It has been two and a half years since my last newsletter. The e-commerce world increasingly feels equal to dog years – a lot has changed. What are the major learnings I have had.

Learnings A to Z

Amazon is still a misunderstood channel for brands. Yes – you read that right. There are still brands that either are unaware of the channel or are just not interested in selling on the marketplace. A decade ago, I was one of those idiot consultants who thought that brands should not be on the channel. Really? Over the last two and half years – the numerous times I saw Amazon being the largest and fastest-growing channel for brands. Consumer packaged goods believe that the deck is so stacked against them that Amazon is not worth the effort. Really? What are we doing here?

Not all brands are created equally. I know they have different names, but what was the original channel for which the brands were designed? Was it retail, online, a combination, or something like direct-to-consumer? I understand that the brands I worked with were either in trouble, needing transformation, or unaware of their imminent failure/bankruptcy. Understanding brands and their initial founding is helpful to understanding their future.

Strategy is not Tactics

There is a definite difference between strategy and tactics; agencies and service providers have no idea. Increasingly, as time passed, I started looking at the background of those I worked with to understand their digital frame of reference. If you have domain expertise, you can quickly determine whether you are dealing with an operator or a pretender. Sadly, I had a mixed bag, which I think depends on talent availability. There is no such thing as a risk-free, easy e-commerce strategy to help businesses grow. If a service provider would communicate that to me – my first question is – wait, what?

Brands and their leadership teams can and should ask their service providers hard questions. One of the most mind-blowing situations I witnessed was a call between managed services and an agency team telling a brand about the past two weeks and how they should think about it. The brand staff asked no questions and took all the words as gospel.

Did I mention that the agency also referenced how the brand growth would impact future costs based on performance bands? If we grow X then your costs will be Y. What? The brand is the client and should be asking questions, and cost management should never be used as a negotiation tactic. Alignment of incentives is incredibly important.

Every vendor/service provider must be kept on a short leash to ensure that operations align with goals and long-term direction. Third-party logistics providers and software vendors are not kept on their toes because their pricing models are not aligned with the company’s long-term needs.

I am flabbergasted at how little benchmarking and analysis is done when funds are paid for services rendered. The best founders and C-level executives constantly renegotiate costs to ensure better unit economics and profitability, yet signing long-term agreements is done with little or no oversight.

Humans, dynamics, and decision making

Management uses human dynamics to not make decisions. I do not believe that management understands what management is. I worked with a management team that essentially said the right things but, due to relationships, essentially did nothing. “I am unable to progress or get a promotion and thus am going to slow play this.” when the shoe meets the road, these same companies can not understand why they are getting eaten for lunch and dinner like a buffet by leaner and meaner teams.

I had a conversation with two founders recently in which they said they are burnt out due to people dynamics and the toll it takes. In my advisory capacity, I told them they needed to put this business/es into the naughty corner for at least a quarter and restart the conversation. I will never forget a call with a board of directors where the CEO asked his head of E-commerce, ” Why was this never communicated to me?” Newsflash—this happens often, and consultants worth their payment should communicate this to their clients.

When Capital Deployment Looks for a Problem To Solve

Just because it looks good in a spreadsheet does not make it a good idea. Before I went silent, I spoke to Amazon aggregators, and honestly, it was a dog-and-pony show. How on earth does this make sense? Amazon software-as-a-service (SaaS) aggregators (hello Carbon6, threecolts, and others) are increasingly going down the same path. Why is an asset for sale and why can only you turn it around? If private equity or venture investors have given your aggregator millions, why would you acquire companies and then hope to offer an end-to-end solution that customers will use?

Learning – Less is More

Newsflash: Monolithic software is over and, in most cases, only does one thing well. I am seeing more and more companies use multiple solutions to operate profitably rather than paying one company a boatload/ a shed full of fees. We currently have too much Amazon software available, yet entrepreneurs believe they should enter this crowded market. One of the biggest challenges not spoken about is sellers and vendors having access to the correct software for their current needs. The best operators do not have long-term software fees but use performance-based business models to ensure they can access the newest solutions with the most recent technology. Every software startup I do diligence on has artificial intelligence baked into it. Really?

Amazon Accelerators that Accelerate?

Amazon accelerators (hello Pattern, Spreetail, and others): what are you accelerating? I wonder if these companies could revert and rethink their funding from non-traditional funders if they would take the capital. Was this ever a 10x opportunity or another case of replicating something that already exists (hello, Amazon 1P services) and trying to create margins in tough parts of the Amazon marketplace. I believe these companies made mistakes such as no product profitability analysis before taking inventory.

I spent nearly a month in this sector, and it feels that the advertising services have been commoditized to such a degree that the only real driver of these solutions is the supply chain services it offers brands. Increasingly, non-standardized Amazon inventory enables these services to make a margin per transaction. Could these private equity investors who invested in these companies be looking for exits?

Goodbye Shopify – It’s You Not Me

I got off the Shopify hype train. If you have worked with Shopify software, especially outside the US and Europe, it’s a nightmare. Customer service is horrific, and solutions are sometimes not logical at all. There is little to no curation of their app store, which in some cases directly affects performance, yet curation is not done. Unproven code or inactive apps are easy to find, but fundamentals are not inside Shopify’s software. Shopify has created a generation of entrepreneurs who do not know what good looks like. They would much rather follow the cult leaders on X/Twitter, who sometimes do not disclose their commercial relationships with these startups. Shopify’s management has gotten away with not answering questions on earnings calls through paid research from an undisclosed Big Four consultancy. Arming the rebels was a great moniker, but it leaves entrepreneurs lacking solutions when there is no real competition from other platforms.

Digital Marketing Needs a Rethink

Can we just admit that the customer acquisition marketing that agencies and internal teams do is broken? The initial success was due to low costs and the platforms’ desire to grow their advertising platforms to please Wall Street and investors. I have yet to see agencies that can grow businesses without huge/ginormous budgets. Why do startup founders and investors believe in spending millions to grow product market fit and have no clue what the intent of their business is? What are the keywords that are driving your business? Can new initiatives not be tested with organic and no-budget tools? Have we created a generation of entrepreneurs dependent on Meta and Google products? Why are new audiences so hard to find, and why must everything be a big black box similar to those found inside airplanes? Large brands I have worked with have forgotten about email and depend on social media to grow engagement. Has anyone inside your business seen what your ads are shown next to?

East and West are Geographical Locations Not Coming Closer

China-US relations will never return to normal. Both sides of the equation think the other side has malicious intent. While it may be very complicated if you do not live in one of those markets, the world is increasingly divided into two parts. These countries need another for investment and consumption of manufacturing, and increasingly, I wonder if we will see Chinese companies listed on US stock exchanges. Ask yourself a simple question, does it make sense for TikTok/Bytedance or SHEIN to list in Europe? Increasingly, I believe these businesses will rather raise capital from investors or secondary markets than list on small stock exchanges such as Hong Kong, London, and Frankfurt.

The Largest Marketplace in the world – What Happened?

What happened at Alibaba? The press seems to believe it was caused by botched management changes and competition from Pinduoduo, KuaiShou, and Bytedanbce. What if multiple challenges impact China’s first US-listed business. While the company has refocused on China, it does feel like it’s an easy target for journalists to make a narrative. The biggest challenge no one is willing to talk about is the staff turnover and staff movement to competitors who are likely paying bigger salaries with stock options that will vest and provide generational wealth. I also believe that China is never going to become a consumption-based country due to Chinese culture and the humility required to be a Chinese citizen.

The Congratulatory Industry Events

Is there any need to attend NRF, Shoptalk, and other E-commerce events except to see friends? I have not attended an industry event or webinar in years – why? I feel we gloss over issues and can send teams to events but do not have budgets for the fundamentals. Unless you are in a country such as Ireland that seemingly understands that small, intimate events (thanks for showing me this – Vinny O’Brien) help the sector, it feels like we have lost our direction. Maybe my introverted personality is showing itself here, but I am concerned about the self-congratulatory LinkedIn content I read about spending three days in whatever location. Attending trade shows is important, but conference hopping and creating valuable sessions are mutually exclusive. E-commerce is hard, and very few companies understand, let alone execute it at a level, yet we have various topics we do not discuss – analytics, profitability, etc.

In conclusion, it is a very interesting time to work in e-commerce, and I am going to strive weekly to ask the hard questions and provide answers for the operators, agencies, and funders (venture capital and private equity funds) as I am not seeing it. I also want to thank Rick Watson and George Westcott for their input to get me to restart my newsletter.