A Look At How Online Advertising Is Changing Supply Chain And Product Decision Making In Ecommerce

Retail and eCommerce marketers, advertising and marketing agencies in Dubai can no longer rely solely on media metrics such as ROAS to monitor their progress. Their universe has just expanded.

They must include product development and manufacturing, as well as shipping and fulfillment, in addition to the media and advertising supply chain. 

The metrics ACOS (Advertising as a Cost of Sale) and IPI (Inventory Performance Index) are provided by Amazon to sellers, and they take into account not just marketing expenditures but also storage and fulfillment expenses, as well as the cost of shipping a product. Supply chain data has become an inevitable metric for eCommerce marketers and advertising companies in UAE as a result of the metrics.

Consequently, these supply chains are convergent, and as a result, data is shared among many brands and sellers. It’s vital to keep storage inventory flowing efficiently and in stock on Amazon if you want to appear in profitable sponsored and organic search results. Because grab-and-go basics like candy bars or a six-pack of beers are almost difficult to deliver to someone’s door without compromising profit, the cost of product delivery is affecting new product development and even merchandising for store-based businesses. 

In addition to being used for advertising, Ad data must now be used to guide product development and fulfillment supply chains. Supply chain data is essential to marketers and digital advertising companies in Dubai who wish to use it for their online marketing campaigns. 

Influence of Amazon

The greatest illustration of how eCommerce marketing has merged several separate supply chains into one, the massive sales funnel, is Amazon. 

Utilize the ACOS metric for Amazon ad performance (Advertising as a Cost of Sale). The Amazon-specific ACOS illustrates that after a sale is achieved, return on ad spend is only one part of achieving a sale, since there are other aspects to consider too, including merchandising, packaging, warehousing, and fulfillment.

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Influence of Amazon

A product may appear to be flying off the shelves with a huge return on investment if you just look at ad spend. In reality, however, the brand might actually lose money when you consider the costs of manufacturing, packaging, and shipping a product. 

The Inventory Performance Index (IPI) is another cross-supply chain indicator used by Amazon to assess products and influence how highly they will appear in organic search results. 

Amazon restricts its capacity because a bedding company may take up a lot of space in a warehouse. However, the IPI score is likely to be high, if the company spends a lot of money on promotion and keeps the goods in stock rather than having bedding languish in a warehouse for days. It will also be given exposure to Amazon’s shopping site and warehousing space. 

According to Brian Burt, CEO of Amazon marketing agency Canopy, Amazon has placed a greater emphasis on its IPI score in the last year. Because it was focused on supplying essential home cleaning and health-care products, Amazon limited its warehouse inventory in the early days of the pandemic in 2020. The stricter IPI appears to be the new normal, not a pandemic response because Amazon has not loosened those standards.

For Amazon, this is a significant shift. A seller with savvy advertisement and keyword targeting tactics always had an advantage on Amazon. As a result, now, Amazon is requiring manufacturers and fulfillment suppliers to upgrade their supply chains or they will be unable to use Amazon’s advertising supply chain successfully, which means it will favor brands with high IPIs for ad inventory.

Even well-established firms face challenges in making the switch to eCommerce. Advertisement isn’t the only source of supply chain convergence. Ad companies such as Prism Advertising Agency in Dubai UAE are branching out into fulfillment-focused companies. 

The worlds of retail and eCommerce are colliding.

Real-world businesses are encountering similar issues and developing their own solutions, even though Amazon is the most visible illustration of how merchants must consider all three supply chains thoroughly. 

Even greater sophistication is possible. A product that is cheaper to ship to someone’s home on Amazon might shift part of those potential delivery savings into a reduction in price or advertising campaign on the merchandise.

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The worlds of retail and eCommerce are colliding.

Data from advertising and eCommerce is also making its way up the corporate ladder. Advertising campaigns used to be based on advertising data. Digital ad analytics and data gleaned from the media were used to optimize the campaign. In contrast to pure ad metrics ROI like better click rates or reach, advertisers are now pulling data from additional parts of the organization to see if they’re delivering lucrative business results. As with global shipping and product costs, CEOs and CFOs are curious about the cost structures of online advertising.

To give you the best guidance and strategies in online advertising, employ the services of Prism ME, the best digital advertising agency in Dubai. They have a team that is always ready and glad to be of service. Their services are also proven to give you profitable results for your business. Give them a call now at 04-332-0808 

 

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