Vendor’s Concern
LGE, a leading global consumer electronics company, faces significant challenges as a vendor on Amazon. The primary concerns revolve around the rapidly changing competitive landscape, which fluctuates due to factors beyond LGE's control, such as shifts in competitor pricing, promotions, and seasonality. These external influences make it difficult for LGE to keep pace and adjust strategies accordingly. Additionally, despite having a vast product range, the company's limited manpower struggles to focus on Amazon due to the demands of other major retail channels, making it challenging to dedicate resources solely to optimizing performance on the platform.
Adapting to a Volatile Environment
The market for consumer electronics is highly saturated and inherently volatile, with frequent fluctuations in competition and consumer behavior. Identifying the factors driving this volatility is critical, but understanding whether trends are short-term or long-term can be complex. LG Optapex addresses this challenge by thoroughly analyzing data to uncover how various factors contribute to a product's performance, and continuously following-up by applying solutions that can help improve the performance.
LG Optapex Solution
1) Predicting Organic CVR and Organic Revenue
LG Optapex adopts a holistic approach when evaluating the factors affecting a product's competitiveness. It considers various data points, including product pricing, traffic, rankings, reviews, and performance trends. By examining these elements, LG Optapex gauges the competitiveness of each product in the market, using Organic CVR as the primary indicator. Organic CVR, which represents non-ad-related conversions, effectively reflects consumer willingness to pay for the product and serves as a measure of its competitiveness. However, recognizing that short-term promotions can inflate perceived competitiveness, LG Optapex accounts for both long-term and short-term Organic CVR to provide a balanced outlook.
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2) Predicting Ad Efficiency
Based on the insights derived from Organic CVR and other relevant metrics, LG Optapex forecasts the expected performance of ads for each product. This analysis extends beyond predicting basic metrics; LG Optapex places significant emphasis on estimating how advertisements will influence revenue growth. By accurately forecasting impressions and clicks, it enables more precise and impactful advertising strategies.
3) Budget Sensitivity
To maximize the effectiveness of advertising budgets, LG Optapex utilizes predictive values and advanced modeling techniques to determine the optimal budget allocation. This approach seeks to increase impressions, clicks, and revenue while minimizing costs. In LGE's case, LG Optapex demonstrated a notable ability to deliver results by spending only 80% of the initially planned budget, having identified that any additional expenditure would not significantly enhance performance.
4) Adapting Based on Predictive Insights
Using its predictive insights, LG Optapex continuously fine-tunes budget allocations across different products to find the optimal budget mix. The platform also adjusts keyword bids on an hourly basis, ensuring that keywords with high potential receive appropriate exposure while minimizing spending on those with less impact. This dynamic approach enables consistent adaptation to the evolving market environment.
Results
The strategies implemented by LG Optapex produced remarkable results for LGE. Over a four-week period, ordered sales increased by 2.8 times, while ad sales saw a ninefold growth. This steady and sharp improvement began from the first week of optimization, showcasing the effectiveness of LG Optapex's approach to navigating a volatile market landscape.
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