Marie Kondo your catalog. Just because you sell it doesn’t mean you have to sell it on Amazon. Apply some spring-cleaning zest to your product catalog and run profitability analyses on your low-volume SKUs. One of our grocery clients pared down their Amazon product portfolio and focused all marketing efforts on driving sales growth on a smaller number of products, which improved sales and profitability by more than 30 percent.
As a part of my interview series about “Five non-intuitive things you need to know to run a very successful Amazon business, I had the pleasure of interviewing Michael Lagoni, CEO of Stackline, a retail technology company based in Seattle, WA. Founded by a group of Amazon veterans, Stackline activates data, automates execution, and optimizes e-commerce marketing performance for hundreds of the world’s largest companies. Before founding Stackline, Michael held data analytics roles at Amazon and The Boston Consulting Group where he helped consumer brands turn insights into commercial excellence. Michael earned his MBA from Harvard Business School.
Thank you so much for doing this with us! Can you share with us the “backstory” about what brought you to this specific career path?
My entrepreneurial fire was sparked by a college professor who encouraged me to study the captains of industry of the 20th Century. I was inspired by their attitudes towards risk and their will to innovate far out ahead of demand. After college (and with my own school experience as inspiration), I started the Cleveland chapter of non-profit, Minds Matter, to help underserved teens unlock their academic potential and earn college degrees. That gave me my first taste of organizational leadership, and more importantly, what it felt like to be told by a community of successful business people that something I wanted to achieve was impossible. But discouragement can be highly motivating, and we ultimately secured more funding for our programs than we projected and built a thriving student and mentor community. On the heels of those valuable lessons, I went to Harvard Business School before heading west to find out what it was like inside one of the most successful, innovative companies in the world. Working for Amazon, I saw how e-commerce would continue to grow and transform retail and marketing practices across the globe. At the time, the industry was supported by a long-tail of small, singularly-focused software and service providers, and that created a challenging environment for brands. I watched brand leaders scramble to assemble and manage portfolios of technologies and service providers, each one offering a different angle on the truth. My belief was that if a single company could consolidate all of the data, software tools, and services on one platform, clients could operate far more effectively.
From that founding idea, Stackline emerged from my tiny studio apartment in Seattle to become a leading retail technology company that is helping more than 500 of the world’s largest brands and retailers grow their e-commerce businesses, and it’s a privilege to be part of their growth.
Can you explain to our readers why you are an authority about selling on Amazon.com?
We built Stackline on the unique combination of enterprise software and premium managed services, which work hand in hand to simplify and accelerate our clients’ path to e-commerce success. When I started the business four years ago, our first clients were services-only. I took on holistic management of their e-commerce channels, using my Amazon experience to help them run everything from merchandising and inventory planning to content and SEO. As our software has become more sophisticated, our scope has continued to expand. Stackline’s consulting services now span forecasting and demand planning, profitability analysis, pricing and promotional strategy, and vendor negotiations, while our agency services cover omnichannel campaign management, content development, and SEO. We’ve been at this for years now, and we’ve brought a lot of platform and disciplinary expertise in house to lead these lines of business. We’re also backed by our own analytics tools that offer clients the most comprehensive ecommerce performance data in the industry. I don’t think anyone who works around e-commerce and digital advertising can ever rest on their laurels — these industries move too fast for that — but we’re working hard to amass the most experience and resources under one roof.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
Really early on in the business, when it was just me and my long-time friend and co-founder, Mitch, working out of a tiny shared office, we got a call from a large prospective client on a Friday afternoon. They heard we had built sophisticated models for projecting e-commerce sales growth and market share, and they asked if we could run an analysis on an emerging brand. While we did have some awesome tools in our arsenal, our data-gathering processes were still highly-manual, and this would entail at least two weeks of concerted effort on top of our regular 90-hour weeks. Nevertheless, there was only one appropriate answer: “Of course we can.” No sooner had we said it than the client clarified, “and we’ll need it by end of day Monday.” Mitch and I hung up the phone, panicked for a while, and then settled into our second-hand office chairs for a 72-hour marathon through one of the hottest weekends in Seattle history. We shed sweat and tears when the AC broke on Saturday morning, but we delivered that report on time, and that small project grew into a much larger portfolio of business for us in the subsequent years.
The mistake we made? First, we should have clarified the terms of the project upfront, but as I look back, the bigger miss was that we didn’t drop everything to beat Postmates to their business idea. During those two days, we would have paid any sum for a fan, deodorant and a sandwich delivered right to our door. Seize the inspiration from the pain!
Are you working on any exciting projects now? How do you think that will help people?
We’re working on a number of engineering feats and industry-firsts behind the scenes, but first out of the gate is a new competitive intelligence product that’s going to change how clients optimize their digital advertising and e-commerce strategies across channels.
We’re releasing software that gives brands and manufacturers the ability to track, optimize, and benchmark e-commerce performance with a full view of competitor metrics at every stage of the conversion funnel. They’ll have access to the complete list of keywords driving clicks in their category and the cost other advertisers are spending to win them. They’ll also see their relative paid and organic traffic volumes and the sources from which that traffic comes, and they’ll get advertising spend and return metrics across their competitive set.
We’re excited to launch data our clients haven’t seen anywhere else and help them build and execute strategies that reflect how their marketing efforts across multiple digital and social channels affect e-commerce traffic and sales.
Ok. Let’s jump to the core of our discussion. You are a seasoned Amazon expert. Can you share with our readers five, non-intuitive, insider tips, in order to be as successful as possible on Amazon? Please share a story or example for each.
1. Let Amazon help with your homework. Amazon offers earth’s largest product selection, which means it’s also the world’s best source of product and market research. Savvy brands take advantage of the opportunity to scope ratings and reviews, product attributes and advertising for a quick read on competitive product strategy and consumer demand. One of our fastest-growing clients in the vitamins & supplements category tracked changing shopper behavior through our software to come up with their next product idea based on the attributes they saw consumers referencing in search.
2. Look down the long-tail. Your competitors may be fighting a turf war for the top category keywords, but you don’t have to play their game. Many advertisers are only bidding on top-100 keywords, but there are often thousands of keywords driving clicks in a category. One of our pet food clients expanded their campaigns to target thousands of lower-volume keywords that together drove significant paid and organic traffic. They were able to boost their advertising profitability by 54 percent and capture an additional 4 percent market share in less than two months.
3. Lace up your running shoes. We’ve often said that managing the Amazon channel is more like managing a hedge fund than a retailer. Teams have to be ready to run fast if they’re going to successfully track, analyze, and react to the vast amounts of data moving through the platform. Tools like ours are designed to simplify data collection and analysis so teams can spend more time executing. Our most successful clients structure their e-commerce teams to be highly agile, empowering managers to use insight from our software to make incremental adjustments in real-time.
4. Meet your customers. Ratings and reviews are playing a more prominent role in the Amazon shopping experience, and it’s never been more important for brands to give customer feedback the white-glove treatment it deserves. Amazon gives sellers the opportunity to engage directly with reviews through the ‘official comment’ program. A consumer electronics client of ours saw their average rating start to slip, but they used official comments to redress product challenges and build deeper relationships with highly-engaged consumers, even incorporating the feedback into their marketing messaging, new product attributes, and content. The new engagement strategy helped them rebound quickly to a 4.9-star average.
5. Marie Kondo your catalog. Just because you sell it doesn’t mean you have to sell it on Amazon. Apply some spring-cleaning zest to your product catalog and run profitability analyses on your low-volume SKUs. One of our grocery clients pared down their Amazon product portfolio and focused all marketing efforts on driving sales growth on a smaller number of products, which improved sales and profitability by more than 30 percent.
Amazon sellers have a reputation for being great guerilla marketers. Do you use any clever and innovative marketing strategies that you think large legacy companies should consider adopting?
Our 500+ clients cover the spectrum of industries and life-stages, and we’re fortunate to work with some of the world’s most dynamic, forward-thinking brands. The biggest factor in their success is their level of commitment to treating the e-commerce channel as a long-term strategic priority for the business.
To paraphrase the old wisdom, you’re ahead of 80 percent of people if you show up, 90 percent of people if you show up on time and 99 percent of people if you show up on time with a good attitude. We tend to think the same truth applies to e-commerce and digital advertising. ‘Showing up’ means exploring and standing up multiple e-commerce channels to get an early lead on multi-platform management. ‘Showing up on time’ means staying on the pulse of the latest ad formats, digital merchandising opportunities and adtech betas. ‘Showing up with a good attitude’ means you’re committing to testing and learning more diligently than anyone else to make sure you have the best-performing ads in the best-performing placements tailored to your most important audiences. The brands that are thriving right now are combining this thirst for the latest and greatest with an unwavering commitment to the timeless principle of advertising: to earn engagement, you have to trade real value in the right place, at the right time.
Because of the position that you are in, you are a person of great influence. If you could inspire 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. 🙂
Reinvigorating the rate of entrepreneurship. Although the faces of famous entrepreneurs cover many magazines, the underlying truth is that the rate of entrepreneurship has been declining in the United States. In fact, research from The Kauffman Foundation showed that the number of companies less than a year old has declined as a share of all businesses by over 40 percent since the 1970s.
Since startups are disproportionately the source of new innovations that drive economic growth and job creation, I believe inspiring a movement to help more people launch companies is the single-most important economic issue to get right in the years ahead.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
Sheryl Sandberg spoke at my Harvard Business School graduation, and it was in that speech that she offered her famous wisdom, “If you’re offered a seat on a rocket ship, don’t ask which one. Just get on.” I remember being so gripped by that idea. I think like most people, I have a healthy sense of risk, and my rational brain is trained to constantly run cost-benefit analyses on the choices I face as a business leader. But as an entrepreneur, and certainly now as I consider the various ways to approach hyper-growth in our business, I return to that guidance often. Instinct doesn’t replace due diligence, and opportunity needs to be evaluated in full view of costs, but sometimes you just need to get in the jump seat and go. In the fast-paced industries we’re working in, advantage is on the side of the fearless.
Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch with, and why? He or she might just see this if we tag them 🙂
Our whole company is reading The Hard Thing About Hard Things right now, and if someone told me I had the opportunity to share a meal with Ben Horowitz, I’d drop everything. He brings a depth and breadth of perspective and a frankness about the challenges of business-building that I find affirming. As Stackline heads deeper into its fourth year of 100 percent year-over-year growth, I could use more of his been-there-seen-that wisdom applied to our business.
Thank you so much for these great insights. This was very enlightening!