As more and more consumers shift their purchasing online, the 2016 holiday season is poised to be the biggest holiday season in e-commerce history. This year,customers will spend an even larger share of their wallets on Amazon.com, with analysts predicting that one in four online holiday purchases will take place on the website. Amazon’s brand influence and consumer trust has grown in recent years, with more consumers adopting it as their starting point when researching to make a purchase. According to a poll by internet marketing firm BloomReach, 55 percent of people begin online shopping journeys on Amazon—an 11 percent increase from the previous year.
From an Amazon retailer’s perspective, Amazon’s dominant share of consumer search is an incredibly important metric—if your product offering isn’t discovered within a customer’s initial Amazon search, another third-party retailer (or Amazon itself) will likely convert the sale. Vice versa, the reward for optimization and winning the Amazon game is greater and a bigger opportunity than ever before.
To help you stand out and seize the opportunity this holiday season, focus on five tips to give your Amazon business an edge.
1. Pay close attention to SEO.
Your first order of business is getting people to your product page, which means being hyper-focused on Amazon SEO. Even if you consider yourself to be an SEO expert, it’s important to note that SEO for Amazon is vastly different than for Google or other search engines. Amazon constructs its algorithms to match customers with products that have high conversion rates, considering more factors than simple metadata or weighted relevancy. Amazon’s search algorithm, called A9, is just as complex as it is closely guarded.
While there’s no foolproof way to crack the code, here are three simple ways to optimize your listings for search:
- Use keywords wisely: Don’t stuff keywords into your copy. This only hurts your SEO value. Write for real people, fill in all product categories and provide accurate product attributes in Seller Central, such as target audience, subject matter and intended use.
- Optimize on-page and off-page content: Make sure your front-end information (product title, price, description, images, reviews) and back-end information (additional product details, etc.) are accurate, clearly written and include keywords—but not too many.
- Remember five FBA rules for better SEO: Fulfilled by Amazon (FBA) products consistently appear higher in search results than those fulfilled by merchants (FBM), and that Amazon categorizes its search results by price competitiveness, accuracy of product category, quality and quantity of reviews, and high conversion rates.
2. Be prepared for Amazon’s fee increases and policy changes.
Using Fulfillment by Amazon (FBA) to target Amazon Prime members, its most valuable customers, must be a critical part of your holiday playbook—but it’s vital to understand how to execute the FBA model at a high volume. As Amazon has scaled its web of fulfillment centers to accommodate more supply and demand, executing an FBA strategy has become more complex. Making it worse, Amazon appears to change its fee structure and policies frequently, with apparent disregard for the headache that it causes sellers. For example, Amazon has increased its short-term storage fees for the months of November and December by as much as 200 percent. Conversely, it has reduced its per order “weight handling” fees to give sellers an incentive to focus on fast-moving inventory.
As an Amazon seller, it’s extremely important to calculate the marginal impact of these cost changes to your business. Be objective; Put the time in to analyze reports and devise the optimal strategy before you make inventory investments. Make sure you understand Amazon’s fee changes in detail and study them. Don’t miss the fine print and double-check every calculation. Unfortunately, Amazon is not flexible and won’t give you any opportunity for a fee refunds if you claim negligence for missing a notice or a policy change.
3. Use Amazon Sponsored Products and Subscribe & Save to get discovered.
Getting your products discovered on the first page of high-volume Amazon search terms is a vital way to capture a slice of millions of customers hunting for items to purchase. Amazon Sponsored Products can give you this option even if you’re product hasn’t established a first-page SEO ranking. It’s a pay-to-play, cost-per-click advertising program that allows Amazon sellers to bid on keywords, then have their products displayed alongside search results and on related product pages. There is no minimum spend, so as long as you’re in line with your bidding strategy and effective gross margin after advertising, you should definitely give it a go to send more valuable traffic to your listings.
Amazon’s Subscribe & Save program also helps retailers go the extra mile, allowing sellers to offer discounts when customers subscribe to specific items. For repeat purchases, such as home, baby or pet supplies, the Subscribe & Save program gives sellers a way to secure returning customers, guarantee monthly sales and add additional products and deals to every offer.
4. Measure your unit economics before you scale.
Remember: Your goal should be profit, not revenue. Make sure you have a good handle on your cost of goods sold (COGS), Amazon commissions, FBA fees, freight costs, refunds and all other marginal costs to calculate your true gross margins for every product. Before you ramp up to increase sales, make sure you have these marginal inventory metrics calculated—at a SKU level and across your entire business.
Once you have unit economics measured at this granular level, you’re in a position to evaluate each product in your catalog to determine products and sales techniques that work well. You will also have the information necessary to determine the products you might be better off liquidating.
5. Plan to optimize into the New Year.
After the holiday rush, every retailer wants—and deserves—a break. However, as online shopping on Amazon increases, the momentum continues to build deeper into the new year as consumers take advantage of online gift cards and exchange unwanted gifts.
Going on vacation or backing off operations at the start of a new year is a common mistake we see retailers make. Our data shows that January is often one of the strongest months for Amazon sellers. This trend has increased each year and will continue in 2017, spurred by Amazon’s Prime acquisition strategy and devices like Amazon Echo, Fire TV and Kindle, each expected to bring a large spike of active customers into the ecosystem during the holiday. By focusing on the above tips throughout (and beyond) the holiday season, every retailer has a chance to win big on Amazon in the year’s busiest shopping season.
Teikametrics provides data-analytics tools and marketing consulting for Amazon sellers.