“Focus on the customers” With James Thomson

When the Pandemic has passed, and consumers are able to return in large numbers back to physical stores, their expectations will have changed around how to interact with retailers. With online channels, consumers can find in-stock supply of what they are seeking without wasting time driving between stores. Online, it’s much easier for consumers can […]

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When the Pandemic has passed, and consumers are able to return in large numbers back to physical stores, their expectations will have changed around how to interact with retailers. With online channels, consumers can find in-stock supply of what they are seeking without wasting time driving between stores. Online, it’s much easier for consumers can do price comparisons, and watch video demonstrations to learn more about how they might interact with products. Finally, online channels have made it harder for pricing promotions to be run in specific geographies, now that channels like Amazon go looking for regional pricing specials that Amazon can match through nationally-shared pricing.

As part of our series about the future of retail, I had the pleasure of interviewing James Thomson, Chief Strategy Officer, Buy Box Experts.

James Thomson is a partner at Buy Box Experts, a managed services agency supporting brands selling online. Earlier, he served as the business head of Amazon Services, the division of Amazon responsible for recruiting tens of thousands of sellers annually to the Amazon marketplace. He also served as the first Fulfillment by Amazon (FBA) account manager. Prior to Amazon, James was a management consultant and banker

In 2015, James co-founded the PROSPER Show, a continuing education conference for large Amazon sellers, and in 2017 published the book “The Amazon Marketplace Dilemma”, designed for brand executives seeking to optimize their distribution strategy on the Amazon marketplace. In 2020, he co-authored the book “Controlling Your Brand in the Age of Amazon”, designed for brand executives struggling to handle critical channel management issues caused by pressures from the Amazon marketplace.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

Back in 2007, I had spent nearly a decade working in management consulting and banking, and decided I needed a big change. Having been trained to incorporate data into all of my work, I decided to look for an industry that was growing and flush with usable data. Living in Seattle, it didn’t take long to decide that working at Amazon might be a suitable path. It turns out that after six years at Amazon, and another seven running an agency supporting brands that sell on Amazon, I can confidently say that I think this “Amazon thing” is going to work out! I’ve been very fortunate to have learned so much from working directly with thousands of entrepreneurs who have launched their businesses on the Amazon marketplace.

Can you share the most interesting story that happened to you since you started your career?

We all want to make a difference professionally, and my big wake-up call happened back in 1999, when I was working in Asia on a consulting project for 6 months, supporting an international brand that was trying to build its local market share. We joined the client’s country manager and team in developing a substantial, data-driven study that helped point the brand in a direction that they had not contemplated. The fact that a small team of young consultants were able to build substantial knowledge quickly and contribute to this billion dollar client’s efforts to change direction, this was a big realization for me on the benefits of identify the key levers that would make a difference for the client. This project gave me considerable enthusiasm to work on bigger, more complicated problems — ultimately, achieving what was initially deemed impossible brings a level of excitement and enjoyment that I have pursued professionally ever since.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson or takeaway you learned from that?

I am humbled by the umpteen mistakes that I have made where I’ve assumed that I was somehow a typical customer of the brands with which I worked. I have lost track of the number of times that I saw a product that made no sense to me, only to learn that it was selling absurdly high volumes of product. When I was Amazon, it was drilled into our heads that we are not the “average” customer. That being said, I don’t think anyone is actually average customer, but instead there is a wonderful challenge of positioning products successfully for sale when the “average” customer is really a collection of wide-ranging customer needs.

Are you working on any new exciting projects now? How do you think that might help people?

I get excitement each day by working with brands to help them sell online more efficiently. So many brands haven’t clearly defined their unique value proposition, which remains a critical part of differentiating one’s brand in online channels that are chalk full of endless competitors. The people I primarily help are the brands that are evolving how they think about online channels — slowly we are seeing a shift away from a confrontational attitude towards these channels, moving towards a recognition that online channels are much more flexible for testing ideas, collecting consumer data, and adjusting inventory to address wide-ranging customer needs across geographies.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

Without a doubt, the single most effective way that I have avoided burn out is to protect carefully at least half a day a week to work on new projects that are driven by my own observations and curiosities. By being able to innovate and test with these projects, I can remain fresh and focused, even if 90% of my time is required for the mundane parts of my job.

None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?

In my banking role I had before working at Amazon, I had an executive coach named Ric Oslin who guided me through my frustrations and lack of self-awareness on why I didn’t like my role. He helped me frame what is ultimately important to me in a job, and what motivated me to work on projects that I deemed as worthwhile. Not understanding initially why I was unhappy professionally, I benefited immensely from his mentorship, as I came to the realization of how critical an alignment was between corporate culture and my own motivators. Thanks for Ric’s help, I left my banking role to join Amazon, where I was able to be judged by the quality of the data-driven work that I did, rather than by level of relationship management skills.

How have you used your success to bring goodness to the world?

Ultimately, others will judge me on the goodness that I have been able to bring. I have been very fortunate to have a business partner who has high ethical standards, and believes in making clear any potential conflicts of interest. I believe that it is easier to do good if you are open and honest about your intentions and goals, and I have worked diligently to honor those standards throughout my professional career.

Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share five examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?

When the Pandemic has passed, and consumers are able to return in large numbers back to physical stores, their expectations will have changed around how to interact with retailers. With online channels, consumers can find in-stock supply of what they are seeking without wasting time driving between stores. Online, it’s much easier for consumers can do price comparisons, and watch video demonstrations to learn more about how they might interact with products. Finally, online channels have made it harder for pricing promotions to be run in specific geographies, now that channels like Amazon go looking for regional pricing specials that Amazon can match through nationally-shared pricing.

Learning from these developments, I see physical retailers needing to try these sorts of experiments:

  1. More in-aisle video displays, showing consumers how a product works with their lives.
  2. Software that provides much more accurate, real-time inventory levels of inventory on physical shelves. That information will be made available for shoppers to see on their phones, as they ponder whether to travel to the physical store or simply click online to buy. Today, some retailers have inventory level information available, but its accuracy definitely continues to need a lot of work.
  3. Physical retailers will make it easier for customers to get products shipped directly to their homes, especially for inventory that isn’t available in the particular store where a customer happens to be shopping.
  4. Retailers may run more in-store educational events that draw consumers into the store, and away from the computer.
  5. Brands are likely to reduce the depth of discounting that they offer in physical stores, reverting to smaller discounts run more often — such behavior will reduce the likelihood of the substantial retail arbitrage behavior that goes on today where consumers buy heavily discounted products instore, and resell them online at full price for a tidy profit.

In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?

Physical retail provides consumers with strong opportunities to browse and to use shopping as a social event. Online channels haven’t figured out either of these. On the other hand, far too many physical retailers haven’t seamlessly integrated the online shopper into their physical store operations, choosing instead to operate online and instore as completely different businesses. This leaves shoppers unable to shop in-store but have shipped to them (limited delivery options from the store), or able to shop online and then return instore.

For physical retailers to succeed, I see the mall becoming a much more important social destination, and less critically a shopping destination — we see plenty of malls capitalizing already on integrating dining, movie theaters, etc. into their operations. For standalone retailers, they will need to bring accurate inventory reporting and interchangeable online and instore experiences to keep customers interested in spending time in physical outlets.

The so-called “Retail Apocalypse” has been going on for about a decade. While many retailers are struggling, some retailers, like Lululemon, Kroger, and Costco are quite profitable. Can you share a few lessons that other retailers can learn from the success of profitable retailers?

Short-term profitability comes and goes, often driven by external factors outside the control of retailers or brands. But long-term profitability is almost always driven by internal discipline around listening, adjusting and innovating to the needs of customers. I’ve worked with too many companies that get caught up in the sunk cost fallacy that they will continue to do things the way they’ve always done things. As the introduction of online marketplaces has proven, brands and retailers that don’t adapt will be left behind.

Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?

There are two issues here causing headaches for US and European brands — the first is how many layers of middlemen are involved in getting products to consumers. If a manufacturer can sell directly to consumers, there is typically one less mouth to feed along the distribution value chain. Most US and European brands have traditionally used distributor or retailer models to get products in front of consumers. As more brands (including US digitally-native brands) build share on marketplaces like Amazon, these brands are finding they have more margin to work with to build their brands because there is at least one fewer step in getting products to consumers. Some brands are already succeeding through online shopping carts that they offer on their websites.

The second key issue has to do with channel control — digitally native brands are usually able to control who sells their products online, and at what retail prices. We believe most consumer brands should be considering a DTC strategy, specifically one involving much tighter distribution control across all channels, so less product ends up being diverted from traditional retailers onto Amazon, where it is typically sold at lower prices by unauthorized sellers.

Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

My focus is on helping companies that sell on Amazon. I’ve watched too many new entrepreneurs view Amazon as a hill of gold waiting to be captured. Unfortunately, it’s an incredibly competitive marketplace where not everyone plays fair, and Amazon monitors the performance of each seller according to very high operational standards — definitely not a place where one can easily “dip their toe” into the market. Rather, you have to be all-in, or all-out! Five years ago, my business partner Joe Hansen and I co-founded The Prosper Show, an educational conference aimed at demystifying the process of selling on Amazon, and focused on providing best practice insights to help Amazon sellers raise their game. I’d like to see more organizations focus on education and simplification to help these budding entrepreneurs to make better decisions about how they interact with the large, but challenging opportunities that the Amazon marketplace represent.

How can our readers further follow your work?

I’m on Linkedin at https://www.linkedin.com/in/jblthomson/, or at www.buyboxexperts.com . I also published a couple books about Amazon that are conveniently available on Amazon.

This was very inspiring. Thank you so much for joining us!

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