In another of our Podcast series Q&As, Profitero’s Keith Anderson speaks to Melissa Menchaca of InstaNatural, a beauty brand that was born on Amazon and which remains its primary distribution and growth platform.
In this episode, Keith and Melissa discuss InstaNatural’s rationale for launching on Amazon in 2013, the strategies and tactics that InstaNatural uses to outperform competitors, as well as the critical importance of customer product reviews (‘social proof’).
Q: Tell us a a bit about yourself and your company.
I am currently the Business Intelligence Manager for InstaNatural, a personal care, beauty and skincare company. We were born from Amazon back in 2013. My job is to dig into the data and really try and gather as much insight as we possibly can to make informed decisions that drive our overall strategy in relation to how we’re building our revenue. We sell primarily on Amazon which is a very data rich environment but it can be hard to navigate.
Q: We publish our Amazon Fast Movers reports every month in the U.S. and the U.K. in ten different categories. We took a look at skincare and in the U.K., InstaNatural was the number one brand in skincare with six products out of the one hundred best-selling products and an average of more than eight hundred reviews per product. You said that InstaNatural was born of Amazon about three years ago. Can you just spend a minute explaining what that means. What was behind the decision to start a brand focused on Amazon and why Amazon remains the focus?
Amazon is a huge online eCommerce channel. It’s booming now but back then it was growing. We started off on Amazon because so many people go to that website to shop every day. A lot more people are now on it but there’s still a great opportunity to leverage it and optimize your listings or really make the most out of that channel.
When we did start from Amazon, it was a different approach than what we’re doing right now. A couple years have passed and before now, we were Amazon focused and building products on the Amazon channel. Today, we’re really focused on building a brand to hopefully go outside Amazon into other channels as well. That’s a whole new strategy that we’re currently learning and trying to walk through at the moment. We do know Amazon. We’ve been very successful on the platform and it’s a great opportunity for other sellers as well.
Q: As you know, Amazon has their first-party business where they buy inventory directly from suppliers and Amazon, itself, is the seller. Then they’ve got their third-party market place. Can you talk a little bit about where InstaNatural fits into Amazon’s platform and how you go to market with Amazon?
We primarily are a third-party seller on Amazon and we use the FBA services to store our products, warehouse and ship them out to customers. However, we recently have started experimenting with having Amazon sell our products. Using the vendor central account to be able to send products to Amazon directly and they buy it from us, pretty much, at a wholesale cost. They sell it on our behalf. From a regular person’s perspective, you’re buying it, it’s shipped and sold by Amazon.com. As opposed to sold by InstaNatural, shipped by Amazon.
There’s a little bit of a difference there but there is a big opportunity that we are hoping to be able to capitalize on using Vendor Express. One thing that I found recently is that when you have a Vendor Express account, you have the ability to create what’s called an A+ page. That gives you additional content to be able to put on your product listing. I think that’s a really good opportunity which we’re hoping to be able to capitalize on more.
Q: You had mentioned something when we spoke earlier about social proof and why that’s so important at Amazon. I was hoping we could spend a few minutes just defining it and talking about how you use that concept to drive performance at Amazon.
Because we’re so Amazon driven, social proof for us relates to reviews. More specifically product reviews from our customers. The reason why that is so important is because, number one, that is how we drive as a business. We are very lean, we’re nimble, we’re fast- acting and this is what really sets us apart from other big name brands out there in the world.
We’re able to gauge consumer interest about products and get that product to market faster than our P&G competitors. That’s a huge, huge leverage that we have that also Amazon works into as well because it’s so easy to launch new products into Amazon. It’s a virtual catalog. You really can’t go many other places and launch as many products as we have.
Product reviews are not only important to our business model, how we run it and operate as a company, but it’s just as important to Amazon as well. The reason for that is reviews factor in to how well your product performs on Amazon. There’s no bible. There’s no biblical formula of “Do this. X+Y=Z and Z is you make a lot of money and you sell really well.” The Amazon algorithm is very much like Google’s algorithm where no one really has all the exact formula to do well but you can have reasonable assumptions based off what’s working and what’s not working.
With Amazon, one of the universal truths out there is that reviews matter. If we launch a product and the reviews are terrible, that lets us know “Hey, we have a bad product. We need to have a serious discussion about reformulating this or dropping it entirely from the portfolio if it’s not performing.” If you’re just a regular user on Amazon, we know this works because take your everyday life. If you’re buying something on Amazon, are you going to buy a pen that has no reviews versus a pen that has a hundred five star reviews? Most likely you’re going to click on that one. Reviews really help drive purchase behavior and really help drive conversion which is why it’s so important to us as a business.
Q: Can you talk a little bit about how you actually acquire those reviews? In other words, one of the real challenges with social proof generally is authenticity. Especially given your position as a FBA seller on the third party marketplace, can you talk a little bit about the playbook for how you encourage shoppers to leave those reviews?
We use an e-mail communication tool that lets you communicate with your buyers. When somebody buys a product from us, they’re going to get some helpful information about how to use this product. What are some other hidden uses that you can get out of this product. Give a little bit more background information about the product. Also, what to expect buying it from Amazon. We get a lot of positive feedback from customers that enjoy that information.
Once they respond, you’re controlling the conversation. What’s important about this is opening up that channel of two-way communication between you and the customer. If you don’t have that, if it’s just a one-way communication, the buyer can go straight to Amazon and start posting whatever. Posting their free reign of thought. Being able to reach out to the customer, provide helpful information, really establish that connection with your consumer, gets them engaged and almost helps you control the conversation. It’s super important from that regard.
Also, as part of our sequence, we, of course, ask to follow up. How do they enjoy using the product? What’s their experience like? We do factor in that feedback from our customers. If they say they don’t like the product, that gives us helpful information about giving them a replacement product. From that perspective, it turns into a customer service experience. Still, being able to control the conversation is really important. Ultimately, what you’re trying to do is create that positive experience with the customer so they’re more likely to leave a review that’s positive because they’ve been given information about how to best use the product.
Q: What do you think about new product introductions and new product development? Are you actually using Amazon as a source of consumer or shopper insight that feeds your new product development?
When it comes to scoping out new products, we do competitive landscaping. Obviously, checking out what’s selling. What’s in the top hundred this week and fast movers or top hundred list. Being able to check what’s working, what’s not working. Checking out the Best Seller Rank. How fast it’s moving. Are certain product categories moving faster than others? There’s so many tools out there that help you do it. It’s really a matter of being very, very detailed oriented.
Being able to pin point what’s moving, what’s not moving. That pretty much gives us a general guideline into what products launch but this formula is still factored in through a little bit of gut instinct. Unfortunately, some products we’ve launched haven’t done as well as we would have thought. It’s definitely a learning experience. It’s all about taking each experience as a learning opportunity to be more successful.
Q: Absolutely and I think over a span of a few years, you’ve established this new brand as a leader in such a prominent and important distribution channel. How do you think about competition with some of the big established brands in the mainstream cosmetics and skincare industry?
The upside to us as a company is that we know Amazon. We’ve lived in this space for a couple years now. We know the algorithm. We know the Amazon channel like the back of our hand, pretty much. We know how to keep it that way. Being always up to date with new Amazon terms and service releases. They seem to update those every couple months. Knowing what drives rankings for products. These are all things that we can use to leverage ourselves to make ourselves known on Amazon. That’s really how we differentiate ourselves from other bigger companies.
With Amazon we’re able to leverage that to launch into the international markets as well. I think you referenced us being in a U.K. report. We also sell through Amazon U.K., France, Germany, Italy and Spain which are all growing markets. It’s actually really phenomenal, the growth that we’ve seen in the European market. We never imagined it to be so explosive.
Q: We’ve observed over the last several years other brands on a similar trajectory that, as brands, first emerged on Amazon and then leveraged that success to gain distribution in other channels. Do you have any thoughts on the right way to think about how you expand from a great start on Amazon to other complimentary channels?
When it comes to brick-and-mortar, I would say hats off to anybody that has managed to transition from Amazon to brick-and-mortar. From my experience, it’s a huge challenge to be able to make that jump because it is a very big jump. When you think about Amazon, you have to think about who is the consumer? It’s a lot different than someone who’s buying in-store.
Someone buying online, they’re typically very price driven. They are disloyal to brands. They like to shop through a catalog and they like to do research on their computer when they’re buying online. You have a very different customer from online and in-store. It’s all about building a brand to be able to carry what you have online into the store and be able to portray your brand as how you want it to be presented to this brand new type of consumer.
When it comes to other e-tail channels, the big difference between Amazon and other eCommerce channels is that Amazon is not really a curated experience. What I mean by that is, Amazon is a virtual catalog. We can launch anything. Even though we’re a skincare brand, we can technically launch a book tomorrow if we wanted to. Amazon has no restrictions on what you sell as a seller.
Q: I don’t know if you’ve got experience in other industries but I’m curious if you have thoughts about what’s similar or different for a beauty and skincare company selling on Amazon versus other categories. Have you had to adapt any of your strategies or tactics for online beauty shoppers?
I would say that the beauty category is a good starting point because it’s a very highly competitive field. We’ve really had to work hard to be able to rise to the top in a category that is so overwhelmed with competitors. I would say that with all the knowledge that we’ve gained being in the beauty industry, we would be competent going into another category but it doesn’t make sense for us because we’re trying to build a brand. We’re a beauty company. We’re skincare. We make naturally focused products. That’s our brand vision.
Q: I was also thinking of whether you need to pay special attention to making sure your title or description or bullets have specific attributes that shoppers are searching for or whether your images need to reflect, not only what’s in the box or what the product is, but certain claims or benefits?
One thing that we’ve actually started doing recently is incorporating product photography of in-use application for our product. When we’re like “Why didn’t we do this before?” It just makes sense. When you sell beauty products, people want to know what it looks like when you put it on their face. When they look at a picture of someone applying it, you can kind of envision yourself as that person. You can almost feel the experience through that photography.
We’ve started experimenting with that and I will say that it’s helped us tremendously with conversion. Adding those photography shots of in-use application of the product. Showing what it looks like. What is the texture? What does it look like when you apply it on your face? What does it look like on your fingers? All that’s really important because, again, when people are shopping online they don’t have the product in front of them. They only have to go by what’s on their screen so the more information that you can provide about what experience they’re going to get with the product, really helps them turn from an aware customer to an actual mega purchase customer.
To hear other industry thought leaders discuss the key eCommerce trends impacting the CPG and retail sector today, including our latest episode with Lincoln Merrihew of comScore who talks about the digital path-to-purchase, visit the Profitero Podcast Series.
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