As business owners and aspiring entrepreneurs, now is the right time to set up your Amazon storefront. Refine your Amazon marketing strategies to outrank your competition in this crowded marketplace.
Amazon is still the most popular eCommerce platform. It has more than 230 million active users with approximately 2.5 million registered sellers. The numbers are expected to rise for the next five years, making it the fastest-growing investment hub in the digital landscape. 
Using Amazon as one of your primary online platforms can elevate your business. However, this platform requires a lot of work. In fact, more than 80 percent of businesses fail at selling on Amazon because of these factors:
● False Expectations — When investors start taking their business to Amazon or any eCommerce platform, they expect instant success. Just like any business setup, the learning curve is sharp and it takes time to reach your objectives.
● Lack of Data — One of the advantages of Amazon is the tools it offers for both buyers and sellers. Amazon’s numbers don’t lie! They give us all the information about products, so use it to your advantage.
● Miscalculations — Another huge factor why many Amazon businesses fall short is because they are chasing the wrong figures. As a business on Amazon, it is imperative to know your numbers. Identify clear objectives. Focus on profits, not just on sales. Otherwise, you’ll just end up competing with other sellers racing to beat the lowest price.
● Relying Too Much On Organic Sales — Amazon has its own algorithm. It’s not like Google or other online platforms. “In Amazon, there’s no way you can be successful by just relying on organic sales,” said Sam Schwartz, Thrive’s eCommerce Senior Manager. “You can’t expect Amazon buyers to find your product listings without coming across 150,000 sellers. The bottom line is you need to pay to get on top of Amazon’s search results.”
● Lack of Investment — Just like any business setup, you’ll need resources to jumpstart and improve your Amazon business as you go along. Allocate your budget for Amazon marketing strategies, such as Amazon search engine optimization and Amazon pay-per-click.
Why Amazon Matters
Amazon business is now one of the largest contributors to both the U.S. and global economy. In the world of eCommerce, they call this the Amazon Effect. In the third quarter of 2019, Amazon had already exceeded its final quarter sales forecast, generating $141.25 billion. This was nearly a 15% sales increase from $122.99 billion in 2018.
One of the main reasons for Amazon’s great success is its innovation. Its platform never stopped evolving – and it’s not just in terms of online visibility. Amazon’s team has found a way to improve their overall – from customer service, shipping process, transaction security, and other features and policies. This has created a wonderland of options for both businesses and consumers.
While most eCommerce sites struggle keeping up with the latest updates, Amazon has become the digital trend. Today, nearly 90% of all online sales happen on Amazon.
Take a look at these Amazon mind-blowing facts:
➢ By 2022, Amazon will be a bigger logistics shipper than UPS and FedEx combined
➢ 95 percent of retailers closing their doors report Amazon as the No.1 cause
➢ 150.6 million mobile users in 2019 prefer Amazon
➢ 103 million Amazon Prime subscribers
➢ 120 million products available on Amazon
➢ 44 percent of all Amazon sales were in the electronics category
➢ $100 million in sales in one day on Amazon Prime Day
➢ 4,000 sales per minute on Amazon
➢ 2.5 million sellers registered on Amazon
➢ 23 percent of online shoppers go to Amazon first to get inspired
These astonishing facts and figures only show how Amazon can accelerate your business– if used effectively. Now, let’s go deeper and unpack why you should jump on board the Amazon bandwagon:
● Wide Network Reach
The main reason business owners are leaning towards Amazon is because of its vast network reach. As mentioned earlier, Amazon has more than 230 million active users as of 2019 and nearly 90 percent of all online sales came from Amazon. That’s a huge disparity from eBay and all other online platforms combined!
● Reputation and Credibility
Based on a survey conducted by Feedvisor in 2019, 89 percent of buyers prefer buying products on Amazon than other eCommerce sites. Amazon has been generous with real-time data for both buyers and sellers. The policies on customer reviews is a good example. Sellers are not allowed to alter any reviews given by the customers. Additionally, Amazon can now easily detect fake reviews. These rules give consumers peace of mind when making transactions.
● Product/Market Test
Another advantage for sellers is you can test the market to see if a new product will sell. As mentioned above, Amazon tools provide useful data on whether your product is in demand. And more importantly, you can gauge how to price your product.
Check out this image below for example:
This gives you an idea of which shoe brands are popular, at least on Amazon — and the price range for each pair of basketball shoes. Needless to say, this data should help improve your strategies when launching your online store.
● Cutting-Edge of Online Retail
Amazon can help your business stay on top of the latest digital trends. It consistently provides you with what you need to manage your own eCommerce business – from carefully selecting a profitable product to understanding the data analyses for marketing.
There are plenty of good reasons to start your Amazon business. The only challenge is finding the best way to use the platform effectively.
Amazon Survival: A Roadmap To Amazon Success
Let’s talk about how smart business owners use this eCommerce platform to their advantage. The four tips below are how many Amazon business owners have succeeded.
No. 1: Build Your Brand
Before launching your Amazon business, focus on how to build your brand. Remember, Amazon has millions of sellers. This means there’s a good chance you might be offering the same products as other sellers. So, what makes your shop more distinct from the rest? What can you offer? Who is your target market?
First, you need to identify your niche and products you want to sell. From there, you can start with product and market research. Study your competitors and observe how they price their products. Other than improving the quality of your products, make sure to offer a fair return policy. The goal here is to establish customer trust.
Schwartz’s Advice: One of the most common mistakes in eCommerce is sellers usually jump to a new system without understanding how the platform works. It’s even worse when they don’t have an idea about their own business. It’s like going to a battlefield without any strategy or the right weapons.
“Selling on Amazon requires understanding the basic terms and principles of business,” Schwartz said. “No one here will tell you they had an easy way of making money. It’s a process and it takes time.”
No. 2: Invest More in Amazon Marketing Strategies
Setting up your account is the easiest part. The real challenge is making your Amazon business more visible and credible to attract potential customers. While Amazon does much of the work for you, you can’t just rely on organic traffic to become successful. This is where Amazon SEO and/or Amazon PPC comes in.
“If you’re expecting buyers to find your product listings without coming across 150,000 stores or 100,000 merchants, think again,” Schwartz said. “The bottom line is you need to pay to get on top of Amazon’s search results.”
Schwartz’s Advice: Success isn’t guaranteed even if you pay for ads. Just like in PPC, it’s important to gauge your campaigns to see which strategy works best for you.
Sidenote: Schwartz personally sold $240,000 in baby products last year on Amazon, so he practices what he preaches.
“Amazon is not like Google or social media and other online business platforms,” Schwartz said. “It has its own algorithm and the metrics can be quite tricky. No matter what, don’t run your own paid advertisements! This is probably the main reason only [about] 20 percent is successful on Amazon. My advice is to get help from Amazon marketing experts who know more about Amazon PPC or Amazon SEO.”
No. 3: Encourage Reviews
Having positive reviews is another huge factor in your success. Generally, you want to keep your average review rating higher than four stars with a monthly velocity. This should also happen organically, but there are tools to speed it up.
While sellers usually get reviews based on the quality of products and services, another effective way to promote positive reviews is to stay proactive with your customers. Asking about their experience with your products and services reflects good customer service. Keep in mind, however, that Amazon has guidelines when doing this.
Check out these examples from Schwartz for reference:
RECOMMENDED: “Hi Name, thank you for purchasing our product. Please let us know how much you enjoy using it. If you have any questions, you can leave them on Amazon. We appreciate you taking 30 seconds to leave us a review. Thank You!”
QUESTIONABLE: “Hi Name, thank you for purchasing our product. Please let us know how much you enjoy using it to get discount coupons. If you have any questions, you can leave them on Amazon. We appreciate you taking 30 seconds to leave us a 5-star review. Thank You!”
YOU WILL GET BANNED: “Hi Name, thank you for purchasing our product. Leave us a 5-star review and we will send you a 50 percent off coupon for your next purchase. If you have any questions, go to our website at http://websiteaddress.com. We appreciate you taking 30 seconds to leave us a 5-star review. Thank You!”
Schwartz’s Advice: Bear in mind that Amazon has become smarter and its algorithm can now detect fake reviews. Editing or modifying customer reviews is also a violation of Amazon’s review policies. Additionally, don’t ignore negative feedback. Find a way to compromise and apologize for their experience. Stay professional and look for the best ways to resolve the issue.
Overall, the most important thing is to show good customer service. You can accomplish this through listing content, following up on emails or offering useful tips and usage recommendations. Consider having a dedicated customer support team, as well.
No. 4: Take Advantage of Fulfillment By Amazon (FBA)
Now, this is where most sellers get confused, especially the newcomers. Before you register as an Amazon seller, take note that there will be fees for some of the services it does for you. This includes commission fees, shipping processes, storage, advertisements and others.
Here’s a breakdown so you can see if everything is worth the price:
A. Commission Fees: If Amazon’s eStore converts a sale for you, you’ll pay 15 percent commission of the sales price.
If you take a closer look, you’ll see this is a fair conversion fee, considering Amazon’s conversion rate is approximately 74 percent, while most eCommerce websites’ conversion rates are below 12 percent.
B. Shipping: If Amazon ships the product for you, you’ll pay 16 percent of the retail price in fees.
Come to think of it, 16 percent for shipping is a fair price. Run your numbers again. Can you take care of all the overhead costs and ship for less? While a few merchants such as Zappos can take care of the shipment, Swchartz insists it’s smarter to let Amazon cover the shipping process as the costs will be basically the same. It also eliminates all the stress, allowing you to focus more on other important tasks.
C. Amazon Advertisements: There are three ways to advertise on Amazon: by product, brand or image. Most sellers will pay 12 percent to 30 percent of the retail price per conversion.
AdWords and Facebook product conversion cost-per-acquisitions (CPAs) are usually higher. Again, Amazon’s metrics are different for these platforms. You need to understand the dynamics and analyze the best model that works for your business.
D. Storage: If a product sits, Amazon will charge you for a storage fee. And if you have damaged products, Amazon can charge you an additional fee or they can ship the item back to you.
This may sound somewhat alarming, but the good news is Amazon has dashboards and metrics so you can see your progress. Amazon will also notify you in case you’re dealing with slow sales. Amazon is not your warehousing arm for free. It wants you to churn so you can both be successful. This is why Amazon provides you helpful tools to improve your business.
Let’s Recap: What Did We Learn Here?
Amazon can be your one-stop eCommerce store. Basically, it has almost everything set up for you. Of course, it will charge you for some of the services, which seems appropriate based on the explanations above. The bottom line is you still need to do your part as an entrepreneur. In other words, you help Amazon, it helps you!
No. 5: Choose A Profitable Product and Determine the Best Pricing Strategies
In Amazon, scalability is the key to success. Always do your math to see if you’re making profits.
Let’s take a look at Schwartz’s examples below. This should also help you more in determining the best price for your Amazon products:
Product costs $2.00, Shipping to the U.S. is $0.25, Shipping to Amazon is $0.25 = $2.50 Cost of Good Sales (COGS). Assume Retail of $24.64 = 12.32 Times Markup
A.
$24.64 less 50% Coupon = $12.32
less $6.82 31% full price FBA = $5.50
less $2.50 COGS = $3.00 profit (LOW)
B.
$24.64 less 30% Ad Spend = $17.25
less $6.82 31% full price FBA = $10.43
less $2.50 cogs = $7.93 profit (HIGH)
These figures show two smart ways to sell on Amazon. The first example is for new sellers introducing their products and the second one represents when you start to spend for Amazon PPC and other ads.
You need to consider your goals and other expenses before finalizing your markup price. When you’re just getting started with Amazon, don’t expect to get a positive return on investment (ROI). It takes time. The best thing to do is to be ready for your next move. Do more research. Study your competitors. Review your Amazon marketing strategies.
No. 6: Compute Your Total Advertising Cost of Sale (TACoS)
Knowing your Total Advertising Cost of Sale (TACoS) will also help you determine the right pricing for your products. These items will help you understand whether you’re making profit from your ads or not.
Total Advertising Cost of Sale (TACoS) is a metric used to measure your Amazon ad’s performance based on the total revenue generated. This will help you determine which strategy works for your Amazon business.
You may also refer to your TACoS stat line to improve your organic sales. For instance, a low TACoS means you’re generating more sales. On the other hand, a high TACoS means your ads are not performing well and require re-evaluation. Check your Amazon PPC campaigns. You might need to change the keywords or your bidding strategy.
No. 7: Subscribe To Amazon A+ Content Program
In Amazon, credibility is everything. If you want to outrank your competitors, you need an impressive product listing. The Amazon A+ Content feature should help you with this. This program optimizes your product detail page with visuals and enhanced content marketing. The objective is to drive brand affinity and establish customer trust. Additionally, Amazon A+ Content boosts your ranking on Amazon search results, which is one way to effectively improve your Amazon Best Sellers Rank, as well.
You should also explore the premium version, which offers more advanced features, including integrated high-quality product videos (720p) three minutes in length, HD images, enriched FAQs, mobile-responsive and voice-friendly product pages and interactive automated query features.
Bonus Tip: Amazon PPC Ads
Using variations is vital to your Amazon PPC success. This will help you understand your target market. Observe how they respond to each ad campaign. Take advantage of the data you’re pulling from your ad campaigns. There’s always a phase. Be consistent and make adjustments whenever needed.
Check out the example below:
Two Days Weekly: Run a 50 percent off coupon deal, stacked with a free shipping coupon. Two Days Only! — This will drive attention and organic traffic but won’t dilute your brand or wipe you out. The five days of full-price sales increases will more than make up for the discounted sales.
Monthly PPC Mix: Make sure you are running these four variations:
1. Manual Product Sponsored Ads, Keyword Targeted (KWT)
2. Manual Product Sponsored Ads, Product Attribute Targeted (PAT)
3. Manual Brand Sponsored Ads, Keyword Targeted
4. Automatic Product Sponsored Ads, Keyword Targeted (fishing)
Other Key Takeaways:
Scaling is one of the main keys to success! Always do your math to determine whether you’re losing money or making profit!
Never run your own Amazon PPC campaign even if you think you know SEO, social media and other paid ad strategies. Amazon has its own algorithm. Hire an Amazon marketing professional for more efficient results.
Be honest with product reviews! You can use different review tools or be proactive with your customers, but make sure to comply with Amazon review policies.
Be creative and analytical with your Amazon marketing strategy. Explore other effective ways, such as Amazon SEO, to boost your Amazon credibility and visibility.
Conclusion
Amazon is growing at a rapid pace and it makes sense that many entrepreneurs are shifting to this platform. While it’s true, investing in Amazon can take your business to the next level, it is imperative to have a solid business plan to ensure success. Your plan must include setting goals, product and market research and accounting, as well as promoting your brand pages and developing your products and services.
For help taking your Amazon business to the next level, contact our Amazon marketing experts today so we can create a unique strategy for your products or services that will increase your ROI.
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