Scalability and Flexibility: Navigating Both Retail and E-commerce Realms

Santevia's Strategy Example

The Santevia Example – How to strategically maximize your results in platforms like Amazon, Shopify and TikTok

In the dynamic realms of retail and e-commerce, strategies centered around scalability and flexibility are fundamental to success.

Recently, Matthew Gohl, was a guest at the Two Ecomm Experts Podcast (a podcast hosted by the founder of Markademics Viktor Stoilov, you can check the episode here) where he told the story of his company Santevia.

Santevia is a water filtration company. They have a product that not only filters and removes harmful contaminants, but also adds back healthy minerals to the water to promote overall health and wellness.

Successfully being the CEO of the company, Matthew Gohl, shares invaluable insights on how to navigate on platforms like Amazon, Shopify, and TikTok, what are the obstacles and how to overcome them.

The shift towards online shopping has been accelerated, especially since the start of the pandemic in 2020, leading to more people buying and selling online.

Since then, Santevia has adopted a strategic balance, with 60% of sales generated online and 40% through retail channels.
This approach lets them not only benefit from selling directly to customers, but also having their products available in many retail stores.

By maintaining a diverse sales channel strategy, Santevia lowers risks and maximizes opportunities for growth in both the retail and ecommerce worlds.

But how platforms like Amazon, Shopify and TikTok helped him leverage the business correctly and what are the strategies behind each?

 

Amazon

Amazon has significantly transformed Santevia’s sales, enhancing its reach.

Leveraging Amazon’s marketplace offers unparalleled scalability, allowing Santevia to rapidly expand its customer base beyond traditional retail channels.

However, operating on third-party marketplaces like Amazon introduces challenges and risks, emphasizing the importance of maintaining a direct-to-consumer relationship.

E-commerce provides higher margins, whereas Amazon’s role resembles that of a distributor, impacting profitability.

Around 2017, Santevia began its Amazon journey using Vendor Central. However, by 2019, they recognized the limitations of this platform. In response, they decided to transition to Seller Central. This shift allowed Santevia to maintain ownership of their products in Amazon’s warehouses.

By 2022, they had completed the full transition, consolidating their presence on Seller Central to gain greater control over pricing and sales strategies.

But what exactly is the difference between the two selling platforms and why it had such crucial influence?

Vendor Central (1P) has its initial ease in wholesaling products to Amazon, however it has limited control over messaging and pricing, unpredictable product drops and limited access to customer data.

Whereas, Seller Central (3P) is the opposite. Having complete control over messaging and pricing, greater flexibility in logistics and inventory management, as well as access to valuable customer data, however it requires more day-to-day management, and potential stress due to increased responsibility.

 

Lessons for Transitioning from Vendor to Seller Central:

  • Cash Flow Preparation: Ensure adequate capitalization to sustain the business during the transition period, accounting for at least six months of potential low sales.
  • Inventory Forecasting: Utilize tools like Fathom for cash flow forecasting and inventory management to estimate future inventory needs and expenses accurately.
  • Advertising Strategy: Be strategic with advertising efforts, particularly during transitions, ensuring continuity and effectiveness in campaigns despite changes in inventory and platforms.

 

After Matthew explained the lessons, Viktor summarized the key points in the conversation so far, creating The Growth Formula for 2024 at Amazon:

Firstly, it is important to stay in stock to maintain trust with the algorithm and customers, leading to higher sales.

Secondly, optimize your advertising strategies through comprehensive keyword research.

Thirdly, focus on optimizing image carousels, titles, and descriptions to enhance conversion rates and visibility on the platform.

This strategic move empowered Santevia to optimize margins and customer acquisition efforts through Amazon advertising while retaining ownership and flexibility over their product listings.

 

Shopify

Growing on Shopify requires a relentless focus on content creation, as emphasized by Matthew.

He stresses the importance of content and brand awareness for acquiring new customers, advocating for a continuous content production.

Short-form videos play a central role in their strategy, cycling content every 7 to 14 days to maintain relevance and engagement.

Additionally, they supplement videos with static ads to diversify their approach. Despite primarily using organic reach, they also leverage ads for content that shows promising performance.

Sometimes, a piece of content performs unexpectedly well, posing a challenge to stick within the ad budget. Matthew emphasizes the need to assess if exceeding the budget is worthwhile and stresses the importance of trust between the team and ad buyers. They set thresholds for Cost Per Acquisition (CPA) and Return on Ad Spend (ROAS) to guide spending decisions, ensuring financial stability.

Maintaining financial flexibility is crucial for sustaining growth without disruptions caused by budget constraints.

 

Tik Tok and Influencer Marketing Strategies:

TikTok’s decline in ad effectiveness surprises Matthew, prompting a shift in advertising focus towards Meta platforms. He criticizes TikTok’s ad platform development, suggesting it’s ineffective for most e-commerce brands, contrary to popular belief.

Despite initial concerns over TikTok’s influence, Meta’s quick response with features like Instagram Reels and YouTube Shorts overshadowed TikTok’s impact.

While acknowledging TikTok’s popularity among Gen Z, we believe its advertising potential remains uncertain, especially if it fails to improve.

Additionally, influencer marketing can be a tricky game.

Working with influencers can yield mixed results, with only a fraction truly driving value. The key, Matthew suggests, is to focus on influencers with fewer than 250,000 followers, avoiding the big price tags often attached to larger accounts.

Having a budget of around $1,000 per influencer is sufficient, ensuring a manageable investment. A crucial component is the importance of obtaining full rights to the influencer’s content, allowing for whitelisting purposes.

This ensures maximum exposure for the content, even beyond the initial campaign period.

Moreover, by incentivizing influencers with commissions, brands can further boost engagement and drive sales. Ultimately, influencer marketing offers a unique opportunity to leverage trust and credibility, translating into more responsive audiences and higher conversion rates.

But how can we track influence performance?

As this question occurs Matthew employs two main methods.

The first involves using UTM links in Google Analytics, allowing for detailed tracking of traffic and conversions originating from influencer content. This method provides valuable insights into the effectiveness of each influencer’s campaign.

The second is Shopify’s coupon code platforms that are utilized for commission tracking and payout automation. By providing influencers with unique coupon codes, we can easily attribute sales to each influencer and calculate their commission accordingly.

This approach streamlines the process, especially when working with numerous influencers, ensuring accurate payouts without the need for manual calculations.

By implementing these tracking methods and optimizing influencer partnerships, Matthew maximizes the impact of influencer marketing in his growth strategy.

In conclusion, Santevia’s strategic approach exemplifies the art of maximizing results across diverse e-commerce platforms. Tells the strategy behind scalability and flexibility in navigating both retail and e-commerce realms. As well as sharing valuable insights on how to strategically maximize our results in platforms like Amazon, Shopify and TikTok.

To discover more inspiring stories and insights from industry experts, check “Two Ecomm experts” podcast on YouTube and Spotify.

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