The Hybrid Approach To Amazon Selling: 1P vs 3P

Vendor Central, 1st Party, 1P

Amazon sells your products on a wholesale relationship. You send your inventory to Amazon, they control your pricing and your listing displays as “Ships from and sold by Amazon.com”.

Amazon Vendor Central 1P

Seller Central, 3rd Party, 3P

You sell your products on Amazon’s marketplace and you have Amazon fulfill your orders from their fulfillment centers (Fulfillment by Amazon, FBA) and/or you can fulfill orders from your own warehouse or 3rd party warehouses (Fulfillment by Merchant, FBM).

Amazon Seller Central 3P

Adding 3P (marketplace) to Amazon if you already sell 1P to Amazon

  • You can open up a marketplace selling account and safely sell your products that Amazon 1P is not selling.
  • You may be able to safely sell on your 1P listings (the ASINs where Amazon is selling your products 1P) but we recommend asking your rep at Amazon if there they have any objections. We recommend telling them that you want to have products available via FBA in case 1P runs out of inventory.

To Sell 1P or not to sell 1P to Amazon, that is the question.

As 3P sellers that control their own brand become successful, they are commonly approached by Amazon Retail about selling direct to Amazon (1P). This is a flattering proposition that should be carefully considered. As with anything, there are pros and cons.This article on 1P vs 3P by our friends at Buy Box Experts is extremely insightful.

Pros:

  • bulk purchase orders from a retail giant.
  • ASIN (listing) optimization by Amazon’s internal merchandising team.
  • listing priority since Amazon is incentivized to sell through your inventory.
  • credibility for your brand among skeptical and careful consumers since your products are sold directly by Amazon.

Cons:

  • you lose control over your pricing since Amazon has the right to sell at whatever price their automated system decides — even below your MAP policy.
  • your margins are reduced since you’re selling at wholesale prices, not retail prices
  • your payment terms are longer than the 14 day disbursement cycle on the marketplace.
  • Amazon gains leverage as you become more reliant on your relationship with them. This leads to lower margins and longer payment terms.

The Hybrid Strategy

Many successful sellers (brands, manufacturers) find themselves in a hybrid arrangement with Amazon where they’re selling a portion of their SKUs direct (1P) and the remainder on the marketplace (3P). Amazon’s merchandising teams are often selective about the SKUs that they decide to carry 1P. The math needs to make sense, this means some SKUs are left to be sold 3P if at all.

We believe it’s most ideal to sell only 3P. This is the surest way to protect your brand. If you sell 1P, we hope you will also find ways to sell at least a subset of your SKUs 3P to take advantage of the benefits outlined above.

Facebook and Cambridge Analytica scandal, explained!

A visual of how it all fits together. They’re now shutting down.

Cambridge Analytica, the political consulting firm that did work for the Trump campaign and harvested raw data from up to 87 million Facebook profiles, is shutting down.

There is a complicated web of relationships that explains how the Trump campaign, Cambridge Analytica, and Facebook are tied together, as my colleague Andrew Prokop explains in this excellent piece.

But if you need a refresher on how all the pieces fit together, this diagram helps make sense of it all.

1) Here’s the very simple version of the story

Facebook exposed data on up to 87 million Facebook users to a researcher who worked at Cambridge Analytica, which worked for the Trump campaign.

2) But how is the Trump campaign connected to Cambridge Analytica?

Cambridge Analytica was created when Steve Bannon approached conservative megadonors Rebekah and Robert Mercer to fund a political consulting firm. Bannon became vice president of Cambridge Analytica, and during the 2016 election, he reached out to the Trump campaign to introduce the two sides.

Bannon, of course, eventually became a senior adviser to Trump before he was fired in August 2017.

So what is the SCL Group, which does the work for Cambridge Analytica? It’s a public relations and messaging firm that has clients all around the world, and as Vox’s Andrew Prokop writes:

SCL tends to describe its capabilities in grandiose and somewhat unsettling language — the company has touted its expertise at ”psychological warfare” and “influence operations.” It’s long claimed that its sophisticated understanding of human psychology helps it target and persuade people of its clients’ preferred message.

This means, as the New York Times writes, Cambridge Analytica is basically a shell for the SCL Group.

3) How did Cambridge Analytica get its data?

Cambridge Analytica CEO Alexander Nix actually reached out to WikiLeaks founder Julian Assange about the emails that were hacked from the Democratic National Committee’s servers, according to the Wall Street Journal.

But the more important part of this story is how Cambridge Analytica got its data from Facebook. And according to a former Cambridge Analytica employee, the firm got it through researcher Aleksandr Kogan, a Russian American who worked at the University of Cambridge.

4) How did Kogan use Facebook to harvest up to 87 million user profiles?

Kogan built a Facebook app that was a quiz.

It not only collected data from people who took the quiz, but as my colleague Aja Romano writes, it exposed a loophole in Facebook API that allowed it to collect data from the Facebook friends of the quiz takers as well.

As Romano points out, Facebook prohibited the selling of data collected with this method, but Cambridge Analytica sold the data anyway.

Why this is a Facebook scandal more than a Cambridge Analytica one

Facebook founder and CEO Mark Zuckerberg wrote in a response to this scandal, “I’ve been working to understand exactly what happened and how to make sure this doesn’t happen again. The good news is that the most important actions to prevent this from happening again today we have already taken years ago. But we also made mistakes, there’s more to do, and we need to step up and do it.”

But former Facebook employees have said that there’s a tension between the security team and the legal/policy team in terms of how they prioritize user protection in their decision-making.

“The people whose job is to protect the user always are fighting an uphill battle against the people whose job is to make money for the company,” Sandy Parakilas, who worked on the privacy side at Facebook, told the New York Times.

Now, there is a decent chance Cambridge Analytica’s work didn’t actually do much to elect Trump; the firm’s reputation in the political consulting community is less than stellar.

But this highlights a larger debate over how much users can trust Facebook with their data. Facebook allowed a third-party developer to engineer an application for the sole purpose of gathering data. And the developer was able to exploit a loophole to gather information on not only people who used the app but all their friends — without them knowing.

Still, it’s Cambridge Analytica paying the price today after losing multiple clients after the last several months of unflattering publicity.

Voice Search and the futur of SEO

Google Voice Search

OK Google, Siri, Alexa, Cortana; Can you tell me some stats on voice search?

I’m not going to pretend this post is anything more than a list of statistics. Statistics on voice search that you can read and refer to in order to understand how optimising sites for users will change in 2017 as usage of voice search increase.

2017 saw the launch of Home – Google’s voice-activated speaker powered by the Google Assistant and also the integration of Google Assistant into our TVs.  December 2016 saw Amazon’s Echo products become their most popular product over the holiday period. According to Google, their Assistant is now available on more than 400 million devices, including speakers like Google Home, Android phones and tablets, iPhones, headphones, TVs, watches and more.

Predictions

“50% of all searches will be voice searches by 2020” according to comscore

“About 30% of searches will be done without a screen by 2020.” via Mediapos

“We estimate there will be 21.4 million smart speakers in the US by 2020” according to Activate

“By 2019, the voice recognition market will be a $601 million industry”, according to a report from Technavio via Skyword.

“This year (2017), 25 million devices will be shipped, bringing the total number of voice-first devices to 33 million in circulation.” based on a new study by VoiceLabs via Mediapost

Current Usage

“Google voice search queries in 2016 are up 35x over 2008” according to Google trends via Search Engine Watch

“40% of adults now use voice search once per day” according to Location World

“Cortana now has 133 million monthly users” according to Microsoft/Tech Radar

“In May 2016, 1 in 5 searches on an Android app in the USA were through speech” according to KPCB

“25% of 16-24s use voice search on mobile” via Global Web Index

“41% of people using voice search have only started  in the last 6 months” according to MindMeld

“60% of people using voice search have started  in the last year” according to MindMeld

“11% of people using voice search started  more than 3 years ago” according to MindMeld

19% of people use Siri at least daily. (HubSpot, 2015) (Source: https://www.hubspot.com/marketing-statistics)

“9% of users said that they’ve used AI personal assistants like Siri or Cortana in the past day” according to AYTM

“45% of those who have used AI personal assistants said they’ve used Siri. 33% have used Google Now. 27% used Microsoft’s Cortana. 10% have used Amazon Echo or Alexa.” via AYTM

“1 in 5 online adults have used voice search on their mobile in the last month” via Global Web Index

“37% use Siri, 23% use Microsoft’s Cortana AI, and 19% use Amazon’s Alexa AI at least monthly.” (HubSpot, 2015) (Source: https://www.hubspot.com/marketing-statistics)

“We estimate that 325.8 million people used voice control in the past month” according to Global Web Index (that’s almost 10% of the online population according to Internet Stats).

“We estimate that the retail giant (Amazon) has sold 5.1 million of the smart speakers in the U.S since it launched in 2014” according to CIRP via Geekwire.

“Amazon sold approximately 2 million units in the first nine months of 2016” according to CIRP

“Amazon sold 4.4 million Echo units in its first full year of sales” according to Geek Wire

“25% of searches on Windows 10 taskbar are voice. On desktop!” according to Purna Virji

“Only around a third of smartphone owners use their personal assistants regularly, even though 95% have tried them at some point.” according to Creative Strategies via The Economist

“Only 11% of respondents who already own an Amazon Alexa or Google Home device will also buy a competing device.” via Voicelabs.

“Application growth for Amazon Alexa has been impressive – over 500% in the second half of 2016″ according to Voicelabs.

“Evercore estimates 500,000 Google Home units shipped in 2016” via Bloomberg

“65 percent of people who own an Amazon Echo or Google Home can’t imagine to going back to the days before they had a smart speaker.” via Geomarketing.com

“42 percent say voice-activated devices have quickly become “essential” to their lives. via Geomarketing.com

“The Echo Dot was the best-selling product on all of Amazon in the 2018 holiday season” via Techcrunch

“1 in 2 use voice technology on their smartphone, 1 in 3 voice technology users use voice technology daily.” via ComScore

“47% expect their voice technology usage to increase” via ComScore

” The number of households in the US with smart speakers has grown 49% in the last 5 months (Jun-Nov 2017)” via ComScore

“Amazon and Google account for 94% of all smart speakers in use” via Strategy Analytics

“Google Home has roughly a 25 percent share of the US smart speaker market.” via Search Engine Land

“56% of online grocery shoppers use or plan to use voice controlled smart assistant/speaker” via Global Web Index

“52% of people keep their voice activated speaker in their common room (e.g family or living room), 25% in bedroom and 22% in their kitchen” via Think with Google

“72% of people who own a voice-activated speaker say their devices are often used as part of teir daily routine.” via Think with Google

“41% say using their voice-activated speaker is like talking to a friend or another person.” via Think with Google

Intent

“Mobile voice-related searches are 3X more likely to be local-based than text” via Search Engine Watch

But “just 13 percent of smart speaker owners use their smart speakers to find a local business” according to an NPR survey via Geomarketing.com

“Home Alone and Elf were the most requested 2016 holiday movies with Alexa.” via Amazon

“Customers use Amazon Echo for many purposes, with one-third using it as an information provider responding to questions and over 40% as an audio speaker for listening to streaming music.” according to CIRP.

“Nearly 50% of people are now using voice search when researching products.” via Social Media Today

“High consumer usage of voice assistants in autos (51%) and household (39%) indicates increased comfort with the technology” – according to Activate via WSJ.

“Google’s AI has been reading nearly 3,000 romance novels in order to improve its conversational search abilities” via Click Hub

‘Personal assistants’ is the top marketing search of 2016″ according to Bing via Econsultancy

“Voice activated speaker owners would like to receive the following from brands; deals, sales and promos (52%), personalised tips and info (48%), events and activity information (42%), business information such as store location (39%) and customer service support (38%).” via Think with Google

Reason

“Humans can speak 150 words per minute vs type 40 words per minute” via Katherine Watier

“28% think voice search is a more accurate way of searching” via Katherine Watier

“43% cite that using voice search is quicker than using a website or an app” via Katherine Watier

“42% say that use while driving is  a reason for using voice search” Katherine Watier

“21% don’t like typing on their mobile phone and so turn to voice search” via Katherine Watier and Statista, 2015 (Source: https://www.hubspot.com/marketing-statistics)

“82 percent of Amazon Echo smart speaker owners subscribe to Amazon Prime” via Geomarketing.com

“More than two thirds of current owners of Amazon Echo and Google Home smart speakers are planning to buy another smart speaker within the next six months” according to Strategy Analytics

Errors

“outside 35% of normal recognition errors, 31% were noise related and 22% were pronunciation related” according to Research Gate

“Today, speech recognition word error rate is 8 percent.” via Bruce Clay

“Fifteen years ago quality had stalled, with word-error rates of 20-30%. Microsoft’s latest system, which has six neural networks running in parallel, has reached 5.9% (see chart), the same as a human transcriber’s.” via The Economist