with Ecommerce. There's still things in here that can be affected like products packaging, is one example where that can be a driver as well.

The third driver is media spend and attribution. So, advertising costs makeup fairly large chunk of costs in the Ecommerce channel and other channels as well, obviously. How media spend is attributed to the Ecommerce channels is very important. So, there's a concept of above the line and below the line media.

Above the line branding media spend attributed evenly across all channels or is it sort of unfairly allocated to digital channels? Below the line marketing as well, we recognize that there is a halo [00:15:00] effect of outcomes associated with retail media spend particularly Amazon.

This is some separate Digital Shelf Institute research, which was done not by myself, but been very extremely instructive to, a lot of my understanding, which is that for every dollar spent on Amazon retail media, at least $7 is spent in store. So, what we're finding is a lot of halo effect between social channels and Amazon or Amazon spend and D2C sales or in-store sales.

So, you need to consider the aggregate effect of this media spend, and it's increasingly harder to attribute media spend to certain channels, and my argument is that we really shouldn't.

Tim Curtis: I would agree with that. Unfortunately, it becomes a bit of a unicorn hunt in trying to find the right attribution, and what you're doing is you're not really getting the full answer because of that halo effect.

Kiri Masters: Yep, exactly. This is a lot [00:16:00] easier said than done, especially in a traditional organization, which is very much channel oriented, but I think that there's more of a body of understanding around channels being that it's a construct for marketers, it's a construct for the manufacturer. Consumers don't think about channels. They just think about, I saw this ad on Instagram, that sounds interesting. I'm going to pull that up on Amazon and check that out, add it to my wishlist, and then I actually end up buying that product at CVS next week.

So, digitally influenced sales is one metric that some brands are using, but because of the walled garden nature of these platforms, it's very difficult to track across platforms like that. That's not going to change. There's going to just be more platforms, more retail media networks, and more of this complexity.

So, I think that instead of resisting that and expecting each channel to be neatly defined and have a very clear [00:17:00] ROI in embracing the messiness of it, is a more sustainable solution.

Tim Curtis: You talk a lot about Amazon and the relationship with Amazon as that fourth driver.

Kiri Masters: Yes. The relationship with Amazon is a significant driver. That's the fourth driver because Amazon generally accounts for a large chunk of Ecommerce sales for a lot of brands. So, understanding what are the leavers in that relationship. If you're a vendor selling to Amazon on a wholesale basis, then there's a very specific aspects to that relationship.

Or if you're a seller, then there are specific aspects to that relationship. Understanding what factors drive profitability in the Amazon relationship, that's very much, can be, low hanging fruit in this endeavor to improve profitability.

Erik Martinez: So, Kiri, just going back to number three for a second, and talking about embracing the messiness of [00:18:00] all these multiple channels and how they influence eachother, what do you do when a client or an executive says, but I really need to know where to invest my money?

Cause that's the key question, right? Like, we're all trying to figure out how much money to invest in each channel, how much effort, what's your advice in that situation?

Kiri Masters: So, I think there's two aspects. You need to be looking at your retail channels and understanding what drives success on those retail channels. So, my background is all in Ecommerce, so I'll just use those examples. So, if I'm selling on Amazon, then I want to be looking at Amazon's media platform.

If I'm selling my products through Instacart, through my retailers, because I'm a CPG brand, I want to be looking at Instacart. So, I want to be present where my products are being sold, where customers are buying them. Beyond that, of course you still want to have a view of how is each channel performing from a direct [00:19:00] attribution standpoint. For example, we find Instacart to have an extremely good ROI for a lot of brands, and that might be in contrast to Walmart, where they've got a different kind of bidding system, it's a little harder to see that ROI. So,, you want to still have a sense of where is the most efficient place to put my money, but also understand that there's going to be some crossover there as well.

So you don't want to be completely blind to performance measures, but I think what's misunderstood, particularly with Amazon, is just looking solely at that ROAS number or at that ACoS number, without real clarity on what your objective is as a brand. So, are you there to grow market share and share of wallet and share a voice, or are you there to run a really tight ship with your profitability and you've got very specific metrics that you need to hit there?

So, [00:20:00] to clarify those two points, look at where are your products being sold and where are people purchasing and researching your brand, and then also what's the objective of this channel for the business. Profitability might well be a focus, but usually that's not the only priority.

Tim Curtis: In the research that really I keyed on is that concept of item level profitability. When I'm consulting with clients, these are clients of all sizes, right? One of the things that I think is the most foundational element for profitability is don't forget to look for the small incremental changes and the small incremental steps that you can make that will radically shift the foundation of your business to be able to measure for profitability.

Businesses have P and L, so they have an aggregate understanding of profitability, but the concept that you have in the research is item level profitability. Understanding, and really managing each skew as a business. In other words, can this skew handle what you're asking of this skew. Of course [00:21:00] later, I think it's in the second driver, you get into the concept of hyper scrubbing where some skews may not be appropriate for some channels because they may not necessarily have the margin to be in that channel.

That seems like a very broad statement, but the concept of item level profitability and zeroing in on that is absolutely, so fundamentally critical to Ecommerce and understanding how to drive profit. It was seismic for me to see that someone's actually calling this out. So, in your research, are you seeing that people are beginning to make these changes to adopt this kind of mentality because it feels like we're just at the beginning stages of that?

Kiri Masters: Yes. So, I agree. We're still at the beginning stages of that. It is not the way, I think, especially for larger brands who have traditionally sold through stores, their P and L's and the structure of the company from even just an org chart standpoint has been built around retailer channels.

So, the structure of [00:22:00] the sales team versus marketing, for example. Whereas in this era, I'd say that sales and marketing need to be much more collapsed because of the way that online marketplaces work. They're one and the same thing in a lot of ways, but the P and L structure has been built around this channel structure, and it's been built to serve a traditional model.

So, especially for larger brands, it's very challenging to move from a channel model to a product level model. It's definitely one of those things that's far easier to say than to implement, especially for a really big company.

Tim Curtis: Yeah. When you talk about in the research also, the challenges of legacy brands who have had Ecommerce creep up as a part of that brand, but they've longed for a long time, prior to Ecommerce going along the scene had traditional retail channels. Then you compare and contrast that to startups today who can build their business fundamentally different [00:23:00] and can build it from that item level profitability standpoint.

Kiri Masters: Yeah, exactly. So. If you look at a channel like Amazon, where there's a lot of brands being born on Amazon. You're right, when you look at the metrics on the seller central dashboard, you can break that down very easily to the skew level.

I actually received a survey from Amazon for sellers asking about what profitability metrics they're using in their business. So, do you track cogs? Do you track days, forget what the term is, but basically around inventory turn? Asking about all these metrics and do you track this in your business and do you track it at your account level or at the skew level or the category level?

Basically, the end of that survey was indicating that Amazon is looking to build an item level profitability dashboard in seller central. Still the early stages, they're obviously just collecting feedback on that, but that gives you an indication, like you said, Tim, if [00:24:00] you're an Amazon native brand or an Ecommerce native brand, that's how these selling platforms are actually setting themselves up, so you can drill into the skew and find out that level of detail. So, that puts those digital native brands at a huge advantage from that perspective.

Tim Curtis: Oh yeah. In the new economy, having that understanding about the business is so foundational for success on so many channels.

That concept of hyper scrubbing, which is essentially saying, here are skews and ensuring that you have margin on those skews that can handle that particular channel. I know that may not be something that people are doing a lot of. I, actually last week, with a client was having an in-depth discussion about item level profitability and hyper scrubbing for channels, because that was a concept that had not ever resonated.

We were selling too many things at a loss in channels, and we just needed to pull back on that. So, excellent that you called that out in the research [00:25:00] that hyper scrubbing is something that whether it's a thought experiment or it's an actual process that you need to begin immediately. It's something that we're certainly focusing clients on.

Another thought on D2C, I think this is another one of the call-outs, and this comes up, not necessarily as a question, but as more of a philosophical question that oftentimes clients will ask when you're discussing a marketplace versus direct to consumer.

We have always viewed our philosophy at CohereOne has been to view those as two separate channels. So, it's interesting that in the research, you've called that out as a potential to really look at separating the Amazon or the marketplace channels from that traditional direct consumer Ecommerce channel, because they have different rules, but when you're getting in direct to consumer, it's important to remember that, I think you did a great job of this, going direct to consumer provides other non-financial benefits back to you from a brand building perspective, from [00:26:00] research, from direct consumer relationships.

You want to go down a little bit more and kind of drill into that?

Kiri Masters: Yeah, and so I'm aware that this might sound a bit contradictory to say channels just don't exist anymore, just ignore channels, and then to say, well, maybe you should split out your D2C from your marketplace.

So yeah, I fully admit there's a little bit of contradiction in there. The point is like you said Tim, some cases there's intangible benefits to your D2C channel or sort of nonfinancial benefits, which are collecting first party data about your customers and having the ability to retarget to them outside of a walled garden.

That's a huge benefit. Just that understanding of who your customers are, that connection with them, collecting purchase and research information. So, what do people buy after they check out this product? What's the repurchase rate and that's incredibly valuable data, and all companies should be endeavoring to collect their own first party data as we're increasingly in walled [00:27:00] gardens.

So, that's a big reason to pursue D2C, even if it is on paper from a P and L perspective, more or less profitable channel. That's the nuts and bolts of it. I think from the execs that I spoke with as well, one of the challenges with digital and particularly with D2C is some of the costs that end up getting lumped in there that should really be allocated a bit more fairly.

So, for example, for a lot of the execs I spoke with they're the leader of digital for their company, and call center operations often get allocated to digital because the number for the call center is on the website. It's as simple as that. In reality, people call up for all different kinds of reasons for products that they've purchased in store and whatnot.

So, two things there. One is digging into the item level allocation, and it really is incumbent on [00:28:00] digital and marketing leaders to understand more about accounting and the way that they are being measured and have a very detailed view into what's driving things there. Secondly, is it worthwhile looking at the D2C channel with nonfinancial metrics?

Tim Curtis: You called it by even calling for that line by line, actually analysis, of that budget to do a sniff test on everything in it to determine is this unfairly allocated to a channel that's weighing it down financially when in reality it should be only partially allocated to that channel.

Those are age-old discussions have been going around for some time, but you've done a great job by calling out all of those things that I described. As we were talking before the podcast, those are the things that are years of management know-how and the years of management experience that are really consolidated in the research.

So, again, I think it's particularly fantastic. We talked about splitting up the Amazon channel from your direct to consumer channel, how do you tell [00:29:00] brands to maximize at Amazon while they're still investing in these other digital channels? I mean, there's obviously a little bit of conflict there, but you're doing it right, you're giving that advice to people now.

How do you tell brands to maximize Amazon while still maximizing the opportunities on direct consumer channel beyond just splitting them?

Kiri Masters: I'm laughing because there's no real one size fits all answer here. I think it depends on why you have a D2C channel and why do you have an Amazon channel? There could be a financial aspect to that, or there could be a customer relationship building, first party data collection, reason behind operating a D2C channel as well as Amazon.

I think a lot of brands are fairly concerned about putting all the eggs in one basket with Amazon. There's all types of horror stories about Amazon suspending products and accounts and things like that. It's certainly not a situation I would suggest being in, to be completely dependent on a channel like that, which you don't [00:30:00] have control over.

Again, it depends on what the goal is of each channel. With Amazon, you're not necessarily building a long-term relationship with a customer, you might, but I think a lot of brands have setting that expectation fairly low in terms of that customer is there Amazon and not necessarily a long-term customer.

So, a lot of brands want to make each item profitable on Amazon. One brand that comes to mind in the CPG category, they have a fairly different view, which is they have a trial pack of their CPG products that's available on Amazon. That's a loss leader, and it's really designed as an entry point for consumers to actually trial that brand, and then they actually see quite a lot of recurring purchasing coming from that initiative as well.

So, I think that there's different ways to look at it. It's going to depend [00:31:00] again on your category and assortment as well. Are you able to look at Amazon as an acquisition channel for new customers and expect to build loyalty through that channel, or due to the nature of your products assortment is that unrealistic, and building a relationship with a customer in a D2C setting might be more attractive?

Erik Martinez: So, if you have a company that is trying to take the strategy of I'm going to build a business in Amazon, I'm going to build out my brand there. How did they maintain that brand identity within the Amazon marketplace?

There's lots of tools on Amazon to build brand pages and get your advertising and build your awareness within the marketplace. There's also a heck of a lot of competitors competing for that buy box. So, what I see with my clients who [00:32:00] have both D2C channels and Amazon channels, we see no overlap or virtually no overlap of customers.

Now that may be just the way we're recording the data in our systems, but it always feels like Amazon is that I'm buying the sale. So, back to your point about item level profitability, I'm always buying a sale, I'm never building any loyalty, which our research is saying, hey, that's not true in its entirety because there is a halo effect.

Amazon, because of its size, is bringing brand recognition to brands that would never have been founded any other way, right? They would not show up necessarily on a Google search very easily, but they found a niche within the Amazon marketplace. The question though is if I'm an already established brand in the D2C world, and now I'm coming into Amazon, how do I strike that balance?[00:33:00] I see a lot of my clients struggle with that balance, or I even have clients who refuse to go into the Amazon marketplace. So, what do they do? What's your advice to them?

Kiri Masters: I think it's necessary to dig in a little bit more to the reasons for resisting it.

It could be quite case by case. I think some brands have almost like philosophical aversion to Amazon, which I'm not sure what to say to those people. I look at the fact that 50% of US households have a Prime membership and that 50% of all Ecommerce sales go through the Amazon platform.

I look at those numbers and I think it's sort of a bit foolhardy to not try and look at that channel and take advantage of that. To your point about crossover, it's difficult because it is not really possible, at least in my experience, to track cross platform movement between a D2C side and Amazon, just [00:34:00] because they've removed so much identifying information about customers from their reporting.

So, matching up customer profiles between D2C and Amazon sales, I'm certainly not aware of a reliable way to do that. So, there's a lot of guess work involved in it, but what I advise against is, we'll never sell on Amazon approach, or painting the whole platform with a brush.

I'll be the first to say it's a challenging platform to operate. There's a lot of rules and requirements that are challenging. It's a challenging platform and it's fairly opaque. Certainly pay to play. You can't speak with those customers, but you can't argue with the fact that so much Ecommerce activity runs through Amazon at the end of the day.

Erik Martinez: Here's a follow-up question then. So, I have a client who started in the D2C space. They started on Amazon early on and they're doing very, very well. [00:35:00] Amazon is the largest channel in the business. It's helping them grow the business.

This particular client has embraced the marketplace concept full heart. They're in as many marketplaces as I can count. The strategy that the owner's taking, and we've talked about this and debated this a little bit. So, this goes back to pay to play. He is getting into his mid sixties.

He's now starting to think about an exit strategy for his business. What's your advice to that type of client. How do I best position my company for a purchase or sale or an exit strategy, whether that be other investors, or how do I best position my business for that type of activity?

Kiri Masters: So, just to clarify, what percentage of their sales is D2C versus Amazon right now?

Erik Martinez: Amazon probably represents about 35%, D2C represents 30%, and all the other channels make up the rest.

Kiri Masters: I think [00:36:00] that's a really nice allocation across those channels. It's not super dependent on any one. It's sort of a tough question to answer without really getting into a lot of detail.

Erik Martinez: Let me phrase it a different way then.

What if I'm a brand that grew up in Amazon? I started my business in Amazon. We have a couple of clients who have started in Amazon and then wanted to build a D2C business. Now a couple of these were very narrow product definitions and they found it very difficult to go out in the regular D2C channels.

So, the question then is, how much economic value do I need to build in my business in order to be attractive to somebody else within the Amazon marketplace because that's the only place that I exist?

Kiri Masters: We might be taking the conversation a little bit of off track, but I'll give you my perspective on that. There's a lot of companies out there who are acquiring Amazon [00:37:00] businesses, these FBA aggregators like Thrasio and Elevate Brands, and their whole business model is to buy companies that sell on Amazon.

In some cases, the aggregators have the philosophy of, we want companies who only sell on Amazon. Some of them want more diversified sales channels. I don't do a lot around acquisitions or we don't really play in that space, but my fairly limited understanding is that this is a really hot market right now for Ecommerce brands.

There's a buyer for everyone, whether you're diversified or you only sell on Amazon, there's still lots of companies out there acquiring Amazon only brands.

Tim Curtis: There's a market for everything, including brands. Kiri, one other thing you had put in here that I was curious about as we transition here towards the close, but cross-functional silo crashing and to be able to do that with brands and I wondered, are you getting any glimpses of people who were effectively doing it?

Is it those [00:38:00] startups who are just building their business differently? Any thoughts there?

Kiri Masters: Yeah. We've talked about a couple already. So, one is that, if you're a sales or marketing or digital leader, understanding how the accounting works and advocating for that.

That was a big win for a lot of the executives that I spoke with, was line by line, pushing back as well because the accounting systems a lot of these companies are built around a traditional model, so actually challenging that and questioning that and advocating to say, this doesn't work in my category.

Can we look at a different way of doing things? So, that's one example of silo crashing and really advocating for a new model, if the current accounting model doesn't suit you. Among the 10 execs that I spoke with, a number of them mentioned advocating for a fairer accounting treatment as a win. So, that's one [00:39:00] example.

Then another one is actually from the book that I published earlier this year, Instacart for CMOs, which talks about, particularly with Instacart, there is a very interesting relationship between the brand and Instacart in that the retailer is really at the center of that inventory relationship.

So, it's typically the sales team within a traditional brand that has the sway there, but they may not necessarily have the digital marketing experience to know how to actually run a good Instacart ad campaign. Sales and marketing is another area for collaboration that we're seeing become more important in the era of Instacart advertising.

My belief is that there's going to be a lot more retail media platforms which are going to need both the relationship aspect of the sales team and the performance marketing and brand marketing [00:40:00] aspects of the marketing team. So I think that sales and marketing need to come together in a much more cohesive way in the future as well.

Tim Curtis: I can certainly agree with that. As we start to wrap up here, had one question for you. I've known you for a couple of years now, and I know you're very busy. You've been on the move, literally for a couple of years now. One thought we like to ask some of the industry and thought leaders that come on the show is, what do you do to keep yourself at the top of the game?

Some people have a particular book they go back to. I have one, it's What to Do Your First 90 Days. Is there some sort of a trick of the trade or something that you do to keep yourself on your toes and fresh?

Kiri Masters: Yeah. Well, I wish I had a single book. That would be cool. I'll check that one out.

For me, because it's such a dynamic space and then there's so much change and there's so much news to keep on top of, my favorite resource is actually LinkedIn. I'm quite active on LinkedIn and I find that to be the best source [00:41:00] of news and insights.

Once you follow people on LinkedIn who share really good commentary and insights about what's going on in your category, that it improves your experience immensely. So, those people that I follow on LinkedIn, I know I can do a scan through LinkedIn a few times a week and be kind of caught up on what's going on. So, in a really fast paced category, like Ecommerce, that's where I go.

Tim Curtis: If someone wants to get ahold of you, what's the best way to do that?

Kiri Masters: Yeah, you can find me on LinkedIn, Kiri Masters, and if you want to email me, Kiri, KIRI

Erik Martinez: Kiri, one last final parting thought from you. If you were Tim, or myself, what question would you ask yourself that we didn't ask you?

Kiri Masters: I would ask about what's next with retail media platforms and sales [00:42:00] channels in Ecommerce. I think that's a really interesting space. I'm not sure that I would have the best answer either, but I think it would be a really interesting thing to talk about, which is that retailers are getting squeezed with their margins right now as well.

One really profitable source of revenue is to stand up a media platform and then get media dollars is a very profitable one in business. So, I think that there's going to be a lot more retail media platforms that brands will need to assess, and it's going to get really complicated really quickly. You asked the question before Erik about where do I spend my media dollars?

How do we do that? I mean, it's a complicated question even now, but in the future, it's going to be even more challenging.

Erik Martinez: It's the rise of the machine, right? I'm a big Terminator fan. So I feel like it's the rise of machine and the automated data brokers because when you have that really complicated advertising [00:43:00] environment, how does one person or even a team of people keep on top of it, measure it effectively on a regular basis? I think that's a great question. What is next? Well, Kiri, thank you so much for your time. We really appreciate it. We know it's early in your day and it's getting late in our day.

That's it for this edition of The Digital Velocity Podcast. I'm Erik Martinez

Tim Curtis: and I'm Tim Curtis with CohereOne.

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