AI, Inflation & the Future of Selling on Amazon

Chris McCabe: [00:00:00] Hey, everybody. Welcome back to Seller Performance Solutions, our wonderful podcast here at ecommerceChris. I’m Chris McCabe. I’m with Chris Moe, yet another brilliant, wonderful Chris. How are you doing?

Chris Moe: Good. Good. Great to be here and represent the coalition of Chris.

Chris McCabe: Exactly. Chris of Cartograph. So one reason we like talking to you and others at Cartograph as often as we do is because you see kind of everything under the sun.

You’re working with different kinds of brands and different types of problems, and on the cusp of Prime Day, but also just in general, I think it’s fair to say there’s numerous challenges that, you know, not just Amazon throwing people curve balls, but competitors doing crazy things, margins not being what they used to be.

I’m kind of curious what your state of the union take is halfway through the year in terms of like- For some of the brands you work with, and maybe even some of the ones you could work with in the near future, what do you think the rest of this year looks like in terms of like making sure you’re still [00:01:00] growing the way you wanna grow, hurdling the obstacles?

Do you think some brands are just gonna get fed up and drop out because they can’t compete? Or do you think there’s gonna be kind of like an agency musical chairs that goes on where they’re like trying different people to see what works?

Chris Moe: Yeah. Yeah. It’s a great question. I mean, I think it’s funny the last few years have… the word that’s always been tossed around is uncertainty, but it seems bigger than ever right now. And if you first just look at general macro uncertainty, right? We’ve got a war going on, which is affecting oil prices, which had some direct impacts to Amazon. But then we’ve also got some big pending market action with like SpaceX IPO coming up.

I think I just saw news that Anthropic just filed for IPO. And so these are going to not only be major market events, but like if they don’t go well, could be, a major event. And so I think in the wake of that and everyone kind of scratching their head and saying, “What should I do [00:02:00] with these LLMs with regard to my business and Amazon business?”

And, doesn’t seem like there’s a silver bullet yet, like a solution that’s really even any part of the value chain with AI. But there’s lots of like people out there. I mean, it kind of reminds me of the crypto times where it’s like, “Here’s how you should be using the blockchain to improve your Amazon business,” right?

And so like it feels like that. There’s some good stuff out there. Anyway, to back up to actually answer your question though. So it feels like there is a lot of uncertainty in how you should be using Amazon, and we can go back to how we’re using AI too. But, overall sales has been pretty good for us this year.

We, we work in pretty much CPG, food and bev, beauty, supplements, and pet., And volumes have been pretty strong. I would say ad competition has not been so bad. I think people are pulling back because of this uncertainty. There’s not as much dollars in the market. And then I actually think probably the bright spot is supply chain [00:03:00] is probably the smoothest it’s been for a long time.

We’re mostly only US supply chains, so that’s a little bit easier. But even when we used to deal with capacity bidding, placement fees, all that good stuff- that’s smoother than it’s been, especially, you know, less than 30 days from Prime Day.

Chris McCabe: Yeah. I mean, it’s not always a popular view, but you see it a lot on LinkedIn.

A lot of people say this time next year, a bunch of low seven-figure brands won’t exist. They’ll either be consumed by some other larger brand or by someone else. Then there’s also a lot of people say the same about agencies, right? Are bigger agencies going to eat smaller ones? And that’s not a popular thing to talk about either.

But we’re halfway through this year. The marketplace itself, at least on Amazon, is consolidating, I think rapidly. Maybe other people think it’s been gradually doing it for two or three years, but now I think we’ve entered a stage of rapid consolidation. Are you just kind of expecting that you’re gonna be auditioning for a bunch of new or different brands who are [00:04:00] ditching their agencies, just to put it bluntly?

Or do you think people are gonna ride it out for the rest of the year and decide after how Q4 goes? What do you foresee?

Chris Moe: Yeah. I mean, we’ve been part of that agency consolidation. We sold the agency to a larger retail brokerage just a couple months ago. It was a really exciting outcome for us and one we’d been working on for a long time.

But, I think larger brands are more… Are in the world of uncertainty rather than doing… when you’re a marketing buyer, you can go, go two directions. You can, one, buy a consolidated service, and it’s like a one-stop shop type thing.

Chris McCabe: Mm-hmm.

Chris Moe: And the other is kind of go a la carte, and people call them like point solutions and buy.

And, I think within the Amazon ecosystem, it’s interesting to see that, like, all of the point solutions with regards to like ads and analytic tech have basically already consolidated to the ad tech providers. There’s not that many a la carte services that people are running that the ad tech providers aren’t running.

But, yeah, what I’d say is like, I think people are definitely [00:05:00] shopping agencies. They see this like… There’s kind of this implication that agency work should be lower cost with AI, and they’re looking who’s moving on it. What, uh, what we have noticed is that people are savvier shoppers now.

Anything you send them, they put into the AI. They’re already audit- you know, asking Claude or ChatGPT to audit their ads. Sure. Or, or, you know, do some keyword research. And so, like that kind of stuff I think is actually helpful for agencies. Like when at the end of the day, you’re no longer accountable to do so much of the basics.

They want your like actual category expertise, actual Amazon platform expertise.

Chris McCabe: Yeah. I think, and is it going to be the battle of the AI, like our agency’s AI is better than your agency’s AI? I could see that kind of being one of the big questions they ask. But the scrutiny of what an agency will tell them in terms of strategy, they probably come back with more questions than they did before just because they’ve got AI’s [00:06:00] help in asking you questions, right?

Chris Moe: Right. So, yeah. I mean, there, there’s like– I think you can put a positive spin on it ’cause it used to be any agency gets in an ad console and they’re like, “These are 1,000 things that your agency is totally screwing up and wasting your money.”

And now they– people can kind of self-serve that. They can also check when people do those like alarmist audits, and they can be like, “Oh, you know, ChatGPT agrees that there’s a couple things that could improve, but it’s actually going pretty well.”

Yeah. “There’s not that much wasted spend.” And I think that’s probably a little bit better for the industry.

Chris McCabe: Yeah. And, and since you mentioned macro, not to change gears just abruptly, but in terms of buying practices and buying behavior and power, um, eventually, ’cause this war is kind of dragging out, right?

And fuel prices have stayed up. I mean, eventually other types of inflation plus this is going to hurt people’s ability to spend as much on brands that are selling on Amazon. [00:07:00] So are people kind of just assuming that that all goes away once there’s a peace treaty or counting on Q4 to make up for any lost sales because of inflationary concerns now?

Because I mean, I’m not fi-following some of the macro trends that you might be, but I’m sure buying power eventually will suffer because of what’s already happened this f- this year.

Chris Moe: Yeah. I mean, downstream costs to inputs are already, you know, from fuel are already hitting in some ways. But like, what you can think about is the production supply chain of those inputs tends to have multiple months anyway.

So fuel prices go up, things that take fuel to produce that then go into your product take six months to play, and then you might have six months of inventory already. So like the, the follow-on effects of these, these price shocks can take some time to hit. I think if we’ve learned anything from the pandemic era is that like not a lot of these costs- [00:08:00] Reverse.

Yep. Yeah It is interesting that, like, tariffs seem to be reversing right now. Um, we don’t work with a lot of tariffed, uh, brands because of our categories. Mm-hmm. Most of them are manufactured in the US, but I- Yeah … I would imagine it’s, um… Yeah, it’s, it’s very challenging to, to even think about recouping your dollars if you’re a smaller operator.

Um, and, you know, getting those back and not having it be stuck in court for a couple years while the, uh-

Chris McCabe: Yeah …

Chris Moe: government fights it out.

Chris McCabe: That’s why it’s been so important for people. I mean, Prime Day is coming up. Everyone wants to kill it on Prime Day like they do every year. But if there’s, like, a sudden drop in buyer interest in your product and diminished revenues, then you’re twice as concerned at how well Prime Day goes, and then later in the year, how Q4 goes.

Chris Moe: Totally. We were actually kicking around internally of why Amazon hasn’t officially said when Prime Day is gonna be. Um, we think it’ll be the week of the 23rd. [00:09:00] But, um- Yeah … some people have this theory that last year it was announced pretty early, and there was a pretty dramatic drop of sales, um, for the weeks running up ’cause people were like- Yeah

“Oh, I’ll just wait to buy it on Prime Day.” Yeah. Yeah. You know, I can get a discount. And so- I remember

Chris McCabe: that …

Chris Moe: maybe we learned our lesson. Maybe we’re gonna, uh, wait on that one a little bit.

Chris McCabe: Yeah. And then there’s all these posts about like, “Why doesn’t Amazon tell you when Prime Day is?” I don’t know. I mean, lots of reasons.

Some are good, some are bad, some are for them, some are for you. Totally. I don’t know anymore. It’s just like, be, be prepared for anything, right? Totally. Um-

Chris Moe: Totally.

Chris McCabe: You know, it’s good for humorous posts. But- … in terms of like costs, I mean, I don’t know how many of us have hung out in Seattle lately, or on the West Coast.

I think California’s the same. I mean, there were a couple times I think I spent… ‘Cause I always, when I’m out there, even though most of my meetings are within like a quarter mile of the, of the South Lake Union campus area, um, I [00:10:00] still drive into the mountains or, you know, go off for a day or two, and like the cost of gas out there was like, a couple of times I went to places, it was like 5.75 a gallon.

Chris Moe: Oh, it’s, it is expensive, man. It is. Even, even here in Texas, it’s like-

Chris McCabe: Yeah … four

Chris Moe: or five bucks. Yeah.

Chris McCabe: Okay.

Chris Moe: Yeah. But like, in 2020, it dropped below a dollar when there was that like really low point. Like Texas is usually pretty cheap.

Chris McCabe: Oh, really?

Chris Moe: Yeah.

Chris McCabe: Wow. So I mean, I just… That anytime I do that, I mean, obviously I’m making…

I’m not commuting to work when I do that. I’m making a choice to spend on gas to do something fun. But it just- Right … makes you think, what is it like for people who have to commute or like, I mean, they can’t negotiate with different gas stations. You can drive around to different ones, but you’re going to, in a, in a state like that at least, I mean, fortunately it’s a lot lower here, um, you just, you just have to pay.

Yeah. And if you’re doing that with, you know, staple [00:11:00] goods plus fuel, plus everything else, at some point, whatever you’re buying today on Amazon, you’re gonna think twice about it, unless it’s an absolute necessity.

Chris Moe: Yeah. I saw some analysis that fuel people feel in their, um, budgets on a regular basis a lot, and that’s actually- Mm

a net win for delivery ‘Cause you don’t have to pay for the fuel. Yeah. I saw a little bit of analysis on that. I think people… there’s a lot of, uh, reports on consumers saving up, pulling back spending and economic uncertainty. And so I think a good time for brands to be thinking about that.

How can you mirror that? How can you offer bulk discounts, as people are thinking about, like, fewer trips to the grocery store, fewer purchases, all that kind of stuff.

Chris McCabe: So what else are you hearing in terms of your clients, the brands, what they’re worried about? Not just Prime Day focus, but just in general in terms of their competition, or are they worried about Amazon throwing them last-minute curveballs?

[00:12:00] I’ve noticed an uptick in kind of worrisome texts or emails that we got from people who are like, “I don’t know whether it’s the price-matching stuff,” which has kind of gone off the rails, or random AI rewrites of a detail page or just like one buyer complains, “Hey, this isn’t the way it looked on the site,” and getting a warning that your ASIN might come down unless you appeal it.

People… Just the uncertainty of not knowing what the next 24 hours look like seems to be the main theme.

Chris Moe: Yeah. I think, I think anxiety increases in the run-up to Prime Day, and that’s been amplified with, uh… I don’t, I don’t feel like we focused on reference pricing as much a couple years ago.

Mm-hmm. And so people are very thoughtful of it. We’re very conscious of reference pricing, of like, “Okay, we can’t discount now because that’s gonna ruin our Prime Day deals.” And so that’s actually kind of like a second-order price-matching problem that if you’re getting price matched elsewhere.

But yeah, we have seen, the last six plus months, price matching [00:13:00] being way more aggressive, cross-channel. We’re developing some more kind of remixing a lot of the old tactics of, can you find ways to differentiate your units? But, finding some that, that are pushing through.

But I think that kind of stuff is as important as ever. I mean, that’s the kind of stuff that actually will keep agencies alive, is if you can fol- if you can solve price matching, resellers, inventory, right? Like, ads is gonna be way harder to be differentiated. Yeah. Content’s gonna be a little bit harder to be differentiated.

Um, probably some decent stuff on like ad budget deployment and strategy between products and so forth will continue.

Chris McCabe: Right. Right. Budgetary focus, yeah.

Chris Moe: Yeah. Which products matter, which products are more profitable, all that kind of stuff we’re getting a lot more questions about.

Chris McCabe: Cool. And yeah, so you’re now, at least you’re based in Austin.

Um, I heard there’s an event late October in Austin, which would be… If I go, which I’m planning to go, that’ll be my first [00:14:00] time in Austin, so I’m looking forward to checking out ev- what everyone’s been talking about for all these years.

Chris Moe: It, it’s a great- Yeah. It’s a great place. It’s great that time of year.

It’ll probably be right around the Formula 1 being here. Okay. So there’s always a lot of stuff popping up. And then, yeah, there’s a huge community of ecommerce folks, brand folks, and Amazon ecosystem folks down here.

Chris McCabe: Yeah.

Chris Moe: That, uh… Yeah.

Chris McCabe: Yeah. I’ve been invited down there a couple times for different events and just had conflicts.

I’ve been looking forward to… I mean, the food, too. I’m looking forward to a lot of it, actually.

Chris Moe: There’s a lot of good stuff. No mountains, though.

Chris McCabe: Yeah. Um, I’m, I’m eventually planning a trip to Big, Big Bend National Park-

Chris Moe: Oh, nice …

Chris McCabe: in the southwest corner. I’m not saying it’s near Austin.

Chris Moe: I’ve still never been.

Like, growing up in California, I was always spoiled with park proximity. And you gotta drive six, seven hours from here to get there.

Chris McCabe: That’s… Yeah. It’s a bit isolated. That’s a [00:15:00] bit of a trick. I’ve been trying to plan. I was in Texas a couple months ago. I just wasn’t in that part of Texas, so I had to put it off.

But I’ll eventually do that, maybe next year. And if you’re there, I think it’s the last week of October, I’ll see you in Austin. But in the meantime, people who wanna reach you, ask you questions, show you things, what’s the best way for them to reach you?

Chris Moe: Yeah. Best way is find me on LinkedIn. That’s where we put most of our content.

I post pretty regularly on there. I’m Chris Moe. You can also look up Cartograph, that account posts as well. And then find us online, gocartograph.com. And you can also always email me, chris@gocartograph.com.

Chris McCabe: Awesome. Thanks for taking the time to talk to me today. The battle of the Chris’s seems like it worked out pretty well, even without the battling.

Chris Moe: Even without the battling. Our power grows every time we do this.

Chris McCabe: That’s right. Our consolidation of Chris brain.

But I appreciate your time. Yeah, anyone who has any questions for Chris, you know where to find him. Thanks for listening in, and we’ll [00:16:00] catch you next time.

Chris Moe: All right. Thanks, Chris.

Chris McCabe: Yeah. Take care.