Profitero Blog
A Q&A with Patrick Miller: Amazon’s Growth Flywheel

In our continuing Podcast series, Profitero’s Keith Anderson interviewed Patrick Miller,  co-founder of Flywheel Digital, an agency which helps CPG firms succeed online, especially on Amazon.

In this new episode, Keith and Patrick discuss early mover advantage in eCommerce, how to continually optimize Amazon’s growth flywheel, as well as the growing influence of Amazon’s ratings and reviews – which Patrick describes as ‘the world’s largest unacknowledged social network’.

Q: Tell us about your background and what you do with Flywheel Digital.

I’m co-founder of Flywheel Digital, and we help various CPGs really figure out Amazon from a brand, a sales and a supply chain perspective. Amazon is sort of unique in that all three of these, often times isolated tactics converge on Amazon. So we work with different CPGs on how best to be successful on Amazon, and part of that is helping Amazon be successful.

Q: If I recall correctly, you’ve worked with big CPGs and small CPGS. What’s your sense of the state of the industry as it relates to eCommerce?

There are so many really smart people that are working in this space, that are figuring it out every day, that are being collaborative, that are helping one another, that are competing with one another, and just making the industry better. Really, it’s a lot of fun right now. However, it’s challenging in the sense that this is a game of granularity, and the folks that dug in a few years ago, they have a real head start here. They’re figuring it out every single day, getting smarter and better, and iterating more and more quickly. Those that were waiting, still doing size of the prize analyses, they’re falling behind and getting lapped by the competition.

Q: We hear that a lot, that there’s a big first mover advantage in eCommerce, both for the retailers but also for brands. Can you talk a little bit about what that looks like? What are some of those early mover advantages in eCommerce?

It’s the reason that we named our company Flywheel, the idea that you can take disparate pieces of energy and spin out something much bigger. So by having that first mover advantage, within organizations, within brands, people learn to see things differently. I think a great example is supply chain and the customer service function. So often, if you think about the customer service function, that is somebody who is metric’d around efficiency, not ability to grow topline sales.

However, there is nobody more valuable in the entire chain than that customer service rep, that person who is ensuring that that first order, that pipeline order that’s the most underwhelming pipeline order of your career, is actually confirmed, is actually filled and is actually received. It’s just a very different way of thinking and a different way of valuing traditional functions within a CPG.

Q: Since you mentioned the name of your company, Flywheel Digital, it may be interesting to spend a minute just unpacking Amazon’s growth flywheel. 

I would think of it almost as you’re teaching the machine how to sell your items. Just as in a traditional brick and mortar call, your sales executives are going in there and talking to the buyer, and they’re talking about the attributes of your item and why it should be slotted here or there, or who the demographic is of who likes this item and where it fits in from a mixed perspective and a profitability perspective.

You’re doing the exact same thing on Amazon except you’re doing it through data, you’re doing it through attribution, and you’re doing it through technology. So really, what you’re doing is you’re teaching the machine how to sell your item and how to make your item relevant. Ultimately, Amazon cares most about having an awesome, awesome customer experience. So shop the site as a shopper. How do your items show up? If you’re doing a non-branded search, are your items popping up? What are people saying about your items?

If we look at what the CPG investment is in broader media, look at how much people are spending on social media, I would argue that Amazon ratings and reviews are the world’s largest unacknowledged social network. These are people who are having these conversations about your item, and there’s a Buy Now button right there. Are you engaging with those people? Are you talking with them? It’s so much bigger than just the incremental volume that’s moved on Amazon. This is where your brand lives and dies on the web today.

Q: We always say that the half-life of a rating or review on Amazon or really any retailer, but Amazon specifically, is so much longer than most forms of social media.

Totally agree. I mean, I would say, if you think about Facebook or Twitter or Instagram, the second you post something, it disappears down the feed. On Amazon, it’s the exact opposite. A rating and a review, every time somebody finds it helpful, it goes up and up and up. If you think about the cost of that review, which is often times nothing, it has a compounding effect over time as it rises up. Social media managers see this as customer service 101 to engage and to have a dialogue with these folks that are having a conversation about their products, and there’s a Buy Now button right there.

Q: You also emphasized that notion of relevance. I’m still hung up on this Flywheel concept. We were talking about the power of being an early mover and the advantages that that conveys. The way that you train Amazon’s algorithms is important because success early on becomes a factor in success later on.

Just put the customer first. If they’re asking Amazon a question and they’re saying, “I had this need set. I have this question”, can your product answer that question with a straight face? If customers do click on your item and they find it relevant and there’s great content there, they’re going to convert, they’re going to click, and then your product is going to rise up over time.

One of the things that I find very surprising is how much CPGs struggle with getting great content. It’s not exactly the sexiest job, but it works so, so well. Think of your Amazon detail page as a micro site. If you look at Amazon’s reach and how many eyeballs are going to your detail pages, it’s probably more than whatever your brand.com is.

Think of this almost as an earned media opportunity to own real estate that most of the time is free. All you have to do is make your detail page some place you actually want to visit as a shopper, not an afterthought with awful bullets and blurry images. Make it a place that you would, as a shopper, want to spend time, want to read more, understand a brand and understand a product, because ultimately, you don’t have that first moment of truth and that ability to pick up and kick the tires. The detail page has to accomplish that, and having great content, making sure it’s right, monitoring it and using tools that scale across thousands of items, across multiple retailers is really, really key.

Q: You mentioned how many brands struggle with getting great content. Do you have any thoughts on why it’s so challenging?

It’s very granular work, and I think that’s a problem that a lot of folks have within Amazon. There are lots of folks that want to be strategists. In our minds, strategists sort of don’t exist. What you need is to work with people that want to get their hands dirty, that want to dive into it, and that want to figure out on a very basic, on an ASIN level, what’s working, what’s not.

We always say to clients, “Love your ASIN. Your ASINs have a life cycle. You want these to be the prettiest ASINs on the block. You want these ASINs to be just awesome, awesome places that you want to spend time.” It’s a clunky interface on the back end, and it takes a little bit of time to learn it and understand it and sort of, what works, what doesn’t, but really, if you put the same effort that you put into brand.com onto your detail pages, you’re going to have phenomenal success.

The folks that tend to do best in this field are the ones that get the joy in digging in, the curiosity and figuring out the puzzle and how people are interacting with the site. This is a cultural shift more so than anything, and how people’s behaviors change, how they ask questions, where they ask those questions. It has moved online, and selling in is the easiest part. So a traditional sales manager, who has worked in teaching buyers how to buy an item and what items to buy, I don’t want to say it’s irrelevant, but it’s close to it. Instead, is it profitable? Does it make sense? Then doing a new item setup. Instead of it being a selling task, it’s an Excel task. That’s a very different proposition in how CPGs are typically built around the sales executives.

Q: You mentioned that product content is one of the pillars of success with Amazon. What are some of the other fundamentals that people need to be focused on when they’re just getting started?

Ultimately, what is a sale on Amazon? A sale on Amazon is nothing more than a glance so how do you efficiently drive an eyeball to your detail page? Once the eyeball gets there, is your product in stock? If it is in stock, you have the opportunity to convert. Does your content and your price allow that opportunity to happen? Just go spend the time with your customer service team, with your supply chain team. How low can you get your vendor lead time? How quickly can you get items to Amazon?

Because Amazon, especially for new items, tends to not have very much cover, and it’s great. You have national distribution the second your ASIN is in stock; however, that ASIN can go out of stock very, very quickly because the millions and millions of users on Amazon on any given day can spike that item out. So how quickly can you get back into stock? It becomes much more of an exercise around these in-stock metrics and the supply chain more so than in a traditional selling perspective.

Q: Talk about some of the more common challenges that you encounter or that you see brands encounter as they graduate, in a sense, from some of those basic early steps and how they start getting more sophisticated.

Finding people that you can empower to make decisions quickly. Who is the ultimate decision maker and the idea of a brand brief and going back and forth 100 times in order to make a slight incremental change, when the platform is changing every single day? How do you create an organization that supports iterative decision-making that’s very, very quick, that’s reactive? That’s listening to the data, which is ultimately listening to the shopper. I think that’s a biggie.

Again, sounding like a broken record around supply chain, but think about it. If you were doing traditional display advertising and you’re sending to brand.com, but you have a 404 page. That’s what it’s like sending to a detail page when you’re out of stock.

Q: Amazon’s portfolio of formats essentially for CPG products is evolving and expanding, between Amazon.com, Pantry, Fresh, Prime Now. How do you think about these evolving formats? How do you treat them differently? Are there different keys to success with each of them?

That’s a really good question. Being outside of Baltimore, we were the second market with Prime Now, and we now have Frozen and Perishables. I may become a hermit because I don’t have to order from anywhere else but Amazon. I can get my groceries delivered to me in sub-two hours for free. A week’s worth of groceries, it took me maybe five minutes to shop. When I go back and I go to order again on Prime Now, all those items that I had previously purchased, they’re right at the top of my list. So now all of a sudden, I’m just going back to those brands.

There’s brands that had that first mover advantage that leaned in with Amazon and said we’re going to give this a shot, this is different, this is new. They are now benefiting because they’re at the top of my list and I’m hitting the button when I come back into Prime Now, and they’re showing up at my doorstep over and over again. It creates that virtuous cycle. I’m now going to write nice reviews about them because they’re great products, and then they’re going to be served up to other people because it’s teaching the algorithm how to sell your items.

I think with any platform that Amazon launches, they’re not launching platforms to fail. Wall Street makes fun of Amazon’s lack of profitability sometimes, but they’re trying really hard. They have really smart people that are trying some real cool, difficult things, and they’re not going to launch something like Prime Now or Prime Pantry or even Fresh designed to fail or designed just to take money from vendors. They have a sincere desire to be successful and to help shoppers discover great items. I think as they get into different platforms, not all of them are going to work, and that’s a good thing. It’s a chance to learn, a chance to experiment and figure out where the shopper is and what makes a great experience.

Q: Any other leading practices or great ideas you want to share with folks?

Amazon Marketing Services has been getting a lot of attention recently. It’s a great tool. Really interesting what those folks are doing and it’s empowering vendors to manage cost-per-click advertising, both on a search and a display perspective. The tool is pretty new, so there’s a bit of a learning curve there, but we’re seeing really strong ROI there, and it’s a great experience. I think that’s a newer tool that’s out there that a lot of folks are starting to work with, and a lot of folks are seeing success with.

Q: Well, Patrick, this has been fantastic. Thank you again for joining us. If people want to find you, how can they reach you?

You can go to our website, Flywheeldigital.com, or reach out on LinkedIn. Really enjoyed the conversation, as always, and I think this is a great series. Appreciate the opportunity to have a conversation with you.

To hear other industry thought leaders discuss the key eCommerce trends impacting the CPG and retail sector today, including our latest episode with Mark White of content26, visit our brand new Profitero Podcast Series.