James Thomson 15:53
So we’ve talked a lot in the last few minutes about authorized versus unauthorized. Even if everybody who sells your product is authorized. There is this strange learning that brands eventually go through where they realize that, let’s say on Amazon, everybody’s authorized. But Amazon is actively going out and finding lower prices that some seller is selling somewhere else. How do you help brands think through this question of price parity across channels, regardless of whether the sellers are authorized or not? How do you deal with this issue?
Andrew Schydlowsky 16:29
Well, look, the internet is an ecosystem. We spoke briefly when I mentioned briefly that in retail, it takes you 15 minutes from go to store to store Yes. And online takes seconds. So your internet isn’t just Amazon. You know, the last numbers I saw. There’s a recent report that said 58% of global sales online happened in marketplaces. So globally, which is a huge number and arising as a marketplace model. Shopify is moving towards kind of an interesting marketplace model, TBD, where it ends up going to Walmart or eBay, groceries within the marketplace transitions, like there’s all sorts of things moving in that direction. But there’s also an incredible number of websites. And, you know, Amazon is crawling and looking at all those price points. So is Walmart. And everybody’s looking at each other. And so it’s really critical that you think of the internet as this ecosystem. It’s just, it’s easy to pick up Amazon as you plug your phone and go, look, look what I found, alright. But it’s actually not that simple. You have to have strategies that think about a wider scope. Because I guarantee you that the people you’re selling to you are thinking wider as well. And so we’re all you know, so often we’ll find that clients engage with us, and I think that they have 60 or 70 accounts. There’s one recently 6070 accounts, they had almost 2000 websites selling their products, online websites, not marketplaces. Plus marketplace sellers. It was insane. Yeah. And they were basically rebooting a brand. And you can’t, no one’s gonna take your product until you fix this. And fortunately, we had a really quick solution for them. And we were able to very quickly and it’s been tremendously successful. But it’s a wide world of the internet and it’s extremely chaotic, very dynamic moves really quickly, and you have to have a broader scope. So if you start with visibility, who’s doing what, where, when was it looked like over time, from that you can create strategies and use that’s the first step is Hey, what’s going on? Once you know the depth of the issue, then you can take action on
James Thomson 18:42
So Andrew, you’ve talked about the transparency of the internet. Let’s talk about you know, besides using software like TrackStreet, what else would you recommend brands be thinking about doing themselves to become both more consistent and more transparent with how they choose to operate online
Andrew Schydlowsky 19:01
Look, I think what it comes down to? That’s a great question. It really really comes down to one, having a financial set of documents that applies to everybody. So let’s treat people the same. So what are the rules? Let’s define the sandbox, you control that. And let’s take our best information that we have images, content description, make it easy for partners to get it in clear and create a clear set of packages that people can use to market and brand your product for you. And think about carrots where the incentives for people to be good partners for you, not just pricing, but what other values do they get for helping drive your brand and, and align yourselves with them. So how do you get visibility into their sales and ensure that the sales are happening where they are, but reward them for bringing you new customers, right. I think that alignment across channels is really important. I think looking at engaging experts in Amazon, Walmart and such to optimize their presence, we want consistency of brand everywhere it’s sold. Yes, not everybody has in house experts in some of these areas. So go get the best and create a strategy that you’ll be consistent with across the marketplace.
James Thomson 20:23
So let’s talk about some of these carrots. What are some of the carrots that you’ve seen brands effectively use to reward certain authorized partners who are participating and helping to create consistent branding, consistent pricing and consistent customer experience?
Andrew Schydlowsky 20:38
Yeah, so sometimes it’s as simple as that can be special markup units for people only available at a certain tier to be really successful, it could be certain bundles, right? That could be a certain product, it could be swag. It can be certain kinds of branding or logos those clients can use on their websites or in store as ever. Though no more than an authorized dealer badge, but a level of that. It could be included on where to buy on their website? Yes. It’s all the things that help them sell more of your product for you. It could access things like videos and educational, it could even be a technical support line that only customers of your Platinum program seller can access to, which is awesome, by the way, so that it can be integrated into your foundational documents or have an authorized dealer network. Those are things that signify to your partners that you do care, because that’s what really asking like, do you really care about us? I thought you love me? Yes, yes. But I
James Thomson 21:44
care about you only so much as you care about me at the same time. And if we both care about each other, we’re better aligning our incentives, then yes, but but you know, the struggle that we see as there are so many brands that historically have said but we’ve always worked with these retailers and we can golf with these retailers and we love these retailers, while at the same time those retailers are playing the games behind their backs, sourcing products or sorry, distributing products to other folks and so on. Getting people getting brands to break through that mentality of why am I so focused on my retailers, when ultimately I have to create consistent experiences for customers, that’s something that brands that don’t have direct to consumer experience, often struggle extensively with.
Andrew Schydlowsky 22:28
I don’t think there’s ever been a time when brands have been further away from their customers. And they are now I think, as a huge challenge. And I think particularly the times we’re facing at the moment where a lot of retails being closed, and is in transition that has been eliminated. And so I think you raised a great point, like how do you align with your channel so that you get closer to the customer? It’s not your turn to take the customer, but you want to participate in that conversation with the customer. And how can you drive brand loyalty through your partners is really the question
James Thomson 23:01
So let me ask you this. Buy Box Experts, we consistently are surprised how many brands aren’t working to control their pricing across sellers on Amazon, let alone other websites, that there’s still this perception that somehow online isn’t that big a deal because it only accounts for a small percent of sales. These brands are focusing their sales efforts almost exclusively on brick and mortar, without a clear understanding of the negative impact that pricing discrepancies and branding discrepancies online can create for their overall business. What are your thoughts on that? And how do you get these brands to wake up and realize, okay, actually, we have been completely ignoring a rather big problem.
Andrew Schydlowsky 23:42
I think all brands will get there. The question is, do you get there when there’s still time to save yourself? Mm hmm. One price is a determining factor. People are people buying your product or not. That’s what’s driving it. And unfortunately, without some kind of program in place, that’s what happens. Just drag race to the bottom in places like Amazon. What happens is there’s this incredible downward pressure on price across all parts of the channel very quickly. Brands realize that not only do we want to buy it for so much less they can afford to make that same quality product. But they can’t make it. We have to cheapen it. But then they can’t do r&d on the cool new product they want to market. And all of a sudden a perception in the marketplace that that really amazing $200 product, actually is a $100 product. And it can be $100 products that might have price controls, but they’re different classes of product. Right, right. And so all the work the brain has put in to create their place in the market and the pride they’ve put into what they build because it’s awesome as he wrote it, and it’s a terrible place to be. And so, you know, I think as retail has transitioned right now we’ll continue to I think people have gotten a pretty rude awakening. The internet is going to matter a lot more. Is that I mean? And it’s I think it’s mattered. Now they’re starting to get it. And there’s a scramble to figure out what that means. But we find that most people are not using technology to do anything on the internet yet. They’re really just like, very slowly figuring it out. And the internet’s super complicated. It changes all the time. It’s really complex. And the problems you face managing the internet aren’t well addressed by putting lots of people in a room on them. And so there’s a learning curve, and there’s technology needed. And not only the experts know what they’re doing, but you usually need to give them bugs to take care of things for them. But usually, what we’ve seen is people come when their retailers have made enough noise, they started screaming enough. So they’re reactive. I think what’s going to happen is the people screaming aren’t current inside the organization. And those are the warning signs. And the question is, you know, are you listening internally of where the markets really headed? And are you able to see The shifts online and the reaction and the behavior online, be radically different.
James Thomson 26:04
So let’s shift gears here for a minute. Andrew, I want to talk about when brands decide to finally do something about controlling their pricing, stabilizing prices across channels, there’s a lot of stuff that has to happen within the brand organization. And that period of transition is one that, quite frankly, a lot of brands are scared of, you know, three to six, three to nine months that they may have to deal with. Retailers either being cut off or retailers having to adjust to no longer being able to sell online. Talk to me about some of the clever nuances you’ve seen brands use during that transition period, to be able to move from the chaotic situation to one of stable situations where everybody understands the rules, and everybody is to some level abiding by these new rules. Talk to me about that transition period and what you’ve seen companies do.
Andrew Schydlowsky 26:58
Yeah, so think there’s a couple pieces here. And first of all, what can people expect of this period? What comes out the other side? Without question what we see people that commit to a program, my commit, I mean, there’ll be times when it feels like it’s not working. And this is a bad bit of bad decision that is getting through that stage. We all know sometimes making change is hard. Yep, you gotta get through the dirt. But we see every single time that the end result is increasing profitability. So for example, we had one company in the pet world go through this process, and it was not pretty. But what we saw in the end was that they added a 60% increase in retail sales. So meaning that one is the stores they dealt with, widen their product and deepen their product, which is a huge win. And they got accounts that wouldn’t take them in often and took them in all of a sudden because they believe that they actually do love them.
James Thomson 27:55
Andrew Schydlowsky 27:56
And we actually saw that their Amazon sales were at a higher price. Points tripled. Right? So that’s what came out for these guys. It was millions of dollars worth of revenue. So that’s what you want to get towards. How long does it take? It really depends on the brand we’ve seen within a week’s 92% decrease in authorized sellers and map violations. Right? Like that’s an example of one recent brand we took on tremendously effective. Now the process is clear communication throughout. You want people to know what’s coming, you are now proactive. And it’s about consistency, proactiveness , indication it’s pulling the line. And this isn’t about punishing people. This is about rewarding your partners. This is good for them. It’s good for you. And the ones that are complaining and making the most noise maybe aren’t your partners. And so, you know, stars if you go through distribution, communicating what’s expected with that channel, so hey, we’ve got a program place. Here’s what it is. If you’re walking an authorized dealer program, it’s very possible that some of these rules may say, store and sell our product, but no one has our popular internet, anywhere, no one even buys it from you distributor, let’s run our whitelist. If you don’t know whitelist, they’ve got to go apply to be on that whitelist from us. I know it’s inconvenient, I’m sorry, these are the new rules, it might be uncomfortable, or the process of communication what’s expected by the distributor retailer, you tailor and you have to make some hard choices. You want to be consistent in that. And as you want to communicate what’s coming ahead of time, begin the process and roll it out. It’s staying consistent throughout with the messaging as being proactive, unilateral in your responses, meaning you’re not picking and choosing. You are actually following through people now. It doesn’t mean that you have to take certain punishments. You actually do have some room and some of these policies to make decisions and based upon what’s happening and where, but you want to have consistency. And what we see is a one to many how much supply the market, it might take him time to dry up places that are leaks. And so you might have a bit of time where people are just simply liquidating, so prices may drop, you’re gonna figure out the market. It’s um, yep. But it’s holding strong. But what happens is most people clear out, you separate the world is the filter process. You’re pulling the onion, who were the good kids were the bad kids. Your mom is looking out the window, they’re gonna start jabbing each other with sharp sticks, but they stop jabbing each other when they know that mom’s watching and that’s your job. Maybe our job. A great
analogy. great analogy, mom watching the kids. Yeah, it’s little kids and puppies. I mean, in the best way because we love them. We’re doing what we’re doing because we care. And so you go through this process. You separating them, seeing consistently what we started seeing them as one price may stabilize. Generally, that’s the goal, we’re stabilizing pricing, meaning we increase margins or preserve the channels. And you may have a short term dip in your sales mix, sometimes you don’t. So as inventory clears out, you will see that adjustment of inventory, but the pie hasn’t changed. Your pie is still the pie. But what’s happening is you’re changing who’s eating the pie. Right, right. And so that will all of a sudden you start seeing pull through and generally markets expand because all of a sudden your partners that care about helping you sell because you’re protecting them, and their pie actually increases.
James Thomson 31:42
So let’s talk about protecting your, your, your partners, there are a number of companies out there that are in this business of helping to remove unauthorized sellers. And one of the challenges that I have seen with this approach is companies saying well, I got one 80% of your unauthorized sellers. So look at what a great job we’ve done. The problem is the 20% that are left behind are big, sophisticated gray market sellers, their lawyer up, they know how to source product 10 different ways. So getting rid of 80% of the unauthorized sellers simply moved around who had a piece of the pie, it didn’t get rid of the fact that a lot of the pie is still being served by the wrong kind of companies. How do you help brands think through how much of a clean channel they need before they’re going to start to see positive benefits that consistently will remain in place.
Andrew Schydlowsky 32:32
There are lots of people that claim it can ruin sellers for you. But you have to be very careful. What we don’t want is someone filing false counterfeit claims on your behalf. We don’t want his people going into the Brand Registry and hammering removal orders for people based on trademarks. You know, they may be tools that appear to be used for something but the reality is that’s not removing authorized sellers. If you do have a counterfeit confrontation as a true counterfeit with a test that would go through Brand Registry, that’s where you could do it. But if you keep on pushing these buttons for the wrong reasons they stop working. If you are filing false claims through the Amazon portal, you do expose yourself to huge liability. people doing that for you it could be causing a huge problem. So there is a difference between counterfeit products in authentic products that are not right based upon being sold by the wrong person with material differences all based on the foundation of your documents. But you want to be careful what you’re doing here and so when someone says I’m going to kick people, you ask a lot of questions. You know, that’s it should be a warning sign if they’re guaranteeing a certain removal rate. Watch out right, he’s really biting later. But Awesome. Well, yes, you want to get rid of the low hanging fruit and you’re going to clear up some of the cap some of the some of the market but yes, it looks great. It’s really part of the problem and It’s a cleaner report to show your boss. But have you saved? You know, we really addressed the problem of not getting there.
James Thomson 34:06
No, no, not at all. You’re not
Andrew Schydlowsky 34:08
you haven’t. And so you really don’t need to look at your supply. Right is how are people getting products? What are your reseller requirements is their sub distribution, how you start cutting off source you’re gonna go back to your foundational documents, you have audit rights of who you can sell who people have been sold to, your ability to track and trace your product. There’s interesting ways of doing that. Now, we’ve met some interesting companies lately that have some interesting technologies where we can kind of see where things come from. But this is where it gets more complicated, sophisticated, you are going to do some investigative work. You just testified. You need to maybe use your auditing rights. You’re going to work backwards, your channels, you might want to evolve some legal in this because diversion is tough. And those of us have been in e-commerce while men have been doing it at some point in time, too. Yeah, there gales I
James Thomson 34:59
I can speak. You know, between having helped recruit unauthorized sellers in the past and having been an authorized seller myself at some point, you know, I learned a lot about how leaky these channels were and how leaky these brands let these channels be. And quite frankly, it’s kind of scary when you see household name brands, who literally have no clue what their salespeople are doing, in terms of, you know, bastardizing process products and letting anybody have access to it if they have cash. It’s really crazy how some of these sales incentives that are put in place, motivate all the wrong kinds of behaviors. The brands don’t realize they’re creating problems for themselves long term.
Andrew Schydlowsky 35:37
I can’t remember I can’t even count how many times I was a big e-tailer. Call me at the end of the month at the end of the quarter hander. I need a big order. Yep. Well, what can you do for me? Yep, well, I’ll give you an extra 30. Great, well, I’ll take 80 Grand 100 grand on that product, and I’ll take this of that, and what else but what How about if I order to Under grant, what do you do? Well, hold on, I’ll get back to you. They go to their boss, they come back like Know what? Give an extra rebate. Okay, well, where’s the pot going to go? Well, they didn’t care. They’re chasing their number. You’re absolutely right. Then it goes 15 directions, right? chasing numbers is dangerous. But this is hard when you start getting to the more sophisticated sellers they are sourcing from masa people. And you know, when I was a seller, Amazon used to try to get products from me. Maybe it was you back in the early days, trying to get transfers from us, I don’t know might have been. And so yeah, this is where it gets complicated, but the job is to peel the onion. If you know, the safest city or town in America still has crime. Mm hmm. You have to stay on it. And you have to be proactive. You’re gonna peel the onion. And but you can get to the core. It’s amazing how effective you can be if you’re consistent and diligent and you decide as an organization as a priority also means you think about how you incentivize your salespeople. If you reward them for compliance, our channel is really clean. You guys get a bonus So yep, yeah, aligning with partners and internally as well.
James Thomson 37:06
So Andrew, let’s, let’s change gears here for a minute. I want to talk a little bit about turning points for you professionally, whereas when you were building brands and working with brands, when did you realize you were good at working with brands to help them with their online shopping oversight? Hmm, let me let me put the question a little bit differently. One doesn’t just say, Hey, I’m going to build a software company that specifically looks at identifying unauthorized sellers and violating sellers. How did you think about getting into space and how did you identify that, you know, this is something where you thought you could be successful?
Andrew Schydlowsky 37:43
So I think like, like many stories, there’s not a straight line. There’s lots of ups and downs and twists and turns. I think the bottom line is at heart, I’m a marketer. I’ve always loved applying technology to hard problems. That means solutions. And I think we people like to talk about superpowers, right? We all have something that we think really makes us. Yes. And mine has always been that I can walk into a room and figure out what’s missing, and solve it. And so, in my last businesses, we reimagined how to acquire customers and how to drive growth using technology ways people hadn’t before. And as I was talking to all these brands, seeing that the future was right in front of them, but they weren’t really seeing it. And they were running another direction from it. There’s an incredible opportunity to help them move along the lifecycle to re empower them and drive incredible growth because the internet is the most incredible machine if you utilize it right. And so I got really excited about how we create new ways of bringing brands closer consumers educated across communities, driving knowledge and transforming sales, based on value. And communication not based on price isn’t the lever. But how do you make a flywheel? And that’s what gets me really excited. And I saw there’s an incredible opportunity to build things that hadn’t existed yet to take some of what I built previously, and commercialize it, scale it up, but work closely with companies that were really good at helping them understand where to go, but also incrementally how to get there. So how do you connect the pieces so that you can go through a journey of incremental steps to creating a machine that starts flying? And that for me was really exciting and seeing our customers get it? Even in conversations all of a sudden, their eyes light up when they get that they could do this and how to get there. incredibly exciting. So for me and for us, we think about our first step: how do we look at the pain points that our customers face every day and rank them in the hierarchy of pain? And how do we solve them? They go to bed at night, to work in the morning and the world’s better place. And that’s super exciting. And that’s really about empowerment. And for us, it’s a core. But our driving success for people that use our systems and people we talk to on a basic basis is really exciting. So it really started clipping in, you know, and really in my last company, but every time we had a conversation where people’s eyes lit up, and they just got it. We know we’re on the right track, I think, for all of us who are in e-commerce now must have been in a long time, but we’re still in the infancy of what we’re going to be. But the path is accelerating. And so it’s incredibly exciting and fun to be part of this journey where we’re starting to ramp things up very fast. And you know that knowledge transformation is incredibly important, but we’re gonna have to connect the dots faster than we ever have. That’s a really good place to be. We’re all gonna be thinking about e-commerce very differently in four or five years.
James Thomson 40:54
I want to ask you one one final set of questions. For our discussion today to talk to me about Who were some? Or who are some of your professional mentors? And what kind of advice Have they given you? That has really helped you focus to do what you do today?
Andrew Schydlowsky 41:13
You know, I made the mistake in my career of being a lone wolf. Far, Far too often. You know, I had to take, you know, a very rocky road and learn some hard lessons because I was just too stubborn to be listening. The last several years particularly, I’ve had the really good fortune of having some incredibly successful and smart people guiding me. And I think through my life, I’ve had a number of mentors. But often my ears weren’t ready and weren’t open enough. Interestingly, my grandfather was probably the first and he would say learning is earning. So keeping your ears open and paying attention around you is a man who dropped out of school when he was eight. self taught, you know, in so he was hugely influential, you know, as are other members of my family but professionally, you know, in the last number of years particularly, I’ve learned a lot from people who have taken an idea and grown it and scaled it in the software space specifically, as you know, it’s really thinking about customer first. Now, how do you measure success, and really think about keeping vision intact, but making sure that throughout the process, you’re focused on the success of the customer that drives everything. And so, the interesting thing about software in e-commerce is it moves much faster than other industries. So while I was using mobility technology, last thing I did that you know, they were retail etail, they’re very different. Soccer was much faster. So I’ve been very fortunate to have people within our company, some of our investors have scaled large companies in the software space. So thinking about how we put the parts together and main customers customer centric And build systems that keep us accountable and transparent. It hasn’t been easy. And we’re still I’m still kind of looking and building those mentors. But I think every stage of business you go through, you find new people that take you to the next level. So I’m still in that process. But certainly our last investment or venture capital backed and funded and have been really incredible investors that have built some large e-commerce platforms in the world previously. And each of them have one on one by one helped guide me through how do you build a sales process? How do you build the customer success process? How are you dealing with customers and transparency and in brand consistency, we have to protect our brand, just like we protect our clients brands, we have to communicate the value of what we do in a way that is kind of universal and thinking about what’s next without getting too distracted. And so yeah, that’s about it. evolutionary process just like everybody we work with, we’re all growing and learning. But very, very fortunate to particularly last number of years have people around me that have really been tremendously helpful? keep me on track.
James Thomson 44:11
Andrew, I want to thank you for joining us today and sharing your insights with our audience. For those of you interested in learning more about Andrew’s organization, please visit trackstreet.com thanks for joining us today on the Buy Box Experts. And now to finish today’s podcast I’d like to share some final thoughts. For third party sellers to be successful on Amazon, a critical lever will be soliciting feedback from customers. We at Buy Box Experts are really big fans of the team at eComEngine, and it’s tools that help Amazon sellers to simplify the process of messaging customers of Amazon orders. To learn more, go to ecomengine.com. And with that, I want to thank you for listening today and I look forward to joining you next time on the Buy Box Experts podcast.
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