Episode Transcript
[00:00:03] Speaker A: Welcome to check in to check out the E Commerce growth podcast for Mobile First.
My name is Justin Ehrenstein and alongside me is my co host Connor Burke.
Welcome to check in to check out. Today we have a first guest not in America. We are actually joining the being joined by Giovanni from Milan, Italy who's currently watching the Olympics. Got to see USA versus Canada women's hockey. A little jealous and and he's living the great Italian life.
Giovanni is currently the head of E Commerce at Cooper Consumer Health Italy, but he's also written a book.
Giovanni, what's the name of your book and what's the hypothesis around it?
[00:00:53] Speaker B: Hello. Hello everyone.
Hi Justin. So I just published a few months ago my first book selling on Amazon 1P vendor and 3P seller Marketplace Wisdom for professional. That's the subtitle. So very big statement. I try to help professionals approaching sales on Amazon companies trying to understand the monster and try to figure out the best way to land product on Amazon and have a comprehensive branding strategy. Because many questions are raised about Amazon. So different angles to crack the code must be taken into account.
[00:01:32] Speaker C: Perfect.
[00:01:34] Speaker A: Love it. So as someone who comes from more of the D2C side who has also done maybe some more of the technological integrations around Amazon, I always have seen traditionally Amazon as this operational monster. Like okay, we have to operationally do these things.
Is it more strategic, is it more operational, is it a blend of both? How do you kind of view that
[00:01:56] Speaker B: in order to win on Amazon and to crack the code you have to have a bit of both. Meaning that you cannot forget the operational part and the way the system and the algorithms work. The processes are very important because there are processes, algorithm and rules governing the majority of the recipe you have to implement on Amazon. But on top of that you have to know where you're going, you have to know where you're steering the boat. Because certain decision, especially when you're talking at high level, can have tremendous impact not only within Amazon but also in the broader world where your company operates in other distribution channel across multiple geographies. When we are talking about for example the European market, a wrong strategy on Amazon on market might spill over very fast in another European market because there is such an integration between Amazon and the offline world and the way your brand is perceived on Amazon and outside Amazon that really getting a long term vision on how to crack the Amazon code is important for the entire company.
[00:03:12] Speaker A: So how do you crack the code and specifically how do you know when to work with 1P 3P? How do you make that transition, can you be working with both and how do you make those decisions?
[00:03:26] Speaker B: So as a matter of fact, as a personal experience, there is no right or wrong, there is no recipe that can apply to everyone. Perhaps Jonathan could have a brand that works better with 3P. But at a certain point in time, due to needs of scale and needs of branding, he might resort to 1P to fully extract the potential of Amazon. This decision depends on a lot of aspects and also on on on trends. For example, a couple of years ago there was a trend of consultants pushing companies to move from 1p to 3p. Use the hybrid approach.
Then Amazon started to crack on this. They boycotted this. If they were finding there are fine prints in the agreement you sign with Amazon when it comes to to distribution.
If they find out that a brand is operating directly under both premises, seller and vendor, they might decide to block the products, delist them. So you have to be quite careful. But in a nutshell, it depends on the economic model and the long term vision you have for Amazon. But there is one question that brand might not ask himself.
Whether Amazon yes, Amazon no. That's a question that should be taken out of the table, is Amazon how.
And then to decide how to applicate right recipe, right implementation strategy. For example, I have worked with brands that decided to use Amazon only as a gateway to marketing in a way that is not possible on Google, for example. So investing only in the media part, only in the media channel, like connected tv, online video. So this is also Amazon.
It's not Amazon retail, but it's part of the Amazon ecosystem. And when it comes to the retail portion, the one that everyone thinks of, it's very reductive to think that you can control the Amazon experience only by limiting yourself with retail.
There is much more to be extracted from this channel, from this ecosystem.
Because what I found is that nowadays company has are extracting value from Amazon if they're able to capture the ecosystem efficiencies, the ecosystem data externalities. Because Amazon is was born thanks to data. Data are fed constantly into the system by the users, by the brands. And those who make the most out of the Amazon ecosystem are those who can connect the dots thanks to data. Data is there from Amazon and part of it is free. Part of it is paying data, part of it will become in the nearest future paying data.
And we are at a crossroad nowadays with agentic e commerce geo trying to change the rule of the game on how people discover products. Amazon is trying to reinvent itself. They want to understand how to profit from these large masses of data that will transition from an advertising model to, to another one. And brands have to be there, have to be there on Amazon for Rufus, have to be on ChatGPT to connect demand with the sale on Amazon or other retailers. So it's really important to understand that limit yourself to 1p or 3p is just part of the, of the question you have to ask for Amazon.
[00:06:54] Speaker C: Giovanni, I have a question.
[00:06:55] Speaker B: So you said it's.
[00:06:56] Speaker C: It's not a matter of yes or no, it's or it's, it's how. So are you saying that there's always a strategy or combination of strategies that will always benefit a brand by being engaged with Amazon?
Always. If you do your, if you do the work right, you should always benefit, whether it's on brand, whether it's on product sales, whether it's on relationships, whether it's with advertising, there is always a way to benefit and be more successful. Is that your hypothesis?
[00:07:27] Speaker B: I would not be so harsh on the hypothesis. I would rather say if you don't manage Amazon, if you don't have an how for how your brand or products are present within the ecosystem, and I'm talking a broad definition of ecosystem, then you will be managed by the ecosystem, which is far worse. So not necessarily positive externalities, but definitely if you don't manage Amazon, then you are going to have some negative spillover effect if there is no control, because one way or another you are going to get in touch with the Amazon ecosystem with your brand or product.
[00:08:10] Speaker C: Fascinating.
[00:08:11] Speaker B: It's fascinating because I'm spending an entire day trying to explain and to understand myself, with my colleagues, with my team. How do we make sure that, that we turn the conversation of our favor rather than be subject to a conversation we don't want to have with the retailer or with the actors present on Amazon. And I'm being more precise, it's very difficult when you're talking to executives that are looking for immediate results or short midterm results. How harvesting on Amazon takes time.
There is the illusion that E Commerce, especially Amazon, delivers result right away because it's full of data.
It's not always the case and not necessarily if you do the job right. It takes time to build incrementality and to benefit of the results from an RGM strategy or from an advertising strategy, because the machine learns, the customer is learning and also changing its behavior based on what they see and how they interact on Amazon. One metric that I really like is the customer lifetime value. This is Something that in consumable CPG is very important.
And Amazon gives you a lot, a lot of levers and data to extract value and be really granular on the way you invest and how you extract value. I know how to make the most out of my advertising investment. I know how to create a product based on the input I get from the Amazon advertising platform or the Amazon retail platform. And this is something that is extremely valuable and very limited competitors can offer.
[00:09:54] Speaker C: So is it a zero sum game? Like if, if everybody in the world reads your book, which I hope they do, does that, let's, let's say they do, does the game change or just everybody is benefiting equally or, or do. Does the game change? Is, is the first hundred people that buy your book and, and follow the as much of the blueprint as possible, are they going to benefit more than if everybody does or if everybody reads and does this playbook will all benefit? Do all boats rise?
[00:10:24] Speaker B: So the aim of my book is not to give a manual to follow for implementation. It's more food for thought and strategic guidance for the leaders who have the Amazon problem.
And when I'm talking about leaders, I have a rather broad definition and I have sub chapters dedicated to supply chain director, marketing director, sales director, because each of them has a different angle to the same problem. And what Amazon brought to the table, different from what other companies or retailers did in the past, is that it became the litmus test.
Everything came to surface thanks to Amazon. The silos approach that was governing most of brands or most of companies has been, has been fading thanks to Amazon. The marketing director now needs to speak to the sales director because when it comes to Amazon, you cannot hide the wrong commercial strategy, you cannot hide the wrong positioning. It's in front of everyone. If you have a spillover in distribution, if you did a monthly end of the month push to deliver the results to the shareholders, it's gonna naturally have a spillover on Amazon in terms of pricing, dropping reviews or bad reputation. And this changes the way people should be looking at execution.
It makes everyone accountable. Because if you are launching a product is a failure, rest assured somebody will write a negative review.
And this is something that you can hardly stop.
And the way Amazon changed the perception of marketing is that with reviews more than any other retailer, it gave the power to people to speak, speak up about products, speak up about brands.
And this is something that changed a lot. Nobody does it. So such a big scale like Amazon does with reviews program and you have to imagine that from an European perspective is Even more game changing because on this side of the ocean we are less accustomed to to give word to the end customer.
In the United States you are more open to conversations between brands and the end customer. Here there is more like a GOTA of brands. Brands are the gatekeepers.
They have managed the conversation with an history of being established player in their industry and they are reluctant to give this free speech to the consumer. Yeah, the voice with Amazon, the voice now is out for everyone and new brands are born every day with a strong heritage of direct to consumer. In the purest essence of this definition, Amazon is capturing well.
[00:13:31] Speaker A: So you said something that I don't think I can ever let go of, that every brand should be interacting with Amazon and I can't let go of it. But so many brands that we work with don't for various reasons. So if you're up for it, I'm going to give you some information about maybe one or two brands and you tell me where they could get started in that.
So one brand, we'll just say they do about 20 million online, they manufacture their own golf clubs, set of golf clubs and they do it D2C. They also have some in Costco which they created a new line of products for. Costco is like a big retailer.
[00:14:12] Speaker B: Yeah.
[00:14:15] Speaker A: Right now it's D2C and Costco. How could they get started with Amazon while still maintaining their brand and they feel like they're a premium product that's really in that D2C space. How could they get started talking to Amazon? Where's that strategy look like?
[00:14:35] Speaker B: So they could be interacting with Amazon using the Amazon infrastructure for their D2C end without selling on Amazon. That is a thing that we should always remember. They can use prime fulfillment service, they can use AWS technology, they can use Amazon media to talk to audiences and bring them from Amazon infrastructure from Amazon ecosystem to their direct to consumer website without even stepping into Amazon.com that's to be taken out of the table. But if they were to approach Amazon as a retailer and decide whether to go in as a 1p or 3p first they would need to assess where they want to go with Amazon. They want to have incrementality, incrementality with profit or overturn their brand and decide to offer the full experience in Amazon because this is something that puts them at a crossroad. If they want just to try out the potential, but go with very little steps, I would say they should be differentiating with some technicalities or some feature part of their offer and test gradually what is the feeling of the Amazon consumer test? Whether there is a return on investment of putting this part of the selection there and there is no cannibalization. They have to make sure that they don't cannibalize sales of the wear and then they can build on that to extend and scale the experience. They can even decide to launch a tier 2 brand extension so that they can differentiate more clearly the user experience.
This is something that many brands are doing, but it's always true that it takes a lot of marketing power to create as a brand because you have to create awareness in the people. This is something that takes a lot of money, especially on Amazon, because nowadays if your brand exists, it's very likely that there is traction on Amazon already.
Whereas if you have to create something from scratch and create traction just by bidding organic on the generic keyword and branded keywords, it takes a lot of investment that has to be added on
[00:17:06] Speaker A: top of the P and L. I love it. So for everyone who doesn't know what you currently sell, what do you sell and what is that strategy that you use for Amazon for your products?
[00:17:20] Speaker B: So I currently work in a company that is selling food, supplement, beauty products and cosmetics products. Our products are distributed offline and online mostly through pharmacies, drugstore and E pharmacies and Amazon. This product category has a lot of similarities with CPG in terms of consumption mode.
If I'm looking at it from the point of view of a European versus an American.
I have to deal with many more regulations compared to an American company, an American consumer. This is because of the landscape we have in Europe.
And the Ministry of Health of Italy has different regulation versus the Ministry of Health of France in terms of what could be sold, the doses, et cetera, et cetera.
When I approach the market, I am considering E commerce for multiple reasons. One of the main reason is that consumers are shifting online, especially when it comes to self medication, self care, and also because there is a natural trend of awareness about how to take care of yourself, treat diseases before they even show up with a healthy lifestyle. And food supplements and self medication are just there, easy to grasp like the information on the web.
What we do is we leverage Amazon as a gateway to new consumer, younger demographic, different demographic or different purchasing patterns.
What we saw from data is that the customer that normally purchase for these products in Europe, especially in the pharmacies, is different from the one that purchases online.
We're not seeing a cannibalization, we're seeing a differentiation.
And also we see that the consumer Interacts with the brands online in a completely different way from what is happening in store. Where there is a mediated sale, the pharmacist, the sales assistant do always a mediation. Whereas online the brand is more in control.
We create the asset, we create the content. And this is something where the challenge for brands in our category lays ahead. Because you have to think that CPG brands, especially in the pharma or with consumer healthcare heritage, they don't have in their courts the narrative building that is required by fast moving consumer goods to that extent, meaning that they are not content powerhouses. A consumer healthcare brand doesn't have in its DNA the pillar of content, content in the way the end consumer would consume it.
The content is very institutional, very clean. Because we're talking about the pharma industry. When you open up to CPG with this product category, you have to start approaching a different narrative. E commerce is living thanks to content. We have to build great content for Amazon, for all the platforms. Think about TikTok shop.
My job today is to convince the colleagues that we have to start investing on content creation and relax the rules that have been governing the company and explain to the ministry directly that the narrative has to change. You have to say things that were not even thought of, forbidden, like you have to use influencers, which is something that in certain markets of Europe is not regulated for the product category I'm talking about.
So when you're talking about E commerce in this product category, there is so much to build. This is why consumer healthcare is receiving a lot of attention from private equity investors, because it's at the forefront of a revolution.
We are seeing new customer approaching the product category with a new awareness on the benefits, with a new consciousness about what they should be expecting and also with with a different approach to what was once considered something negative like a medication. Now it's no longer like that. You do it for prevention. You do it to boost yourself, to power up yourself. So it's really, really challenging, but also very exciting.
[00:21:58] Speaker A: And so you have products on TikTok, shop, on Amazon D2C and you're managing all.
[00:22:08] Speaker B: My company doesn't do direct to consumer. We do all the other touch points you describe, but no direct to consumer. Consumer health care is not so prone to direct to consumers in Europe. In Italy, due to certain regulatory limitations, but also because the consumer does appreciate the browsing in the category does mix and match and is coming from an experience that has always been mediated in a multi brand, multi category environment. The pharmacy is multi category, multi brand.
So they would expect a destination that is multi offering. And E pharmacies are really important in Europe because they do this function. So very limited exposure of consumer healthcare brands to direct to consumer ventures because of this reason.
[00:23:08] Speaker C: I think the points you're making as far as differentiation in the European market versus the US is really fascinating.
One of the elements that we hear every single day is omnichannel. The connected consumer should be regardless whether it's online, offline, et cetera. And it seems like due to regulatory and other things you've pointed out, it's still bifurcated. So my big question right now is for you, for your primary markets in which you serve Europe and Asia, what is like in the next year, is it adopting more things that the American market is already moving towards or are you sidestepping that and you're seeing there's a whole new frontier that you guys are pursuing that even the American market is still caught up in other things.
[00:23:49] Speaker B: So when we are talking about the European market, what is the natural trend is a general Americanization in the sense that. Let's take a step back.
You know that our healthcare system is very different from yours in general. Across Europe there is a public half public healthcare system.
The state is very involved. In certain cases like Italy, you can get everything through the state with different level of services.
Okay, there is private on top, but in theory you can access everything from the state paid by the state through your taxes, all inclusive. In other markets there is a mix of public and private. In other markets, very few there is fully private or. But still the states require, like in Switzerland, the employer to make sure that the employee or the citizens have some sort of minimum coverage.
So nobody's left alone.
This system is showing its limits because we can no longer afford, with the current trends to offer this to everybody with the same service level.
So what are the regulators doing? What are the governments doing? Directly or indirectly, they are scaling back on the level of support.
And how do they do it? In a very subtle way. They don't just cut on cost or reduce the services or ask for a contribution for the end user for something that would used to be 100% free.
They are also liberalizing some services to some operators that were not able to deliver these services. These operators are willing to step in just because they can get reward for it. They can get paid for it.
The pharmacy, the pharma company.
Well, what do they get out of it? For example, certain medication, certain products that used to be medicine. They are changing their status to over the counter, changing the status to liberalize product like cpg.
This means more capabilities in terms of advertising which was forbidden for medication now is possible. In certain states of Europe. You cannot advertise medication like you do in the US Completely different landscape this is changing. And with these changes it means that new possibilities to do business appear and the state lowers itself of the of a burden.
Same goes with pharmacies. And I go back to your point of Omnichannel.
Nowadays the pharmacy has a limited range of product it can sell.
This range is getting bigger and bigger.
There is a liberalization of products and two areas of development for pharmacies in Italy and in Europe are helping the P and L of these pharmacies, which are businesses at the end of the game.
The first is cosmetics and the second is services.
Meaning that if today you own a pharmacy, you can crack omnichannel by offering services that were previously administered by doctors, practitioners, hospitals, blood test, certain prescription can be done by the pharmacist. They take apart of of the offer that was offered by somebody else for a fee. Or the other thing they can, they're starting to do is they offer a wide selection of derma cosmetics products. Beauty.
Beauty in a way that you will not be finding at Sephora or beauty parlor store.
Beauty with some scientific know how beauty sold with a very premium price.
And when it's sold by a pharmacist with a dermatological background, you can stretch the conversation from Botox to filler all the way to the cleansing product.
This is very lucrative. Omnichannel comes into play because it's a gateway to the pharmacy, but also a gateway from the pharmacy to the house of the end customer. Because you get the consultation from the pharmacist in store and then you can keep on ordering online and get your product delivered. Once you get the consultation from the pharmacist, not the doctor, the pharmacist.
[00:28:38] Speaker C: I understand.
[00:28:39] Speaker A: Got it.
[00:28:40] Speaker C: The pharmacy basically refills. They offer us the refill. Amazing. The democratization or liberalization, as you said. Fascinating.
[00:28:48] Speaker B: Big difference between Europe and the United States. I'm talking about continental Europe, not the uk.
In Europe continent, prescription drugs cannot be shipped via mail.
[00:29:01] Speaker A: Got it, Got it.
[00:29:02] Speaker C: Has to be picked up through the distribution channel, which is the pharmacy.
[00:29:06] Speaker B: Yes, like you have to be. I'm not saying I did.
But it has to be handed over to you.
They have to check that you can take that medication and physically see the prescription. That's got it.
[00:29:19] Speaker C: It's good stuff.
[00:29:22] Speaker A: Awesome. And what has to do with Amazon? What's your e commerce hot take.
[00:29:26] Speaker B: I think that we are on on the edge of a of a revolution because I see that the interaction of my customer base with Amazon is changing very fast. The way AI is changing. The user experience can have repercussion on the way we do marketing and we develop product that is not yet fully captured in the in the business plan three to five years. Meaning that we are entangled and limited by a way of thinking that with AI, with the development of user generated content or content in general doesn't speak anymore. The pace at which we should be going is not the pace at which we are going in terms of of company of brands and the demand will be captured by brands and companies who are more agile to translate the conversation with end customer into something that AI can recommend. You are not talking to the end customer, you are talking to the end customer mediated to the agents, to the LLM models.
And this is something where Amazon is sending multiple signals of development not fully grasped by the brands. And also in general there is a lot of fuss, a lot of confusion about AI, what it means and many companies are trying to find their recipe to give an answer. If I'm thinking about what we see in the newspaper, perplexity, chatgpt clothes Rufus, who is the leading one, where is the customer changing? The reality is that the customer doesn't know yet. They are bouncing from one to the other and we are going to be seeing this type of situation for long I think a couple of years still and then there will be a consolidation towards one mean or the other.
[00:31:35] Speaker A: A hundred percent agree. What do you say to the person that says hey AI, that I'm going to be talking to the machines that then talks to the customer is what do you say to the person says well that's just what I've been doing with Google for the past 20 years. As I've done SEO optimization, I've been doing my content. Is it something new, is it something different that this brand is going to have to do? Do they need to hire a new staff or is it kind of a very similar playbook?
[00:32:03] Speaker B: I think I'm talking with many agencies, I'm talking about with the big agencies, with the small agencies, with young marketeers, old marketeer. The reality is that I think they're trying to sell a way out of this question, but nobody really knows. Meaning that there is so much confusion on the way to approach the narrative so that the agents can pick it up and pick it up in a meaningful way that many attempts are done not 100% as sure that the ROI is there, but nonetheless, it's worth trying.
The models and the LLMs are changing fast and are changing based on market dynamics, because the LLM that you have in Saudi Arabia is different from the LLM of China or the LLM of Europe or the LLM of the US in terms of broad adoption. And what is clear to me is that you have to, if I'm talking about brands, you have to understand where to invest in a meaningful conversation with a customer. That's the key.
You have to bring meaning to the table. And if you bring meaning to the table, it will be picked up as long as you are present in multiple touch points online by the LLM.
But you have to bring real meaning, then the LLM will pick it up.
[00:33:34] Speaker A: Yeah, I, I agree. I think what you're saying, and you can agree or disagree, you cannot.
[00:33:41] Speaker B: You, you don't have to agree. You can say, I'm a visionnaire. It doesn't apply.
[00:33:47] Speaker A: I think what you're saying is, at the end of the day, comes down to marketing fundamentals, just like it always has. It's about differentiation and showing up what, where it matters. And one of the places that you strongly believe it matters is Amazon. Like, you have to be on Amazon in one way, shape or form.
Even if you're not selling directly, at least show up in their advertising because people are going to be searching for your category.
And that also applies to LLMs. Make sure that you're showing up where the LLMs are looking. And yes, they will be crawling your page, but there will be new rules to how the page is crawled. And it comes down to the fundamentals. Being differentiated, having a story, and being able to really tell why the customer needs your product.
[00:34:33] Speaker B: Yeah, I see that.
Marketing and paid advertisement is gonna make the difference when it comes to who will survive the AI buzz.
Friendliness, in the sense that at a certain point, somebody will have to make money out of this AI business.
And the easiest way to monetize is to find an advertising dynamic model. Sorry. That can be applied.
Amazon has this way, Google has this way.
ChatGPT is gonna have its way.
Let's see how this evolves, because I'm really curious to see how advertising will be shaping the AI experience. Because today, now we trust that AI is doing its best to find the answer to the queries. The prompt can be as detailed as possible, but we assume is unbiased. The LLM, when you will add to the equation advertising, the answer will be for sure biased.
[00:35:49] Speaker C: Sure. Be selected.
[00:35:51] Speaker A: Awesome.
[00:35:52] Speaker C: Really good.
[00:35:53] Speaker A: Thank you so much for your insights, Giovanni. Where can people find you? Where can people find your book? Yeah, plug yourself so you can find
[00:36:01] Speaker B: me in Milan for the time being. So if you come down for the Olympics, I'm going to be here.
But apart from the offline world, you can find me on Amazon of course. My book selling on Amazon P vendor and 3P seller marketplace, wisdom for Professional is available there, both paperback and Kindle.
Or you can drop me a line on LinkedIn and Instagram.
Feel free to reach out to have a conversation on a virtual coffee.
[00:36:35] Speaker C: You are such a pleasure.
[00:36:36] Speaker B: Wow.
[00:36:37] Speaker C: It was really great meeting you man.
Good luck for the revolution.
[00:36:42] Speaker B: Thank you.
