2020 accelerated the adoption of online shopping by as much as 10 years, but successfully expanding into onmi-channel ecommerce takes a lot more than simply listing your products everywhere. In this discussion Kunal Chopra discusses different omni-channel strategies such as brand building and expanding to different marketplaces.
[00:00:07] Chris: Hey everybody. Today I'm speaking with Kunal Chopra of Kaspien— omni-channel expert. How many years have you been working with Kaspien?
[00:00:21] Kunal: Well, I've been with Kaspien only a couple of years, but I was at Amazon for a couple of years as well before that, but Kaspien has been around since 2008 -09.
[00:00:31] Chris: And we all know the wonderful knowledge that ex Amazonians have, right? That they're sharing with business owners and sellers every day. We're going to be talking about your Amazon presence, efficient business management and growth that doesn't necessarily only focus on Amazon. Why sellers need to expand to other marketplaces, what to look for when you're expanding to a new marketplace, and of course, how shifts in consumer spending behavior should inform or alter your strategies. Why do sellers need to think about expanding other marketplaces? Why can't they just grab the biggest one, Amazon and focus all their energies and efforts there?
[00:01:10] Kunal: Yeah. The simple answer to that question is because there's demand on other marketplaces. I mean, for any brand out there, Instead of thinking about whether Amazon is the next big thing or Walmart's the next big thing, the better way to think about it is where do my customers shop and who my customer is? And where do they shop? And guess what customers are shopping across different channels today, they're shopping on Walmart, they're shopping on Amazon, their shopping on your own website, they are shopping online on Tik-tok , on Twitter. And there are various distribution channels across the omni-channel spectrum where you should be engaging your customer.
So, because demand is more omni-channel, it's important for brands to think about a strategy that extends beyond just one particular distribution channel understanding who their customer is and where do they shop? Where are they engaged?
[00:02:03] Chris: And in terms of the key, maybe ABC 1, 2, 3 of how you identify that instead of just assuming, hey—everyone's on Amazon, I'm gonna focus my energies there. Is that surveys? Is that social media? Is that tracking where your buyers are coming from— interacting with them to make sure that they tell you all of the places they're seeing your brand?
[00:02:24] Kunal: Yeah. I think this goes back to the theory around, you know, product market fit and startups. You've got to understand who your customer is, what the customer segmentation is that you're going after.
You know, what's the value proposition of your brand or your product today to that particular customer segment, trying to understand then where are those customers shopping today? What's the journey that they will actually take. So that would include things like social media, different distribution channels, brick and mortar, et cetera.
It might be different for every different customer segment. But the way to do that is a combination of both primary and secondary research. So primary research for those of you who don't know is when you actually talk to your customers and you conduct interviews. You speak to your customers, you understand from them, where do they shop, what their needs are, whether Amazon's the right place, whether it's brick and mortar, whether it's Walmart, et cetera. And then it's the secondary research, which is just your own research outside of talking to customers. So looking at survey results, looking at the industry reports, looking at the data from Google trends.
So that's combination of trying to be engaged with their customers directly and combining that with market research, industry research should help you form a hypothesis on what's the next marketplace, or what can I add on to my Amazon-only presence and think about an omni-channel distribution strategy.
[00:03:45] Chris: Okay. So once you understand who your customer is and you've done that preliminary research, what are the top questions you're asking yourself about expanding into a new marketplace. Once you've identified that your brand customers are already in that marketplace, what are the next questions, next steps?
[00:04:01] Kunal: Yeah. So let's assume that you've done the work on understanding where your customer is. Let's assume that you've done the work on this is the next marketplace, potentially, you want to go after, or you've done all the market sizing, et cetera, et cetera. But there's the other question that you have to ask is what's the unit economics of this particular marketplace?
What would it take for me to get from zero to one onto this marketplace? Just because you are successful on Amazon, it doesn't mean that you will be successful in another marketplace. The unit in your home economics may not work for you. And so, again, going back to some of that startup theory around, what would it take for me to get my first few products onto that marketplace?
Well, what's the one product that I should go after? What's the unit economics on that particular product, what would it take for me to get set up from an operational infrastructure perspective to be able to execute on that marketplace? So I would recommend, outside of the market sizing, understanding your customer, understanding the economics of the marketplace.
And how do you get your products on there? How do you take your products from zero to one on that particular marketplace or any distribution channel is going to be very critical and doing that work upfront as I think important.
[00:05:08] Chris: Yeah. And you're probably having a lot of conversations about people who said, well, the economics made sense for Amazon FBA, but now they're not taking as much of our inventory during Q4 as we expected so we have to reconfigure our other channels. Is that what you're spending most of your time talking to people about right now? Or is it just getting through 2021 and then we expect things to revert back to healthy, happy Amazon in 2022?
[00:05:33] Kunal: See, what we realized during the COVID situation is that you can't put all your eggs in one basket, period. I think Amazon restricting products, all the supply chain constraints that we saw globally, all those have hampered sellers across the board. And so what we did at Kaspien specifically is we said we are going to diversify as much as possible. And we were already doing a diversification strategy on the front end, which is Amazon, Walmart, Target, etc, but we be expanded that to the backend as well. But what that means is we're no longer, only dependent on Amazon FBA. We are also leveraging various third party logistics providers. We have our own warehouse in Spokane. So being able to leverage different aspects of the supply chain and being able to effectively move things around as, and when the need arises, I think is a strategy that people should start thinking about, not just diversification on the different channels for distribution, but different diversification on the front end, on the back end even if you're using only one channel on the front end. So yeah, but that's the conversation we're having with a lot of brands today is just how can we consolidate in China and bring it directly into FBA. If it's not working, can we bring it to our warehouse in Spokane? Can we sell to at an MFN offer and ship directly to the consumer. So those are the kinds of conversations we're having. We're not just going to get through to anyone we're going to fix it.
[00:06:53] Chris: Right, right. Should we do more fulfilled by merchant or should we sell more on our own website or through other channels? Maybe some people got used to the thinking of well, most of my inventory is already dedicated to Amazon so the rest of it, we'll just scatter around other channels, as it makes sense. Now they have to kind of reconfigure that, all the eggs in one basket strategy, right?
[00:07:15] Kunal: Absolutely. And I would encourage everyone listening here as well to sort of think of that strategy as a default strategy going forward, you know, how can I leverage other channels? How can I create a more distributed supply chain and sort of think through the portfolio overall, as opposed to thinking how can I maximize Amazon-only, you should certainly maximize that, but think about how can I maximize selling online as a whole? That's the sort of shift in thinking that we all have to go through.
[00:07:44] Chris: Yeah. And also you mentioned COVID, consumer behavior changed a lot in the last 12 to 18 months. How can a brand on Amazon or a brand that's interacting with their consumers and their consumers change their behavior, how can a brand assess what their next steps and their next moves need to be when that happens? Especially in unprecedented conditions like we had with the Pandemic.
[00:08:10] Kunal: Yeah. I mean there's obviously change in behavior in multiple ways and it's changing still at some level, at some level last year, consumer behavior was a lot of shopping that was not happening online started happening online, which is, which is great.
We saw people forced into this new way of operating and people who are not used to being online, for example, for the first time found a package at that door in two days and said wow, this is great. So there was a new consumer that was created. That is great for us as an industry as well.
And so it's important to recognize when those patterns are happening and trying to understand sort of who are the new consumers that are potentially your first-time users of your product, but then also who are fans of your product and trying to differentiate between the segmentation there and try to figure out strategies around how can you engage both these consumers in probably slightly different ways. Y our consumer fans are going to interact with you, your brand differently, the new consumer is trying you out for the first time. Maybe they were forced into it, but can you convert them into fans? So thinking through the segmentation of who your customers are and trying to come up with strategies on the marketing side that can engage both these kinds of consumers I think is very critical for brands to think about.
Now you're going to start seeing a slight shift, right? Some of the demand is leveling off. People are going back into stores. You know, but obviously with this delta variant, again we're seeing some demand shift online. So there's been a lot of mix in the demand overall. I mean, at the end of the day though, I'm a firm believer in understanding who your customer is.
Brand is important, the connection with your brand is important. The products and services that you offer, products in this case, should really serve the customer need— irrespective of where they are shopping. And so my general feedback would be understand your customer, segment them and have strategies to try to target those particular customers and create lifelong friends in your customer base.
[00:10:12] Chris: Yeah. And what kind of conversations do you have with e-commerce brands that haven't sold in retail stores before that are interested in— hey, there's a bunch of people going back into retail stores now, I want to finally make that change and not just be a hundred percent selling on Amazon or a hundred percent selling on my website. How does that conversation go?
[00:10:32] Kunal: It goes pretty well. There was a phase where a lot of brands were starting off on Amazon or they were starting off on their own Shopify website a nd that made sense as a strategy, right? You know, these are some behemoths out there— everyone's on Amazon, there's a lot of demand on Amazon, which makes sense. Brands are opening up to the idea now that it's not about trying to just sell on a particular channel. But it's really about engaging the consumer across their entire journey and that includes multiple channels and that includes brick and mortar as well.
Previously our conversation used to be it's on Amazon only or it's brick and mortar only. Now they're opening up to the small portfolio approach and trying to think about ways like how do I get into brick and mortar? You can see some of the other trends with Amazon too, opening up department stores and doubling down on that whole brick and mortar presence.
In fact, I truly believe that some of the brands that are sold online have a better chance of being able to engage customers in store. How? Because when you go online first, you have access to data so you know your customer and that can extend across to the brick and mortar presence in a true omni-channel experience that you can create for your brands.
And so, to answer your question, Chris— the conversations have been a lot more positive. The challenge has been, how do you get into brick and mortar? What does that brick and mortar look like for you and how you create those relationships with the right brick and mortar retailers?
[00:11:54] Chris: Especially when they don't have experience with it. If they have the data, but they don't know how to convert that to you know, should I change my retail packaging for in store presence? How many different kinds of data do they need to make that decision, maybe they're speaking with you and you're kind of handholding them through that process, but, is that sort of bewildering change for their entire business? Or are there a couple of ways that they can dip their toe in and just start small and then grow from there in terms of getting into retail stores that they weren't in before. '
[00:12:25] Kunal: Yeah. So you're absolutely right.
[00:12:29] Chris: Because some people just don't know right ? They're starting from zero. They can listen to us, talk about it and it's fun to have a theoretical conversation about it, but then when it's time to sit down and do it, do they freeze?
[00:12:40] Kunal: Right. Yeah. I mean, my view, again comes back to some basic elements of building a business, right? Like again, understanding your customer. If your customer shops in brick & mortar a nd if that customer is the exact same customer that is shopping online and it's that same sort of segmentation, and if your product packaging, your product is working online, then extending that to brick and mortar within its current form might be the right way to go. So then it's really a matter of how do I get into brick & mortar and what does that relationship look like?
Calling on agencies, working with Kaspien or whatever else, but if your customer is slightly different, it's a different segmentation. For example, we've got brands in the arts and supply space. Turns out in the arts and supply space you have the young engaging consumer who is on Tik Tok and trying to bring in his or her latest art online.
But then there's also another consumer that goes into the brick and mortar store, which is a senior citizen, for example. Who was older, who likes to go to the brick and mortar store and likes to spend most of their day trying to do some art and craft book.
So now you have a product set that is appealing differently to this consumer set and to that brick and mortar consumer set, the packaging has to be slightly different. You've got to engage on Tik Tok, on Amazon, on some of the more online channels. You know, then you've got to engage with the brick and mortar. So that's sort of the difference in understanding who your segmentation is and where do they actually shop.
[00:14:06] Chris: Yeah. There is a generational divide, right? Somebody who's a senior citizen, probably isn't on Tik TOK so much and understanding those nuances before you decide where to sell.
[00:14:16] Kunal: Right. Exactly.
[00:14:21] Chris: We can maybe take a few minutes just to talk about Amazon specific stuff. A few years ago versus now, what would you say has gotten better/worse? I mean, aside from the obvious, what do you think they need to improve? Maybe not in Q4 if they can't implement something right away, but in 2022, should they go back to doing something well that they used to do better or what can they improve and initiate next year that they might not necessarily be doing now?
[00:14:46] Kunal: Yeah. I mean, I think their biggest challenge this year has been just figuring out their supply chain and they've run into capacity constraints and some of that extended partially from last year as well. So I think a lot of their focus has just been on that. What has been challenging because of that is there's a been lack of transparency to sellers like ourselves around, you know, why am I restricted or what is the reasons as to why oversized brokers aren't going in? Or why is it opened up the next day? It's just very hard for sellers to be able to manage when Amazon is moving things around a lot more. So I think that's the biggest opportunity for Amazon in front of them right now is how do you give more predictability to sellers so that they can plan better? And that has been the biggest challenge because some of these issues may not even be issues.
If Amazon was able to predict better how their housing space is going to impact a particular sellers demand over the next six months or so. So that's a big opportunity to get more predictability to sellers.
[00:15:50] Chris: Kunal— thanks so much for taking the time today. Are there any final thoughts that you would like to leave our viewers with or our attendees for the quarter ahead and even heading into next year? Top tips, anything you'd like to leave them with?
[00:16:07] Kunal: Yeah. I would just say if there's one word that you should start thinking about is diversification and that would be my tip for everyone. And maybe the secondary to that, it was just plan early. Things are changing a lot. We are not in stable state as an industry. Lot of moving parts, you never know what's going to happen. So plan early, think through a diversified approach across the supply chain, across all the different channels that we're talking about. Think through different strategies.
And I firmly believe that there's a huge market opportunity in front of all of you listening that you can capture. You just have to change the way we've been thinking. And I truly believe that there's a big opportunity ahead of all of us
[00:16:48] Chris: Creative thinking and innovative strategies have never been more needed than at the present uncertainties in the marketplace.
Again, Kunal Chopra of Kaspien. Thank you so much for taking time with us today. And any other questions for Kunal, the best way to reach you?
[00:17:05] Kunal: firstname.lastname@example.org
[00:17:07] Chris: Thanks again, Kunal. Have a great day.
[00:17:09] Kunal: Thank you, Chris. I appreciate it.