What Amazon Sellers Should Learn From 2017
Following another strong Q4 in 2017, Amazon stock prices helped CEO Jeff Bezos become the richest man in history. From humble, yet cliche beginnings, in the garage of a small suburban home in Seattle Bezos, has permanently transformed the conventional commerce. With nearly 9,000 brick and mortar closures last year, and an expected 12,000 closures in 2018, it’s clear more customers are shopping online and with Amazon accounting for nearly half of all web sales, are likely to make a purchase on Amazon.
Looking Back at 2017
Like many other internet companies, Amazon uses massive amounts of consumer data to make changes aimed at increasing customer experience and conversions. This can be a curse for Amazon sellers, when such changes affect the way they sell on Amazon.
However, as we start another year selling, there are some trends and changes from last year that might help us learn what’s to come. Here are some of the more noteworthy changes and events of 2017.
Algorithm Changes
In the spring of 2017, Amazon decreased the number of back-end keywords their A9 algorithm was indexing from 5,000 to 250. This presented a unique challenge for some sellers who started to see rankings slip. However, sellers who consistently stayed up-to-date on Amazon updates, made the change, and saw an increase in rankings.
Seller Tip:
Just like Google, changes to the algorithm can have an immediate impact on rankings and sales. Make sure you stay up-to-date with Amazon news by following experts on social media and reading industry blogs. Making the appropriate changes quickly, especially in comparison with your competition, can make a huge difference in your organic keyword rankings.
Prime Day Success
Prime Day, started in 2015 as a way to drive sales during the historically sluggish summer season, has seen consistent growth year-over-year. However, no one could have anticipated the success of Prime Day in July 2017. The sales event which outperformed every Black Friday and Cyber Monday in history, with an estimated $2.88 billion in sales.
Seller Tip:
Make sure you mark your calendars for Prime Day. Although Amazon hasn’t announced the official day, we can assume it will take place around mid July. There’s no reason Prime Day 2018 won’t destroy all previous single sales day records. Brands who position themselves well leading up to the annual event in July will most likely see the same boost.
Fee Changes
Amazon’s fee structure changes happen periodically to “reflect the changing costs of storage, fulfillment, transportation, and customer service.” The most recently announced changes take effect on February 22nd, 2018 and include increases for standard-size items over 1 lb. and combining Order Handling, Pick & Pack, and Weight Handling fees into a single, “Per-Unit Fulfillment fee.
Seller Tip:
Take at least a little time to look at the fees and how the changes might affect your brand’s profitability. Amazon fees tend to change annually. Watch for changes around the beginning of the year and leading up to Q4. What’s most important is to understand what fees you need to pay now and in the future.
Sponsored Ads
In 2017, 3rd-party sellers were given access to headline advertising. By giving sellers space to advertise in the banner, Amazon sellers can cross-promote products and product lines. Before, headline ads were exclusively for Vendor Central sellers.
Seller Tip:
Take advantage of the all Amazon Ad capabilities, which have proven an important component in increasing organic rankings and conversion. Headline ads specifically help increase brand awareness and rise above the competition. Additionally, watch for other Amazon advertising opportunities that are rumored, such as retargeting across the web.
Increased Brand Marketing Capabilities
In 2017, 3rd-party sellers continued to see an increase in capabilities to showcase their brand on Amazon, rolling out brand storefronts, sellers were finally able to personalize brand pages, adding brand videos, brand images and content on a single customizable page. Amazon also released more templates for Enhanced Brand Content (EBC) giving sellers more options to improve the look of product listings.
Seller Tip:
There are always rumors that eventually these features could one day no longer be free. Although we haven’t seen evidence of this, it’s still worth mentioning and if nothing else act as an incentive to get your brand and product pages built. All of this suggests that on the marketing side, sellers should anticipate blurred lines between Vendor and Seller central accounts marketing capabilities.
Amazon Private brands
Amazon private brand sales totalled nearly half a billion dollars in 2017, and it looks like they’re just getting started. While that number is relatively small when compared to the estimated 271 billion in annual sales on the channel, private brand sales growth is nearly 15% year-over-year.
Seller Tip:
Make no mistake, Amazon is a competitor if you sell a similar product to any of their private products. This doesn’t mean you should give up if they one day show up for any of your keywords. Highlight your products quality and your brand story, both of which are important to an average Amazon customer and both are lacking in Amazon products. Expect Amazon to continue to push products on their private labels, particularly on frequently purchased products that are smaller, lighter, and cheaper.
Amazon Acquisitions
In late 2017 Amazon purchased Whole Foods for a whopping $13.7 billion. While it’s still unclear what Amazon plans to ultimately do with the purchase, it should put brands on notice who felt immune to the Amazon effect. Practically overnight grocers big and small were forced to think about a viable online/delivery option.
Seller Tip:
Whether you feel threatened or affected by Amazon now, you need to take a good strong look at what you are proactively doing to get ahead of any potential threats. Amazon isn’t going anywhere and all things point to its reach only increasing. The truly successful sellers will take advantage of that growth and see it as an opportunity to grow themselves.
