5 Top Reasons Your Brand Should be Selling on Amazon
In 1994, Jeff Bezos launched Amazon.com as “the Earth’s biggest bookstore.” At the time, the only retailers that felt under threat were other booksellers. But that’s all changed -- quickly.
Fast forward to 2020, and consumers turn to Amazon to purchase just about anything their hearts desire -- from toys and electronics to clothing and groceries -- and nearly everything in between. According to data company ScapeHero, Amazon offered nearly 120 million products in April 2019. That number has likely grown even more in the past year.
Today, brands and retailers in a variety of different categories see Amazon as a real threat, and it’s easy to understand why. Amazon has experienced massive growth in its relatively short existence, and it doesn’t look like it’ll be slowing down anytime soon. In 2019, Amazon had $280.5 billion in net sales, up 20% from 2018.
How can brands cope? The way we see it, there are three options. The first is to bury your head in the sand, which is never a good option. The second is to spend time and resources developing strategies to beat the ecommerce giant. But more often than not, that’s not a practical approach. This is especially true for smaller (or newer) brands. The third (and most effective, in our opinion) is to capitalize on Amazon’s success to grow your own brand. In other words, start selling your products on Amazon.
Not convinced? If your brand isn’t selling on Amazon (or even if you are but need a bit of reassurance), read on to learn five reasons why you should start.
1. Amazon is Leading ecommerce Growth
It’s no secret that a growing number of consumers are opting to shop online. According to an analysis by Digital Commerce 360, last year, ecommerce sales in the US grew nearly 15%. A preference for online shopping will likely grow even more in the wake of the global COVID-19 pandemic, when people are encouraged (or even required) to practice social distancing, therefore avoiding public places like retail establishments.
Even products traditionally purchased at a brick and mortar store (like food, health products, cosmetics and other consumer packaged goods) are seeing significant growth in online sales. In 2018, online sales of CPG products grew 35.4% in 2018, according to data from Information Resources Inc.
Clearly, ecommerce is growing. Who’s leading that growth? Amazon, of course.
A study from Feedvisor found that two thirds of shoppers start their search for new products on Amazon. This number is even higher (75%) when the shopper knows what product they’re looking for. What’s more, the same Digital Commerce 360 analysis we mentioned earlier found that in 2019, Amazon accounted for 36.9% of ecommerce sales in the US.
Consumers are shopping on Amazon. If you’re not selling your products there, you’ll lose sales to brands that do.
2. Amazon Shoppers are Loyal
Amazon provides shoppers with a trusted, familiar online shopping experience. Regardless of what they’re shopping for, they know exactly what to expect from the shopping journey.
Amazon’s product pages are filled with all of the information shoppers need to make educated purchase decisions without leaving the site. That includes plenty of the user-generated content consumers are increasingly seeking out, such as ratings and reviews, questions and answers, and user-submitted photos.
Checkout is simple, as the shoppers’ shipping information and credit card details are often already saved to their profile. Shipping is quick. And if there are any problems with the order, it’s easy to get support or return the product.
This great shopping experience fosters loyalty. Many shoppers show their loyalty by paying $119 to become Prime members. According to Statista, Amazon has an estimated 103 million Prime subscribers in the US alone.
Prime subscribers are frequent Amazon visitors. According to Feedadvisor’s 2019 Amazon Consumer Behavior Report, 78% of Prime visitors visit Amazon at least weekly. What’s more, they spend more than the typical consumer. On average, Prime subscribers spend $1,400 on Amazon each year, compared to $600 for non-Prime members.
Amazon delivers a buyer experience that fosters loyalty (and spending). Start selling on Amazon to capitalize on the ecommerce giant’s loyal following.
3. Amazon Does the Heavy Lifting
Today’s shoppers have higher expectations than ever before. Thanks to Amazon, shoppers expect free shipping and returns -- and they expect their orders to arrive fast. A study from the National Retail Federation (NRF) found that 75% of shoppers expect free delivery when ordering online -- even when the order is less than $50. Meeting these expectations can be extremely costly for most brands, especially those that sell products at a lower price point. It can also require a brand to hire additional staff to handle the time consuming tasks associated with fulfillment and customer service.
But here’s the thing: Amazon’s got fulfillment down to a science. They offer a service called Fulfillment by Amazon (FBA for short) that allows brands to ship their products to a warehouse and let the ecommerce giant handle the rest. Amazon stores the product, packs and ships it, and handles customer service and returns. As an added bonus, the product is eligible for Amazon Prime free 2-day shipping and will display the Prime logo, which makes it more attractive to shoppers (especially those Prime members we talked about earlier). The shopper knows they’ll get the product quickly, and they know shipping will be handled by a company they trust.
PLEASE NOTE: There’s a recent, temporary change to the Fulfillment by Amazon service. In light of COVID-19, Amazon is temporarily prioritizing household and medical supplies to get these key products out to consumers more quickly. According to the announcement from Amazon, products in the following categories will be prioritized: baby, health and household, beauty and personal care, grocery, industrial and scientific, and pet supplies. If you sell other products and use Fulfillment by Amazon, you can’t ship your products to Amazon warehouses until at least April 5, 2020.
4. Amazon Provides Brands with Robust, Actionable Data
Historically, one frustration brands had about selling on Amazon was the lack of data and reporting available to them. In order to access more robust data and customer demographics, brands had to pay $30,000 per year for Amazon Retail Analytics Premium.
But that’s no longer the case. Recently, the ecommerce leader made Amazon Retail Analytics Premium available to all Brand Registry vendors -- at no additional charge. Now, brands have a ton of data about customer behavior that can help them improve their products and the way they market them.
An important note here is that in order to be eligible to receive these robust analytics, you’ve got to sign up for Brand Registry. And you’ve got to do it by March 31, 2020.
5. Amazon Boosts the Reach of Your Products
Brands are always searching for ways to grow their businesses, and many include paid advertising as part of their promotional efforts. Amazon offers brands effective advertising options that allow them to get their products in front of more customers.
As one example, if a shopper searches for “face lotion,” the results page includes a few different types of advertisements for Olay and Aveeno products that unobtrusively flow with the rest of the content on the page.
If the data is any indicator, these types of ads are effective at capturing shoppers’ attention. The Feedvisor report we mentioned earlier found that 43% of consumers indicate they’ve clicked on an ad linking to an Amazon product while browsing the web. When they’re shopping on Amazon, 35% have clicked on a product advertisement.
What’s more, those who click often convert. According to AdBadger, Amazon PPC ads have an average conversion rate of 9.47%, compared to an average 1.33% average conversion rate for websites other than Amazon.
Manage your Reputation on Amazon and Beyond
There’s no denying that Amazon is leading ecommerce growth. Selling on Amazon can be a powerful way to boost sales for your brand.
One key way to stand out on Amazon is to effectively manage your reputation. Need help managing your reviews on Amazon -- and everywhere else you sell? Contact us to find out how we can help.