If you’re an online retailer, you’re already familiar with the selling power of Amazon.
If you’re an online retailer, you’re already familiar with the selling power of Amazon. The marketplace giant represents 40% of all online retail sales in the US, and its influential position continues to expand. In fact, 54% of active consumers in the US now say they begin their product searches on Amazon.
But success for brands and retailers isn’t guaranteed. In addition to being proactive and up-to-date with Amazon’s ever-evolving trends and requirements, you must also take steps to ensure your products and brand stay one step ahead of the ever-increasing number of sellers competing for consumer eyeballs and attention.
In this eBook, we’ll share some of the most important strategies that online retailers and manufacturing brands should employ on the ever-growing, ever-popular Amazon marketplace.
Prefer the PDF version of this eBook? Download the The Comprehensive Guide to Amazon.
The Multichannel Growth Flywheel for Amazon
For brands and retailers that want to succeed on Amazon, simply listing your products on the site is not nearly enough.
As you strategize your approach to Amazon — and e-commerce as a whole — a growth flywheel can be an effective, high-level way to structure your thinking. Working through the flywheel can surface important questions, such as:
Where are my strengths? Where are my weaknesses? My opportunities? Am I investing enough in this part of the flywheel? Do I have all the pieces in place to keep growing my business?
There are five essential components that make up a holistic growth strategy:
- Connect your products to consumers with error-free listings
- Market your products effectively to drive awareness and sales
- Sell your products by converting browsers into buyers at the moment it matters
- Fulfill your customer’s expectations with fast, efficient delivery
- Optimize your Amazon strategies to constantly improve results
Choose the Best Business Model for You
Amazon is both a retailer and a marketplace. As a retailer, Amazon purchases inventory in bulk and resells it at a profit, via a wholesale model. And as a marketplace, Amazon lets sellers list items on its site and takes a commission on sales.
Brands can choose between having a first-party (1P) relationship, where they sell products to Amazon via Vendor Central, or a third-party (3P) relationship, where they sell products directly to consumers via Seller Central. Both of these models have their advantages and disadvantages, and it’s up to each brand to decide which is right for their business (if Amazon gives them a choice).
In a 1P arrangement, for example, a brand is responsible for advertising, promotions and shipping products to Amazon, while Amazon controls the pricing and inventory. In a 3P arrangement, the brand controls advertising, pricing, inventory and any fulfillment or logistics (unless they choose FBA).
All options are on the table, though, and some brands leverage a hybrid model of both arrangements in parallel. One example of how that could work would be a brand selling most products through Vendor Central and leveraging Seller Central to push many of their older, “end-of-life,” lower-margin products.
Minimize Your Listing Errors
The majority of consumers begin their buying journeys on Amazon. And whether you sell on a single Amazon marketplace or in multiple countries, whether you sell as a vendor or a retailer, reaching those consumers all starts by connecting your product data to Amazon and configuring it to meet Amazon’s listing requirements.
The unique data structure of each marketplace can lead to listing errors, which is a common issue that all brands will need to address. Listing errors can cause products to appear incorrectly, or prevent them from showing up at all, which in turn leads to a poor consumer experience and loss of marketplace sales. Make sure your Amazon connections are error-free by ensuring your product data is clean, organized and in line with Amazon’s standards.
When building your product titles, for example, here are several specific requirements:
- Titles must follow the recommended length of your product category characters
- Titles should not include promotional phrases like “great deal” or “while supplies last”
- Titles should not contain characters for decoration
Obviously, you should also avoid restricted products and categories when sending product data. And lastly, most categories require that you use a Global Trade Identification Number(GTIN), such as a UPC, ISBN or EAN as a product identifier when creating new product pages or matching to existing pages in the catalog. Amazon controls the pricing and inventory. In a 3P arrangement, the brand controls advertising, pricing, inventory and any fulfillment or logistics (unless they choose FBA).
Maximize Your Visibility Through Advertising
If you really want to boost your visibility and increase sales, Amazon advertising is a must. But this is one marketplace where a simple manual campaign isn’t likely to cut it. Successful sellers know to look beyond the basics of keyword selection to create a truly strong strategy — one that’s virtually guaranteed to get your products in front of the right people at the right times.
Successful sellers tend to take advantage of multiple ad types, including:
- Sponsored Products, which can be used to promote individual listings. Keyword-driven Sponsored Products appear alongside organic search results, and are ideal when the goal is to get high-quality clicks from consumers who are actively seeking the products you sell.
- Sponsored Brands, which can be a great way to reach consumers who are browsing but don’t yet know what they want to buy. These ads often appear on top of search results pages to make people more aware of different choices as they peruse categories and listings, but they can also appear in various places on the results page. Sponsored Brands also allows for a video option, which is keyword targeted, cost per click and becoming very popular in some categories.
- Sponsored Display Ads, which can help you reach new audiences through display ads on specific product detail pages, the Amazon home page or across third-party apps and websites.
Having a mix of Amazon ads will help ensure your products are seen by different consumers at various stages — whether they’re simply browsing or are ready to “buy now.” Relying on a dedicated specialist or agency partner can help ensure you’ll know precisely when a promotion is performing well and warrants additional bids, or when it’s time to reallocate your budget to new keywords.
Optimize Your Search Terms and Listings
Before consumers can buy your products, they have to find them in the Amazon search results.
Not only do over half (54%) of US consumers begin their product searches on Amazon when they set out to buy a product, but a growing number (41%) also begin their search on Amazon when their intent is simply to research. Accurate information builds trust, and the more trust you can build during the consideration phase, the greater your chances of success.
When writing your product listings, put yourself in the minds of consumers. What are they looking for, and how are they going to search for it? Several best practices can help in identifying the ideal mix of keyword combinations:
- Research. Start by doing a search for a similar product to see what listings come up high in the rankings, and to find words you may
not be using already.
- Make your product titles descriptive. Use only highly relevant, accurate keywords that help describe your brand, product name,
key features, colors, sizes and quantity.
- Don’t focus on repeating title keywords in your description, as Amazon already factors those into search results.
- Only use terms that describe your specific product. Amazon doesn’t permit third-party brands or trademarks as search terms.
- Use hidden keywords, where appropriate. The optional hidden key field is an opportunity to use synonyms, acronyms, abbreviations
and other alternatives that consumers may be using to find your products.
Strive for the Buy Box
You probably know how important the Buy Box is on Amazon. And with only one Buy Box available per item, you’ll find yourself competing with a number of other retailers all trying to win it. The Buy Box is located on a product’s page — where a consumer starts the purchase process — and is highly visible.
To win the Buy Box, you must meet Amazon’s criteria in a number of areas. Although Amazon closely protects the exact formula for calculating the Buy Box, it takes into consideration:
- A competitive price
- A positive customer feedback metric
- Fast and efficient delivery
- Volume of inventory
- Low refund and return rates
Though it generally takes some time for a new seller to build up a sales history that will win them the Buy Box, focusing on these aspects is good for business regardless of the marketplace. They’ll not only help to increase your sales but will also contribute to your customers’ overall satisfaction.
Keep Your Prices Competitive
When listing a product on Amazon, you’ll often be competing against hundreds of other sellers offering the same item. One of the best ways to stand out from the crowd and stay ahead of the competition is to constantly offer competitive prices.
However, you still need to retain a sufficient rate of return — and use safeguards to ensure you don’t inadvertently breach policies elsewhere by failing to lower your product prices across sales channels.
One way to manage the effectiveness of your repricing is through an automated repricer. The ideal solution will allow you to set parameters around pricing values while preventing the potential for undercutting retailer listings. To understand how to implement repricing tools on a practical level, it’s first important to recognize the different types of repricers:
- A marketplace repricer (e.g., Amazon repricer) helps sellers win sales at the highest possible price, by continually monitoring the listing and evaluating the quality of the competition to arrive at the optimal price.
- A velocity repricer changes pricing to competitive levels across your various marketplaces based on the total quantity sold for products, allowing sellers to take action to move stale inventory or to maximize profit on fast-selling products.
Repricers help sellers win the Buy Box and best offer positions. They also increase competitiveness and visibility of your products among bargain-savvy consumers.
Overall, for brands, automated repricers prevent product erosion and help catch MAP pricing violations before they start a ripple effect. In addition, they provide maximum profits while also helping your business react to real-time demand and move product.
If you’re a registered brand on Amazon, Amazon A+ Content provides a fantastic opportunity to let you present your brand and your products the way you want. Free and unlimited for both vendors and sellers, Amazon A+ Content is one of the most effective ways to increase traffic and sales — and to cross promote your other products — by giving you the ability to display:
- High definition videos
- Enhanced images
- Comparison charts
- Robust FAQs
- And more
In addition to A+ Content, Amazon’s Stores help you expand coverage across the marketplace and exercise more control over the consumer journey, potentially:
- Driving customer acquisition and engagement
- Boosting organic ranking
- Increasing cart size and volume of sales
- Generating better return on ad spend for your Sponsored Brand Campaigns
Learn more about how to build a successful Amazon Store in the ChannelAdvisor Resource Library.
Choose the Right Fulfillment Option
Two options offer access to the golden shelves of Amazon Prime: Fulfillment by Amazon (FBA) and Seller Fulfilled Prime (SFP).
While both allow you to sell on Amazon Prime, each includes a unique set of features.
- Fulfillment by Amazon, as the name suggests, means your orders are completely fulfilled by Amazon. You send a portion of your inventory to Amazon’s fulfillment centers, where it’s stored until a customer decides to buy it. Amazon then picks, packs and ships the items directly to consumers for you. FBA also manages customer support and returns, and keeps your inventory secure and insured against possible losses or damages.
- With Seller Fulfilled Prime, fulfillment is in your hands. Customers will purchase through Amazon Prime as usual, but your company ships the items directly with no intervention from Amazon. You use the Amazon Prime brand name and shipping rules, but it’s up to you to pick, pack and ship to Prime members. Keep in mind that you’re also responsible for returns, which are automatically authorized by Amazon.
FBA and SFP offer different advantages and disadvantages, so it’s important to vet the two options carefully against your business needs and goals.
Improve Your Customer Metrics
A positive customer satisfaction rating is essential for not only retaining existing customers but also securing new ones. Why? Because most consumers look at reviews before making any purchase and trust those online reviews as much as personal recommendations.
For this reason, it’s not just what your customers are saying, but how you respond to their reviews that matters. This is because sometimes, if a customer had a bad experience with, say, shipping, their review may be more about that specific experience than about the product itself. Working to resolve those issues can go a long way in gaining loyalty and trust.
Amazon provides a wealth of information on how your brand is doing with respect to customer satisfaction. It’s important to watch a number of performance metrics, including:
- Order Defect Rate (ODR), which measures the percentage of orders that receive negative feedback
- Return Dissatisfaction Rate (RDR), which measures customer satisfaction with how returns are processed
- Late Shipment Rate, which measures the percentage of seller-fulfilled orders confirmed after the expected ship date
Remember, your reputation on Amazon is extremely important. Customers listen to other customers, and that affects your bottom line. Keep a close eye on your metrics and ensure that you’re dealing with requests quickly and efficiently.
Need a hands-off approach?
Let our Managed Services team of marketplace experts guide your day-to-day strategy and execution across both your inventory management and retail media strategies. We’ll work with you to customize an action plan for growth — whether that means maximizing your presence on Amazon or choosing a new mix of additional marketplaces for expansion. And thanks to our longstanding relationships with Amazon, you’ll be first to know about new opportunities as they emerge.
Expand Your Presence by Going Global
Around the world, people are turning to Amazon to meet all kinds of shopping needs. And Amazon has expanded to meet the demand of both consumers and brands. Amazon now operates in 13 different countries, including marketplaces in the UK, US, France, Germany, Italy, Australia, Spain, Canada, Japan, China and more, offers Prime memberships in over 19 countries and ships products to over 100.
Selling internationally could significantly increase your consumer base and sales. To start, the Amazon Global Selling program opens up your Amazon product listings to international consumers who are already shopping on Amazon and is a great way to “test the waters” of cross-border trade. You’ll get great insight into which regions provide the most demand and can see which countries are predominantly buying your products — then use that knowledge to determine if expanding to another marketplace in that location would be cost-effective. And since you’re selling through Amazon, you won’t need to translate or localize your listings for other regions.
Signing up for the Amazon FBA Export program is also a great idea if you’re considering selling internationally. This program allows your products to be purchased from Amazon by international consumers for fulfillment through Amazon’s many centers around the world. It works just like FBA does for domestic orders and can save you valuable time as well as the hassle of shipping abroad.
As a driving force behind the global e-commerce landscape at large, Amazon sets the stage for successful online selling. But the days of simply listing onthis marketplace giant are long gone. Staying up-to-date on the latest trends, requirements and best practices will remain crucial as you continue to learn which marketing, selling and fulfillment techniques work best for your customers on Amazon.
Stay Ahead with ChannelAdvisor.
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