Understanding the difference between strategies and tactics for demand capture vs demand generation is fundamental in eCommerce.
If you’re not sure which you’re leveraging, or whether you’re leveraging one more than another, this explanation is worth a read.
I’ll start by saying this article was inspired by a Podcast episode with Austin Brawner and Brett Curry on the eCommerce Influence Podcast. I’ve pulled out some of the best bits and provided some food for thought.
Here’s a link to the podcast episode:
So let’s jump right into the meat of things…
When is an eCommerce product serving Demand Capture?
Demand Capture – people are already searching.
They’re also not likely to be influenced to make a purchase just because they saw an Ad. i.e. People don’t buy a car exhaust just because they saw a Facebook Ad.
These types of products have limited scale for Ad Campaigns – the limit is based on the search volume.
After all, you can only serve as many Ads on the search results as there are searches in the first place.
This number is finite.
When is an eCommerce product serving Demand Generation?
Demand Generation – putting something in front of someone could result in them deciding to make a purchase.
It could be a “healthier” version of something they know and understand, like a protein shake, but they then get prompted to make the purchase by the Ad.
These types of products do scale with Ad Campaigns – the limit is based on the amount of money you can spend getting the product and the Ads in front of people.
From the podcast:
…something new that people can be exposed to for the first time and desire because they now understand why it exists
Content Marketing is demand capture, but the Ads you then place on your content could be Demand Generating…
From the podcast:
…what does the founder decide that they want to focus on?… …If it’s demand generation, they need to learn paid social, or they needed to learn how to maximize sales on Amazon. Amazon’s getting more like a demand capture type thing.
Austin actually calls Amazon out as a Demand Capture play. There’s a fixed search volume, it’s just figuring out how you grab a bigger share of the pie.
There’s recognition then, that if you want to “make a bigger pie” you need to understand how to do Demand Generation “Off-Amazon”.
As demand capture has a limit to it’s scalability.
It’s limited by the search volume on Amazon.
Demand generation therefore is the engine for growth in an eCommerce business once the demand capture processes and systems are in place.
In Amazon Seller terms, demand capture is maximised when;
- Your listing is optimised
- Your Ads are optimised
- Your review generation system is optimised
- You’re ranking highly for a wide range of terms
- You’re ranking highly for some of your “main” terms
At that point, you’re capturing as much demand as can be reasonably expected.
Beyond that point, you need to generate your own demand!
Of course this ignores the idea that generating your own demand from the outset is a great way to launch your product on Amazon.
Then keep it there.
Which type of demand is right for you?
As with all things in life and the universe, a balance must be struck.
Understanding which you’re focused on is important for the financial assessment of your business, potential for growth and the risk profile.
If you’re not leveraging demand generation, but scraping by on demand capture, you may not have a business. Demand capture typically a cheaper route. You’re converting primed and ready buyers into customers, it’s as easy as it gets (aside from competition).
If you’re managing to leverage demand generation, you’ll know it doesn’t convert half as well as demand capture, but you’ll appreciate the marketing innovation required to keep costs to a minimum so ROI is positive.
I talk about this in relation to Ezra Firestone’s 3 pillars of profitability here.
If you’re purely leveraging demand generation, maybe it’s time to look at some demand capture options. These might well make your life a little easier and provide a bit of a boost to overall sales.
An example would be a retail brand who sells on their own store, but not on Amazon. They could be missing out on capturing existing demand for their type of product, with sales going to lesser competitors and products.
Are you striking a balance in your business?