Selling on Amazon has become more multifaceted than ever – and it’s stretching Amazon sellers outside their comfort zones and into difficult territory.
You now need to invest like a business owner to take control of the levers – or sell the business.
Selling on Amazon used to be a way to avoid all of the conventional complexities of running an eCommerce business. Knitting technologies together, generating your own traffic and performing your own front end marketing.
Not any more. Amazon has the complexity (and more) of running your own online store when it comes to marketing your products, your brand and generating traffic.
Just look at the features that have been released over the last 3 years on Amazon.
- Enhanced Brand Content (now A+ Content)
- Video Shorts / Video Reviews
- More levers and features than ever in the PPC Management area
- Sponsored Brand Ads
- Amazon Display Ads
- Amazon Posts (see posts.Amazon.com)
- Amazon Attribution (encouraging you to pay for your own traffic off-Amazon)
- Amazon Video Ads
I’ve also probably missed a few as they’ve become fundamental during those last 3 years.
Many of these features have allowed differentiation (during the early adoption phase, then everyone does it and it’s no longer significant differentiation).
But a lot of these features have simply added to the workload of sellers trying to keep up, or at least NOT fall behind.
And that’s just ON-Amazon.
During those 3 years, it’s gone from being unnecessary to run Paid Advertising off-Amazon to almost mandatory to keep up with competition. (If you’re not doing it, your competition may well be!)
Let’s remind ourselves of that huge growth in 3rd Party Sellers on the Amazon marketplaces:
The economics are stacked AGAINST Amazon…
The economics aren’t stacked in Amazon’s favour either. When sellers wake up to the fact that they’re unable to optimise the generation and conversion of traffic (as much as they can with their own online store where they own and use the customer data for detailed targeting and remarketing), many will be left wondering what the hell Amazon are doing for their 15% “referral fee” – especially if you’re the referrer of the traffic!
Amazon is economically challenged in it’s strategy to push Amazon sellers to further invest in their own generation of traffic. Many sellers will engage in paid strategies, many already are. As the already flooded paid advertising market gets even more flooded, costs will escalate and the economics of driving traffic to Amazon listings with paid advertising will also collapse.
Amazon shirking responsibility for the generation of traffic is likely to undermine it’s proposition not only for small brands and private labellers, but most definitely won’t help in attracting national or regional brands who are already sceptical about Amazon’s ability to get counterfeiting under control.
If not for the traffic and high conversion rate (ultimately leading to sales) why do sellers use Amazon?
The FBA or Fulfilment By Amazon programme is a big part of the answer, but the FBA programme has long been able to fulfil orders that are generated off-Amazon.
FBA is a warehousing and distribution solution. A cost effective one, but increasingly 3PL’s (third party logistics providers) are getting their shit together and creating challenger offerings for medium and larger sized sellers.
Shopify themselves announced earlier this year at Shopify Unite that they would be creating the Shopify Fulfilment Network;
a geographically dispersed network of fulfillment centers with smart inventory-allocation technology.
And they’ve actually gone further than Amazon FBA could ever go;
We’ve negotiated low rates with a growing network of warehouse and logistic providers, and then passed on those savings to you. We support multiple channels, custom packaging and branding, and returns and exchanges.
And it’s all managed in Shopify.
You can check out the announcement at Shopify Unite in this video, or just read the full blog here.
If you’re wondering at this point whether Shopify is therefore a competitor to Amazon, I’d read this article by Ben Thomspon over at Stratechery.com
You’ll see how Shopify is a Platform as opposed to an Aggregator (like Amazon) and why that’s a good thing – especially when the Aggregator is suffering an “identity crisis”.
Amazon wants to behave like a platform whilst reaping the rewards of being an aggregator.
This should be pretty unsurprising for a company that dodges huge tax bills and is largely driven by an overt capitalistic greed (in my opinion). Everyone should make a profit, but not at the expense of upstream and downstream suppliers.
Should we all run off and start Shopify stores?
Well that’s up to you.
What is your core competency as an eCommerce business?
Are you an innovative digital, direct response and brand marketing business who wants to make money selling product independent of marketplace or platform?
Or are you “pushing product” on Amazon with no desire to move up-stream into the big bad world of full-fat, full-throttle, high octane eCommerce marketing?
I’d back you either way
The RISK needs to be worth the REWARD.
Many people got into Amazon FBA with the promise of a positive risk-reward balance with low labour costs.
With all the “additional work” you may now be facing to drive your own traffic to Amazon (for which you are paying Amazon in the first place) it may feel like there’s not enough time in the week, month or year to keep up.
If you’re inspired to take control of generating sustainable, cost effective traffic which can pay for itself (like a self-liquidating offer), take a look at my article on our 9 step process to getting started with a high traffic website you can use to drive traffic to your products on Amazon.