How to Start Developing a Profitable Amazon Marketing Strategy
Amazon is a cornerstone of the e-commerce marketplace. Amazon alone accounted for about 6.5% of all retail spending in 2021. While business leaders can choose from countless marketing strategies for their business; C-Suite and industry leaders should consider integrating Amazon into their overall marketing strategy to remain competitive and ensure maximum profitability.
A comprehensive Amazon marketing strategy takes into account and optimizes hundreds of variables. Executives today can do some fundamental things to refine their Amazon strategy and increase profitability. Here are the first steps to building a profitable Amazon marketing strategy.
The beginning: focus on product ranking:
Product ranking is crucial for increasing sales. Only with 25% of consumers Beyond the first page of search results, it is critical that leadership focuses on landing and cementing their product on the first page. Here are the key points to focus on:
- photography
The saying “a picture is worth a thousand words” certainly applies to Amazon. Consumers respond well to clear, well-lit product photos that give the potential consumer a detailed impression of the product and can envision using it. - Give Amazon what they want
Amazon prefers high-margin products listed with Fulfillment by Amazon. Listing products with a high margin and working to sell the product with FBA will create a feedback loop that pushes the product up in search results. - Consistent sales and inventory
Amazon measures how often sales are made over time. When sales falter, or there is a technology glitch or a lack of inventory, the product’s Amazon ranking begins to drop. Once the product has gained an Amazon presence, it is crucial to protect it by focusing on maintaining a reliable inventory and aggressive promotion.
Managing the middle: Increase sales with the Amazon Buy Box:
Amazon leaders need to focus Amazon Marketing Strategy and receive your product in the Buy Box. The Buy Box is the gold standard of Amazon product placement. Buy box sales account for more than 90% of purchases made on Amazon. Sometimes known as a Featured Offer, it is a critical part of an Amazon marketing strategy and needs careful consideration. Here are the key points to consider when using Amazon’s Buy Box to increase sales:
- Order failure rate management
ODR is the ratio of negative customer experiences to the total number of orders in the last 60 days. A strong ODR score contributes to Buy Box placement and is therefore the reason why product quality assurance, shipping and handling is vital for both monitoring and perfection. - engagement with customers
Aside from positive reviews, Amazon wants customers to be able to respond to their questions and concerns quickly when inquiries come up or when customers have specific questions. - manage inventory
While not the only factor, Amazon wants to ensure that an item is readily available in that coveted location and can reach the end consumer. An item that is out of stock and on backorder may negatively impact ranking.
Overdressed? – Manage Inventory Performance Index:
Although it may seem counterintuitive as low inventory can be detrimental; too much inventory hurts too. Amazon’s overheads and profitability go down when storing obsolete inventory — so they want to encourage sellers to keep inventory down while still meeting sales demand.
Note that this metric only applies when a seller uses Fulfillment by Amazon. FBA offers benefits like improving search rankings and improving Buy Box reputation, but when tracking FBA, you also need to consider other factors – inventory performance index at the top. The main thing to remember when managing the Inventory Performance Index is understanding how IPI works.
IPI is derived from a combination of sales, inventory levels and costs, updated weekly. Amazon uses this score to take into account how well your product is selling and ultimately what it costs Amazon to sell the product. Amazon is transparent about how your IPI number affects you.
A rating of Good to Excellent means you’re a top performer and likely working in line with Amazon’s goals: that is, to sell a large volume of products efficiently. When the bar turns yellow or red, you know you need to take action to improve your score. Keeping in mind that Amazon wants strong sales with low overhead will help in decision-making in this area.
After the sale: keep the customer satisfied:
Faced with an extensive product selection and no apparent reason to choose one of the products, consumers are likely to turn to social proof to make their decision. It is of paramount importance that leaders take theirs into account Seller Feedback Rating.
A seller rating is a combination of ratings, chargeback rates, cancellation, delivery time, and several other factors. The rating scale goes from 1 to 100 (with 100 being the best) and the result is displayed on the seller’s page. Managing all of these factors is crucial to maintaining a top presence in the Amazon marketplace.
Amazon has a tremendous impact on the e-commerce market and businesses cannot afford to ignore this dynamic. Following a disciplined Amazon marketing strategy is likely to increase the company’s profitability, while failure to keep up can give competitors an edge. Executives who learn to coexist with Amazon and use Amazon to their advantage have a higher likelihood of succeeding in today’s highly competitive e-commerce environment.
Written by Jason Streiff.
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