GRUNDENS
2pXp™
Since the start of the 20th century, Grundéns has pioneered high-quality fishing gear and apparel that withstands the forces of nature – keeping men and women warm, dry and safe on waters across the globe. Grundéns was seeking help in improving its overall brand experience, assortment, sales, and margins.
HOW GRUNDÉNS TRANSITIONED AWAY FROM 3P SALES, BECAME A SELLER, AND IMPROVED MARGINS BY +15 POINTS ON AVERAGE
OVERVIEW
THE PROBLEM
Grundéns was looking to control the Amazon channel while improving the brand experience and assortment to drive higher sales. The brand was not interested in managing its own Seller Central account or in selling directly to Amazon. So, they teamed up with a third-party (3P) seller. Unfortunately, PO's from the 3P seller were driven by sell-through, not breadth of product assortment, leading to a conflict of interest.
THE RESULTS
Grundéns was surprised that they, themselves, could become sole sellers of their products on Amazon by leveraging Ridgeline Insights’ Seller Central account by proxy (2PxP). By investing ad dollars in right-to-win categories, year-over-year gross sales for the brand increased by +23% in the first 6 months. Strategic categories, such as footwear, improved by +35%. Overall margins for the brand increased by an average of +15 points (1500 basis points), leapfrogging Grundén’s wholesale margins even after Amazon expenses.
2P SELLING BY PROXY
HOW WE DID IT
LEVERAGING OUR SELLER ACCOUNT
Grundéns made the decision to transition away from its 3P relationship and become a seller by leveraging Ridgeline Insight’s Seller Central account. Selling by proxy can be used to become the sole seller on the channel or to sell alongside other 3P partners. The brand’s seller is shown as “Ridgeline Insights”, which can also be helpful when discounting or liquidating inventory.
THE BENEFITS - IT MAKES AMAZON SO EASY
Selling 2P by Proxy (2PxP) negates the need for the brand’s own Seller Central account, which typically requires accounting integration and dedicated resources. With 2PxP, we do all of the heavy lifting. Our team becomes an extension of the client's team and takes full responsibility for the brand’s content, catalog, inventory, and advertising management through our Seller Central account. Additionally, we provide comprehensive sales and margin reporting to enable timely decisions and handle all state sales tax filings.
WORKING THROUGH ACCOUNTING AND INVENTORY HURDLES
With 2PxP, we purchase products from our clients on 180 day terms. Once sold, clients receive the profit from all channel sales after product costs, Amazon selling fees and fulfillment costs, and agency commissions are deducted. The net result is higher overall margins for the brand versus wholesale margins, even after accounting for Amazon advertising expenses.
To increase the breadth of assortment for Grundéns and to comply with Amazon’s variable storage limits, we take a balanced approach to fulfillment based on current and historical sales data. Fast moving items are processed though Fulfilled by Amazon (FBA) and qualify for Prime shipping. Slower moving items are fulfilled by merchant (FBM) through our 3PL partner. Our team handles purchasing and allocation to sustain optimal stock levels at all locations.
INVESTING IN WHAT SELLS
As a rule of thumb on Amazon, brands should invest ad dollars in products with higher sales velocity and/or a right to win (for Grundéns, this was their Outerwear). Generally, a product with a right to win has strong points of difference vs competitor best sellers at a comparable price.
When formulating your brand’s strategy on Amazon, it’s important to understand the audience vs. the traffic coming to your brand’s website. 80% of searches on Amazon do NOT include a brand name. This may mean that more niche items (highly technical or in the upper 20% of category pricing) may not move as well on Amazon versus the brand’s direct-to-consumer (DTC) site.
A focal point for Grundéns during their launch was footwear. Upon category review, we suggested spending 50% of their advertising on stealing competitors’ share, as Grundéns boots were technically superior to Amazon best sellers at roughly the same price. This strategy paid off for Grundéns, with return on ad spend (ROAS) on footwear at a 3 to 1 ratio and overall ad conversion at 7%.
LISTINGS THAT ANSWER THE QUESTION... “WHY BUY?”
Conversion of a brand’s product detail page (PDP) comes down to multiple factors. Imagery, bullet points, and A+ content all play a role. For Grundéns, we optimized the image carousel with features, technology infographics, use cases, and sizing/fit charts. This resulted in a branded experience on par with the messaging and selling points provided on the brand’s DTC site.
EFFECTIVELY CROSS MERCHANDISE VIA THE STOREFRONT
To efficiently increase exposure of Grundéns’ extensive product line, and specifically new or slower moving items, we optimized Grundéns’ storefront. Amazon storefronts provide an immersive branded experience for consumers. Visitors may enter from an ad link or organically from the PDP and upon landing can be presented with additional brand options and complementary products.
Grundéns optimized storefront boasts a 13% conversion rate for its first months, which is over four times the industry average for DTC sites at 3% and +4 points higher than the average conversion rate across all of our channel management clients at 9%. This is especially impressive as 58% of Grundéns storefront traffic is pulled in from advertising, which typically converts at a lower rate than organic traffic.
WINS & STATISTICS
THE RESULTS
AFTER A 6 MONTH PERIOD
When it comes to success on Amazon, we’ve learned that with a holistic strategy focused on delivering specific KPIs, your brand can excel beyond your wildest dreams.
7%
AD CONVERSION
+23%
INCREASE IN AMAZON
GROSS SALES
13%
STOREFRONT CONVERSION
+15 POINTS
(1500 BASIS POINTS)
INCREASE IN IN AVERAGE PRODUCT MARGIN
We don’t showcase these numbers to boast, but rather illustrate the success we aim to achieve with our partner brands. You’ll be able to learn more about our approach and what it takes to succeed on the world’s largest marketplace in the upcoming white paper, “Building Your Brand on Amazon.”