Amazon, Tofka Vodka, investment and data - Interview, Lewis Bowen, Babco UK
In 2019, Babco UK had one product listed on Amazon. Now, it has 64 SKUs. By year-end 2020, the company’s Amazon sales were up by 440% on the previous year and they say year-to-date sales for 2021 are up 496% - with Black Friday still to come. Drinks Retailing caught up with Lewis Bowen, group strategic director of the Sheffield-based drinks development and distribution business, to talk all things Amazon.
“People don’t see an immediate return,” he explains of why some companies shy away from selling via Amazon. “And that’s why they tend to leave it. It takes a lot of investment, whether that’s ad spend or there are terms - there’s a lot of work to do to get a brand moving.”
He says the company saw “unnatural” growth during Covid lockdowns but also organic growth following that. Amazon sales for Babco have gone from £40k in 2019 to £400,000 in fiscal-21, which ended in September. Growth has been driven by Tofka Toffee Vodka.
“It’s a top five vodka on Amazon – it fluctuates in the top 10, top five,” he says. “It’s a single SKU, it hasn’t got any extensions – I think that’s what Amazon does quite well. You don’t need a range on Amazon like you need in retail.”
Bowen explains that Babco has a vendor relationship with the retailer, which means that they sell stock at trade price to Amazon and then it is Amazon’s stock to sell to consumers.
Babco then decides when to invest. “It’s quite flexible,” says Bowen. “We can say we’re going to invest £2000 on ad spend or put a voucher on – it’s in our control what we do.”
As more companies turn to direct-to-consumer selling, we chat about whether he’s tempted to change his relationship with the ecommerce giant.
“No, I think it's a really good one. And it takes time to grow it,” he explains. “There's lots of opportunities.
“Our decision has been to work with large ecommerce providers because it's the larger growth piece.”
Bowen says using an ecommerce specialist comes down to scale.
“We’ve started to concentrate on export, especially with Neptune Rum and also with Tofka. We launched Germany and we did it all from the UK.
“It’s about scale but it’s also about risk. We can put a £1 into Amazon and we know what return we’re getting.”
Babco has created ‘shops’ within Amazon for its Roberto Cavalli vodka and Neptune Rum brands and the platform allows for data-driven planning in terms of the ‘who, what, when are where’ of its buyers. For example, Bowen is able to track ads from Facebook through to Amazon and learn how many consumers have clicked through and also bought the products. He’s also able to see the next three products that person buys, arming him with information on where best to place ads.
When it comes to advice for those looking to sell via Amazon, he says: “Don’t be surprised about how much it costs to start with. And be patient.”