Newsletter - December 2024

Navigating the Evolving E-commerce Landscape: TikTok Bans, Seller Angst, and Channel Strategies

The world of e-commerce is shifting rapidly, with sellers voicing growing concerns and exploring new strategies to stay competitive. Here’s what’s driving the conversation right now…

TikTok Potential January 19th Ban Sparks Uncertainty

Federal Court Rejects TikTok’s Bid to Halt January 19 Ban: What It Means for E-Commerce Brands

TikTok Shop (TTS) has emerged as a powerful driver of sales and marketing for brands integrating it into their multi-channel strategies. However, uncertainty around its future due to a potential U.S. ban is forcing businesses to hit pause on critical investments. With stability, brands could move full steam ahead on platform adoption and innovation.

The Ban: What’s Happening?

President Joe Biden signed a bipartisan-supported law requiring TikTok to either divest from its Chinese parent company, ByteDance, or face a nationwide ban. This follows former President Donald Trump’s previous, unsuccessful attempt at a similar ban. The latest legal blow came when a federal appeals court rejected TikTok’s emergency bid on December 9 to delay the ban, which is set to take effect January 19. If no further legal action succeeds, TikTok will vanish from major app stores.

Implications for Brands

The potential ban raises serious challenges for brands banking on TikTok’s dynamic e-commerce environment. Companies still assessing how to optimize TikTok Shop may delay key campaigns or redirect budgets toward other platforms like Instagram Shopping or Amazon Live or Haul.

However, ByteDance’s deep investment in TikTok's U.S. presence suggests the company is unlikely to exit the market quietly. Ownership restructuring or strategic partnerships could emerge to preserve the platform’s U.S. operations.

What’s Next?

While legal and political battles continue, brands should monitor the situation closely and prepare contingency plans. Diversifying platform strategies now could mitigate potential disruptions and ensure continued digital growth.

Actionable Insight: Stay nimble. Diversify your social commerce portfolio while keeping a close eye on TikTok's evolving legal status. Consider testing other emerging platforms to maintain a competitive edge.

Amazon’s Latest Judo Move: Shifting FBA Reimbursement Policy to Manufacturing Costs

Amazon has long been a master of control, meticulously managing its supply chain. Now, in a bold shift, **starting March 10, 2025**, reimbursements for lost or damaged FBA inventory will be based on manufacturing costs (COGs).

Premium Products Should Be Concerned

What’s Changing?

• Cost-Based Reimbursement: Amazon will reimburse based on manufacturing costs (COGs), not retail value.

• Amazon’s Estimates: If sellers don’t provide their costs, Amazon will calculate them using industry averages.

• New Portal: The Manage Your Manufacturing Cost tool launches in January for sellers to input COGs.

Why This Matters

Amazon’s push to know your costs gives it a stronger foothold in controlling seller behavior. With access to sellers' profit structures, Amazon can:

• Benchmark and standardize costs across product categories.

• Pressure sellers with higher COGs to cut expenses.

• Potentially penalize “outlier” products that deviate from category norms.

Challenges for Sellers

• Distributors Are Vulnerable: Their naturally higher COGs could be disproportionately flagged.

• Gamesmanship Risk: Sellers may inflate costs to manipulate reimbursement benchmarks.

• Innovation Threatened: Premium products with higher COGs may face unfair scrutiny.

How to Stay Ahead

• Be Strategic: Provide manufacturing costs carefully, focusing on accuracy and positioning.

• Protect High-Value Products: Monitor how Amazon handles premium items in your category.

• Leverage Tools: Automate responses to Amazon flags on “high-cost” items to streamline negotiations with suppliers.

If you’re wearing rose-colored glasses, Amazon’s move to reimburse based on manufacturing costs (COGs) could be seen as a way to lower customer prices. A more cynical perspective suggests Amazon may use COG data to expand its private label offerings efficiently and understand how much margin is left to squeeze from sellers. By setting internal target margins for sellers, this approach, initially informational, could soon become a required metric—forcing products to align with average costs or lower, and potentially disadvantaging premium items.

As always, where there’s a judo move, there’s an opportunity to counter. Let’s see what tools and strategies emerge. There’s potential for tools that automate supplier notifications when Amazon flags a product for high costs. Such tools could help sellers start cost-reduction conversations, making it easier to adapt to Amazon’s evolving standards.

Seller Frustrations Are Boiling Over

Industry Concerns Mount Over Amazon's Treatment of Sellers

Key concerns are intensifying among industry insiders about Amazon’s treatment of sellers:

• Profitability Pressures: Fees, rising shipping costs, increasing advertising investments, and tightening economic conditions are squeezing sellers’ profit margins, while operational inefficiencies continue to escalate.

• Amazon Warehouse Distribution (AWD) Performance: Sellers are increasingly concerned about AWD's reliability, complicating their fulfillment strategies.

• Logistical Delays: Recent shipping performance, particularly during major events like Black Friday, has been a significant point of frustration. Sellers report delayed shipments from Amazon fulfillment centers, which has resulted in discrepancies between recorded sales volume and actual transactions due to unfulfilled orders.

A recent industry post captured this growing sentiment, highlighting how shrinking profitability and unreliable logistics are forcing sellers to rethink their business models. What sets this wave of dissatisfaction apart is its depth, the clarity with which sellers are articulating their struggles, and the sheer number of voices expressing concern.

Different Content Channels - Different Goals

Sellers today are embracing a multi-channel strategy to meet customers where they are, tailoring their approach to the unique environment in which their product information is consumed. The magic lies in understanding that different platforms frame the customer's expectations differently, requiring aligned content, pricing, and offerings.

TikTok Shop excels at driving product trials through short-form video content, where consumers prefer smaller samples at accessible prices. In contrast, YouTube’s broad reach makes it ideal for mass-market storytelling and brand awareness.

This approach extends beyond digital platforms. Whether customers are on Amazon, shopping in-store, or engaging with content-driven platforms, content and format must match their expectations. To maximize reach efficiently, sellers should streamline offerings into three core variations: large wholesale quantities, mid-tier options, and sample-sized entries.

Tech Tools Making a Difference

Carbon6’s Advanced Tools: Empowering Brands with ARMR, a Hawke Media Company

Free PixelMe Audits: ARMR, a Hawke Media Company, offers complimentary audits of PixelMe to help brands optimize their digital ad performance. PixelMe enables:

• Precise audience targeting and retargeting

• Actionable insights to enhance ROI
  This free audit reviews pixel performance metrics and identifies opportunities to maximize the impact of every ad dollar.

Prime DSP Solutions at an Unbeatable Price: Carbon6’s DSP stands out for its extremely accessible price point—1/4 to 1/5 of industry norms. Features include:

• Advanced algorithms for data-driven ad campaigns

• Cutting-edge optimization to reach high-value audiences
  ARMR leverages this powerful tool to deliver exceptional results, offering premium DSP capabilities without the premium price. Together, these tools provide unparalleled value for marketplace advertising.

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Controversial Corner:

Capturing the Curious Consumer

In a world of endless scrolling, most consumers are on autopilot, moving from one laugh, rage, or viral moment to the next. But a select few are in curiosity mode—open to discovering new ideas. These are your golden opportunities.

Strategic product placement in repetitive, interest-driven content—like a unique shape of surf wax in the background of surf videos—plants the seed of intrigue. Over time, curiosity builds: What is that? Why do they use it? When consumers actively seek out your product, you've won their attention.

To execute this effectively, your product must have a distinct, recognizable feature—like a unique shape, bold color, or memorable design. Then, align your SEO strategy with those standout elements so that when curiosity strikes and consumers search, you are front and center. Let curiosity lead them to you.

Industry Insights & Events

Limited-time coupon fee reimbursement for new FBA selection

From now through January 31, 2025, Amazon will automatic reimburse FBA Sellers $0.60-per-redemption coupon fee for coupons on newly launched Fulfilled by Amazon (FBA) selection. The promotion applies to FBA offers on products that first became buyable after November 2, 2024. Read more.

Amazon Science and COSMO’s Initiatives

If you haven’t explored Amazon Science yet, it’s a hub of groundbreaking research shaping the future of e-commerce.

For anyone interested in AI, technology, or e-commerce, Amazon Science is essential reading.

Amazon’s COSMO:  Common Sense Knowledge -  Finding User Intention

 

COSMO is Amazon's internal system for generating and deploying e-commerce-specific commonsense knowledge, leveraging fine-tuned large language models and user behavior data to bridge the semantic gap between customer queries and product information. It enhances search relevance, product recommendations, and navigation across 18 product categories, indirectly benefiting sellers by optimizing product visibility and alignment with customer intent.

1. User Intent and Behavioral Data Integration

• User Intent Capture: COSMO generates commonsense knowledge from user behaviors like search-buy (queries leading to purchases) and co-buy (frequently bought together).

• This knowledge bridges the semantic gap between user search queries and product listings, enabling better content alignment.

• Impact:

• Optimize product detail pages (PDPs) to match user intent.

• Refine keywords and product attributes to improve search relevance and conversion rates.

2. Query-Product Relationship for Content Enhancement

• COSMO introduces structured relation types (e.g., "used_for," "capable_of," "is_a") to explain product functions and user needs.

• Example: "Winter coat → provides warmth in cold weather."

• Impact:

• Enhance A+ Content by explicitly addressing how a product meets customer needs.

• Improve bullet points and titles with specific, intent-driven information.

3. Scalable E-commerce Knowledge Graph (KG)

• COSMO expands knowledge across 18 product categories (e.g., Electronics, Home & Kitchen, Clothing).

• Generates millions of high-quality relations with low annotation cost.

• Impact:

• Use this knowledge to guide content strategy for multiple categories on Amazon.

• Target content updates for products in high-opportunity domains based on user intent signals.

4. Search Relevance and Navigation Improvement

• COSMO improves search relevance by augmenting query-product matching with commonsense knowledge.

• Reduces semantic gaps in ambiguous queries like "camping gear" → "winter camping air mattress."

• Enhances multi-turn navigation by dynamically refining search queries.

• Impact:

• Guide clients on improving product discoverability with tailored keywords.

• Advise on backend search terms and attribute tagging to align with user behaviors.

5. Session-Based Recommendations

• COSMO enhances session-based recommendations by incorporating search queries and user interactions.

• Generates intent-specific knowledge for query-product pairs to predict the next purchase.

• Impact:

• Optimize cross-selling strategies for products frequently bought together.

• Use session insights to recommend complementary or related items effectively.

6. Practical Applications for Agencies

• COSMO can inform:

• PDP Content Refinement: Use generated intent knowledge to improve titles, bullet points, and A+ Content.

• SEO Optimization: Align keywords with user behaviors for better search visibility.

• Ad Targeting: Use search-query intent to fine-tune retail media campaigns.

• Product Bundling: Identify co-buy relationships to create effective bundles.

7. Revenue Impacts and Scalability

• COSMO’s deployment in Amazon’s search navigation resulted in:

• 0.7% increase in product sales (hundreds of millions in revenue).

• 8% increase in navigation engagement.

• Impact:

• Validate strategies for content updates and search optimization with measurable KPIs.

Events

Stay ahead by attending these key industry gatherings:

• Winter Fancy Food Show - Las Vegas, Jan 19-21, 2025

• COSMOProf - Miami, Jan 21-23, 2025

• Expo West - Anaheim, Mar 4-7, 2025

Want More Insights? Looking to discuss these topics further or share your perspective? Connect with us [insert link].