We held a Sidecar Live Q&A broadcast on March 24, 2020, to discuss how the retail industry can adapt to the fluid landscape created by COVID-19, the disease caused by the coronavirus. We pulled our experts together quickly — those on the front lines of working with our retail customers and helping them adapt to the dynamic nature of the situation.
If you missed the broadcast, you can listen to the recording: Adapting Retail Marketing to COVID-19 Impact. The Sidecar experts on air included:
- Mike Farrell, Senior Director, Integrated Digital Strategy (panelist)
- Mike Baber, Director, Strategic Accounts (panelist)
- Brittany Lerario, Associate Director, Amazon (panelist)
- Mike Perekupka, Senior Product Manager (moderator)
Read on below for the show notes. We’ll continue to cover the COVID-19 impact on retail right here on Sidecar’s resources page.
Mike Perekupka: Just to set the stage, we’re really looking for everyone to take part in this. We want to take your questions. So please, start submitting them now.
As the questions start to roll in, we wanted to share a few trends that we are noticing in the market. There are many things happening right now. You’re adjusting on the fly, learning lessons, but there have been some major trends that we wanted to call out first. One of them that is very interesting is this idea of this moral dilemma that a lot of our partners are discussing. Is it okay to promote a sale right now? Should I be thinking differently about the way I advertise?
Second one would be the online shopping growth. People are now confined in their house and they’re not able to go to stores, so more and more people are being forced, whether they did in the past or not, to shop online. We’re seeing some verticals really experience that and we want to discuss that today.
Third one being product availability and demand, so this is very specific to the vertical and catalog. The fourth one I think is really interesting is this idea of, how can you potentially turn this into an area of opportunity in the competitive landscape? One major development that has happened is Amazon has really pulled back most of their ads on Google and it’s opening up more impressions, more impression share, for other people.
Then lastly, one thing I wanted to call out specifically relating to Amazon on a different side of things is, Amazon made a pretty large announcement about fulfillment methods. Specifically, they notified FBA and first party sellers last week that it’s suspending shipments of non-essential products to its warehouses through mid-April, with the goal of prioritizing inventory of those essential items. So as a result of that, we are seeing many Amazon sellers and advertisers that are needing to reevaluate immediately, reevaluate their fulfillment method, their budget, so that is another major topic that specifically Brittany, who heads up our Amazon strategy, will discuss.
It’s a mix of challenges, but also opportunity, and I think that is something we did want to call out before getting into the nuts and bolts of this presentation. How do you adapt and be creative? We’ll share some of these stories about retailers and marketers who are being creative.
With that said, some questions started piling in, so let’s start tackling them. I will serve as the moderator of this chat, but I will direct questions to the panelists.
Mike P: I’ll direct this to Mike Baber. What are some of the key considerations to keep in mind when determining how to allocate spend across channels during this time?
Mike B: It’s definitely a question we’re hearing a lot in talking with different retailers, and it’s certainly going to be case by case. It’s not just depending on the vertical, which verticals are being impacted more, but also just on each specific retailer. What budget they’re working with and what their goals are in the channel. And I’ll give a high level overview of how we’re thinking about it, and then actually give a more tangible example.
But we’ve definitely seen some retailers, especially in verticals that are less affected where they’re staying the course, making some tweaks to their goals, whether that’s changing their ROI target to allow for budgets to flow a little bit differently across channels or are making some tweaks to strategy. And then there’s going to be other cases where retailers are having to, as Mike was saying, initially rethink what they’re advertising or who they’re advertising to in this specific time.
And to give an example of that, we have a larger beauty retailer that sells both B2C and B2B. And traditionally, they’ve had a certain segment of their catalog that’s very B2C heavy and the rest is B2B heavy. What we’ve seen during this specific time is some of those B2B products, whether it’s salon equipment or the enterprise, or things of that nature, are actually being purchased by consumers now. We saw a huge uptake in that segment of the catalog. And so there’s an example of where we were working with this retailer to actually shift their budget and understand, not holistically where their budget was going across campaigns or across channels, but within a segment of their catalog, to really attack that and capitalize on that demand.
So it’s going to come down to how demand is shifting within your catalog and also what your competitors are doing, understanding the landscape and looking at things like CPCs to make an informed decision there around how to best allocate budget and how to capitalize on some of these temporary trends and keeping all in mind that this is temporary and you still want to be preparing for a world after this and making sure you’re not veering too far off course, but you’re still able to react and be flexible to what’s happening right now.
Mike P: Thanks, Mike. So, another question just rolled in. I’ll direct this one to Mike Farrell. How do we shape our marketing to sell product while still being sensitive to the situation? Is it in bad taste to run an online sale during this time? What’s your opinion on that?
Mike F: This is a sensitive subject and everyone’s trying to navigate the different aspects of how people feel about the current environment. I think the reality is the primary concern right now is for public health and safety, but there are clearly other challenges, like the strain on the economy. I think online shopping in particular is a primary way where we can prop up the economy and help provide a service to the public by making sure that online retailers are out there and they’re promoting their products, and they’re getting the right products in the hands of their users that want them and are willing to be shopping at this time.
Simultaneously, there is an ability for retailers to be mindful of the messaging that they’re putting out there. There’s an ability to look at the bigger picture and find ways to continue to promote products in this environment without necessarily making people unhappy. There are going to be certain people that will probably take offense to the fact that you’re running a promotion, but I wouldn’t get too deep in the weeds and overreact to those people. I think that generally speaking the public and recognizing that there are strains in all different places in the economy and showing that online shopping is a good way to help prop people up.
Mike P: The next question is, can you list some smart tactical steps to take in Google Ads or digital marketing strategy overall, given that we need to operate more cost efficiently?
Mike B: That’s a great follow-up to the first question around just directing budget across channels and how you think about that, so I can provide some added context. At a high level again, I think it really does come down to a couple of things. One is evaluating the catalog and the second is evaluating how consumers are purchasing. There’s a lot you can do with that information that can be very strategic during this time.
So first is understanding again, how your catalog is reacting and trying to cross that and build that into the strategy. Whether that’s flagging a segment of products that are of lower inventory and not pushing as much on those, or flagging a set of high margin products, where right now you know you could to really focus on those to help your overall profitability. There’s a couple of different ways you can think about the catalog a little bit differently based on some of these challenges you may be faced with, again, whether it’s inventory, or whether it’s something about the way you’re just measuring success and measuring the overall performance of your business.
And then the second piece of this is really, again, reacting to changes in consumer behavior. I think, Mike, you hit on that really well when you said early on, they’re at home now. They’re being forced to shop online, whether they like it or not in a lot of ways and that can impact how people are shopping on weekends versus weekday. Typically, you see those patterns emerge based on when people are at work versus when people are at home. But one thing we recommend doing is really reevaluating your dayparting strategy in light of all this and understanding, maybe there’s some room to capitalize on areas that weren’t as strong before, but are now a pocket of opportunity.
So between thinking about modifiers like dayparting and thinking about your catalog in terms of prioritizing or deprioritizing different products, there’s a lot you can do there. Mike Farrell, you may have some other thoughts on this, but I think that those are some of the key things that I’ve been working on with our partners.
Mike F: Yeah, I think that there are a few other things that from a tactical perspective make sense. You talked about dayparting modifiers. I think things like adjusting demographic modifiers are another popular way to go about redirecting costs or trying to hone in on what’s going to be the most profitable for your business.
Household income is an area that we’ve talked a lot about. Obviously, with the economic factors, the lower household income shoppers might be more adversely affected by this than maybe some of the higher household income shoppers. So we’re keeping a close eye on how that data shifts for those target segments and trying to react appropriately for each one of our clients, depending on obviously what type of vertical they’re in, what type of products they sell.
Other things to think about: From a business perspective, think about your shipping policy. There might be instances where you’re looking to cut costs and save money. The urgency with which you need to deliver products in this environment might not be the same as it used to be when you were trying to keep pace with the Amazons and the Walmarts of the world with free two-day shipping. There may be costs to be saved by easing up on the speed with which you’re delivering product.
And again, this environment doesn’t automatically mean stop marketing and advertising. It just means you got to find a way to shift your approach and think about what are the biggest opportunities to drive valuable revenue while maintaining lower costs.
Mike P: Got it. Yeah, thanks, guys. Brittany, let’s talk Amazon for a sec here. This is a question that just came in. What are some smart steps to take regarding adjusting the Amazon advertising strategy?
Brittany: Yes, so Amazon is slightly different mainly due to the fulfillment. As you touched on, one of the biggest concerns from the Amazon side is the FBA fulfillment and the new restrictions that have been put on place. So, retailers do have a couple of options if they are fully FBA to be able to keep their business moving.
First thing is consider temporarily shifting your ad budget into other channels where your fulfillment isn’t as limited. Flexibility in ad budgeting is increasingly important as you seek to keep your business moving amid all of the changes that are constantly happening.
Another idea is to shift your fulfillment method from FBA to FBM if possible. Note that this can be harder for some retailers that haven’t done Fulfillment by Merchant previously, but if you are able to experiment this type of fulfillment, definitely recommend doing so and it’s always good to have a backup fulfillment in case of a drastic market shift like it’s currently happening.
And lastly, consider liquidating FBA products. We don’t really know if Amazon will continue to charge storage fees for those FBA products that are staying within the warehouse. So our thought would be to possibly put more spending into the FBA if you do have a lot of inventory there to be able to sell through it and not get charged with those high-storage fees.
Mike P: Will a prolonged brick and mortar shutdown make e-commerce ad spending even more important even during a future recovery? Mike Farrell, would you mind taking that one?
Mike F: Yeah, sure. I would say absolutely. I mean, obviously with stores being shut down for a longer period of time and more people being stuck in the house and getting more comfortable with online shopping. I mean, obviously, there’s certain demographics that are very comfortable with the now, but certain demographics that might have preferred going in store are being forced now to kind of think differently and start to test shopping online more frequently for different types of products.
And I think that while the shutdown is happening and even after the shutdown ends, you’re probably going to see a major shift in the way that people shop, just what their shopping habits are, and that that is going to be interesting in how the data starts to shift in all of our different marketing campaigns during the next couple of weeks as this continues to go on and then obviously, coming out of it and how all that stuff shifts afterwards.
So, I definitely think that e-commerce is going to become an even more integral part of how people run their business even though not it isn’t right now, but as we go through this and come out on the other end of it, I think it’s going to be a major part of how people run their businesses going forward if it’s not already.
Mike P: Yeah, I think you’re spot on. So another question just came in, what do you expect the future will hold for retailers who are grappling with the coronavirus impact? Mike Baber, let me throw that your way.
Mike B: Yeah, exactly. I mean, that’s a great question. I think we’re all wondering that to some degree. And what we’re seeing right now is there’s not one silver bullet and I think what I was hitting on earlier was agility and creativity are keys and really moving through this period. And as I was hitting on before, being able to steer your goals or make tweaks or adapt to a change without completely losing sight of what you had in your campaigns, in your advertising repertoire before this hit.
And so, we’re evaluating the landscape daily and continuing to adapt and we recommend retailers are doing the same and just keep in mind that there are going to be some positives coming out of it, as Mike Farrell was saying, maybe an increased presence of digital or online shopping after this is over with consumers becoming a bit more comfortable.
I would say creativity and agility are key during this time, being able to adapt day-by-day and then just keeping in mind that when you come out of this, you’re going to want to blend what you had before with any new opportunities garnered to this.
Mike P: What are the positives that could fall out of this situation?
Mike B: One positive we’ve hit on a couple times now is just the increased comfortability with purchasing online and shopping online and that increased exposure to some degree for online shopping. And I think a couple of other things to keep in mind are just unearthing or discovering tactics or again, segments of your catalog or segments of your audience that you maybe didn’t know you had before.
I’m going to go back to the beauty retailer example, but maybe a little bit more crossover of some of those traditional B2B products in the consumer space. There’s an example of that audience or that segment may not have quite been as packed before and whether that’s going to carry on for you after this is over, it remains to be seen, but there’s an opportunity to capitalize on some of that and start to maybe rethink a little bit of your long-term strategy based on some of the tactics and the ways you adjusted during this period.
Mike F: I think that another positive is possibly discovering the new audiences that are coming online and figuring out how those people fit into your overall marketing mix and how you’ll be able to go after them and retarget them and, and maybe rethink some of the messaging and promotions that you put out there in the long term after this is over, given the fact that you’ve unearthed these new audiences during this process.
It’s going to be interesting to see how people adjust their marketing strategy after this is over. Right now, you’re probably thinking of ways of your cutting spend in certain areas versus others and you might come out of this realizing that you don’t have to spend as much money on certain marketing tactics going forward, because they weren’t providing as much value as maybe they looked like they were previously. And then in other areas, you might find new areas where you feel like you can’t live without those channels, and you’ve got to make sure that you’re increasing investment in those things going forward.
Mike P: In a slightly different direction are you seeing or should we expect small brick and mortar stores coming into the paid search shopping environment? Mike Farrell, I think I’ll direct that your way.
Mike F: Sure. Yeah, I mean, I think that this unique challenge is presenting an opportunity for people to rethink the way they go about promoting their business and some smaller businesses might have been trying to exist in a more local fashion, with just their brick and mortar stores, but in this day and age, I think, it’s important that everyone has some online presence.
There are many tactics that businesses can use, even if they have small ad budgets, to focus on certain regional aspects and tactics that help build their brand and awareness of their business without having to spend a lot of money and compete with bigger players. They can play in a smaller space, specifically around their local stores to make sure that they have presence. And I think that that will be important for people, particularly small businesses.
I also think that one of the trends you’re seeing when you’re watching the news is that there are a lot of people talking about when we come out on the other end of this thing, support your local businesses, support the small mom and pop shops and stuff like that. And I think that you’ll see that more people will be looking to buy locally and support those smaller businesses because they recognize how hard they’re getting hit during a time like this.
Mike P: Yeah, that’s a great point, Mike. Brittany, let me get you back involved here. A question came in on the Amazon side, what’s your take or I guess Sidecar’s take or your personal take on how Amazon is supporting sellers and advertisers so far?
Brittany: Yeah, so they actually are taking major strides to address the logistical challenges due to the coronavirus pandemic. One of the latest changes that they released over the weekend is that they are actually relaxing some of their policies for shipping related performance metrics, so if you need to cancel an order due to any inventory or shipment issue, you can do so through a couple of links within Seller Central, and it won’t count against your health risk or your account health.
So definitely taking some strides to help the retailers in that space due to inventory concerns. We’re continuing to monitor the changes and their impact to sellers, just released over the weekend, so don’t have too much data to support how it’s working just yet, but they are taking pretty big steps and we’re continuing to monitor it.
Mike P: Next question. Mike Baber, this one I think is right up your alley. There’s a segment of merchants that it’s called in this question of going dark. Do the merchants who effectively turn off or go dark with basically reducing their spend during this time to potentially nothing, could they face a harder recovery and harder climb back to brand presence?
Mike B: Yeah, definitely. I mean, we certainly see retailers who, even with some of the strategy we’ve discussed, have to pull back spend nearly entirely or shut down. That’s something that we understand, maybe just a consequence of what’s going on right now. And I think a couple of things to keep in mind are, what I was hitting on before with, it’s really important that if you are taking drastic action like that, where you’re pulling back spends or you are almost going dark, to at least, and this is going to sound very simple, but it’s something that is just so important so effective to understand where you were before that and what are some of the key strategies you had in place.
I would say, if you are able to track adjustments you’re making, whether it’s by audience, whether it’s the only targeted very small substantive keywords or campaigns or products. If you’re going to have to whittle things down and really get to the basics of what you’re able to advertise, having that record of some change log will allow you to ramp back up quicker and make sure you’re not having to totally redo your campaigns or strategy.
It could be something as simple as creating a duplicate campaign and preserving the old copy and then running with a very small budget in this campaign. It could be something as robust as tracking all of your different audience adjustments and modifiers and being able to get back to that quickly to square one.
So I would say the most important thing is understanding, not just what changes need to be made, but how they’re going to impact things now, but also how you’re able to quickly come out of that. And I think retailers who are doing that, even if they do have to pull back spend, are going to be able to ramp back up and recapture a lot of that share voice that they had before.
Mike P: That’s really interesting, because I think that the overwhelming trend in this time period is for people to make a sweeping decision to shut down and turn things off and I think that you made some good points about thinking through the ramp-up strategies. Let me go back to Mike Farrell. With retail of non-essentials basically being shut down and retail of essential business skyrocketing by people stocking up, what do you expect to happen in both the essential and non-essential sector as we exit this shutdown phase?
Mike F: Yeah, that’s a good question. I would say from the essential side of things, I think that you’re going to see a shift in the way that people start to shop for some of those things. I mean, traditionally, people buy those normal essential staples for their household in store when they’re doing their normal grocery shopping, and I think that this period of time that has forced people to think a little bit differently about how and when they shop for those products, I think you’re going to start to see some of the online grocery delivery businesses start to take off a little bit more and things of that nature, food delivery, things like that.
And again, like from an Amazon perspective, I know that a lot of people buy big bulk items like toilet paper and paper towels and stuff like that through Prime and stuff like that. You’ll start to see people use that type of offering more aggressively. The flip side to that is that the stores that usually have relied on people buying those types of products in store might start to see a little bit of a hit when we come out on the other side of this thing and the shopping behavior of those people starts to change a little bit.
I would say on the non-essential side of things, there’s a lot of nuance to that question. Depending on how people will try to weather this storm, if they’re maintaining a presence online, and I know that the last question, Mike Baber was talking about how people that are considering shutting off completely. In those instances, I think that, those people will have a little bit more of a difficult time coming out of this because they’re not maintaining that visibility, but at the same time, to come out of it on the other side and make sure you still have an operation in place is the most important thing first and foremost.
There are certain tactics that I think that we would recommend to maintain some minimal level of visibility and minimal spend through this period of time without necessarily putting a whole bunch of money into online marketing, but I think that the non-essential side of thing, I think that these businesses are going to come out of this on the other side of it and there’s going to be a different competitive impact. Some of these businesses will unfortunately not make it through this and some people will come out stronger on the other side, so there’s going to be a very different competitive landscape when we come out on the other side of this.
Mike P: The last question is really forward looking. How should I prepare now for when things start turning around? What should I be doing right now?
Mike F: I can chime in there. So from my perspective, like I said a couple of minutes ago, I think maintaining brand visibility is going to be important during this time and the people that do that are going to come out in a more positive light on the other side of this process. One of the other recommendations that I would make is even though it may be challenging right now, I would highly suggest keeping a close eye on the customer experience that you’re providing to your customers and try not to let it slip even though it could be difficult.
Things like proactive messaging on your homepage or your product pages, whether it be around inventory levels or shipping delays, setting those right expectations and giving a good customer experience through this processes is one way that it’s going to help weather the storm and make sure that when you come out on the other end of this, you’re prepared.
And I also think right now everybody is on the defensive and they’re thinking very defensively about how do I cut costs and save money and all that stuff and for the people that have the opportunity to try to switch that mindset and think a little bit more offensively, you might see that there’s opportunity here in the wake of a lot of this stuff going on to acquire new types of customers and collect data on customers that could be a user or a customer after this is done.
I think, we talked a little bit about this, but there’s going to be gaps in competition that might be created by people that are being overly defensive and you might be able to take advantage of some of that opportunity if you’re willing and able and have the resources to go a little bit more aggressively during this timeframe.
And I think maybe lastly, I would say, make sure you’re creating messaging for shoppers around things like wish lists and things like that, that you might have that functionality on your website to maybe get them to think about how even though they’re home and you’re maybe just window shopping right now because they’ve got more time on their hands because they’re stuck in the house, I would use that time to put messaging in front of them to create those wish lists so that you can retarget them down the road when everybody is in little bit more of a stable place.
Mike B: Yeah, I think just echoing what Mike Farrell said. I think one really interesting thing there was the audience piece and understanding how you can build out a new customer segment and potentially leverage this moving forward. So, hopefully, as Mike said, you’re able to at least allocate some budget during this period to keep awareness and to keep people coming to the site through these channels.
But one thing to keep in mind is even if purchase intent is varying during this time period, if you’re able to gain new eyeballs or get people who might not be shopping for your product in the past or during this time of day in the past, that allows for some opportunities coming out of this to ramp back up and retarget those customers via audience lists or customer match list. So there’s a few different things you can do there, building up what Mike was saying around, coming out of this and being able to get back in front of new versus existing customers.
Brittany: Yeah, and from the Amazon side, the only thing that I would really add in terms of the brand recognition being very important during this time, if you do have Brand Registry, to continue building out your Amazon storefront, that’s somewhere that you can really take a hold of your brand, build it out, build out different landing pages and really showcase your brand through the storefront to continue that customer engagement.
Mike P: Great. Thank you so much. Everyone out there, we will continue to keep you updated, and keep you informed of ways we’re adapting and the success stories.