It’s no secret that Amazon is a huge force that has taken over e-commerce. We recently went to the LPX Connect hosted by Logical Position and left feeling extremely excited to keep learning about this topic.
For now, here are the main takeaways. A huge thank you to Micah and Logistical Pro for sharing their slides for this recap.
Did you know?
- $0.51 of every dollar is spent on Amazon
- There are over 300 million users and 95 million Amazon Prime members
- 83% of purchases made in the last month were on Amazon
- Amazon is the third largest digital ad platform
- 80% of consumers use Amazon to discover new products and brands
With these staggering statistics, it almost seems impossible to not get involved with Amazon.
WHY NOT? Reasons To Avoid Amazon
- Lost Margins
- Customer Data Loss
- Lack of Brand Experience
- Supply Chain Management
- Will resellers be upset?
Five Biggest Mistakes Businesses Make on Amazon
MISTAKE #1: NO PRICING OR FULFILLMENT STRATEGY
Winning the “Buy Box”
- The “Buy Box” is the upper right hand corner in Amazon
- 90% of Amazon Sales go to the seller winning the “Buy Box”
There are three types of pricing strategies that you can use in Amazon ads.
1. Manual Pricing
- Manual pricing is good if you do not have much competition in your market.
2. Rule-Based Pricing
- Rule-based pricing allows you to set a price above or below who is winning the buy box.
- This pricing strategy will change the seller’s item price in response to his or her competitors. (Rubin, 2016)
- Pros: Allows you to gain the most competitive price
- Only competitor prices are considered
- Prone to human bias
- Marketing conditions are constantly changing
3. Algorithmic Pricing:
- This kind of pricing applies computer algorithms that will set an “ideal price based on all known market conditions.”
- Algorithmic pricing is much more expensive than other options
- It’s not typically suitable for small business with a limited budget and small inventory
- The user has less control over prices
What type of seller are you? Knowing the answer to this question will help you determine what type of pricing strategy to follow.
- A manufacturer/brand with no resellers
- A manufacturer/brand with resellers
- The exclusive reseller of a brand or product
- One of many resellers of a brand or product
1. Fulfillment by Amazon (FBA)
- Amazon holds your item and ships it for you
2. Seller-Fulfilled Prime (SFP)
- The seller delivers directly to the domestic Prime customer from his or her own warehouse
3. Fulfilled by Merchant (FBM):
- The sellers ship their own products directly from their own homes, business, or warehouses after receiving orders through Amazon
- This fulfillment strategy does not include Amazon Prime status
MISTAKE #2: NO LISTING STRATEGY
How to combat this mistake: Optimize Your Product Information
- For the Amazon Algorithm
- Fill out as much product information as possible
- Ensure that your keywords are relevant
- Include enhanced brand content
- For the Consumer
- Use clear and concise titles
- Include unique value propositions and product features in the description
- All images and videos must be high-quality
MISTAKE #3 NOT ADVERTISING
There is an immense amount of untapped potential when advertising on Amazon
- Conversion rates are exceptional
- Advertising directly affects organic performance
- Missing out on potential market share
- First-mover advantage
MISTAKE #4: ADVERTISING INCORRECTLY
There are five major mistakes that businesses make when advertising on Amazon.
1. Poor Account Structure: Add more structure into your account
- Segment by:
- Campaign Types
- ™ & Non ™
- Single Keyword Ad Groups (SKAG) and Single Product Ad Groups (SPAG)
- Targeting Types
- Product Lines and Categories
2. Not Utilizing All Ad Types
3. Not Having a Competitor Strategy
- It’s important to aggressively target your competition
- Target their keywords and product detail pages
- Show your ads on competitor’s product pages in various categories
How to protect yourself from your competition:
- Initiate protection campaigns by utilizing brand keywords and product pages.
- Use your own keywords and target your own product pages
- This can help protect you from your competition as well as increase up-selling of your products
4. Not Using Placement and Targeting bid Modifiers
This works for new campaigns only
- Within ad groups, you can set different bids for close match search terms, loosely match, compliment your product, substitutes, etc.
- You can do them all and see which one wins, just make sure to set a different bid on all of them
5. Not Utilizing Negative Keywords
- This is one of the biggest mistakes that advertisers on Amazon make
MISTAKE #5: NOT LEVERAGING EXPERIENCED PARTNERS
You’re not alone! Reach out to a trusted Amazon partner. These partners can help you with:
- Resource allocation
- New feature adoption
- Access to betas
- Elevated support
- Access to advanced reporting and analytics