Find your Path to a Higher Amazon ROI

No single Amazon selling strategy will ensure success within the platform’s global marketplace. So while winning the Buy Box is a vital piece of the puzzle, it’s only one step. And it doesn’t guarantee your sales will grow moving forward.

Instead, sellers can pursue any number of different strategies in search of their Amazon ROI goals. Most of the time, it takes a combination of these tactics to achieve consistent results. 

Start with the right Amazon sales model

The most common Amazon partnership, of course, is via a seller relationship with the retail platform. With more than 300 million shoppers worldwide and tens of millions of products, the Amazon marketplace is integral to e-commerce in the United States. 

In the Seller Central (3P) model, a brand sells its product directly to the end customer through an Amazon Seller Central account. By avoiding a retailer, brands can realize increased profitability, gain more control over the customer experience, and enjoy increased visibility into data and sales trends. However, finding success with this type of 3P model can require an experienced team that understands Amazon optimization. Unfortunately, many brands do not have the internal skills or resources to manage selling on Amazon. In addition, it can be viewed as competition for other retail partners, and a brand may face more risk by having to own inventory until it is sold to the end consumer

‍In most cases, brands with experience selling directly to consumers and with high-margin products can benefit from opting for this model. These companies can use the valuable data to refine their strategy and will maintain control over their customer-facing interactions. On the other hand, businesses without appropriate margins or the resources to dedicate to Amazon optimization may not be well-served by a 3P model. 

Unique from a traditional Amazon seller account, Amazon’s Vendor Central platform is the interface brands use to sell products directly to Amazon rather than to the consumers shopping in the marketplace. Amazon is then responsible for listing, selling and shipping the products. However, this model is an invite-only program and is usually limited to more prominent brands with $10M or more in revenue on the Amazon marketplace. 

For the few businesses eligible to become Amazon vendors, the 1P option has some attractive advantages. First, it’s easy to understand. Since it’s similar to any other relationship between a vendor and retailer, a brand does not need internal Amazon expertise. It’s also purchase-order based, so the brand receives large purchase orders from Amazon, which then pays for the inventory. 

The 1P model is often a good fit for low-priced and highly competitive Consumer Packaged Goods (CPG). It can also work well for heavy products with high shipping costs and brands that sell through many distribution channels. Of course, by selling to a retail intermediary, a seller is giving up margin, making 1P far less profitable for premium quality brands in many cases. 

Cut fulfillment costs with Amazon FBA

There are several ways that FBA can help a company sell more efficiently in the Amazon marketplace. It can level the playing field against a brand’s biggest competitors and often improves customer service while minimizing costs. In addition, shifting fulfillment responsibilities to Amazon allows sellers to focus on their true strengths. 

One of the most significant advantages is that Amazon FBA allows the product to be Prime-eligible. Over 100 million American households are Amazon Prime members. Prime shipping gives these members two-day shipping across the United States. Customers like this and search for it when buying products on Amazon. At Amify, we often see a 50-100 percent increase in sales when a brand moves to Prime eligibility. 

FBA shipping is also dramatically cheaper than other options for most products. Since Amazon is the largest shipper in the U.S., This allows them to have the lowest shipping rates in the country, and luckily they pass these along to FBA customers in the form of low shipping rates. For most products, we find the FBA shipping costs are 30-50 percent cheaper than a brand shipping products themselves (even when comparing two-day shipping on Amazon to five-day for other carriers. This considerable cost difference requires brands that don’t become Amazon FBA sellers to either increase its price or be willing to accept much lower (or even negative) margins. 

Be sure the price is right

Every brand looking to succeed on Amazon should take a deliberate approach to price. As e-commerce continues its rapid growth, pricing policies will become more critical for retailers and manufacturers. Online sales will likely continue their growth trend while consolidating among the largest online retailers, including Amazon. As this happens, the desire of smaller resellers to compete with industry leaders is more likely to lead to destructive price wars for products that aren’t backed by effective pricing strategies. 

Minimum Advertised Price (MAP) may not be top of mind for brands, particularly new ones. True to the name, MAP is the minimum price a retailer can advertise for a product they sell. The MAP is set by the brand and should include a profit margin that allows retailers to profit reasonably. It applies to any retailer who carries the item and is intended to level the competition among sellers and avoid price wars. It differs from the more familiar Manufacturer’s Suggested Retail Price or MSRP, which refers to the amount that a manufacturer thinks a product should sell for. It does not create any restrictions on the advertised price. Brands can use MAP pricing to control the gap between MSRP and advertised prices. In this way, they can avoid the less-than-ideal message that a product is worth substantially lower than what the brand suggests. 

Target the right buyers

Optimization is also not as simple as repeating keywords numerous times. Regarding Amazon’s algorithm and keywords, quality is more important than quantity. In many cases, once a search term appears in your Amazon listing, it has likely added all the value it can. Therefore, adding it repeatedly, especially to the detriment of the copywriting, is unlikely to improve your spot in the search results. 

Search engine optimization (SEO) on the platform gauges relevance and value to determine how to best leverage a keyword in a product title, feature bullet points, product description or elsewhere. An effective Amazon SEO plan accounts for both the broadest keywords and the long-tail keywords that help differentiate a brand from its competition and target customers who are closer to the point of purchase. Adding these keywords to engaging copy and taking advantage of Amazon’s backend keyword tools to identify the most valuable search terms will help your brand to grow its sales on the platform. 

Pay-per-click (PPC) Amazon advertising can be another excellent way to drive traffic to a product listing or Amazon Storefront. These PPC advertising campaigns allow e-commerce businesses to break through the immense competition on Amazon and increase their reach. But it requires a solid plan, including  a broad understanding of how to maximize the ad spend and the tools available, as well as skilled execution due to its extensive targeting options and bid-based pricing model.  

Engage customers effectively

Amazon A+ Content is your chance to provide fantastic product details for your Amazon product pages and integrate high-quality images, comparison charts, and more. In a world of e-commerce often driven by social media, shoppers now expect this combination of personalized service, captivating content, and a flawless user experience. 

Among the most influential pieces of Amazon content are high-quality images and videos. In fact, 78% of people say video has convinced them to buy a product, while 30% of shoppers won’t even consider a product that presents low-quality images. And remember, nothing packs a storytelling punch quite like video. Done correctly, it has the power to engage potential customers and provide information that can minimize confusion and lead to fewer returns and better reviews.

Creating an Amazon Storefront is another incredible opportunity to raise brand awareness among Amazon customers, which can lead to more sales. Customers who connect emotionally with a brand name have three times higher lifetime value. And according to Deloitte research, 80 percent of consumers would pay more for products if the company committed itself to be socially responsible, environmentally responsible, or paying higher wages.

As the face of your products on Amazon, brand owners should be highly involved with creating their Amazon Store. However, it’s essential to remember that design and branding are skills and not something to take lightly. While Amazon has gone to great lengths to make Storefront creation simple and accessible to any seller via templates and drag-and-drop tools, the task will undoubtedly benefit from a well-devised strategy and an experienced designer. 

Don’t forget to learn from your previous buyers. Product reviews on a site like Amazon can impact your organic rank among the search results even before a shopper discovers your product detail page. Many prospective buyers view product reviews as one of the best ways to inform their purchasing decision. Surveys have shown that nine out of 10 customers read reviews before clicking the buy button, while eight out of 10 give them as much weight as a personal recommendation. 

While it’s impossible to avoid ever receiving a negative review, there are ways to transform them into a success story. A less-than-stellar evaluation can give new customers a reason to hesitate before purchasing. But, it can be incredibly reassuring when you proactively alleviate the concern that an Amazon shopper will have an experience similar to that of an unhappy customer. If you take the time to use any negative reviews to improve your listing or process for the next shopper, your conversion rate will likely rise over time. 

Do more with data

Whether from Amazon or elsewhere, one of the advantages of e-commerce is the incredible amount of data sellers can access. There’s often an overwhelming number of reports available regarding inventory, shoppers, advertising, buyers and more. But, the most effective sellers will leverage the data to reach more customers and increase conversions.

Remember, it’s not just about monitoring this enormous cache of data. It must also be appropriately analyzed to reveal actionable insights that optimize and grow sales. In particular, an Amazon seller can utilize the platform’s proprietary reports via Seller Central and supplement those metrics with other online store or marketing data to create a fuller picture of a brand’s strengths and weaknesses. 

Give Amify a chance

We find that many brands expect huge sales and profitability from the start. And we all want our products to be massively successful right out of the gate, but launching an overnight sensation is extremely rare. Instead, it often takes many years to perfect a product and craft an Amazon selling strategy that leads to sustainable growth.

At Amify, we have helped premium brands achieve their Amazon goals for over a decade. From Amazon marketing strategies to enhanced brand content, teaming up with us puts world-class, up-to-the-minute platform knowledge on your side. Check out our track record to learn why our clients average 100 percent growth in the first year after partnering with us. Then reach out to schedule a consultation.