Timothy Seward, founder and CEO, ROI Revolution
There are 59,721 decks of playing cards for sale right now on Amazon. Already have a deck of cards? Well, there are about 450 million other items you can buy right now on Amazon.
In an attempt to understand the scope of Amazon’s immense catalogue, someone posed an interesting question on Quora last year:
“How much would it cost to buy one of everything on Amazon?”
Business researcher Kynan Eng performed some impressive calculations to arrive at a solid estimate: $12.86 billion.
When considering Amazon’s reach, one critical fact is hidden from the average consumer: Amazon only makes about half of its sales as a first-party retailer. As of Q2 2017, 51% of all paid units were sold by third party marketplace sellers.
So Amazon takes half the deck and splits the other half among roughly two million sellers competing for sales on Amazon’s marketplace.
This breakdown isn’t all that different when looking at e-commerce as a whole. According to Bloomreach, 55% of all online product searches in the U.S. start on Amazon. Search engines and more than 100,000 e-commerce retailers compete for the other half.
Yes, you need a search engine marketing strategy, and probably a social media advertising strategy, but if you don’t want to be invisible to half of all US consumers, you need an Amazon strategy.
The first step to stacking the e-commerce deck in your favor is to realize that consumers are loyal to brands, not retailers or sellers. To properly brand a product, you must make and deliver on a set of promises to the customer. From there, your customer will learn and leverage these branding messages in future buying experiences.
Me-too sellers make one-off sales. Brands make customers. This applies whether you’re selling on Amazon or through your own website.
You can spend your energy trying to convince customers to buy through your most profitable channel, or you can spend your energy making profitable sales wherever customers are already searching and buying.
To that end, there’s a recent book I just finished reading, and I can’t recommend it highly enough: The Amazon Marketplace Dilemma by James Thomson and Joseph Hansen.
The authors brilliantly lay out the strategic implications of selling to Amazon as a first-party seller vs. selling on Amazon as a third-party seller—along with various hybrid approaches. It’s a book every retailer should read.
With Amazon constantly increasing its market share and catalogue of products, there is more incentive than ever to think about how your business can take advantage of this fast-growing channel. Few brands are strong enough that customers won’t replace them if another seller has a similar product on Amazon.
Simply put, if you’re a brand and you haven’t thought strategically about how you can leverage Amazon, you run the risk of losing control of how your products get purchased. It’s time to think proactively and elevate your ecommerce business to the next level.
Carpe diem.
ROI Revolution provides search marketing services to 27 of the Top 1000 online retailers in North America, according to Top500Guide.com.
Favorite