March 31, 2020
Tips and Tricks For Managing-From-Home (From a Full Time Remote Manager)
Major retailers like Target and Walmart have launched initiatives in 2019 and 2020 to compete against Amazon’s online marketplace dominance. This raises the question: Should your brand add Target or Walmart to the list of marketplaces you sell and advertise on, or should you only focus your budgets and efforts on certain online retailers? The answers to these questions all depend on what you want to accomplish in 2020, which is likely an increase in top-line revenue or profitability.
Before we dig into how to develop your 2020 marketplace advertising strategy, let’s first look at Walmart’s ad platform, which is reigning king in the most recent news. Walmart’s advertising platform used to be managed in-house by the online retailer until the January 3rd announcement of Walmart’s new self-managed ad platform. The goal of the platform is to give brands more transparency and control, along with the analytics of cost per click ads, because they have previously had to trust that Walmart’s ad strategy was aligned with theirs..
Now, the new ad platform gives you slightly more control. While the reporting metrics are still very basic, Walmart says they will continue to expand upon these in 2020. Walmart will also be releasing a self-managed Display Advertising platform at the end of 2020 to help brands with retargeting off Walmart.com. One of the biggest advantages of the new platform is that you are now able to leverage in-store and online data, something Amazon can’t do effectively yet.
As with any new platform, it will take time for you to incorporate a marketplace advertising strategy to this new advertising avenue and Walmart is open to feedback from major brands as they build it out more. Should you be excited or nervous? Excited! It will give you even more control of your presence on the platform.
Compared to Amazon, Walmart marketplace’s differentiating factor is their huge brick and mortar footprint with thousands of stores globally. It also models Amazon’s brand platform setup with 1P (First party) and 3P (Third Party) sellers for brands and resellers. Having a similar model like this allows you to choose which one you would prefer based on top-line revenue or profitability goals. Walmart does limit the product categories 3P sellers can go into, which is only 35 product categories at this time compared to the hundreds on Amazon. The number of sellers on Walmart is considerably less than Amazon, which allows for more control over who’s selling their products. Amazon A9 algorithm compares pricing to Walmart 1P and 3P, so you need to take that into consideration when thinking about the pricing on these two marketplaces. Walmart still focuses on keeping costs very low, so the profitability of a brand’s list of products on Walmart will be considerably less but that means a brand needs to focus on the highest margin products before selling on the marketplace.
When it comes to what Target is doing recently in its marketplace, there is only limited information. Target Plus (Target’s marketplace) is a focus for the company in the years to come to compete with Amazon and Walmart. The marketplace is still in its infancy compared to where Amazon and Walmart are, but it is using similar strategies to Walmart, such as being an omnichannel experience. This is an ever-evolving strategy but is something that will continue to set them apart from a company like Amazon that mainly focused on the online experience. Target will take a 5-15% commission rate in their marketplace from your brand, which is similar to Amazon Vendor Central percentages, and lower in some cases. Also, a key difference in this marketplace is that it is an extensive application process, so they don’t seem to be opening it up to all brands and sellers, which is a BIG PLUS to major brands to help reduce reseller issues.
In early 2019, Target renamed its display ad platform to Roundel. This platform will create campaigns and content for brands and agencies, including brands that aren’t sold in Target’s stores. After these are created, it will send customers to Target’s website or “brand-safe” external channels like Pinterest, PopSugar, and NBCUniversal. As you can see, this is more focused on display advertising versus a self-managed cost per click model that Amazon and Walmart started with. While Roundel is mainly focused on being a display platform, Target may start looking into the similar cost per click ad platforms like it’s competitors, Walmart and Amazon. The extensive process for brands to be on Target Plus and Roundel will continue to be very attractive, because you will have more control over one of the largest online retailers.
Target and Walmart are pushing many initiatives to compete with Amazon. What does this mean for small-medium brands or large to enterprise brands? If you want to be on multiple marketplaces (major brands are now on an average of 5 marketplaces), you need to have a holistic marketplace strategy to not only ensure brand dominance but also brand control in these platforms. In the world of resellers, it’s getting more competitive for brands to stay afloat on a marketplace or advertise on a marketplace. This is why it’s even more important that you not only have a MAP policy and pricing, but also an enforcement strategy for all online retailers.
If a brand’s strategy doesn’t have a holistic marketplace strategy that doesn’t directly align with its paid media strategy, it will hurt the customer experience which in turn will reduce brand loyalty. The strategies between advertising on online marketplaces and paid media have quite a few similarities that can’t go unnoticed. The platforms may be different in capabilities and features, but at the end of the day, the strategy is almost the same. This may seem like quite a bit of work for your brand to move forward with a holistic strategy, and you’re right, it is! That’s why it’s important to make sure you have a strong team. For additional help on your retail paid media strategy, contact our team.