selling on amazon & ebay marketplaces e-commerce team meeting, by rick wingender
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E-Commerce Team Meeting, 2/17/2012
Sucharita Mulpuru, Vice President, Principal Analyst, Forrester Research, Inc. Forrester’s “Five eCommerce Trends to Watch in 2011”
“The driver of Amazon’s profit is its Marketplace.”
“Amazon reports that these products are 34% of all units sold on the website.”
“Companies such as Buy.com and Walmart have introduced marketplaces, and we anticipate others in verticals such as apparel, toys, and sporting goods will follow suit. This strategy will help them retain some of the market share they may otherwise lose to Amazon.”
eBay is…
Brands Fixed-Price Large Merchants
The Vision
We will create a whole new selling channel, called the “3PV Marketplace Channel”.
The “vision” is about “Extending The Reach”. We are targeting customers who otherwise would not have shopped at JTV.com or our TV shows
Incremental sales is a secondary mission; it’s not primarily a sales channel, because we’re not actively encouraging repeat sales on eBay and other sites.
JTVonline is NOT just for liquidation product!
New Customers
New customers will come from various marketplaces
Some of them will subsequently purchase from JTV.com because of: • Selection• Promos• Content• Financing
We expect that over 60% of our marketplace customers will have no history in Jupiter
#170 on Internet Retailer 500 List
#1 on Internet Retailer 500 List
#6 on Internet Retailer 500 List
#7 on Internet Retailer 500 List
#12 on Internet Retailer 500 List
#27 on Internet Retailer 500 List
#32 on Internet Retailer 500 List
New Customers
Our listings and store presence clearly show who we are
Our packages go out with current marketing materials (collateral)
We include discount codes for JTV.com to encourage subsequent purchases from JTV rather than eBay, Amazon, etc.
Our expectation for the long-term is that over 60% of “Marketplace” customers will be new to JTV
In the future, we can sell Gift Cards on eBay for JTV.com
Learning
We now have meaningful experience in selling on eBay
We’ve learned from past mistakes in selling on Amazon
We have been running a very successful pilot program since June, 2010.
Top-Rated Seller
Achieving and maintaining this designation is a Critical Success Factor (3 main reasons)
We are carefully cultivating a positive reputation on eBay
Every customer sees this on every product details page. This helps us gain credibility and trust, and helps us build a brand
Top-Rated Seller
“★`*•.¸*•¸★ Great Seller! Super Fast Shipping! Thank you! ★¸•*¸.•*★“
“Man what a buy and service-WOW!!! Will buy again, Thanks !!!”
“100% Perfect Transaction.....Recommend to All.....Thanks jtvonline”
Financial Assumptions
Pro Forma Baseline Yr 1 Baseline Yr 2NR and GM Items
Average Selling Price $60 $66 $66Product Markup % 55.00% 55.00% 55.00%Average Monthly Listings on Ebay 1,100 11,000 15,000 Average Monthly Listings on Amazon - 7,783 15,000 Average Monthly Listings on Buy.com - 3,617 15,000 Return Rate % (by revenue) 10% 10% 10%Shipping Income per Order -$ -$ -$ Outbound Shipping Cost per Order 6$ 2$ 2$ Operational Handling Cost per Order 1$ 1$ 1$ Sales/Listings Ratio 20.00% 25.00% 25.00%
Fees ExpenseFinal Value Fee Ebay (variable) 8.13% 7.83% 7.83%Final Value Fee Amazon (variable) 19.00% 19.00%Final Value Fee Buy.com (variable) 15.00% 15.00%Listing Fee (variable) 0.05$ 0.03$ 0.03$ Monthly Ebay Subscription Fee (fixed) $91 $341 $341Paypal Fee (variable) 1.80% 2.00% 2.00%
Salaries and Wages Expense% of VBM's Time 25.00% 25.00% 25.00%VBM Expense 21,250$ 21,250$ 21,250$ Number of monthly listings per worker 1,100 6,000 6,000 Number of Workers (calculated) 1 4 8Average Annual Worker Salary 35,000$ 37,500$ 37,500$ Annual Cost of Workers 35,000$ 150,000$ 300,000$
General and Administrative ExpenseAnnual Fixed Channel Advisor Fees -$ 12,300$ 12,300$ % of Gross Revenue paid to Channel Advisor (variable) 0.00% 1.75% 1.75%
Financial Model
•Financials represent the first full year of Ebay sales after Channel Advisor implementation (sales ramp imbedded in numbers). FY14 has even greater financial potential, as business matures and completes ramp-up and roll-outs to all marketplaces
•Financials exclude potential $250k spend on outsourced IT labor.
•Economics of Ebay selling channel are heavily weighted towards variable expenses (pay with performance).
•Vendors such as Gemstone King ($1M revenue per month) demonstrate JTV’s potential in this channel.
Pro Forma Baseline Yr 1 Baseline Yr 2Net Revenue 142,560$ 3,997,728$ 8,031,150$ Total COGS 85,637$ 2,118,796$ 4,256,510$ Gross Margin 56,923$ 1,878,932$ 3,774,641$
GM% 39.9% 47.0% 47.0%
Total Salaries and Wages Expense 58,890$ 238,450$ 456,250$ Total General and Administrative Expenses 17,481$ 717,442$ 1,492,477$ Total Expenses 76,371$ 955,892$ 1,948,727$
Operating Income (19,448)$ 923,040$ 1,825,914$ OM% -13.6% 23.1% 22.7%
Financial Projections Highlights (FY13)
Additional Talking Points
Expenses are mostly variable
Virtual SKU & Drop-ship capabilities add significant upside to the Marketplace channel
The Marketplace channel could add significant upside to a future gift card program
FY14 has even greater financial potential, as business matures and completes ramp-up and roll-outs to all marketplaces
Experience from marketplace participation could help JTV launch its own marketplace program in the future, with other retailers paying fees to JTV. “America’s Online Jewelry Mall”
New Customer expectations….
Unmodeled Upside! Our financial models are very conservative, and don’t include upside from:
Future revenue from new customers
Future international sales (Amazon, eBay, and Buy.com all can give significant international exposure)
Future potential marketplaces not included in model (Sears.com, Walmart.com, Overstock)
Future revenue from virtual SKUs / drop-shipping program – unlimited potential!
Additional eyeballs driven to JTV TV shows
Long-term plan: Hosting our own JTV marketplace, where WE collect listing & selling fees! (Crawl, Walk, Run)
New email addresses / subscribers
Additional Benefits / Routine Sales Referrals back to JTV.com!
This data only includes web visitors who came directly from eBay (excludes those who came to JTV.com indirectly or later)
Referral web traffic results in traffic and sales to JTV.com This data only includes web visitors who came directly from eBay
(excludes those who came to JTV.com indirectly or later) This is an improvement over previous years; and is expected to
dramatically increase as listings increase. August 2011 vs Nov 2009
Additional Benefits / Web Traffic Referrals to JTV.com
Then Vs. Now
Marketplace Integration Partner
Advantages of Integration & Automation
Scalability: • Increased sales and new customers: Go from 1,000 listings to as many
as we want, almost instantly • Elimination of most or all current manual processes• Costs are almost all variable
Elimination of: • “Separate” inventory (and operating space), leading to lower inventory
shrink risk • Time-consuming, manual initial product selection and pull process• Time-consuming, manual replenishment process• Lost sales due to out-of-stocks. **(see speaker notes)
Marketplace Integration Partner
Advantages of Integration & Automation
Enables: • New route to international sales through Amazon and eBay
international sites• Additional exposure for closeout / liquidation inventory.• Order fulfillment by the WMS and Fulfillment team (leads to shipping
expense reduction of > $4/box using UPS SurePost) • Marketing. We will acquire many new email addresses which we can
use for marketing campaigns (need Subscription Center integration on eBay landing page)
• Automatic maintenance of price & cost data • Additional & better business reporting via Channel Advisor • Additional customer screening and fraud prevention measures via eBay
and PayPal results in less-risky transactions/customers • Organizational knowledge learned from each marketplace could enable
JTV to open its own marketplace site in the future – resulting in a steady revenue stream without ever touching product
Marketplace Integration Partner
Disadvantages of Automation & Integration
We currently re-write all product titles and descriptions; not possible when listing 15,000 items
Titles and descriptions, as written in SKU Creation application, are inadequate for eBay Best Match search algorithm. Need solution
Shipping speed will slow down, potentially hurting our shipping DSR scores
Returns process becomes part of Returns dept, potentially hurting our communication DSR scores
Returns process FVF fee recovery will still need to be handled by E-Commerce team
Manual ship process has advantage of better pre-shipping product inspections, lowering return rates
Integration will require data feeds including image serving, and changes to BI reports, WMS systems, Jupiter, Returns system, other systems
Marketplace Integration Partner
Ramp-up Plan
Integration Project to take 6 months.
Start out with focus on eBay. Over time….Learn, add staff, add listings, add marketplaces
CA can currently integrate with eBay, Amazon, Buy.com & Pixmania.com. They are working on Sears now (ETA, summer 2012) , and negotiating with Walmart. Others could be in the future
CA gives us the ability to use Amazon and eBay internationally
See handout that details estimated timing for addition of new marketplaces and increases in listings
Appendices
3PV Marketplace Channel Growth Plan ** ** Assumes May, 2012 Launch with Channel Advisor
$66.10 Expected ASP 25% Sales-to-Listings Ratio 1 6,000 Expected Listing Mgmt Capacity per Employee
eBay Listings
eBay Gross Sales
StaffCount
Amazon Listings
Amazon GrossSales
StaffCount
Buy.com Listings
Buy.comGrossSales
StaffCount
Sears.com Listings
Sears.comGrossSales
StaffCount
WalmartMarketplace
Listings
WalmartGrossSales
StaffCount
Total 3PVListings
Jan-12 1400 Channel Advisor Implementation; project plan executionFeb-12 1500 0 1 Channel Advisor Implementation; project plan execution Mar-12 1600 0 1 Channel Advisor Implementation; project plan execution
Apr-12 1700 100 1 Channel Advisor Implementation; project plan execution May 2012 Launch. May-12 1800 29,745$ 1 200 3,305$ 1 0 -$ 1 0 -$ - 0 -$ - 2000
Jun-12 2000 33,050 1 300 4,958 1 0 - 1 0 - - 0 - - 2300
Jul-12 3000 49,575 1 400 6,610 1 100 1,653 1 0 - - 0 - - 3500Aug-12 4000 66,100 2 400 6,610 1 200 3,305 1 0 - 1 0 - - 4600Sep-12 6000 99,150 2 1000 16,525 1 300 4,958 1 0 - 1 0 - - 7300Oct-12 8000 132,200 2 2000 33,050 1 400 6,610 1 100 1,653 1 0 - - 10500Nov-12 10000 165,250 3 3000 49,575 2 400 6,610 1 200 3,305 1 0 - 1 13600Dec-12 12000 198,300 3 6000 99,150 2 1000 16,525 1 300 4,958 1 0 - 1 19300Jan-13 14000 231,350 3 9000 148,725 3 2000 33,050 1 400 6,610 1 100 1,653 1 25500Feb-13 15000 247,875 3 12000 198,300 3 4000 66,100 2 400 6,610 1 200 3,305 1 31600Mar-13 15000 247,875 3 15000 247,875 3 6000 99,150 2 1000 16,525 1 300 4,958 1 37300Apr-13 15000 247,875 3 15000 247,875 3 8000 132,200 2 3000 49,575 2 400 6,610 1 41400May-13 15000 247,875 3 15000 247,875 3 10000 165,250 2 6000 99,150 2 400 6,610 1 46400Jun-13 15000 247,875 3 15000 247,875 3 12000 198,300 2 9000 148,725 3 1000 16,525 1 52000
Jul-13 15000 247,875 3 15000 247,875 3 12000 198,300 2 12000 198,300 3 3000 49,575 2 57000Aug-13 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 6000 99,150 2 63000Sep-13 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 9000 148,725 3 66000Oct-13 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 12000 198,300 3 69000Nov-13 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 15000 247,875 3 72000Dec-13 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 15000 247,875 3 72000Jan-14 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 15000 247,875 3 72000Feb-14 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 15000 247,875 3 72000Mar-14 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 15000 247,875 3 72000Apr-14 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 15000 247,875 3 72000May-14 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 15000 247,875 3 72000Jun-14 15000 247,875 3 15000 247,875 3 12000 198,300 2 15000 247,875 3 15000 247,875 3 72000
1 The Sales-to-Listings Ratio predicts Unit Sales based on the quantity of listings in a given month. 2 This model shows how we would launch Channel Advisor with eBay as the first marketplace in May, 2012, then open new marketplaces with CA every three months. 3 This model shows how we will hire to support the level of listings activity, providing a one-month training period before adding more listings to the given marketplace. 4 This model shows 17,160 new customers in FY13; 23,400 in FY14.
FY
13F
Y14
10% Return Rate
Total 3PVGrossSales
TotalStaff
NET 3PV Sales GM$$
50.0% 12.0%
33,050$ 3 29,745$ 14,873$ 11,146$ 3,966$ (240)$ -0.7% 234 70,200
38,008$ 3 34,207$ 17,103$ 11,146$ 4,561$ 1,396$ 3.7% 260 78,000
57,838$ 3 52,054$ 26,027$ 11,146$ 6,941$ 7,940$ 13.7% 390 117,000 76,015$ 5 68,414$ 34,207$ 17,396$ 9,122$ 7,689$ 10.1% 520 156,000
120,633$ 5 108,569$ 54,285$ 17,396$ 14,476$ 22,413$ 18.6% 780 234,000 173,513$ 5 156,161$ 78,081$ 17,396$ 20,822$ 39,863$ 23.0% 1,040 312,000 224,740$ 8 202,266$ 101,133$ 26,771$ 26,969$ 47,393$ 21.1% 1,300 390,000 318,933$ 8 287,039$ 143,520$ 26,771$ 38,272$ 78,477$ 24.6% 1,560 468,000 421,388$ 9 379,249$ 189,624$ 29,896$ 50,567$ 109,162$ 25.9% 1,820 546,000 522,190$ 10 469,971$ 234,986$ 33,021$ 62,663$ 139,302$ 26.7% 1,950 585,000 616,383$ 10 554,744$ 277,372$ 33,021$ 73,966$ 170,385$ 27.6% 1,950 585,000 684,135$ 11 615,722$ 307,861$ 36,146$ 82,096$ 189,619$ 27.7% 1,950 585,000 766,760$ 11 690,084$ 345,042$ 36,146$ 92,011$ 216,885$ 28.3% 1,950 585,000 859,300$ 12 773,370$ 386,685$ 39,271$ 103,116$ 244,298$ 28.4% 1,950 585,000
941,925$ 13 847,733$ 423,866$ 42,396$ 113,031$ 268,439$ 28.5% 1,950 585,000 1,041,075$ 13 936,968$ 468,484$ 42,396$ 124,929$ 301,159$ 28.9% 1,950 585,000 1,090,650$ 14 981,585$ 490,793$ 45,521$ 130,878$ 314,394$ 28.8% 1,950 585,000 1,140,225$ 14 1,026,203$ 513,101$ 45,521$ 136,827$ 330,753$ 29.0% 1,950 585,000 1,189,800$ 14 1,070,820$ 535,410$ 45,521$ 142,776$ 347,113$ 29.2% 1,950 585,000 1,189,800$ 14 1,070,820$ 535,410$ 45,521$ 142,776$ 347,113$ 29.2% 1,950 585,000 1,189,800$ 14 1,070,820$ 535,410$ 45,521$ 142,776$ 347,113$ 29.2% 1,950 585,000 1,189,800$ 14 1,070,820$ 535,410$ 45,521$ 142,776$ 347,113$ 29.2% 1,950 585,000 1,189,800$ 14 1,070,820$ 535,410$ 45,521$ 142,776$ 347,113$ 29.2% 1,950 585,000 1,189,800$ 14 1,070,820$ 535,410$ 45,521$ 142,776$ 347,113$ 29.2% 1,950 585,000 1,189,800$ 14 1,070,820$ 535,410$ 45,521$ 142,776$ 347,113$ 29.2% 1,950 585,000 1,189,800$ 14 1,070,820$ 535,410$ 45,521$ 142,776$ 347,113$ 29.2% 1,950 585,000
Presented to
ChannelAdvisor Highlights
• Manage $2.6B in Gross Merchandise Value (GMV) through the ChannelAdvisor Platform yearly
• Process a transaction every second through the ChannelAdvisor platform
• Used by more than 3,000 customers globally, including 160 of the Internet Retailer Top 500
– The largest e-commerce solution provider to Amazon, eBay and Buy.com
– Named by Internet Retailer:
• The #1 Most-Used Marketplace Solution to the Top 500 Retailers
• The #1 Most-Used Comparison Shopping Solution to the Top 500 Retailers
• The #2 Most-Used Paid Search Solution to the Top 500 Retailers
• The #2 Most-Used Rich Media Solution to the Top 500 Retailers
• Headquartered in Research Triangle Park, NC
– Offices in Atlanta, New York, Seattle, London, Berlin, Melbourne and Limerick
– More than 300 employees worldwide
Consumer Shopping Landscape
151 million active consumers across eBay, Amazon and Buy.com
Americans log more than 9.6 billion searches per month
55% of online purchases are influenced by a comparison shopping engine
Your Customers
ChannelAdvisor Platform – One Feed
Featured ChannelAdvisor Customers
ChannelAdvisor Marketplaces
A Few Customers…
1 Reduced labor with regard to initial category mapping, listing schedules and posting template set-up.
2 Accelerated launch time frame
3 Application of industry best practices
4 Hands on product training
Why Us?
Resource Allocation during Launch Plus
Goal: To expedite your launch by doing more hands on setup work during this time period. You will be required to participate by shadowing this process and learning from the training documentation so you are able to assume full management after launch hand-off.
ChannelAdvisor Premium Marketplaces - Launch Plus Services
Timeline
Start of Launch.Kick-off
Launch4-6 week process. Includes items listed in scope. eBay & Amazon launch deliverables are different.
Transition point in which customer assumes full management.Launch hand-off
Mon
th
Customer Success
Transactional Data Process FlowFor Marketplace Orders
Risk Factors
4 Risk Types: People, Product, Policies, & Technologies.
People: • Ability to hire quality staff. This is a higher-caliber person than a call-center rep.
Product knowledge, merchandising & business knowledge, margin requirements, must understand multiple systems (ebay, CA, Jupiter, etc), SEO / Best Match, writing ability, problem solving, correspondence, etc.
• Individual productivity estimates. Expected case = manage 6000 listings per person
• Sales volume surpassing ability to respond to customer issues, which would result in poor DSR scores, imperiling the business. Long-term consequences.
• Our ability to train & get SKU Creators to write better, SEO-friendly product titles and descriptions
Product: • Product Titles and Descriptions (SEO / Best Match Optimization)
Each of these points is a Critical Success Factor on eBay.
Risk Factors
4 Risk Types: People, Product, Policies, & Technologies (continued)
Policies: • Changing away from free shipping policy. Must have! • Changing free returns policy / inclusion of UPS or free Newgistics returns labels• Losing physical access to product, to answer questions not answered by our
product listing data. This has been invaluable in creating sales and getting great feedback
Technology: • Technology risk – Daily feeds to / from Channel Advisor must happen;
maintenance must happen• Large-scale processing of Returns FEE transactions may or may not be automated
by CA. TBD • Our ability to make modifications to internal systems and reports (BI input
needed) • Need to resolve problem of customer notes on eBay orders (they won’t show up in
our systems)• Depends on two existing SE projects: Payment Tolkenization and Multiline / Sales
Channel order identification.
Each of these points is a Critical Success Factor on eBay.
New Customers
In the future, we can sell Gift Cards from eBay, for use on JTV.com:
Promoted in each listing
Promoted in a merchandising “content slot” on our store home page
Promoted in our eBay emails
Promoted in our shipping emails
$100
Project Charter
Project Statement of Work (SOW)
This project will be called the “3PV Marketplaces Project”. This project requires the integration of Channel Advisor’s (CA) Marketplace service offering into JTV’s systems via XML feeds over CA’s APIs, for the purpose of automating data feeds to and from CA, enabling JTV’s operation of online marketplace stores on eBay.com, Amazon.com, and Buy.com. The project requires modifications to certain JTV systems, including, but not limited to: Jupiter, Order Management System, reporting systems, Oracle transaction tables, and the JTV WMS & Moku.
Business Case
This project enables Jewelry Television to accomplish two objectives:
1. Develop an incremental sales channel to increase revenues;
2. Acquire new customers for JTV’s other sales channels.
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