Amazon gives sellers a view into their impressive “product demand database”

August 25, 2010

ChannelAdvisor ChannelAdvisor By ChannelAdvisor

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Amazon has implemented a couple of clever seller-facing enhancements recently that help third party sellers and also improve the buying experience that I wanted to highlight.  I’m frequently asked by retailers and analysts how Amazon is keeping their amazing growth rate on track. The answer is hundreds if not thousands of incremental changes.  Individually you may look at these changes and, well, yawn, but when you add them all up, they are clearly moving the needle.  The bulk of the changes are on the buyer-side and so numerous it would be a full time job blogging about them.  There are fewer on the seller side and that’s our focus here at Amazon Strategies.

Anyway the two features I wanted to point out today are at the intersection of selection and the supply chain for the 3P system.

  1. About six months ago, Amazon would email sellers suggesting items they should sell that met certain criteria:
    1.  The seller had sold the item before
    2. According to Amazon’s algorithms (I’m guessing based on search queries, hits to the catalogueueue page, and wishlist ‘adds’) there is demand for the items.
  2. Now, we are seeing that Amazon has expanded program substantially and now has an open page that details what Amazon calls “Amazon Suggested Products” (I’ll call it ASP for short).

 

Details on the ASP program

You can peruse the ASP yourself at this landing page.

Because of Amazon’s robust catalogueueue system they are able to know which products have demand and little selection so they have made that information available now en-mass. Here’s an example of today’s top 25 demanded products with little/no supply: (click to enlarge)

 

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In typical Amazon fashion, you can browse these products in a number of ways – top items regardless of category, top items in each category, or you can even download them all into a spreadsheet which is handy if you need to get them into digital format.  For example, many sellers may have a number of sources they could ‘ping’ with the item numbers much easier from a digital format vs. website/manual process.

The download list includes these columns:

  • Category
  • ASIN
  • Item name
  • Manufacturer
  • Stars (Amazon’s customer rating for the item)
  • And a link to the Amazon product page.

I downloaded the list today and there are 2600 products in the overall file – a pretty large number of opportunities for budding e-commerce entrepreneurs to chase down.

 

Let’s do a deep dive on one to learn more about how this operates.

 

ASP Deep dive – Luke’s lightsaber…

Longtime readers may have caught on that I’m a bit of a Star Wars fan so I searched the product list for any SW items and came up with: Good ole ASIN -> B000CS7A26

Sure enough when you go to the item on Amazon, they are sold out->

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This is the green one (yes Luke does have 2 lightsabers folks, stay with me here) and is sure to be in demand thanks to the imminent release of SW on Blue Ray which features a deleted scene where Luke builds his green light saber.

Over at eBay, I see there are three of these babies with little to no action, perhaps these sellers would do better listing them on Amazon?

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 ASP Conclusions

ASP by itself isn’t going to move Amazon’s needle.  Yes 2600 products is a lot, but it’s a drop in the Amazon selection ocean.  However, what is interesting is you can see that in addition to building the World’s biggest store, Amazon knows more about product demand and supply than any other company on the planet.

You may dispute that assertion and I  look forward to a robust discussion in comments, but let me offer this quick analysis:

  • Google knows about search trends, but doesn’t do a good job of matching that down to a SKU.  Google knows when people are interested about the weather and when they search for sweaters.  But they don’t know which sweaters are the most in demand.  Google Product Search gets them a step in the direction, but it’s somewhat of a mess right now.
  • eBay knows about listings and searches, but also has very little visibility into individual products.  Even with paypal, eBay can see purchasing behaviour but that’s a) too late in the cycle and b) not tied to specific products, so all that closed loop data is pretty useless as it doesn’t anchor on products.
  • Walmart is one company you could argue knows more about product demand than Amazon, but if you think about it, when you walk into a Walmart store, your selection is predetermined on the shelf.  What if there’s something you want that isn’t in there?  You don’t walk up to someone in Walmart and say: “could you please carry the master replicas green light saber.”  So in many ways Walmart has more raw purchase data than Amazon, but they do NOT have more ‘product intent’ data.

As the e-commerce battles play out, I think that position is essentially what makes Amazon an unstoppable force (so far) and until the competitors figure it out, their growth will continue unabated.  The ASP program is the tiniest sliver of view into that data and illustrates how powerful and impressive it probably is under the hood.

Can you imagine how powerful this must be:

  • Amazon probably already knows what the hot toys of 2010 will be and has staked out their inventory claims (I’m writing this in August).
  • Amazon’s buyers can go into negotiations with suppliers with data that a) gives them a huge advantage and b) has tremendous value for the supplier.  Wouldn’t an electronics manufacturer benefit from knowing what the demand curve for their items is – it would help them with their supply chain. I have no idea if/how Amazon is leveraging that today, but I bet a) they are and b) they will leverage it for first shot at products and/or exclusives.
  • Amazon’s private label business will benefit substantially from this data – “Oh here’s a product that we see demand for, but no manufacturers are making it – why don’t we make it?”
  • Of course we see this data feed into the recommendation engine which drives a ton of GMV.

That’s just the tip of the iceberg that this data gives Amazon – I look forward to hearing your thoughts and discussing  in comments.

SeekingAlpha Disclosure – I am long Amazon and Google. eBay is an investor in ChannelAdvisor.