Ten years ago, researchers and study groups were writing about Generation Y –otherwise known as Millenials. New phenoms like Social Media and Instant messaging were like calculus to marketers and companies. The Baby Boomers (1946-1964) viewed Gen Y as satanic spawns and deemed them the “entitled generation”. Yet, ten years later, we are still here and now millennials are writing about how Baby Boomers ruined the future. Social media is now the most effective way to reach a large audience. Instant messaging is a fossil with new companies like SnapChat leading the way in personalized communications. Most companies have had to play catch up to reach the younger generations, but some of them were too late; a few of the most successful businesses eventually went bankrupt because their consumers chose the new vs. their out-of-date strategies. As humans, we study history for a reason: to never repeat the mistakes from the past. In two years, Generation Z (1996-2010) will take over nearly half of the consumer market and the time to prepare for the new gen is now.
How to effectively reach Generation Z
There are hundreds of studies online trying to figure out how to reach the next generation and enact their purchasing power. The answer was the same for every study: social media. Traditional marketing has always used the power of celebrity to try and sway the younger generation. I will always remember when Kobe Bryant jumped over a moving Astin Martin to advertise his new shoe, the HyperDunk. In 2008, the New York Times wrote a piece on how the most successful ad campaigns were based on the idolized figures in America called “Nothing Like Celebrity“. Ten years later, Hollywood has been deemed too political and less efficient than young, social media stars. YouTube has become the center stage for product advertisements–being cheap yet very effective. Instagram “models” are followed and idolized how Hollywood stars were once viewed. Change in business is like Darwinism–it’s a competition for survival and only the fittest will survive. The companies that are able to adapt to the new environment will become successful while others struggle to hold on.
Generation Z is yearning for social media status as bad (if not more) as companies want their pocket money. For my research, I did a little bit of reverse psychology. Videos on “How to Get FREE Products from Amazon, Sponsors, and Brands” are generically common and just show how bad Generation Z want your attention. In the previous blog, I talked about Gen Z’s desire for a real experience rather than an online one. The trick for sellers is to make the consumer feel like they’re special without doing anything really different than before. As a seller, a job market is filled with young adults trying to advertise your product. On Amazon, buyer profiles are actively searching for companies in need of a quick boost in credibility. It’s an easy equation: sell a discounted product to a fledgling persona, let them advertise it for you and post positive reviews, equals a greater reputation for your business. If you find positive reactions and a growth in revenue, try spending money on #sponsored ads to YouTube or Instagram stars to further spread your products to a younger consumer.
“B2C E-commerce sales ($393B), 55% is sold through branded stores vs. 45% via marketplaces.”
Selling on eBay or Amazon does not make you a company but just another seller or vendor online. It does not matter if you’re a $1 million or a $10 million seller, without a secure brand, your company isn’t worth dimes yet. Creating a company name and persona that people can relate your company to is essential for sellers trying to expand. Even if most consumers do not even notice, building a brand can only always be beneficial.
Creating a beautiful website for your business is no longer a significant cost to your business. E-Commerce sellers have seen successful boosts in revenue when they create a destination for their company. Think of your website as a gateway more than a marketplace–linking your customers to the selling channels (Amazon, Etsy, etc.) and your products. Consumers no longer look for just a product but seek validation for why they should give their money to you. A website gives a greater customer experience and can be deemed by Gen Z as “legit”. Not only do you obtain more potential customers but owners can see in greater depth how their products are reacting online.
Brand Registry is a huge tool for Amazon Sellers. Small sellers may not realize this but other sellers can post reviews about your products–a huge potential for false reviews. This service is quite easy and only needs two things: a brand logo on your packaging and a functional website with contact information. Spend some of that leftover revenue and create a brand so that no one besides the buyers can add reviews.
It’s easy to see why building a brand is beneficial to online vendors, but businesses are based on potential (e.g. People invest in stock for companies that are deemed to have the highest potential out of the rest). Now, mix the potential of your business with the potential purchasing power of Gen Z–a massive opportunity. In two years, Generation Z will take over 40% of the consumer market. Two years is plenty of time to adjust, but it is important to get on top of it now. If your business is able to garner brand recognition from the iGen now, the upside is a potential of millions in revenue. The substantial rise in companies like Supreme and Instagram only serves as further testament to other businesses to invest into Generation Z.
A brand not only needs a name and a persona but is in need of constant nurturing. Being able to earn returning customers takes a set-in-place system and more than a pretty logo on your products. Brand recognition is hard to achieve and takes months or even years of work. The time spent messing around with google ads and building one’s SEO is tedious, but could turn your company into a very profitable asset.
Once you have gained the respect of Generation Z, use that to show the potential upside of your business. For the brand you’re trying to sell, layout a five-year plan that shows what is to be expected. Create a business portfolio using every statistic and figure available to show that your company is worth more than they think. A huge tip we recommend is to show how it is possible with extra capital to decrease the COGS and increase your margins. Any potential buyer will be able to see that you have an adequate business model that has not only has a current revenue stream but a business plan that will bring greater profits in the future. A blueprint of your company will only help you succeed and have an idea what is to come–even if you don’t end up selling.
The biggest habit we can warn sellers is to be wary of Generation Z’s fads. Products garnered to the younger generation create high rewards but burn out quicker than any other product. The best example is the fidget spinner. This product with a low COGS gained millions of dollars in revenue in such a short amount of time. Sellers began ignoring quality for quantity which later led Amazon to ban around 90% of the spinners on the market. Sellers that were still able to sell eventually had to liquidate because the “hype” around the product died.
There are always big fish trying to swallow smaller fish to become bigger–even in the e-commerce world. The beautiful thing about Amazon and other E-Commerce marketplaces is that there are sub-marketplaces (e.g. sellers in tech will try to buy other tech sellers). There are companies seeking to grow larger and garner new assets for long-term returns; on the other side, there are sellers looking to sell their company for a quick profit. The true potential for revenue resonates on a seller’s ability to create a brand, sell it, and create two more brands in two different marketplaces for more potential acquisitions.
If you are even the slightest bit interested in selling your company, it is essential to have the proper books to go along with a potential acquisition. No company in the world will try to purchase another if that company cannot keep track of its net income. We at Seller Accountant specialize in helping companies prepare for potential acquisitions through CFO services. If you have any questions or interested in this service, feel free to contact us for a free consultation!