One of the most common mistakes that a brand manufacturer can make is thinking

that the success they’ve achieved in a physical store can be directly and easily

translated into online success. They make an existing offline product available

online for sale, packaged for the in-store experience, without any modification to

their strategy and without considering for the buying habits of online consumers.

This often results in major problems in both margin and customer experience, and

disappoints the manufacturer, the consumer and the buyer.

3 Strategies for eCommerce Success: Margins, Pack Sizes and Consumer PreferencesBy Steve Austin, Account Specialist at One Click Retail

Brands that have had both online and offline success realize that: 1)

not all buyers are the same; 2) online consumers’ shopping

preferences differ from those of in-store consumers; and 3) third-

party sales reveal the balance needed to achieve success for a brand

manufacturer selling on Amazon. To determine optimal ecommerce

product offerings, we’ve looked at some of Amazon’s first-party

and third-party sellers to come away with three key strategies.

1. Mind your Margins

What buyers care most about is margin. The margin they

care about differs, however. A buyer for Walmart, for

example, looks for “% margin” while their Amazon

counterpart measures “penny profit per unit” or “$/unit

margin”.

Mind your Margins

The difference comes down to cost centers. For Walmart all costs are in-

store, while for Amazon it’s all about “outbound shipping” to the end

customer. So what does this mean for $1 pack of gum with 40% margin?

Walmart can sell that pack of gum with a healthy profit margin since they

can spread the store costs on a percentage basis across thousands of

items. Amazon, on the other hand, must spend another $2 to ship that

same pack of gum to the customer, instantaneously kissing any

profitability goodbye.

Why should a brand manufacturer care whether Amazon makes a profit

on their product? In short, if the world’s number one ecommerce

platform can’t make a profit off of an item they’re selling, they won’t

bother selling it (for more on Amazon’s process of dropping an item, read

another insightful One Click Retail article Amazon’s CRaP list). So, if a

brand manufacturer wants to succeed simultaneously in ecommerce and

in stores, they need to always be looking at both the dollar margin

online and the percentage margin offline.

One of the easiest ways for a brand manufacturer to increase

$/unit margin is to sell more quantity per sellable unit. This

allows the “outbound shipping” cost with online retailers like

Amazon to be spread across a higher Average Selling Price

(ASP). In other words, the shipping cost of one pack of gum is

$2, but if it’s sold in a pack of 15, the shipping cost decreases to

only $0.17 per unit.

2. Match the Pack Size to Your Customer’s Preference

Online sales are predisposed to larger pack sizes, selling “club” size packs

rather than “grocery store” units (single item or small pack sizes). Online

shoppers want to stock up and don’t have to worry about carrying heavy

loads home. But when is it too much? While every new parent can’t do

without enough diapers, new parents are also focused on upfront space

and cost – buying in bulk requires the space to store the items bought as

well as the disposable income to make the higher initial investment.

Match the Pack Size to Your Customer’s Preference

Over the past six months, the top 100 Disposable Diaper items on

Amazon collected a total sales volume of nearly $200 million. These

100 ASINs (or Amazon-specific SKUs) contained an average of 135

diapers, with 1 in 6 of these ASINs being marketed as a “One Month

Supply”. Online shoppers are overwhelmingly opting to buy diapers

in bulk, and larger pack sizes allow both consumers and brands to

save money on the transaction.

It makes sense for consumers to purchase large pack sizes for

items that are consumed relatively quickly. It makes sense (and

more cents) for brands selling online to realize how often their

consumers use their products. Very large pack sizes work for

diaper manufacturers selling online, but not so much for other

categories that have a lower usage rate per product.

Diapers aren’t the only category that has figured this out – the

most successful selling products on Amazon like grocery,

office products, sports nutrition and paper products average

well above their offline in-store counterparts. Larger pack sizes

for certain high-consumption items provide both consumers

and manufacturers more bang for their buck.

3. Benchmark 1P Slumps against 3P Wins

Another way to gauge successful pack sizes is to look at what’s

being offered by 3rd party sellers and which of their items are

the most successful. Unlike diapers that have a very high

consumption rate, toilet bowl cleansers represent a moderate

rate of consumer consumption but require a longer-term

commitment for storage.

Benchmark 1P Slumps against 3P Wins

When the 4-pack of a leading toilet bowl cleanser, which

was averaging $13,000 in weekly 1P sales on Amazon,

became unprofitable for Amazon and hit the CRaP List,

third-party sales of the 4-pack product (priced at $2 more!)

took over sales, even though a 12-pack 1P option was

available at a lower cost per unit.

1. Amazon customers who found the 4-pack of toilet bowl cleanser unavailable as a 1P item were unlikely to purchase a single bottle, but opted instead for either the 12-pack or a 4-pack from a third-party seller.

2. Bulk is not always best. Most consumers are willing to pay a higher per- unit cost for their preferred pack size.

3. The discontinuation of the 4-pack toilet bowl cleanser as a 1P item suggests that pack sizes of 4 or smaller of toiler bowl cleanser are not profitable enough for 1P sellers.

It’s a fact: consumers shop differently online than in stores

Amazon started with books for many reasons: optimal pack size and price.

Books have: 1) a high $/unit margin; 2) a good pack size / price vs ship cost;

and 3) a great 3P seller group to gauge correct price point. All brand

manufacturers selling on Amazon and other ecommerce retailers can

accelerate their ecommerce profits by looking at categories like Diapers,

Toilet Bowl Cleansers and Books — all have achieved ecommerce success

because they understand that what works for their customers in stores

doesn’t translate automatically to ecommerce success.

With 98% accuracy, OCR delivers the industry’s most accurate sales data to their brand

manufacturer clients selling on the world’s top eCommerce platforms. To get a glimpse of the

unique insights One Click Retail provides its customers, be sure to follow our weekly blog at

www.oneclickretail.com/insights, and following us on Twitter and LinkedIn.

One Click Retail (OCR) is a market leader in eCommerce data measurement, sales analytics and search optimization for brand manufacturers in North America, Europe and Asia. Thanks to our proprietary sales calculations that are 98.5% accurate down to the SKU level, OCR’s accuracy is unrivaled in the marketplace. The OCR Product Suite provides 1st and 3rd party business intelligence across the 30 largest retailers such as Amazon, Walmart, Target, Staples and Home Depot. The world’s top brands, such as Procter & Gamble, Panasonic, Nestle, Hamilton Beach and HP, rely on OCR insights to drive sales and profitability across eCommerce.

Founded in 2013 by eCommerce experts from Amazon, Walmart, Target, Overstock and other leading retailers, OCR was acquired in 2016 by Ascential plc (LSE: ASCL.L), a UK-based international B2B media company with a focused portfolio of market-leading events and information services products.

To learn more about how OCR can provide your brand with the competitive edge in today’s ecommerce marketplace, visit www.oneclickretail.com.

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