For brands and entrepreneurs selling on Amazon, 2018 was a whirlwind of change with increases in competition, old success tactics becoming obsolete, new Amazon programs, and so much more. If history is any indicator, then we can expect even more of these changes in the new year. But what sorts of changes should we expect? How will these changes impact your Amazon business? And what steps should you be taking to prepare for these changes to best get ahead of the competition?
Here at Viral Launch, through helping drive more than $7 billion dollars in Amazon sales, we’re equipped with a vast amount of insight and data. This experience working with thousands of brands (from small private label sellers, to $100m+ 3rd party sellers and world renowned Fortune 100 brands) has enabled us to predict some of the biggest things to come in 2019. And we want to share them with you so that you can prepare for what’s ahead this year.
Not only that, but we teamed up with more than twenty 7, 8, and 9 figure sellers and Amazon thought leaders to get their unique perspectives on what to expect and how to prepare for success in the coming year. So, here are 11 predictions for Amazon in 2019 to inform your business decision making, formulated by Viral Launch and informed by top industry experts.
1. Major Brands Get Smart About Amazon Organic Ranking & Sales
We are predicting there will be more major brands that get smart about Amazon success tactics, putting even more pressure on Amazon sellers!
The reason third-party sellers (the small private label sellers) have had the opportunity to become ecommerce giants (we have a couple private label customers and personal friends that surpassed $100m on Amazon in 2018) is because when Amazon changed the ecommerce game, they changed the necessary tactics that drive success.
In a lot of ways, the primary tactics used in traditional retail – such as paying for shelf space, good in-person packaging, and branding – gave way to lower prices, organic keyword ranking, and pay per click/direct response advertising.
Amazon third-party sellers have been able to drive massive success because their only chance of driving sales among such established players was to become students of the new paradigms of retail success tactics. These sellers have worked diligently to understand the key drivers of Amazon organic keyword ranking and conversions, which has led to significantly greater visibility than their household name competitors.
Major brands continue to use deprecated success techniques, leaving the door wide open for third party sellers to reap the benefits of their Amazon expertise. Major brands typically only pay attention to Amazon PPC as their most impactful lever of driving sales. However, in general, only 15-40% of a product’s sales potential comes from Amazon advertising, while the remaining 60-85% can be found in the organic search results. It’s within this uncontested 60-85% space that third-party sellers have thrived and grown.
We are seeing more of these larger brands realize that there is far more potential beyond just Amazon advertising sales. They are beginning to hire successful Amazon sellers and/or software providers as consultants in order to help them become experts, much like successful third-party sellers. This is causing them to shift their focus from the 15-40% of sales potential to 100% of sales potential.
2. Amazon PPC Becomes Less Profitable But More Important
We are predicting that advertising on Amazon will see an increase in efficiency, significant increases in cost, and a significant increase in importance to success for brands on Amazon.
As Amazon increases their dominance in ecommerce and retail, brands are forced to move more of their budget to Amazon advertising. Significantly increased demand, combined with inefficient spend of untrained brands, will absolutely result in increased CPCs (cost-per-clicks). We’ve been observing this trend for quite some time in many markets, but we expect it to increase in velocity and ubiquity. It’s hard to go more than a week without seeing a new post in the media about Amazon’s advertising platform. With that said, we do think that while costs will increase, efficiency will improve.
Viral Launch still sees significant inefficiencies in general Amazon advertising campaign management, largely due to the limitations of Amazon’s in-house advertising tools and programs as well as a lack of sophisticated ad management and automation alternatives. However, we expect new tools/improved sophistication and functionality in Amazon advertising tools and programs will allow for an improvement in advertising spend efficiency. We also expect Amazon to continue improving their ad targeting technology with new programs and tools which will help brands improve overall spend efficiency.
Additionally, we believe that advertising on Amazon is and will continue to be increasingly more important to being competitive on Amazon. With more ad placements per page, we expect advertising to continue increasing the share of an individual product’s sales potential versus organic sales potential. Advertising can also be an important tool in affecting organic sales. Brands that have been using purely organic traffic to build their business will be forced to become experts at Amazon advertising in order to remain ahead of the competition.
3. The Reign of Building Brands Off Amazon
We are predicting that more Amazon sellers will focus on building brands off of Amazon as the effort/reward ratio continues to improve relative to the ratio of focusing solely on Amazon.
Up until 2018, Viral Launch has been a major advocate for focusing on Amazon and delaying true brand building until you crossed the $10m mark on Amazon. While we had obviously seen a few brands build success using a multi-channel strategy (selling outside of just Amazon), it was extremely rare. Much more frequently, sellers hit 7 and 8 figures ($10,000,000+) while focused almost exclusivelyon selling on Amazon. Opportunity cost is a powerful metric for optimal decision making, and for the vast majority of sellers, the opportunity cost was too high when focusing off of Amazon. The reason was because selling on Amazon still presented a lot of low hanging fruit and provided revenue growth rates you could hardly ever reach anywhere else.
As selling on Amazon has become increasingly competitive, we feel that the scales of opportunity cost are shifting to point to true brand building as the greater opportunity. Now don’t get me wrong, there are more people spending more money than ever on Amazon. The opportunity is greater than ever, but the cost and effort of seizing the opportunity is also greater than ever (in most markets).
4. Successful Brands Will Continue to Grow Significantly
We are predicting successful sellers/brands will see unparalleled sales volume on Amazon!
While it’s true that selling on Amazon has become more difficult than ever, there are more people spending more money on Amazon than ever before. This trend will continue into 2019, meaning those brands that are able to achieve/maintain top organic ranking positions, as well as perform well in advertising, will see sales volumes at unparalleled levels. The stakes are higher than ever! It truly is an exciting time to be selling successfully on Amazon.
5. Fewer New Entrepreneurs Begin Selling On Amazon
We are predicting fewer new Amazon seller accounts will be created in 2019.
According to Marketplace Pulse there were 1,200,000 Amazon seller accounts created in 2018 (a good portion never saw a sale). We are expecting new account creation to slow down quite a bit.
There are three primary reasons we expect this to happen.
- Reason 1) Increased Barrier to Entry: the cost and complexity of driving success on Amazon has increased. While we still believe there is a massive amount of opportunity on Amazon still (see Amazon Product Research in 2019), the opportunity generally requires larger budgets and more complex strategy.
- Reason 2) Market Fatigue: There are only so many aspiring entrepreneurs and mom and pop shops that are interested in selling on Amazon. We are predicting that the interest peaked in these two demographics in 2018.
- Reason 3) While we are not economists or fortune tellers, the possibility of a global/US based financial downturn is looming. In the event of a financial downturn, we expect people to have less “free cash” available to start an Amazon FBA business.
6. Major Changes in Reviews and Rankings
In 2019, we think Amazon will continue to improve the security/integrity around many systems/processes including their coveted reviews.
While we have been expecting Amazon to make a major systemic change to their review system, we are guessing (and hoping) that 2019 is the year we see this change come to fruition. In 2018 we have seen some review changes, specifically around review locks, in which receiving too many reviews will trigger Amazon to put a lock on new review activity.
We expect many unforeseen changes to take place, however our greatest hope/prediction is for Amazon to change the review system to a LinkedIn-style review cap presented on search results. By this, we mean that on search results pages, we expect Amazon to begin showing review quantities over 1,000 reviews as 1,000+ (or some similar number). You can check out our Amazon review podcast covering why we think this is necessary to protecting the quality of products purchased and the integrity of Amazon’s review platform for more on that topic.
In short, sellers are incentivized to achieve the highest review quantity relative to their competitors. A higher review quantity indicates greater popularity to potential buyers. If a product has been selling for 10 years on Amazon, it has a distinct advantage over new, and potentially better, products that have not had as long to generate reviews. Let’s say Product A has been on Amazon for 5 years, has a 4.4 star rating, and 6,000 reviews. While Product B has been on Amazon for 6 months, has a 4.8 star rating with 1,000 reviews and a price point $1.00 cheaper than Product A. While most may think Product B is a better product at a better value, there is very little hope of Product B gaining the sales necessary to acquire the reviews to outperform Product A. Product A could allow the quality of their product to decrease because they have such a large review quantity built up that it will be very difficult for others to catch up. It creates a stale market favoring age over quality and value. Limiting to 1,000 reviews shown in the decision process would allow customers to know that a statistically significant number of other customers have purchased/reviewed the product so that review rating must be legitimate.
While we do not have many specific predictions we feel comfortable sharing, we do expect there to be rather significant shake ups in the key drivers of Amazon’s organic keyword ranking algorithm. As in the past, having access to significant amounts of data around key ranking factors/metrics while constantly testing will be the key to staying ahead of any algorithmic changes. Fortunately, Viral Launch has been able to stay abreast of any changes thanks to our wealth of data and brilliant R&D team.
7. Facebook Begins It’s Path of Becoming The Second Largest Ecommerce Site
We are predicting Facebook begins making big moves in ecommerce by subsidizing sales through their platform for merchants to sell direct through their platform.
For the last couple of years, we’ve consistently considered Facebook to be the entity with the greatest potential to challenge Amazon in the world of retail. We’ve lost quite a bit of hope in Walmart and Google over the years. If you think through the core building blocks to a successful ecommerce platform, attention, data, trust, and web/mobile capabilities/technology are top of the list. With more than a purported 2 billion monthly active users, unparalleled data around it’s users, and significant web and mobile technology, Facebook is more than well equipped to help brands sell their goods directly through their platform at a massive scale.
I’m not talking about Facebook’s peer-to-peer marketplace. I’m expecting a full fledged Amazon competitor, and we’re beginning to see the early stages. In some instances, Facebook is reimbursing merchants $5 for each product sold to cover the cost of shipping with no additional marketplace fees, making Facebook a cheaper place to move product already. We’re expecting Facebook to start making some big moves in the e-commerce world in 2019.
8. International Markets are the New Gold Rush
We are predicting a substantial movement of third-party Amazon.com sellers in offering their products and brands on Amazon’s international marketplaces in 2019.
Selling on Amazon.com (the US marketplace) still poses massive opportunity if played right, but there is no denying that it is certainly more difficult to grasp that opportunity than ever. We expect the real mad rush for low hanging-fruit sales (Amazon “gold”) will come in Amazon’s international marketplaces. Viral Launch has been a strong advocate of sellers expanding internationally for the last two years, which is why we invested in hiring domestic listing optimization specialists in each country containing a major Amazon marketplace, as well as expanding our tools to work internationally. We have seen success after success with minimal effort and marketing budget in Amazon’s international markets over the last couple of years (check out this incredible story of two 21 year olds achieving 8 figures on Amazon in 2 years, while selling internationally).
As creating and expanding a profitable and high-growth Amazon business becomes more difficult to achieve on Amazon.com, we think 2019 will finally be the year that third-party sellers look to international markets in droves! Selling internationally certainly has some drawbacks, but in general, Amazon advertising is significantly cheaper, driving organic keyword ranking is significantly easier, and growing top line revenue are all much less competitive relative to Amazon.com. Experienced Amazon.com sellers are able to use their learned success tactics and easily apply them to their brands in International markets.
9. Seller Fulfilled Prime Comes Into Vogue
We are not denying the importance of 1-hour and same day delivery, but we predict we will see a significant amount of sellers over the $1m mark moving to a hybrid fulfillment model.
Over the last 6-9 months, we’ve started to observe a trend in larger/more experienced Amazon third-party sellers moving to the Seller Fulfilled Prime (SFP) model using a combination of their own warehouses and 3rd Party Logistics providers (3PLs). The most compelling reason to move from fulfilling through Amazon’s FBA program to a self-regulated SFP model is cost savings.
We are not seeing only sellers with large items such as furniture moving to SFP, but sellers with products of all weights and dimensions. A customer of ours, selling more than $40m/year on Amazon, claims moving to the Seller Fulfilled Prime model has been his single best investment yet!
The second most common reason sellers are taking up SFP is to support fulfillment for other ecommerce channels that may not allow using Amazon’s Multi-Channel Fulfillment program. Having a dedicated 3PL network allows sellers cheaper fulfillment and greater channel flexibility.
10. More Amazon-Owned Brands
We are predicting there will be a significant increase in the number of Amazon owned (not “sold by Amazon”) in 2019.
We have seen a significant push from Amazon in their own private label brands, and we expect to see this trend continue into 2019. Amazon now has over 80 of their own private label brands, and those brands are receiving better placement than ever (Amazon’s “Our Brands” section now shows above organic results for many search terms).
Amazon kicked off a new program near the end of 2018 called their Accelerator Program, which essentially stands as a partnership between third-parties and Amazon to establish new Amazon-owned brands using existing product performance data. This presents the potential for the number of Amazon owned brands to sky rocket! It will be very interesting to see how this progresses in the new year.
The largest threat to Amazon’s private label brands is likely the government presiding over the country in which each marketplace operates. For example, India has banned Amazon from selling any of its own products on Amazon.in.
11. Less Ads Showing on Page 1 of Search Results
We are predicting Amazon reduces the Amount of clutter in Amazon search results which distracts shoppers from the organic search results.
This is not a common opinion, and we’ll admit that there is a decent amount of logic/data pointing to an extremely high probability that this prediction does not come true, however, when we really try to get in the mind of Amazon and Jeff Bezos, this feels right! I (Casey Gauss) want to walk you through my logic on this one.
As I think through what has made Jeff and Amazon so successful, it’s been their relentless focus on the customer experience (think lower prices, faster shipping, return policy, etc.).
In my opinion, in 2018, the actual shopping experience for customers suffered at the expense of Amazon’s advertising revenue and the promotion of their owned products. There are two contributing factors to what I believe is a lower quality shopping experience.
(One key point to understanding my thoughts below is the difference between “organic results” and “sponsored results”. “Organic results” are the items presented to a customer after typing in a given search term that are showing in the results out of merit. Organic results have been selected by Amazon’s A9 ranking algorithm based on performance factors such as conversion rate, number of units sold, etc. “Sponsored results” are items showing with a “sponsored” denotation, and are showing in the results because merchants have paid for the placement. Theoretically, organic results are the best selling products for a given keyword which is why they are showing in the results. The products most likely to best satisfy the customer’s request. While Sponsored results are artificially placed based on how much the merchant is willing to spend.)
1) Overwhelming Information in Results: In general, our data shows that anywhere between 60-85% of a product’s sales potential come from placement in the organic search results. This means the majority of customers’ shopping experience consists of inputting search terms in the search bar (e.g. “fish oil supplement”), sifting through the results, and purchasing a product. In 2018, we saw an increase in the amount of information being shown on the results page which can be confusing, overwhelming, and a barrier to purchasing the products showing organically (the most likely to satisfy the customer’s request based on real buyer behavior).
The shopping experience is overwhelmed with information and creates a barrier to the shopper arriving at the best performing products based on real data from hundreds to millions of real customers. I feel this direct and indirect inhibition to the best customer experience does not align with Amazon’s mission and what has allowed them to be so successful to date.
2) More Sales Through Amazon Ads: There are more advertising placements on Amazon than ever before. Paid media sales are increasing their market share versus organic sales. When customers are purchasing artificially placed products (products presented through ads versus showing based on performance), the probability of the sponsored product being as high quality as an organically ranked product is low. By more sales being driven through advertising, Amazon is selling less of the proven and theoretically higher quality “organic results” to customers for the sake of driving more advertising revenue. More ad sales = more pay to play, versus quality & value to play.
Now, I don’t think that Amazon has nefarious intentions with advertising. They haven’t set out to create a lower quality shopping experience so they can make a few billion dollars more per year. My assumption (with almost no inside Amazon insight) is that this is a classic case of competition priorities between departments (i.e. the Amazon advertising business units are focused on maximizing their top line, without much focus on the overall customer experience).
Either way, I’m predicting that someone in Amazon, perhaps Mr. Bezos himself, will realize that there has been a slight deviation from the company’s overall focus, and will begin to peel back some of the excessive ad placement.
12. Amazon Significantly Outpaces Other Retailers in an Economic Downturn
We are predicting Amazon significantly outpaces competitors if/when there is a downturn in the US economy.
While we are not economists or fortune tellers, there seems a high probability that there will be an economic downturn of some degree at some point in the near future. If the next economic downturn occurs within 2019, we are predicting Amazon will outperform other retailers significantly. With unbeatable low prices, convenience for working families, and an incredibly large catalog of low priced necessities, we expect Amazon to be the go to store when budgets and time are tight.
Amazon Expert Predictions
7 Figure Seller
Seller Coach at Amazing Freedom
- Amazon merges Seller Central and Vendor Central into a new system called Vendor One, which gives third party sellers more brand control.
- Brands direct more ad traffic to Amazon instead of their own websites, increasing PPC costs.
- Amazon shares more data and analytics with sellers.
- Amazon private label continues to grow, so sellers source in product niches.
7 Figure Seller
Speaker and Amazon Teacher at AMZMarketer.com and FreedomTicket.com
- Sellers need to approach Amazon like a real small business, not a get-rich-quick scheme.
- Amazon becomes a pay-to-play advertising platform.
- Amazon expands their private label brands.
- Amazon merges Seller Central and Vendor Central into one system called Vendor One.
- Third Party Sellers undergo an approval process through Vendor One, which means sellers must better conform to guidelines.
- Amazon provides a series of tools to battle black hat tactics and thereby attract new sellers.
- Other marketplaces continue to fail to compete with Amazon.
- Dayparting, geotargeting, and click-fraud technology for PPC is developed to protect third party sellers.
- Amazon makes it difficult to open phantom accounts through voice-match recognition or identifying documentation.
- eBay emerges as the most potent competitor for Amazon through a series of mergers and acquisitions.
- 3P, private label sellers, find more success in the marketplace than Amazon private label brands.
8 Figure Amazon Seller
- Amazon is a lot more involved with initiatives outside the marketplace (influencers, social media, stores).
- International markets play a large role in growth for sellers.
- Less buying and selling of Amazon businesses.
7 Figure Amazon Seller
- Amazon cracks down on hackers and black hat sellers.
- Sellers use outside resources to drive traffic to Amazon.
- Amazon focuses on pushing exclusive products by giving sellers more control over their listings.
Amazon PPC Manager for 8 Figure Brands
The Urban Cowgirl, Wild West Media
- Sellers face fierce competition on category keywords.
- Amazon offers more placements for advertising.
- Sellers put more resources into remarketing.
Partners with $100m Amazon Sellers
- Video becomes more important for product listings.
- Amazon places increased emphasis on quality private label brands.
- Chatbots become more important for Amazon businesses.
Former 8 Figure Seller and Multiple 7 & 8 Figure Exits
- New private label products trend toward micro-brands.
- Specific audiences become more important on the marketplace.
- Big brands adjust for online marketplaces.
7 Figure Seller
Teaches 10,000’s of Students on Youtube
- Accurate data becomes more important for sellers.
- Sellers get more creative with keyword research.
- Marketing expansion to sources outside of Amazon.
8 Figure Seller
- Amazon makes changes to Brand Registry and PPC to give private label sellers more control over their brands.
- New Amazon accounts become harder to open, which means selling Amazon accounts becomes popular on the black market.
- Sellers get better access to honest, accurate review generation incentives.
7 Figure Seller
Trains Hundreds of Amazon Sellers at EcomHub.com
- The marketplaces becomes more competitive with an influx of new sellers.
- Sellers learn how to drive traffic off of Amazon.
- Black hat tactics become less effective.
World Renowned eCommerce Expert
Host at Watchingamazon.com
- The China connection is broken, encouraging online sellers to source from other countries.
- An economic downturn creates problems for sellers sourcing less expensive products that are frequently bought on impulse.
- Amazon continues to dominate market share.
7 Figure Seller & Speaker
Director of Innovation at Viral Launch
- Amazon releases their own suite of tools for advertisers.
- Influencer marketing becomes a bigger part of the Amazon seller journey.
- Amazon attribution and increased external traffic paves the way for a new referral fee structure.
7 Figure Seller
Host of Amazon Mastermind thehivemind.co
- Amazon rids the marketplace of black hat and inattentive sellers.
- New California sales tax issues force Amazon to collect and remit sales tax on all sales going forward.
- Google makes a push into ecommerce using Google Express.
7 Figure Amazon Sellers
Training hundreds of Amazon sellers at BrockJohnson.com
- Amazon platform reaches a point of saturation in the B2C market, so they start to shift their focus toward sellers.
- Sellers become more customer-focused, using tools and strategies to create a good buying experience.
- Amazon B2B sector continues to grow, creating huge opportunity on Amazon.
8 Figure Seller on Amazon
Million Dollar Sellers Group – 9 Figures in Total Sales
- Sellers lose access to customer information, as Amazon will keep that data to themselves.
- Amazon continues to remove incentives for stocking inventory at their warehouses, encouraging sellers to turn to other 3PL companies.
- Tariffs, Amazon private label expansion, and continued reliance on Amazon advertising platforms continue to shrink seller margins.
Kevin Pasco & Jeremy Sherk
8 Figure Amazon Sellers
- New private label brands continue to join the Amazon marketplace.
- Amazon continues to place restrictions around review generation to maintain marketplace integrity.
- Sellers need to have an audience to launch a new product.
8 Figure Seller
- Amazon establishes long-term dominance on the platform by incentivizing brands to sell new products on the marketplace.
- Amazon makes a big push toward social media.
- More brands ship direct to Amazon, spelling the beginning of the end for wholesale.
8 Figure Seller
- Sponsored product ads and AMS become significantly more expensive.
- Sellers move toward email lists, ManyChat, and social to market their products.
- Growing subset of brands that move away from Amazon as a part of their online strategy.
7 Figure Seller
Teaching Amazon at Seller Systems
- Amazon changes the way they are indexing and ranking products, which means sellers have to be smart about their sourcing decisions.
As you’ve probably noticed, there was plenty of overlap between Viral Launch’s predictions and those of the included industry experts and thought leaders. I’m not sure if it is fair to say that this indicates the prediction is more likely to come true, but it does indicate that there is likely more data pointing to that assumption.
An underlying commonality throughout these predictions was increased competition, focusing on building traffic off of Amazon, and adapting your Amazon success strategies. There is certainly the opportunity to look at this with a negative outlook on the future, but please do not forget that Amazon is continuing to grow it’s ecommerce footprint significantly.
As the opportunity for incredible degrees of success continue to grow, so does the difficulty of achieving that opportunity. Instead of playing the victim to increased competition and “unfair” changes, the truly successful adapt with the times, play the long game, and focus on solutions.
I want to encourage you to focus on the solutions. How will you diversify your Amazon business? What strategies will you use to guarantee you and your team are staying ahead of the lastest success tactics? How can you drive sales, reviews, and keyword ranking in this new landscape?
While there are many components that comprise a winning strategy for the future, Viral Launch is focused on giving you the data, automation, and thought leadership around topics like driving sales, keyword ranking, and product selection. Now, it’s up to you to use these to stay ahead of the curve and continue growing exponentially on the world’s largest marketplace!
- Amazon Advertising: Brand Analytics & Customer Behavior - March 28, 2019
- The Future of Amazon 2019: 22 Sellers and Thought Leaders Share Their Predictions - January 10, 2019
- Amazon Keyword Search Volume & Relevance Data Change - December 20, 2018