October 05, 2023

Driving Business ... To Amazon

It's 2006, back in the stone ages. Gnarls Barkley sang "Crazy" and the song ended up being the top ranked song of the year. You could get a loan for a home by breathing on a mirror to demonstrate condensation. Amazon was becoming a force.

My team at Nordstrom had massive catalog mail/holdout tests. If our circulation was 2,000,000 catalogs, we held out 200,000 customers. Yeah, 200,000! This allowed us to measure lift at a segment level.

We also had a proprietary credit division at Nordstrom. This meant that if a customer purchased at Amazon (or Neiman Marcus or Target or your local gas station) using our credit card, we could attribute purchases to our mail/holdout test.

Yeah, that's good stuff!

So good, in fact, that we learned the following fact.

  • For every incremental $1.00 we generated at Nordstrom from mailing a catalog, we drove $0.20 to Amazon.

Yeah, that's not so good.

I recall one test where we for every $1.00 we generated at Nordstrom we generated $1.00 for Amazon. Millions upon millions of dollars of free business we sent to Amazon via our own marketing efforts.

Is it possible that this happens at your brand? You send out an email "blast" and you drive business to Amazon?

At Nordstrom, we knew that Neiman Marcus store openings drove business to our stores, and we knew that our marketing efforts drove business to Amazon. Imagine what your marketing efforts are truly doing?

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