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

ecommerce stockholm syndrome img

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/

NEWS | Kenneth Cole Re-Platforms to Nogin Intelligent Commerce

Kenneth Cole Joins Nogin

Iconic global brand leverages Nogin’s innovative Commerce-as-a-Service technology platform to optimize online store performance, add AI and decrease costs. Move reflects Nogin’s strong track record with brands in fashion, CPG, beauty, health and wellness.

Kenneth Cole has moved its online store to Nogin’s Commerce-as-a-Service (CaaS) platform, enabling the iconic brand to deliver best-in-class ecommerce to its valued customers, as well as increase sales, profits and conversion rates, and execute R&D upgrades in real-time.

“Like so many other brands, Kenneth Cole was caught between extremely expensive and inflexible legacy enterprise software on the one hand, and inadequate, lower-end SMB platforms on the other,” said Jan-Christopher Nugent, CEO of Tustin-based Nogin. “Intelligent Commerce provides a long-term delivery model that will help Kenneth Cole profitably keep pace with Big Retail.”

The global brand is leveraging Nogin’s cloud services and experts layered on top of the Intelligent Commerce Platform, allowing Kenneth Cole to scale with demand generated by a platform that is always learning and optimizing. 

From a business standpoint, Nogin’s Intelligent Commerce software, people and process can translate into benefits such as reduced free shipping and fulfillment costs, more efficient media spend,  higher conversion rates, stronger gross margin, and more.

“Just as Amazon Web Services was revolutionary for on-demand cloud-hosting, the Nogin platform is a game-changer in ecommerce,” said  Nugent, who notes that Nogin has also delivered Commerce as a Service for such major brands as Honeywell, Hurley, Bebe, Lululemon, True Religion, Yeezy and Charming Charlie.

NEWS | Justice Results Go Live

Nogin and Justice

Some 90 days after switching its legacy enterprise ecommerce platform to a new Commerce as a Service (CaaS) approach from Nogin, tween online retailer Justice is realizing strong improvements in profitable topline growth.

Justice (a Bluestar Alliance brand) moved its $250 million online store to Tustin-based Nogin to optimize performance, in part by gaining access to the platform’s leading-edge AI, predictive analytics, and R&D.

When measured against Justice’s legacy platform, notable improvements realized since going live with Nogin’s Intelligent Platform in April include:

  • Reduced shipping costs through algorithms focused on free shipping conversion;
  • Strengthened gross margin by leveraging customer behavior and interests to reduce discounting;
  • More efficient paid media spend, allowing Justice to significantly reduce marketing expenses, and  
  • A reduction in fulfillment costs, without sacrificing SLA (service level agreement), resulting in higher customer satisfaction. 

“Justice had built a great online store that was a hit with tweens and parents alike. However, as we looked to exponentially grow this business, we recognized the need to move the brand onto a next-generation platform,” explained Bluestar COO and Co-Founder Ralph Gindi. “Our partnership with Nogin takes us to that level without the requisite R&D investments and leaves us positioned to build Justice.com into what we hope can ultimately become a $500 million enterprise.”

Elaborating on the benefits realized to date from the switch, Gindi added: “By relying on Nogin Intelligent Commerce, experts and services, Justice also gained greater freedom to zero-in on other strategic priorities. We’re continuing to evolve the Justice brand by innovating our assortments, exploring deeper connections with our customers and forging new relationships with global social media influencers.” “Just as Amazon Web Services was revolutionary for on-demand cloud-hosting, the Nogin platform is a game-changer in ecommerce,” said Jan-Christopher Nugent, CEO of Nogin, which has also delivered Commerce as a Service for such major brands as Honeywell, Hurley, Bebe, Lululemon, True Religion, Yeezy and Charming Charlie.