One of my favorite quotes is by Sir Richard Branson, “if somebody offers you an amazing opportunity but you are not sure you can do it, say yes – then learn how to do it later”. For me, this isn’t about chancing it but about backing yourself, constantly improving and having the desire to disrupt what may be a comfortable existence for something that seems out of reach. If you don’t do ‘it’, someone will so why not you?

This is an opportunity to thank all the Acorn-i team, our partners, clients, supporters that have joined the journey these past two years and helped lay the foundations for us to produce some fantastic work. The hours have been long but the output has made it worthwhile.

A round up on the year and as we head into 2021.

eCommerce and Acorn-i

2020 blew up, literally. For many businesses, 2020 will likely be a defining year. Forecasts and plans went out the window with many business owners re-planning week-on-week prioritizing against changing landscapes. It was likely to our benefit that we were not 5+ years into the business with office leases, large overheads and set operating models that we were able to adapt to client needs and offer support in areas that many companies lacked resource in. Client experience and delivering results are fundamental to how we develop and provide services and products. We have grown the team to 20 people, kept a high bar in expertise with the team being accredited for Amazon programs, developed a proprietary real-time reporting and insights technology platform, Ignite, that our clients love. We have also expanded capabilities to service clients in North America, Europe, Middle East, Asia and Australia. Ignite was shortlisted by The Drum for Best Agency Built Technology, which is fantastic recognition for the whole team. It was always the goal to create a technology and services company and we can head into 2021 knowing that we have the capabilities to add enormous value for our clients and partners.

The year Amazon buckled

Jeff Wilke, CEO Worldwide Consumer at Amazon, sits atop a logistics infrastructure that delivered around 3.5 billion packages in 2019. This represented approximately half of the orders made on Amazon. Morgan Stanley estimated in 2019 that by 2022 Amazon Logistics will deliver 6.5 billion packages. This was pre-Covid though. In 2020, the exponential shift to purchasing online was too much even for Amazon. In July, Amazon cited ‘unprecedented challenges’ when notifying Sellers that capacity within Amazon Fulfilment Centers was being limited. Subsequently many sellers of ‘non-essential’ items had shipments rejected entirely while limits were placed on all shipments. Brands and sellers that relied on Amazon FBA to store and fulfil last-mile deliveries to consumers were immediately adrift. Best-sellers become obsolete overnight if there is no stock.

Perhaps for the first time in the history of many sellers, Amazon’s logistics was vulnerable and the fall-out would impact everyone. For some sellers this has been difficult to rebound from, however AMZN continues to be very robust hitting >$3,400 by end July.

Rise and rise of Shopify

Shopify is a 2020 success story. SHOP is trading at 300% above December 2019 when it powered more than 400K merchants. Covid has accelerated brands efforts and resourcing for direct-to-consumer (DTC) webstores when previously, for many, brand-owned websites were either non-transactional or contributed a small percentage of annual turnover. Many companies manufacturing non-essential items had seen bricks-and-mortar sales reduce to near zero, Amazon all but blocking the ability to reach at least its Prime customers, and so were left with DTC as the main viable option.

During 2020, we have worked with brands that have had incredible success due to finally getting serious about a transactional website. For some, their webstore has become the single largest sales channel and of course one that delivers the greatest margin. Brand investment into owned webstores is certainly a growth area for 2021, key aspects being driving traffic and in particular the experience of consumers once they land (mobile and video capabilities winning out in 2021). Shopify POS (Point of Sale) for bricks-and-mortar stores could merge offline and online customer and sales data, once consumers return to the high street, a very attractive feature.

Omnichannel

A question we are regularly asked, “is Amazon cannibalizing my direct sales?” An ever-present dilemma facing brands, if I invest in growing my Amazon business am I at risk of becoming dependent or losing my customers to Amazon? The Acorn-i product and engineering team have worked tirelessly with clients to help solve this question. Via Ignite, we have created an omnichannel reporting interface that helps brands and sellers better understand cross-channel consumer engagement, purchase path and life-time value. More often, Amazon has proven to be a significant new-to-brand customer acquisition channel that enhances consumer awareness of brands and products for the greater good of the brand. Being able to determine this allows brands to feel comfortable in making the right decisions in channel investments, even if that channel is not an owned webstore.

Given the shift to digital browsing and purchasing in 2020, in my view it is imperative that brands establish a strong digital commerce approach. We often see companies with siloed structures, hiring internal marketers or teams that are compensated against the sales and growth of owned properties only. My advice is that internal teams become motivated to drive online sales holistically, whether this is via owned or third-party marketplaces, as the data we have been able to provide clients to date suggests a greater total benefit of doing so.

Data and Data Ownership

A positive consequence of increased digital transactions is the ability to better collate data and leverage this to improve new product development, enhance CX, optimize marketing and measure impacts in nearer real-time. My belief is that brands will, and should, evaluate their data strategy and how this underpins all aspects of their business in 2021. Amazon is often perceived as a ‘black box’ in regard to data, but it really isn’t the case and Amazon retail and advertising metrics provide a very rich source of actionable information. Via Ignite, we provide over 300 dimensions and measurement combinations down to the product level for clients. We do see a lot of brands and sellers granting apps and third-party companies access to what is extremely valuable data and I believe brands should always ask harder questions as to where their information is being stored, who has access and what it might be used for. If you’re working with a partner that uses a turnkey solution sourced from a third-party you simply do not have control over your data. Being ‘agnostic’ to technology solutions isn’t a worthy value exchange, is my advice to brands.

Amazon FBA Seller M&A

We have seen a sharp increase in companies specializing in acquiring Amazon FBA Sellers. The growth of Thrasio, which has recently raised an additional £200 million to acquire UK and EU sellers, has led to companies such as Heroes, Perch, Heydey collectively raising nearly $1 billion in 2020. The concept is that for any successful FBA Seller that for any reason wishes to sell their business can do so to one of these investment firms. The notion of investing in B2C brands is hardly new, and there are many venture capitalist and investor firms already doing just that, but it shows the scale of revenues that can be achieved via Amazon that investment firms can specialize in acquiring FBA Sellers.

I expect in 2021 we will see further money raised for FBA Seller M&A. I believe some of these firms will struggle. Not only due to being susceptible to Amazon overnight policy changes or account deactivations, but also ensuring they have the expertise and resource required to continue to drive above-category performance once founders bow out. Specialism will be diluted as a result and some investors will lose out.

Augmented Reality (AR)

In my opinion, 2021 is unlikely to see brands adopt AR at scale. You can argue that AR has already hit mainstream and had great success, for instance Pokémon Go was used by millions of people and reportedly generated $894 million in revenue in 2019, and everyday millions of filters are used by people uploading Snapchat images. Statista estimates AR technology market value to be over $18 billion in 2023. AR could significantly enhance, and disrupt, how consumers browse and purchase items online. Via layering digital information, you could redesign your lounge, upholster furniture or re-imagine your entire wardrobe from the comfort of your own home. For marketers, create ever more tailored and immersive consumer experiences capturing attention and time spent engaging with your brand over competitors, with one click add-to-basket.

Given most transactions happen over mobile devices I think the possibilities that AR offers are exciting for brands and one that I do believe consumers will ultimately use at scale for eCommerce, just not in 2021.

I hope some of the above resonates and if nothing else raises questions that will help you make the most of what 2021 will bring, both personally and professionally.

Would love to hear your thoughts. Merry Christmas and wishing everyone a healthy 2021.