- DTC Daily
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- Monday, November 13
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🚨 In today’s newsletter 🚨
Amazon is tougher than ever
How to scale a handmade business
What to do about porch pirates
Let’s get into it👇
#1 - 😣 Why it’s gotten tougher to sell on Amazon
📰 TL;DR - Over 60% of sales on Amazon come from small and medium-sized businesses, but that doesn’t mean Amazon has made it easy for them. According to the FTC antitrust lawsuit against Amazon, the marketplace used its “monopoly power” to get sellers to pay ever-rising fulfillment and advertising fees. They also allegedly tracked prices and punished merchants who sold their goods for cheaper somewhere else. The costs to sell on Amazon are also significant — “ 15% to list, another 10% to 15% for Amazon’s fulfillment services, and 15% to advertise.” Basically, you end up competing with yourself.
💡 Insight - With all that in mind, it’s a more complex decision than ever to choose to sell on Amazon. On one hand, you simply can’t beat Amazon’s reach and potential exposure. But it’s gonna cost you. Perhaps a smarter approach is to build your DTC business and start on Amazon by fulfilling orders yourself. Once you hit a comfortable volume, it may be more viable to use Amazon fulfillment. On the other hand, if you start on Amazon as your first platform, you can build around the fees. An expert quoted here said to aim for a successful profit margin of 10%, so consider whether or not you can pull that off.
#2 - 🎨 It is possible to scale a handmade business
📰 TL;DR - This episode of the Shopify Masters podcast talks to the guys behind Jono Pandolfi Designs, a handmade ceramics business that has managed to scale to seven figures. First, they talk about how important it is to understand the unit economics of a handmade product. For this brand, they work backward from what they know their target market — hospitality — can afford. They also leverage influencers within their niche, like chefs. Another quirk of a handmade business is you reach a point where a single artist isn’t enough. In this case, they had to hire artists to meet demand. What’s also interesting is how they pivoted to adding a DTC model.
💡 Insight - I think there’s a conception that a handmade business just can’t scale the same as other e-commerce businesses, but this busts that myth. Having a strong wholesale business seemed to make all the difference for this brand, as was identifying a strong niche in hospitality. It really all depends on what your ambitions are. For some makers, a small Etsy business is satisfying enough. Either way, handmade goods certainly come with their own challenges, but that shouldn’t hold you back.
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#3 - 🛍️ Amazon and Meta ink new deal for shopping
📰 TL;DR - Amazon and Meta have a new deal that will allow shoppers to buy Amazon products in-stream without leaving Instagram or Facebook. Users will be able to connect their Amazon accounts for one-click purchases and updated pricing that considers whether or not they have Prime. It’s not the hugest difference considering it wasn’t exactly a hardship to shop Amazon ads on either platform, but it does streamline things. However, this article points out that this doesn’t include robust data sharing.
💡 Insight - It’s unfortunate that this won’t allow for greater ad targeting on Meta platforms due to limited data sharing. It’s more of a win for Meta considering they’ve been trying to figure out how to encourage in-app shopping for some time now. It’s also a nice bonus for Amazon merchants, since we know everyone loves speedier checkout. So it definitely has some value even though it’s not revolutionizing anything.
#4 - 🛠️ Things worth checking out
👛 TIKTOK - TikTok Shop is the latest e-comm platform to offer authentication services, this time for handbags.
💸 BNPL - This guide breaks down everything you need to know about buy-now-pay-later.
👾 ROBLOX - Gen Z is hyped about virtual fashion and that’s great news for brands that want to expand to Roblox.
📈 EARNINGS - Here’s an e-commerce earnings recap of top brands.
🚛 WHOLESALE - Here are 20 ideas for wholesale businesses.
#5 - 🏴☠️ Shoppers are concerned about porch pirates
📰 TL;DR - With nearly 6 in 10 US shoppers planning to shop online this year, a lot of people are worried about so-called porch pirates. In fact, 24% of Americans have reported having holiday packages stolen from their doorsteps in the past. The occurrence rate varies across the US, but it’s still significant with urban and suburban shoppers more likely to be hit. Knowing that, some shoppers are opting for local businesses to avoid the issue.
💡 Insight - Porch pirates are a huge headache for e-commerce businesses because the thefts aren’t your fault but impact the experience of your customers. One way you can mitigate theft is to use shipping services that provide real-time updates and pictures upon arrival so shoppers can get to their deliveries more quickly. Another option is to ensure you have pick-up point delivery options.
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