How do I choose the right Amazon strategy?
How do I choose the right Amazon strategy?
Many online merchants have realized that a partnership with Amazon can be very beneficial. Not only because Amazon has an enormous reach that retailers in the marketplace can benefit from, but also because Amazon has become the number one product search engine on the Internet over time. So there is inevitably no way around a partnership with Amazon, and more and more business models with an “only Amazon” strategy are developing. Although reach and potential sales may seem tempting, companies need to ask themselves a few questions about their brand strategy – especially premium and luxury brands.
- Does Amazon fit in with my brand and corporate strategy?
- What goals do I pursue with my online strategy (additional sales potential, outsourcing of shipping logistics, sales, …)?
- Can Amazon be well integrated into my existing sales channels?
- How can I remain competitive as a seller/manufacturer in the long term?
- How can you avoid being too dependent on Amazon?
- How much time, effort and budget can I invest in the Amazon sales channel?
Categories of Amazon sellers explained simply
In the Amazon seller universe, private labeling was probably the buzzword in 2016. With this principle, standardized products are provided with their own label and thus sold as private labels. As a result, identical products are often available under many different brand names and at different prices. As a seller, it is particularly important to push ahead with the organic optimization of product listings and to create targeted Amazon PPC campaigns in order to stand out from the crowd.
The term reseller (“re-sale”) means “reselling”. These so-called resellers buy merchandise and offer it for sale on Amazon (or on other B2B or B2C marketplaces). So resellers earn money by selling products of other brands. This is quasi the marketplace counterpart to the classic retailer. Since this type of Amazon seller usually sells the same products as many other retailers, the right choice of Amazon strategy is particularly important.
This category of sellers manufactures their products themselves and sells them in their own name and under their own brand on the marketplace. This has the advantage that the product costs are particularly low and a high margin can be achieved. In addition, products can be sold exclusively if necessary. Here it is particularly important to present the potential customer with a uniform brand image. In addition to the organic optimization of product listings and the use of Amazon PPC campaigns, the creation of an Amazon Brand Store or the targeted creation of product ratings can also contribute to greater sales success.
When it comes to Amazon’s classification, retailers are divided into two different sales models – sellers and vendors. The most important difference is that vendors no longer sell their goods to the end customer, but directly to Amazon. So you become the supplier of the platform company and enter into a partnership, which can have some advantages but also disadvantages.
Which factors play a decisive role in sales success on Amazon?
Products offered on Amazon should be characterized by high quality. An important aspect before the actual sale on Amazon is the selection of suitable products. For example, it must be checked whether these may actually be offered on the marketplace (-> product restrictions), the demand and competitive situation should be analyzed and any USPs (unique selling points) defined.
At a certain size and professionalism of your Amazon business, it is of utmost importance to design your internal processes in such a way that you can always guarantee product availability. This is the only way to ensure that your hard-won product rankings are not lost and not downgraded at the same time. Customer satisfaction can also be maintained at a consistently high level.
Promotion (or advertising) refers to sales-promoting or performance marketing activities. Particularly when initial listing is discontinued, it is hardly possible to increase sales figures in the short term without advertising measures, i.e. only with organic SEO measures. Therefore, a mixture of organic SEO optimization of products and control of Amazon PPC campaigns should always be used.
With regard to your product portfolio, you should define a pricing policy and implement it consistently. In doing so, fixed and variable costs should always be taken into account.
It is a rule to offer your products at a higher price – compared to similar products – in order to be able to work with discounts.
Although the Amazon-Seller business has become well known mainly because as a one-man business you can achieve a good return on your investment quickly and flexibly, regardless of location but you cannot avoid hiring staff above a certain sales volume. Especially in the creation of optimized product listings as well as the control of Amazon PPC campaigns a lot of effort can be put into it, which can no longer be managed alone. In addition to building up internal resources, outsourcing to an external agency is also a good option.
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