We’ve been working closely with current and prospective clients to help them navigate their digital advertising goals while monitoring the COVID-19 pandemic.
While shifting strategy, brand messaging and quarterly forecasts have been at the forefront of our routines and conversations, we look to the data trends, opportunity for brand awareness and shift in platforms as we prepare our clients for long term gain. We spoke with Greg Byrnes, Co-founder of Tayst Coffee Roaster, who shared how they leveraged Amazon to transition from B2B to D2C in light of the current times.
Greg, what are the pros and cons of shifting Tayst to Amazon?
As a direct to consumer business, we wanted to avoid Amazon because it was our belief that we wanted to control the customer and the customer life cycle. It became very apparent launching the business that you can’t avoid Amazon. It’s the go-to resource for anybody doing any shopping and so they’re going to check and compare with it, and they’re going to investigate it.
There are two ways to think about it. One, you can lose business to it, but are you really losing business to it? Because they’re actually helping you capture back a percentage of business you would lose. The average company can’t afford to offer low prices and free shipping. Amazon can. They have a dialed-in user base who is paying them a premium for Prime, and so right away, I think you’re actually increasing your average order size that way, if you’re looking at it holistically overall, rather than decreasing it. When you combine the two resources, overall you’re achieving a net positive gain.
We’ve done some investigation and there is lifetime value on Amazon. An area that we were afraid of, and it’s very hard to track, but it does look like we get over 40% of our customers to come back and purchase from us on Amazon. That bodes well for strong lifetime value and brand recognition and so it gave us more confidence to really invest the dollars and time into growing Amazon.
Amazon has also been adding tools, they didn’t have this initially when we started with it, like the Subscribe and Save program, and so you can motivate a lot of your customers and have it pretty much in their buy box. You can enable it and yes, we do have a strong percentage of our customers on Subscribe and Save. The problem is, Amazon takes 15% of your margin, and when you add an additional 5% off for Subscribe and Save, it really starts to hurt your gross profit on the business. That’s the biggest problem on the Amazon side.
The other big positive from Amazon is that it’s almost like a billboard for you. I do answer the phone at times, and we ask people where they found us, and they say that they originally found us on Amazon. A lot of people also want to order directly. One, we create promotions to get them to come directly, but two, sometimes they want to support the local business and know they have a relationship with the local business. So it is a good funnel that way.
How can growing the D2C side of the business help push B2B in the long run?
We do want our coffee in hotels and offices, because if you’re drinking our coffee at your office everyday and you really like it, there’s a good chance you might order it for your home machine. We are now thinking about that vice versa as well. We’ve been doing alot of push marketing, pushing people to sign up for our business, but if we start to grow our consumer business, it’ll be easier to pull those consumers when they go back to work – to bring the businesses in. We’re looking forward to that.
Are you currently running any Amazon Product Ads?
We are. There are some real strategic things that you have to do when you’re setting up Amazon. There’s a playlist here. It’s just like setting up a search campaign, or any kind of marketing campaign: there’s content that needs to be built on the landing pages, the titles and descriptions need to be optimized for keywords that people type into Amazon. You need to think of Amazon as a gigantic search engine. It’s a product driven search engine and so, all of the keywords in your descriptions need to be adjusted. The images are very important, and reviews are extremely important. Amazon is not a zero to sixty process because of the review issue.
When you go to Amazon, you’re not going to buy a product that has two or three reviews, so there are strategies to grow your reviews quickly, which can also be an asset. Some people like when there are 40, 50, or 100 reviews. They see a growing product, and the 4 or 5 star reviews, where people are sharing what’s great about it. You really have to keep your reviews at 3.5 or 4 stars, or it will really hurt your conversion rate.
Once all of that is done, Amazon gives you the opportunity where if you have a trademark of your brand, you can sign up for what is called brand registry. Once you do that, it enables you to use other features on Amazon. For example, there’s a section where you scroll down to an area with content that a company can insert, it’s called Enhanced Branded Content, and that area of content can only be created if you’re registered as a trademark of that brand. The benefit of doing that is it opens up two additional advertising modules. You can advertise on standard sponsored listings on Amazon, and it’s a little obscure but if somebody types in ‘coffee k-cups’ and i’m bidding for that key term, my product should come up as one of the listings.
There are now two new ad units that open up. One, sponsored brand now allows me to, if someone types in the word Keurig or Peet’s Coffee, I can appear in a full ad above all of the products, under those searches. They also have the retargeting ability, so if a customer has viewed our products or clicked on an ad, we also have the ability to target them off of Amazon.
There’s so much great strategy and there are so many things that agencies are going to need to figure out or somebody on staff at the company. It’s not just a product feed like Google Shopping. In order to make Amazon successful, you have to look at it holistically, you have to understand that some people just prefer to shop there. As a business, as long as it’s making economic sense for you.
Amazon has an algorithm, there are incentives for driving traffic to Amazon. Amazon is creating this ad platform where you can buy ads to drive customers back to that platform. You’re paying to drive them traffic, which is unbelievable in a lot of ways, but hopefully you’re benefiting financially by them buying your product. Amazon benefits from you buying your product. But you might drive that user back and they might choose your competitor.
Can CPG brands move into Amazon quickly?
It takes time to build Amazon. Because Amazon makes you earn your way to more traffic organically by placing an emphasis on things like the reviews. It’s not to say that if you have a strategic advantage and a very high profit margin that you can’t purchase ads on Amazon and grow rapidly, but the fact is Amazon is not a “turn on and start selling like crazy” mechanism. Not only does Amazon want you to prove yourself, but they make sure that your delivery rates are on time, and if your deliveries are not on time, they penalize you by reducing your traffic.
Your response rates to customer inquiries – if you don’t answer a customer within 24 hours, you get a negative – there are a lot of different things that they qualify you to do in order to make sure that before they start trusting you to handle the increased traffic. Amazon is forcing you to be a good vendor and a good partner.
Do you have anyone on your team who is solely responsible for managing Amazon?
We should but we don’t. We have people managing Amazon from an inventory standpoint, who are essentially making sure that we’re filling orders. We use a Fulfilled by Amazon product, so Amazon ships our product for us, so that’s important, but we are the ones who manage it from an advertising standpoint. Thankfully we have Mason Interactive helping us drive a great ACOS and ROAS and that’s what we keep trying to figure out – how to drive more customers at a more profitable rate.
We have not been sophisticated enough to drive traffic or incentives to Subscribe and Save. We actually raised our prices over the past few months in preparation to be able to run some deals and promotions on Amazon. This also allows us to account for increasing our ad spend. I would take this into account for strategy and what you’re doing as far as your gross profit and whether you can make room for deals like that. Those are great ways to increase your impression levels and increase visibility and sales.
How are you positioning Tayst to new consumers on Amazon?
When you look at our Amazon [store] products, in the middle you’ll see the Enhanced Branded Content. There’s an image of a woman drinking coffee and we talk about our pod and our brand story. It’s really important to have that kind of content. Our pods are 100% compostable and to be able to say that, we had to provide legal proof of testing and studies before Amazon would allow us to sell our product. Amazon wouldn’t allow us to sell in California for over a year because California’s restrictions on claiming compostability are so strong.
There are a variety of different compostable products coming out to varying degrees, some are not 100% compostable, some are partially, some you have to peel the label off. Ours are from the packaging to the pod to the coffee we use, which is rainforest certified coffee. It’s a true sustainable brand, with grown beans and the soil taken care of, and farmers paid the right wages. We look at the full supply chain of it, not just the end product, and that’s very important to us as business owners but also to eco-conscious consumers.