Featured Dec 11, 2019 5 min read

Why retailers need to rely on big data instead of Amazon to reach new markets

EDITED's Retail Decision Platform can help brands optimize their wholesale strategy by expertly navigating new markets to understand product and pricing opportunities.

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Nike recently ended its two-year pilot trading on Amazon to focus on its direct-to-consumer strategy. This move has increased speculation of a foreseeable uprising against partnerships with the e-comm giant as brands reconsider their traditional wholesale models. 

Yes, DTC may be the buzzword of future retail strategies. However, third-party relationships are still essential to surviving the challenging retail climate and expanding your business – benefiting even DTC brands.  

This is where big data comes in. EDITED’s Retail Decision Platform can help brands optimize their wholesale strategy by expertly navigating new markets to understand the product and pricing opportunities best suited to their business. 

Sound good? Get in touch with a retail specialist to see a demo today.

First, what makes DTC’s so sexy?

In retail, DTC brands like Glossier, Everlane and Allbirds are the current cool kids. Brands with social media clout and a simplistic product assortment that don’t need a middleman to get their goods to their end consumer. The upside of this approach is DTC’s can maintain end-to-end control of their products, all while keeping their costs lower than traditional brands. With their sheer growth and ability to revolutionize conventional retail, often without a physical store presence, it’s no wonder established brands are looking to adopt processes from these former start-ups. 

According to Sourcing Journal, we are amid a DTC takeover. This does not mean the end of wholesale models. In fact, the new frontier of retail will see successful businesses strike a balance between the two, combining the strengths of both strategies.

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Allbirds

The best of both worlds

While DTC’s have built a cult following, many of these brands are digitally native and might not have their own stores or presence in other regions. This is where wholesale partnerships are vital for DTC’s to test the waters in new markets or in a physical space. In return, the traditional retailer benefits from exposure to the DTC brands’ vast consumer base. A recent example of these collaborations is the Glossier and Nordstrom partnership, which saw the beauty unicorn continue its pop-up tour by opening a temporary space within seven department stores. 

While online cult beauty brands are responsible for the decline of footfall at beauty counters in department stores, this relationship will bring a new wave of millenial and Gen-Z consumers into Nordstrom. In turn, Glossier has the opportunity to push its fragrance range within a bricks-and-mortar environment – beneficial as it’s a difficult category to sell online.

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Image via Glossier

Big data benefits

For retailers to win at wholesale in a climate where DTC strategies are currently king, they need to make data their ally. A few easy clicks in EDITED shows the full market view of a potential third-party site to help answer some essential questions:

  • What brands are stocked? And how has a brand expanded or contracted in this space?
  • What are the key price points within this new retailer or region?
  • What product categories are the focus?

From this analysis, retailers have the power to back up their decisions to go after a new market or form a new partnership, as well as the ability to monitor their brand’s promotion and performance on this new platform.

1. What brands are stocked?

EDITED’s ‘Who & Where’ function gives retailers the visibility to analyze the availability of brands within a selected market or monitor the investment of up-and-coming labels. Businesses can use this chart to identify if a retailer is increasing or decreasing investment for a specific brand. For example, on Bergdorf Goodman’s online site, the number of Gucci options available for men has increased by 12% YoY. 

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2. What are the key price points?

One of the greatest challenges when entering a new selling space is understanding the pricing structure. EDITED’s suite of pricing analysis charts demonstrates how your brand stacks up alongside its competitors at a potential new retailer or region. Arm your brand with knowledge of the market and have the data to back it up. Pinpointing the major price points a retailer operates in minimizes the risk of entering a new space over or underpriced. It can also help retailers spot untapped opportunities in real time. 

We used EDITED’s ‘Options’ chart to understand the current price points of men’s sneakers in the German market. This chart reveals an opportunity for a brand to stock men’s sneakers at ASOS priced between €100-€110.

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3. What product categories are the focus?

EDITED’s ‘Assortment’ charts have the power to break down product categories by brand across retailers’ assortments. This gives valuable insight into how third-party retailers are merchandizing your competitor’s products. 

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We analyzed the assortment shifts of the top four brands stocked on Amazon compared to their own sites and competing third-party retailers. For Calvin Klein, EDITED retail data concluded:

  • Underwear makes up over half of the products online at Selfridges compared to 17% on Calvin Klein’s home site. In comparison, this category is only 7% of Boozt’s range, where tops and bottoms are the majority of the assortment.
  • Following underwear, hosiery is the second most invested category at Selfridges, equaling 13% of items from the brand. Looking at sell out styles from July until now reveals tops outperformed hosiery, indicating the department store is under-invested in this category.
  •  Amazon currently has the strongest dress offer, which makes up 17% of product. On Calvin Klein’s own site, dresses are only 3% of the total buy.
  • Amazon’s data also reveals, despite the number of dress styles available, this category makes up less than 10% of Calvin Klein sell outs on Amazon with tops and accessories as the most successful categories.

See the full report on the shifts in assortment, pricing and promotional strategies of Amazon’s top stocked brands in our report here.

Interested in having access to Amazon data for your own analysis? Find out more here.