Efforts to Match Amazon Can Be a Form of ‘Stockholm Syndrome’ for Retailers and Brands

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Rapidly evolving Commerce as a Service (CaaS) model can give mid-tier operators in the fashion, CPG, beauty, health, and wellness industries a better way to keep pace with big retail and drive predictable profitability, advises tech veteran Jan-Christopher Nugent.

Too many retailers and brands suffer from “Amazon Stockholm Syndrome” — the unquestioning effort to compete with the world’s most dominant ecommerce company on its own asymmetrical terms, writes Jan-Christopher Nugent, CEO of Nogin, in an opinion piece for multichannelmerchant.com.

“If the Stockholm Syndrome theory were correct, you’d expect to see long-enduring captives parroting the propaganda of their captors and engaging in behavior that was not in their long-term interest,” Nugent writes. “This is exactly what we see.”

Indeed, companies routinely give up sizable chunks of their margins by trying in vain to play Amazon’s game, he contends. “While a healthy brand’s average discount should be no higher than 26%, we routinely see brands with average discounts of 50% once you factor in shipping and return costs,” Nugent writes.

In the Oct. 11 piece (“How to Snap Out of Amazon ‘Stockholm Syndrome‘”), the ecommerce sector veteran describes Amazon’s success in training consumers to expect free (or seemingly so) shipping and nearly instantaneous delivery. Amazon has also been able to drop prices and force competitors to cut their margins.

While going head-to-head with Amazon may be viable for a tiny number of true giants, for others the rapidly evolving commerce-as-a-service (CaaS) model creates new possibilities, Nugent writes. “In the CaaS model, specialty firms create, maintain and operate ecommerce stores on behalf of retailers and brands. These platforms can deliver superior ecommerce and increase sales, profits and conversion rates using advanced algorithms, data-driven intelligent promotions and discounts, and cloud-based R&D upgrades.”

But before retailers or brands can take full advantage of these gains, they may need to face some captor-induced fears. That could include reconsidering whether there’s truly only one way to please the customer, Nugent notes, and being open to using tech and analytics to win back the respect they have given away by selling at a loss.

For example, CaaS methodologies can reveal which customers are loyal enough to buy even without receiving free shipping, notes the executive, whose firm has delivered CaaS for such major brands as Kenneth Cole, Honeywell, Hurley, Bebe, Lululemon, True Religion, Yeezy and Charming Charlie.

Generally, the mid-tier “is where CaaS has capabilities and services that bolster competitiveness, including higher-order AI and predictive analytics,” Nugent explains. By running intelligent algorithms and multivariate tests, CaaS providers can ferret out which customers will balk at the removal of shipping, delivery and price giveaways, and which ones will keep shopping and stay loyal.

“When CaaS technology is carefully applied across an entire ecommerce store, intelligent segmentation can result in a drop in the average discount from 50% to 25%, or even as low as 4.5%-6% in some cases,” he writes. “Most importantly, it can also help bring you to a cash-neutral position when it comes to returns … That’s what it takes to keep pace with big retail, drive predictable profitability—and snap out of the Amazon trance.”

The full column is available at:
https://multichannelmerchant.com/ecommerce/how-to-snap-out-of-amazon-stockholm-syndrome/

Making eCommerce Smarter

Jan Nugent

Nogin awarded the CIO Review’s “Most Promising eCommerce Technology Solutions Providers of 2021”

This article originally appeared in CIO Review and is reproduced here with permission.

“From a technology perspective, there is a great divide in e-commerce,” highlights Jan-Christopher Nugent, co-founder and CEO of Nogin, an Intelligent Commerce Company that is helping brands improve their performance by providing a new approach to e-commerce software and a host of outsourced services. On one end of the spectrum, there is legacy enterprise e-commerce software that is robust, scalable, and has massive capabilities but is inflexible, slow and expensive to deploy, and very rigid to optimize.

On the other end, there are nimble SMB e-commerce storefront solutions that leverage apps to be effective for simpler stores but have fundamental architectural issues that make them unsuitable for enterprises. “For brands and retailers, providing an exceptional experience to the consumer is a must. However, keeping pace and maintaining reasonable profit margins has been a challenge for the market. Nogin solves that with our unique Commerce as a Service approach to the market,” avers Nugent. The Tustin, CA-based company offers a cloud-based, full-stack, e-commerce platform that includes R&D, sales optimization, and machine learning, so stores drive exponential results. For those who need more, Nogin also provides artificial intelligence-driven marketing, fulfillment, and expert support to help global brands keep pace with big retail giants and drive predictable profitability.

The Nogin Intelligent Suite features superior catalog and full-stack capabilities, a market-leading algorithm, and AI advancements at its core. Nogin blends enterprise-class technology with the flexibility and nimbleness of a commercial solution on the front-end to deliver customers the high-performing, seamless online experience they demand while liberating margins and driving growth. The Nogin Data Scientists, along with AI, process millions of interactions, analyze activity across a brand’s entire operation, and have the potential to act in real-time to help businesses unlock growth, cut costs and identify the source of lost revenues.

“Today brands and retailers are on an island once they replatform, and it’s not really working. With Nogin’s cloud technology and services approach, all boats rise with the tide. We are driving the tech to grow sales, cut shipping, returns, fulfillment costs, and push those capabilities out to all clients,” adds Nugent. Nogin’s high-performing, multi-tenant, and multi-community Intelligent Core feature flexible architecture designed to efficiently manage e-commerce operations, complex catalogs, and sophisticated order management systems to power a business’ day-to-day operations.

Additionally, Nogin’s Commerce as a Service cloud approach constantly invests in R&D, thereby eliminating the need for clients to ever replatform. Nogin’s proprietary software continuously updates with new features for advancement and better results. Imagine getting an update that increases your conversion rate by 20% overnight. With Nogin, it is a reality. Brands and retailers that partner will Nogin can drive consistent and predictable profitability because the platform provides access to all the resources a brand needs. The solution unlocks benchmarks, best practices, and behavioral data with no hidden or extra cost while combining customer, industry, and market intelligence, all wrapped in one platform that gets smarter after every conversion.

Over the last seven years, Nogin has helped notable brands, including Honeywell, Hurley, Bebe, Justice, ModCloth, Lululemon, and True Religion, not only meet their goals but exceed expectations in all facets of their e-commerce business operations. For example, a Fortune 500 client needed to launch eight stores globally with multi-currency, multilingual, and omnichannel capabilities. Working with a traditional enterprise provider would have cost them approximately $20 million and taken over two years to roll out globally. Instead, by plugging into Nogin’s intelligent e-commerce platform, they developed multiple region and language-specific catalogs, with 11 different unique payment methods—all managed from a single catalog.

“The brands went live globally in 90 days on Intelligent Commerce across the entire online demand chain for 5% of standard fees and with the help of Nogin’s experts do over $100MM online. We are now helping them roll out additional divisions”, says Nugent. In the last five years alone, Nogin has grown 1100% profitability. The company will continue to drive Commerce as a Service for brands and retailers to drive exponential results over DIY and Legacy Commerce. “Our goal is to continue to advance our Intelligent Commerce Platform and spin-off apps of high touch technology to drive exponential results for the SMB market as well,” concludes Nugent.