[00:00:00] Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age. Hey everyone, Peter Crosby here from the Digital Shelf Institute. These are, how should I say it, interesting times to be a seller on Amazon. It's good to be able to make decisions based on data in
[00:00:28] the midst of the chaos. So Jay Lovelace, CEO at Jungle Scout, joined the podcast to lay out the trends that the data is identifying overall and across some specific categories that are on the move. Jay, welcome to the podcast. Thank you so much for coming on. Thanks, Peter. I'm excited to be here. Well, I mean, you are sitting on over 10 years of Amazon data, which is exciting, but must be
[00:00:53] incredibly uncomfortable. But I bet it tells an incredible story. I mean, with all of that data, that gives you kind of a front row seat to what is happening all the way down to the category level. And so we'd love to start with some overall trends. Like, what are you seeing with Amazon right now? With the chaotic world that we live in? And then what are the opportunities that you see there? Obviously, when we look at the overall U.S. retail marketplace in general, we're talking about a $7.4
[00:01:21] trillion market. And then when you peel that back and look at e-com, e-com today makes up about 16% of that growing to 22% of the overall retail market. Then if you peel back the e-com section even further and you look at Amazon, Amazon makes up 40% of U.S. e-com flowing through their platform. That is a massive number and a massive sample. And so when we talk about Amazon data and the importance of the
[00:01:49] data, there is nothing better than Amazon as a proxy for what's occurring in the marketplace. Obviously, I think you use the term volatile, but the market is interesting and it's dynamic right now, especially as it pertains to the tariffs. And the beauty of what Jungle Scout can do is we can dig in real time as a pulse on everything that's happening. And so although the tariff situation may seem to have subsided a bit, at least temporarily, the activity that occurs on Amazon
[00:02:19] is an unbelievable barometer of what's happening. For instance, looking at things like price, the velocity of products that are moving. We did a search, if you remember back in April when this really heated up, we looked at the amount of searches on Amazon for people searching the term made in the U.S. That went up 80% in a matter of a couple of days. And so having real-time access to
[00:02:45] this type of information can really serve as a good roadmap for the decisions that you have to make. How is price affecting what's happening overall in a category or a subcategory that you're working with? Are products more being produced overseas, say in China, than they are in the United States? And what's happening to those items as these conversations occur? And so although there's no conclusion to what's happening with tariffs today, having the ability to understand real-time
[00:03:15] what's happening gives brands the upper hand. And so we're fortunate to have that. More importantly, let's talk about disruption. And this was probably triggered by a white paper that we put out a couple of weeks ago about the 3P or the third-party marketplace within Amazon. And when you take a look, for those that don't know, there's obviously the first-party sellers where Amazon's buying their product, they're fulfilling their product, they're managing price
[00:03:41] and whatnot on the Amazon marketplace. And then there's the third-party sellers. What most people don't realize is that the third-party sellers on Amazon who are selling directly to customers make up over 60% of overall Amazon sales. And so it truly is a large portion of what is occurring on Amazon and causing both positive and in some cases negative disruption to the larger brands
[00:04:07] that are out there. And so in our white paper, we hit on three points. Erosion of brand control, the impact of profit margins, and then finally, what we would call the rise of dupes or duplicates that are out there today. And each has a unique position that's really affecting the disruption on Amazon overall. And so one of the number one concerns that brands are coming with us today is
[00:04:31] the fact that Amazon is an open marketplace where three-piece sellers can list, frankly, resell products, even if they don't manufacture or have an exclusive relationship with the brand. And so you think about a reseller who's listing, let's say, for instance, clearance goods, or worse, a counterfeit, selling counterfeit goods or damaged or expired goods. You know, this is a challenge for brands because a brand might not be able to own that, call it buy
[00:05:01] box experience because this third-party player is winning the buy box. Maybe they're utilizing your ASIN to control the buy box and based off price or performance, even if they're not you, they're winning it. And this could, you know, unfortunately be a reflection of your brand or your experience. And so because you don't have control over that product or where it was sourced or where it was stored or how it was shipped and everything, it becomes a direct reflection of your organization
[00:05:28] because, you know, potentially it could be your brand, even if it is a counterfeit. I was just thinking on behalf of our listeners, I think, you know, a lot of them are familiar, I think, with this area of brand control. We've covered it a bit on the podcast. And I'm wondering, are you seeing anything in this particular period that's either increasing that erosion of brand control? Is there something different about this moment in the area of brand control that our listeners should be particularly aware of? I don't know if the theme has changed much over the past,
[00:05:57] call it a year or so. What I'll say is the trip that most brands run into is the fact that they don't have a plan. They don't have a plan for their third-party sellers and managing those third-party sellers or really having a true understanding of what's occurring real time on Amazon. And so fortunately or unfortunately, the marketplace scenario, whether it's Amazon or other marketplace, is a highly competitive situation. And unlike a brick and mortar store where you have
[00:06:26] a certain amount of shelf space, as we all know when you talk about this, it's unlimited shelf space. And it's really how do you win in these scenarios, whether it's through keywords or winning the buy box to gain eyeballs from these consumers. And the third-party area is doing the same as well. And they are getting very creative in ways on winning, whether it be through keywords or timing, just having a real-time post on what's occurring. Enter in, call it the influence of, let's say,
[00:06:55] China. China today makes up over 50% of the 3P items on Amazon. That is a huge sample. And I'll get into it a little bit when we talk more about that. But these are just themes with people that are putting a ton of pressure on the system in a very competitive environment where you have to have a full-time team managing what's happening. Otherwise, you're going to lose. And more importantly, you're probably taking on the chin with profit margins.
[00:07:24] So you had mentioned dupes, Jay. Can we talk a bit about that? Because I think it's both a value play as well as more of adjusting to the changing of the world and wanting to see where it's manufactured from a tariff perspective. I remember when they came out, and I remember people were talking about Lululemon leggings. And everybody was going on Amazon saying, Lululemon dupes, because they're so
[00:07:50] expensive, but they wanted to have that legging that felt the same, kind of looked the same. When did you see the dupe praise increase? Are you seeing it even larger now from a price perspective? I'm just curious if you can dig into that a bit, because I think that's an interesting one. Yeah. I mean, yes, we are seeing it on the rise and it continues across multiple categories, right? Wherever there's opportunity or wherever there's increased eyeballs or increased demand,
[00:08:15] you're going to see dupes start to rise to the occasion. And it fills a void or a vacancy on the consumer front too, because there are individuals that just don't want to pay top dollar for these items. And in many cases, the dupes, I don't want to say are at parity, but they're almost as good in most cases. And so, I mean, you can look at different categories all the way down to the subcategories and determine the dupes, but you hit on an interesting point. I actually have a stat on that.
[00:08:41] You know, do you know how many times the Lululemon dupe was searched on Amazon? How many times a week, I should say, it was searched on Amazon? How many times a week? Two million. I was going to say a million. So there we go. You doubled my number. It's over 15,000 times a week an average shop you're searched for lupes. But I love the two
[00:09:08] million, Peter. I loved your opportunity. No question there. Because I know nothing about math. But it's funny that you said that because I actually had that stat. And that occurs with all big brands. People are trying to look for what would possibly a knockoff or a substitute for that. This is really what I would say, and this isn't a recent occurrence, but with the rise, and marketers can speak to this a heck of a lot better than I can. But the rise of social media, specifically TikTok and a lot of these influencers out there, they take these things under their wing.
[00:09:38] And before you know it, you've got not thousands, but millions of people looking at this and then searching for it and trying to find it. And that goes back to when you talk about a plan for your product, are you really looking at the market holistically and what others are doing? I've seen it over and over, even pre my experience here at Jungle Scout for the last year. So many large,
[00:10:02] large established brands take for granted the innovation that occurs and the new entrants that come into the market and begin to take share. And before you know it, hey, it's one point, it's not a big deal. Then it's two, then it's five, then it's 10. And then there's five or 15 or 20 of them. And you're starting to ask yourself, why in the world are we not gaining share? More importantly, why are we losing? And so having access to this data can be, I use the term before, a barometer, a real-time barometer so that you can start to monitor what's happening
[00:10:31] and when to make business decisions. And we're seeing a rise in a lot of the smaller players. I'm wondering if you have any stats around some of the smaller, maybe more digitally native brands that are popping up on Amazon and how much they make up the market versus some of the more established CPG companies. I know it's a very targeted question I'm throwing at you, but any insight there? I just happened to be looking before this call to one of our Jungle Scout
[00:10:57] strategy accelerators. And this particular strategy accelerator looked at amino acids. And so what I thought was interesting is that when you look at the category overall, it's around 712 million, which is up 22.5% from last year. And units sit at around 17.5 million, which is up about 18% from last year. And so the category has some really interesting dynamics
[00:11:22] and growth. More importantly, and I hit on this topic a little bit earlier, there's been so many new entrants or new brands that have come in to this specific category. And so what we had done is we had looked at like the top 10 emerging brands and you're talking significant dollars. The top brand, you know, I'm sure I'm going to butcher the name. I think it's Bodhi or Bodhi, you know,
[00:11:48] is like $860,000 in revenue. And that accounts for 17,000 units with an average selling price of around $48, $48.50. And they have 111 ASINs. And then you go down to Mr. Penn that has about 500,000 in revenue and units of, you know, about 59,000. And so all of this starts to move into a category that whether or not it's mature or it's been around, typically the dominant players don't
[00:12:14] realize that before you know it, you have 10 players that are starting to gain, you know, share on that category. Further, when you think about specific categories, and I had mentioned how big 3P was to Amazon overall, this study also looked at the amino acids category overall, 3P or third party sellers makes up almost 75% of the sales or the revenue within that category. And so you can see
[00:12:42] that by understanding these things, it allows you to really adjust how you're going to strategize your planning moving forward around Amazon. So hopefully that's helpful. So Jay, let's chat about beauty and personal care because it is a fast moving category. I mean, search, number one search terms sometimes change every hour. There's so many new players. What are you seeing there? What are the opportunities for brands?
[00:13:07] Well, beauty is such an interesting category. We actually put out an annual report every year on beauty specifically because of how dynamic it is and the changes that are occurring. But there's a few trends that we're seeing overall. And I'd say the first is what we would call the rise of luxury brands in beauty specifically. Even if we don't hit on beauty, it's been in the news as of lately. Companies like Saks Fifth Avenue and Neiman Marcus now having a presence on Amazon. But if you
[00:13:37] look at the beauty category, one of the examples that we pulled out for this because I thought was super interesting is let's take Estee Lauder and their brand Clinique. They launched what we would call an interactive storefront last year within Amazon. They have skincare analysis tools. They have live ambassador chats right there built into Amazon. And it has really impacted their numbers overall.
[00:14:03] We looked at our data in our Cobalt platform and we found that the searches on their brand were up almost 30% compared to 2023. And before they launched this Amazon experience, they were kind of not even moving in that direction and it's gone up 30%. And moreover, when you look at some of these stats, typically the price points for a brand like this called $30 per unit, they would avoid Amazon.
[00:14:30] And now they're seeing a huge lift and they're starting to say, wow, Amazon does have the consumers that we need and we're having success. So how do we make the experience unique or different than what they're accustomed to? And this exemplifies that to its core. If I go into the category as a whole, Lauren, and talk a bit more about that, we can go back to the social media stuff that I talked about before and just the explosive growth due to the influencers that
[00:14:59] are out there and some of the impacts that the social sphere has kind of created. But because beauty is such a fast moving category, like I said, we do this annual report that summarizes a few things. And we took a few things out that I thought were worth sharing. And so the market true, and this is where consumer sentiment is super important because when you look at the searches and what people are actually looking for, it starts to drive your roadmap on where you want to be, whether it's
[00:15:24] through SKU optimization, new products, new solutions. And so for instance, lip stain was up 27% and lip gloss was down 36% in our recent study. And so what does that speak to that? You know, Amazon demand equals sales, but demand also equals opportunity. And so the lip stain revenue increased
[00:15:47] a whopping 112% year over year. And demand was also for, you know, you look at ASINs on the lip stain. I'm sorry, we saw numbers of units, I should say units of ASINs for lip stain were up 55%. So the revenue increased 112% and then we had units up 55 or ASINs up 55%. That's a, that's a tale on what's happening. And for those viewers that don't understand ASIN would be, you know, comparable to UPC.
[00:16:15] I feel like I need to up my lip chapstick lipstick game. I did not even know lipstick stain was a thing. I'm pretty embarrassed to say that I was working with our head of marketing, Hillary on this, and I had to ask her what lip stain was. Well, it seems like something you wouldn't want. Is it just me? That just feels like a, not a good thing to have your lip stained, but you know, All I gotta say is according to the consumer, they want it. Well, The revenue is up 112%. So I'm a pure, pure chapstick gal over here.
[00:16:49] Yes. I, yeah. So see, you just never know the consumer knows pay attention. So diving into patio, lawn and garden, which is a hot category right now, or should be wondering what you're seeing, what the activity, what are the ways to win there? Yeah. Great question. You know, when you look at beauty and I think I use the word dynamic because it is, it's, it's, it's, it's kind of a ever changing great pulse of what's happening in the market. And then when you take a
[00:17:18] look at patio, lawn and garden, very seasonal, as you can imagine folks in the spring and early summer, really starting to think about what their experiences are going to be at home in their backyard and so forth. And so we typically see spikes in this category, like I said, in the late spring and summer. And here's just a few stats that we had pulled that I thought were interesting. In the last
[00:17:41] 30 days searches for gardening gloves were up 85%. Searches, searches for grilling tools were up 28%. Bird feeders, 75%. And 30 day revenue was up for all of these subcategories across the board. In fact, May, which most people don't realize is actually the peak month for those subcategories. And so what we often counsel brands on is the fact that, Hey, you need to make sure that you understand your
[00:18:10] advertising strategy as it pertains to these times and these peaks and valleys, because you need to plan accordingly with how you're going to manage this flow. More importantly, the dollars that you have, you just can't have a universal plan. You've got to take into account the seasonality that occurs. And, you know, what we are typically doing as we work with brands or agencies and partners is we are looking at last year's trends. We are looking at the trends that have occurred,
[00:18:37] you know, over the last call it 52 weeks and starting to help them to determine what decisions they need to make moving forward from everything from keywords to ads and simple demand. In that category, Jay, are you seeing, cause I know in beauty, right? Like it just changes so frequently. You have to change content. You have to stay on top of trends. We need to know if lip stain is a thing like, but in the patio and lawn and garden category, are you seeing as frequent
[00:19:05] of an update around content? Are there as many new types of products? Because that's, that's an interesting one, right? It's seasonal. It's heavy. It's more expensive. I'm just curious if there are any trends around new products, content refreshes that you've seen. Yeah. I mean, as a rule of thumb, you're going to see pretty strong innovation around the majority of the categories and subcategories.
[00:19:29] I mean, if you, I can even look, I don't have any specific data in front of me on what innovation has, has led into that category. What I can tell you is that it is a hot topic and we have many brands that look to us to guide us. I can look at my personal life and look at the changes that I've just had on, you know, let's look at any of these items, whether it's gardening, a pair of gardening gloves I literally just bought on Amazon. I want to say four weeks ago, I could probably use to,
[00:19:58] you know, lay concrete. They're so, I mean, they're just, it's a different technology that ever existed. Gone are the days with the old gardening gloves where you rip a hole through them in the first couple of weeks. And so, yeah, I mean, that's the beauty of this data and what we can follow is I can dig into anything and come up with data backed information that's useful to make decisions. So you had mentioned innovation, Jay. I know you don't have anything particular on the category,
[00:20:27] but if you think about cross category, do you feel like Amazon, obviously Amazon has become a very expensive place to live and to experiment. And so I'm wondering if you're seeing how you're seeing Amazon as a, as a place for brands to launch new products, is it still the sort of the top choice for a lot of these categories or do you see anything shifting there?
[00:20:52] No, I mean, if you think about what I talked about at the top of the session here and just the pure reach that Amazon has. And so when you think of testing or launching, there couldn't be a better place to experiment on that. You know, brands come to us because they want better data on how to price. What better to look at than like I talked about that proxy. They want better control over the brand to knock out, like I talked about unauthorized sellers. The big stat that I think is super interesting
[00:21:22] is I mentioned the fact that there's first party sellers and third party sellers and third party sellers make up over 60% of Amazon sales. The unique thing though, about the first party sellers, is 40% of those brands that are 1P sellers also have 3P. And the reason they do that is for what you've just asked me. They look at that as their testing ground to start to experiment
[00:21:47] on new products, SKUs and so forth, and how will that play out in the market. And so, you know, that's not the full use obviously of their, of their 3P strategy, but it is probably a significant portion of it. And so, yes, to answer your question, frankly, that is Amazon becomes an unbelievable opportunity. I don't want to say it's cheap because it's certainly not, but compared to everything else to get a good understanding of what's occurring and why, and to test the waters,
[00:22:14] it really serves a great purpose for that. Yeah. And are you seeing any brands launch Amazon only products or like exclusive to Amazon? I know from like a price matching perspective, it's a strategy that a lot of brands are doing so that they have like an Amazon specific product or launching maybe a Walmart specific product, just general trends. Like, are you seeing that as a strategy? I mean, yes, that's the interesting thing about Amazon because it's such, so much activity.
[00:22:42] I don't have any specific examples to that, but of course, I mean, that occurs on an ongoing basis, certainly. It's such an interesting time, you know, and I don't know if with your, with your clients, you've been having conversation around this, but just watching the news and seeing recently that Amazon is really reducing the amount of inventory they will take into their warehouses.
[00:23:07] And that's real, that's causing a lot of brands difficulty where they're unable to to get their inventory into the warehouse for the direct, you know, Amazon shipments. And so they're sort of holding inventory in other warehouses, which costs more money, and then they can move it in only as, as it becomes more, as it really gets close to Amazon needing. And it's just creating so much pressure out in the world. And I think that's just due to, you know, the, the environment
[00:23:36] that we're in right now with tariffs, et cetera. It really, it's the unknown. And, you know, I mean, we've seen the needle move several times just in the past, call it four weeks. Now, or as I said, we're in a holding pattern here, but people are waiting to make decisions. They're uncertain what decision to make and how it will impact their profit. It really comes down to the margin, right? And then consumers are saying, boy, which was indicative by the search,
[00:24:01] I shared with the, you know, products made in the US. I mean, consumers are a real time check of what's happening. And the fact that it rose that much, just in a matter of days, speaks to consumers trying to get ahead of what they believe is going to affect the bottom line, their pocketbook. Well, Jay, thank you so much for, for bringing this data to us, these, these stories to our audience. And, you know, I think it's always great to hear right from, from the data lakes mouth,
[00:24:30] what is going on. And we appreciate you bringing that to us. That's the first time I've ever been called a data lake, but thank you. I'll take that as a compliment. It's a good one. Thank you so much. Very much appreciate the opportunity to present here. Hopefully this was useful and folks find it informative. And of course I'm available if anybody would like to reach out to me. Thanks again to Jay for sharing his data and insights with us.
[00:24:55] Seek refuge from the chaos and the strategies and research waiting for you at digitalshelfinstitute.org. Become a member while you're there. Thanks for being part of our community.