Amazon is removing the feature allowing anyone to comment on a product review, per a Business Insider report. Amazon officially retired the feature on December 16th, 2020.
What relevance does this have for sellers?
Many sellers utilized this feature to respond to customer reviews as a form of customer service.
Furthermore, this likely signals more changes to come, as Amazon noted the development of other opportunities to connect with customers.
Following the update, a few sellers have received emails notifying them of change:
Dear seller,
You’re receiving this email because you recently left a comment on a review. While reviews and feedback are important to our customers and sellers, the comments feature on customer reviews was rarely used. As a result, we are retiring this feature on December 16, 2020.
We’re committed to your continued success and will innovate and develop other opportunities for you to connect with customers.
Thank you. Amazon Services
Initially, the removal of this feature has been poorly received by sellers.
“Just like removing customer contact information from the order information page, this makes it harder for good sellers to provide top-notch customer service,” stated one concerned Redditor.
However, the update changes the buyer-seller communication experience, but doesn’t end it. Recently, Amazon FBA updates appear to be centered around the buyer-seller communication process.
Sellers and buyers can directly communicate in the Buyer-Seller Messaging Service. Even so, this service permits direct messages to customers and not visible to prospective customers.
As a result, sellers should continue to monitor Seller Central updates as more information becomes available. As mentioned by Amazon, we’d expect more policy or feature changes concerning buyer-seller communication.
What can you do?
Potentially, your listing copy may be a way to address this obstacle effectively. How so?
Let’s put ourselves in the customer position for a situation. You’re looking to purchase a product, but have reservations due to a recent negative review or stream of bleak reviews with a common theme. In the past, the seller could provide help to quell concerns from prospective customers.
Your listing copy can address these issues without replying directly to the review. If customers are misusing your product in a way that could lead to negative reviews, you might be interested in addressing the issue in the product description.
Of course, making changes to your listing copy results in a temporary decline in ranking. So it may not be worth revising your copy after each negative review. But if a review is affecting your conversions, it might be worth the short-term hit.
Did you ever use this feature? How does this change your selling experience? Drop a comment below and let us know how this affects your selling experience.
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One of the most challenging aspects of starting a business is getting your product in front of the right audience. As Amazon owns about 49 percent of the U.S. e-commerce share, it makes sense to start an Amazon FBA business to sell your e-commerce products as your target market already prefers shopping there.
Additionally, Amazon makes it easy for sellers to list, sell, and ship their products through their Fulfillment By Amazon (FBA) program. Here’s everything you need to know about an Amazon FBA business and whether you should start an Amazon FBA business or purchase an existing one.
What is FBA?
Some 73 percent of Amazon sellers in the U.S. use the FBA program, making it one of the most popular e-commerce sales options. Amazon FBA sellers receive immediate access to Amazon Prime customers, which can significantly impact the bottom line of the business. On average, Amazon Prime customers spend $1,400 per year on Amazon, whereas standard Amazon customers only spend $600 per year.
The other reason why FBA businesses are popular is that it’s convenient.
With an Amazon FBA business, you don’t have to ship, package, or store any goods yourself. Instead, you pay a small fee, and Amazon employees handle all of this for you.
Shipping fees are up to $5.26 for large items (items up to 21 pounds), and they also have oversized pricing options for much larger items.
Storage fees are also reasonable at $0.69 per cubic foot for standard items January through September (October through December fees may be higher to accommodate increased demand during holidays).
You’ll also have to decide whether you want to be a professional seller or an individual seller. You aren’t required to have a professional seller account to have an Amazon FBA business, though it may be cheaper depending on how many items you plan to sell. A professional seller account pays a flat rate of $39.99 per month, whereas an individual account pays $0.99 per item.
Therefore, if you plan to sell more than 40 items per month, it’s likely more economical to purchase a professional seller account.
So if you’re looking to own an Amazon FBA business, is it better to purchase an existing business or start one from scratch?
While there is no right or wrong answer, here are a few questions you should ask yourself to determine which is the best solution for your situation and goals:
Do You Have The Capital?
The first question you should ask yourself is if you have the means to purchase an existing business.
An Amazon FBA business usually sells for about two to three times its yearly net profit. In other words:
Annual Net Profit x Multiple (usually 2 or 3) = Valuation
Therefore, if you want to purchase a business that makes about $10,000 in annual net profit, you can expect to pay $20,000 – 30,000.
Unfortunately, if you don’t have any capital upfront, your only choice is to build one from scratch, which can still be quite profitable!
Is This a Long Term or Short Term Investment?
Another question you should ask yourself before getting started with an Amazon FBA business is how long you’re willing to invest in the project.
If you’re willing to invest in this business for a few years, starting from scratch may offer you a more significant ROI. Getting started can be challenging as you’ll have to find your own suppliers and build reviews and a brand. Therefore, during those first several months, you may not make a dime, so you can’t expect to flip the store in a few months.
On the other hand, if you are looking to purchase a store, sell for a few months, and then flip it quickly, an established store is a better option.
Building momentum in a brand new company takes time. Not all sellers are profitable in the first year of a new Amazon FBA business, making it difficult to flip for a reasonable price as your net profit may be zero or negative.
However, once you pass a certain threshold of reviews and brand equity, exponential growth becomes possible.
What Skill Sets Do You Have?
Some people entering the Amazon FBA world have a background in business or marketing. If this is the case, one of the best ways to decide whether you’ll purchase or start an FBA business is to play to your strengths.
For example, if you previously worked for an e-commerce store and understand how to grow it, you may perform better if you purchase an existing store and grow it.
However, suppose you worked at a startup company and understand how to be resourceful, play the long game, and hang in there during the first challenging year of zero profit. In that case, you might be more successful starting a business from scratch.
Building a business from scratch and taking a business from five figures to six or seven figures requires two very different skill sets, so play to your strengths.
What Kind of Risk Would You Rather Take?
Starting any business involves some risk. However, the type of risk you take differs based on whether you purchase an existing business or build one from scratch.
Building one from scratch requires zero capital risk upfront though your chances of becoming profitable are much lower.
If you purchase a business that is currently profitable, your chances of remaining profitable are much greater. However, if you suddenly run into problems with suppliers, knock-off items or pricing wars and your business falls apart, you’ll lose a larger investment.
Therefore, while the risks differ, both have risks. So would you rather gamble time or money? Here are your choices:
Buy a Business = Higher Probability of Profitability + Increase Capital Risk
Start a Business = Lower Probability of Profitability + Lower Capital Risk
What Is Your End Goal?
Ultimately, the right decision depends largely on your goals. Do you plan to grow businesses from scratch and then sell them? If that’s your end goal, starting a business from scratch is the best way to learn.
Above all, running an Amazon FBA business is similar to running any business. Regardless of whether you purchase one or start one from scratch, it requires a lot of time, dedication, and commitment, and you can’t give up on it after a few months. You’ll have to put out fires and appease angry customers, though the rewards of growing a thriving business are more than financial. Get started now, and commit yourself to keep going!
Online Shopping is seeing year after year growth. In fact, Retail e-commerce sales worldwide are forecast to nearly double between 2016 and 2020. If you’ve thought about selling online, now is the time to ride the e-commerce wave to boost revenue. But which online marketplace should you invest your time, resources, and products? Should you diversify or go all in on one? While there are several online marketplace options to sell, we’ll specifically be comparing selling on Amazon vs eBay in this post.
AMAZON SELLERS VS. EBAY SELLERS
In this year’s letter to shareholders, Amazon announced that, “Over 300,000 U.S.-based SMBs started selling on Amazon in 2017.” That’s a lot of new sellers on the platform, and that doesn’t even capture the individuals sellers and larger brands who are all rushing to list their product in Amazon’s ecommerce catalog.
Amazon Sellers
Amazon’s brand awareness as the go-to online store with lightning fast deliveries and excellent customer service draws shoppers like a giant consumer magnet. And that makes it very appealing for sellers. So appealing that many sellers on the platform do not sell their product anywhere else. But with more and more sellers jumping on the platform, competition has increased. And that means customer expectations have increased too.
It’s not enough to ship a product from your garage and have it arrive a week after purchase. Customers want their orders at their doorstep tomorrow. And they want that product to be quality. If it’s not, one bad review can knock down your rating and potentially your conversion rate and your ranking.
Overall, what this more competitive landscape means for the type of sellers on Amazon’s platform is that they are becoming more and more higher-caliber. They are becoming more and more competitive. Those who succeed and win a good ranking position know how the platform works, and they know how to succeed.
eBay Sellers
eBay sellers on the other hand span a wider range. Unlike Amazon, there are not large brand names on the platform. But there is a wide spread of seller types from large, competitive sellers with some brand recognition to the online-yard-sale individuals who are selling single items they are trying to get rid of.
While Amazon sellers battle the high expectations of customers on the Amazon platform, eBay sellers battle quite the opposite: the idea that all items on eBay are used or second-hand. This is probably one of the reasons that eBay sellers list their products on multiple marketplaces. eBay attracts a different kind of customer too, which lends it to certain products more than others.
AMAZON CUSTOMERS VS. EBAY CUSTOMERS
In the selling on Amazon vs eBay discussion, both have unique customer bases that set them apart and make them more or less favorable to certain products. Before you decide where to list your product, you’ll want to make sure that there is good demand for it with the customers on the platform.
Amazon Customers
Amazon is the most popular online store in the United States, according to Statista. It has by far the largest market share for ecommerce. So who are these Amazon customers? Compared to customers on other ecommerce platforms, they are generally more educated and more well-off than the average American. Here are the four most distinguishing traits of Amazon customers:
Younger. According to Digital Commerce 360, over 50% of Amazon shoppers are under the age of 45. Prime customers tend to be even younger than the average Amazon shopper, with 18 – 34 being the most Prime-heavy age group.
Higher Income. Amazon customers are predominantly male and tend to have higher incomes. Amazon captures 90% of the 50 – 100K income shoppers, and 89% of the 100K+ shoppers. And even for shoppers with an income under 50K, Amazon still captures 73% of the market.
Bigger Spenders. Prime members are especially keen on Amazon’s free 2-day shipping and tend to buy more than non-Prime members. And with Prime membership in 64% of US households, that means Amazon customers are spending more on the platform than ever before.
Trust the Amazon brand. Amazon customers trust the Amazon brand for quality products, timely delivery, and excellent customer service if anything does go wrong with an order. Amazon customers are also sometimes unaware that they are even purchasing from a seller at all. Thinking rather that they are purchasing “an Amazon product.”
Overall Amazon has captured most US shoppers, especially those under 45 years old, making over 50K. And since their customers do tend to be wealthier, they come with higher customer expectations. This is especially true of Prime members, Amazon’s biggest shoppers. The Amazon brand is one that customers deeply trust and masks the marketplace experience for customers by providing them with fast shipping and incredible customer service.
eBay Customers
eBay, though not as popular as Amazon, continues to be a big player in ecommerce. According to Statista, “In the first quarter of 2018, eBay reached 171 million active users.” And though smaller than Amazon’s customer base, 171 million is still undeniably significant. Here are the four most distinguishing traits of eBay customers:
Older. eBay customers tend to be older than Amazon customers, with 61% over the age of 45. Like Amazon, they tend to be mostly male.
Medium income. While an exact income range for eBay customers is hard to pin down, it seems to generally be lower than the average income for Amazon customers.
Deal hunters. eBay customers also tend to come in with the expectation that they will pay less for the item they are looking for. While Amazon used to be a lot more competitive on price, customers, especially Prime customers, seem to be willing to pay more for the convenience of 2 day shipping and a wide-reaching catalog.
Less trust in eBay brand. eBay customers do not trust in the eBay brand name in the way that Amazon customers trust the Amazon brand name. Rather, they trust the brand of the seller they are purchasing from. The expectations for customers satisfaction are put on the seller rather than on eBay as the platform.
Overall, eBay is still a significant size market that is more popular with older shoppers, especially those over 45. Since their customers tend to be of average means, they are more motivated to find the best price and pay less for the item they are looking for. eBay customers are much more aware of eBay as a marketplace than Amazon sellers and trust the brands of the sellers they purchase from rather than eBay’s brand.
AMAZON PRODUCTS VS. EBAY PRODUCTS
The types of products that customers buy on Amazon and on eBay are different. Each platform has its own strengths and draws shoppers for those specialties. It’s important to know these comparisons when weighing up selling on Amazon vs eBay.
Amazon Products
Amazon’s catalog has 562 million products in its catalog with Clothing, Shoes & Jewelry being the biggest category by far. Amazon’s top selling categories are:
Consumer electronics
Home and kitchen
Publishing
Sports and outdoors
eBay Products
eBay’s catalog has well over 1 billion live listings. According to the site, some of its best selling products include:
Electronics
Fashion
Video games
Collectibles
While both sites sell electronics and fashion items, Amazon sells far more books than eBay. Amazon also sells more Sports and Outdoor equipment whereas eBay sells more collectible items. Shoppers looking for unique, vintage, or antique items will look to a platform like eBay. And shoppers looking for books, outdoor equipment, and items that they need to arrive quickly will look to Amazon.
AMAZON FEES VS. EBAY FEES
As we look at fees in the selling on Amazon vs eBay comparison, the associated fees are a crucial factor. We’ve written a fuller blog focused on Amazon seller fees, but we’ll give an overview of both here.
Amazon Fees
Amazon fees vary depending on how the item is sold. There are two main ways to sell a product: as an individual or as a professional. An individual is anyone selling less than 40 items a month. Think college students selling their used textbooks. Professional sellers are those looking to supplement or replace their income, including retail arbitrage sellers, online arbitrage sellers, wholesale sellers, and private label sellers.
Individual Seller
Per-item fees
Referral fees
Closing fees
Referral fees depend on product category but are typically 15% with a minimum fee of $1.00. See the full list of referral fees by category here. Closing fees are $1.80 per item sold and apply only to media items such as books, DVDs, music, software & computer/video games, videos, and video game consoles.
Professional Seller
Professional account subscription
Referral fees
Closing fees
Shipping fees (if applicable)
A professional seller account is $39.99/month and replaces the per-item fee charged to individual sellers. Referral fees depend on product category but are typically 15% with a minimum fee of $1.00. See the full list of referral fees by category here. Closing fees are $1.80 per item sold and apply only to media items such as books, DVDs, music, software & computer/video games, videos, and video game consoles. Some professional sellers use Amazon’s fulfillment program (Amazon FBA) to store, pack, and ship their products to customers. FBA has its own fees, which you can see here.
eBay Fees
eBay fees are seemingly less complicated than Amazon fees. But eBay is set up for individual sellers with individual items more than it is set up for sellers with multiple skus (stock keeping unit) and multiple items for each sku. There are two main fees that eBay charges sellers:
Insertion or listing fees
Final value fee
The insertion fee works a little differently depending on how you are selling your products. If you are selling individual products auction-style, eBay gives you 50 free listings per month with a $0.35 insertion fee after your 50th item.
If you are listing a product with a fixed price and hundreds or thousands of items in stock, eBay will charge you an insertion/listing fee up front and every 30 days until all items sell out or you or eBay closes the listing.
The amount you pay for this insertion fee is calculated based on what eBay calls the total start price of the listing. The total start price is the sale price of the product multiplied by the number of items available for sale. So if you’re selling a $15 t-shirt and have 1,000 on the listing, the insertion fee will be based on a start price of $15,000.00.
The other main fee that eBay charges is a final value fee. The final value fee is a percent of the final amount the buyer pays, including shipping and handling but not tax. Final value fees are typically about 10% with a cap of $750.00. So if a customer purchases all 1,000 of your $15 t-shirts, your final value fee would be capped at $750.00 rather than being the full $1,500.00.
eBay also charges a few additional fees:
Listing upgrades
Select category fees
Sellers have the option to pay small fees for listing upgrades like bold font, subtitles, international site visibility, dual category inclusion, Gallery Plus, and Listing Designer. These fees depend on the price of the item and the duration of the upgrade. See all options here.
Because eBay is a smaller marketplace, it is a great way to get your feet wet with e-commerce. You can start selling on eBay with a lot less money, and drop shipping is a viable option. Customer expectations on eBay are lower, and eBay as a platform is more lenient when it comes to requirements for listing your product and customer satisfaction.
Who Should Sell on Amazon
Because Amazon is a bigger marketplace, it is more competitive. That means the cost to compete is higher but also that the reward for success is higher too. There are thousands of product markets that see healthy sales every month where competition is still low. And if you are lucky enough to find one of these markets, the rewards for performing well on Amazon are greater than they will ever be on eBay.
If you have a smaller budget and are thinking of drop shipping, Amazon is probably not the place for you. With high customer expectation, Amazon has strict requirements for their sellers. If you find yourself with too many unhappy customers and late orders, you could be off the platform.
But if you have a bit more of a budget to work with and are looking to sell a large volume of products to a large audience (especially if you are looking to utilize Amazon’s FBA program), selling on Amazon is the way to go.
Recap
Selling online is a huge opportunity for business entrepreneurs. As you research selling on Amazon vs eBay, you’ll want to know the buyer demographics, marketplace strengths, fee comparisons, and the seller options available to you.
Amazon buyers have generally higher income and are younger while the average eBay buyer is older and looking for a bargain.
eBay is more lenient with a lower barrier of entry while Amazon is more competitive but with a higher potential for sales
eBay has fewer fees than Amazon and will generally be more profitable but requires you to be more hands on with the whole process.
Amazon buyers expect higher quality and faster shipping while eBay buyers sometimes assume the products are second hand or less quality.
Savvy Amazon sellers have been taking advantage of Amazon’s global marketplaces for years. With marketplaces in 11 regions, and customers in over 180 countries, Amazon makes it easy to get in front of fresh markets and new consumers. Retail, as we know it, is rapidly developing as consumers purchase more products online rather than in-store. eMarket shows that Amazon is responsible for 44 cents of every ecommerce dollar spent, up from 38 cents in 2016. With this increased growth, more sellers are expanding beyond borders to find less saturated markets and take advantage of exchange rates. The opportunity to sell globally? Massive.
International Selling
We are now seeing more private label brands and resellers become global market leaders. Brands like Anker manage their own eCommerce storefronts and are relatively unknown in the brick and mortar space. But, by optimizing their listings and expanding their brand across multiple channels, they’ve become a titan on global marketplaces. On Amazon, the UK/EU are collectively the same size as the Amazon.com market. In China, it’s projected that more than a quarter of the population will be shopping for foreign products on eCommerce platforms. For those of you counting at home, that’s roughly 455 million potential customers.
That said, opening your business to new markets means learning how to navigate cross border payments, transactions, and how to bring your international sales home effectively. Not to mention you will have to pay VAT, the equivalent of sales tax in the UK / EU, to the international governments in which you’re selling. It goes without saying, you need an effective strategy in place to manage all of your different currencies, tax payments, and supplier payments to protect your margin selling globally.
Money Forward Contracts
So what do you do? Setting up in-country bank accounts requires an entity in that country, and the process to set it up can be lengthy and costly. Not to mention, the currency exchange rates that you’re getting may still not be competitive. While most marketplaces have a currency solution, you have zero control over when they move your funds and no transparency to the trade rate of their funds. You need a solution that both allows you control over your foreign exchange, and protection against potential volatility in the rates.
Take Brexit, for example. We saw the rates move 10% in a matter of hours, and those using a marketplace solution were at the mercy of the markets. Those who were working with a solution like WorldFirst were able to work with their relationship managers to protect themselves against market movement by booking forward contracts or setting rate alerts. This helped them move their funds back home at a rate they budgeted for. By giving our customers the ability to control their money, we were able to provide peace of mind and the ability to protect their rates.
Amazon International Money Transfers
As global eCommerce becomes more accessible to sellers, it’s becoming easier to make cross border distribution a reality for your business. The only consistency in the currency market is that it fluctuates. While you may never be able to predict which way the market is going to move, World First can help you protect your margins and grow your business globally. We have had sellers experience their business grow between 5-10% in the first year of expanding internationally, and then reinvest the profits in your business to promote continued growth in the international space.
World First USA Inc. can help you pay suppliers, vendors, and taxes overseas. We can set you up with local receiving accounts in the countries where you’re selling, allowing you to collect funds in the local currency and take control of when your funds are transferred. The marketplace transfers your earnings to your in-country account and you can transfer your funds back home. We’d love to help you take hold of the global markets. Register here to get started.
Selling your product on Amazon alone is a bad business model. Or is it? Join Viral Launch CEO Casey Gauss and Amazon Seller Coach Cameron Yoder as they discuss whether diversifying your business efforts across multiple ecommerce platforms is really worth it.
Follow the Data Show Notes
Amazon is the go-to online retailer today, and Prime shipping is a huge incentive for shoppers. According to RetailWire, “The average Prime program participant spends $1,300 per year,” and Prime membership is only increasing, which means the potential for third-party sellers continues to grow.
Check out this recap of 2016 Amazon third-party sales. With 2017 shaping up to be an even bigger year, there’s no denying that Amazon offers third-party sellers a sales opportunity like no other online retailer.
Take a look at these Viral Launch Case Studies for a few examples of sellers who decided to double down on their Amazon businesses and saw huge results
Don’t forget to check out our redesign of Market Intelligence. With a brand new look, a built-in FBA calculator, and the most accurate sales estimates in the galaxy, Market Intelligence has everything you need to streamline your sourcing process. Check it out at viral-launch.com/newMI
Want to be on the show? Leave us a voicemail at (317) 721-6590
Podcast Transcript
Casey Gauss:
Approximately 55% of online shoppers start their product search on Amazon. As an online retailer you know Amazon is the place to be.
Cameron Yoder:
But is selling strictly on Amazon the most profitable approach? I’m Cameron Yoder.
Casey Gauss:
And I’m Casey Gauss, your host for Follow the Data: Your Journey to Amazon FBA Success. In this show we leverage the data we’ve accumulated at Viral Launch from over 20,000 product launches and our experience working with 5,500 brands to help you understand the big picture when it comes to selling on Amazon, and most importantly, the best practices for success as an Amazon seller.
Cameron Yoder:
The first four inaugural episodes of Follow the Data are all part of our Dispelling Myths series in which we explore topics that have garnered a lot of conversation among the Amazon seller community but until recently have not been proven or disproven using factual evidence.
Casey Gauss:
We’ll talk about why these Amazon theories make sense and what the data is saying about what’s actually happening.
Cameron Yoder:
Today we’re talking about diversification. Now there’s this conversation happening among sellers, whether to focus solely on Amazon or whether to diversify and sell on other platforms. We’ve heard a lot of people talk about this at conferences. For example, some sellers are listing their products on eBay or Walmart, Shopify, BigCommerce, Squarespace or other big names that others are talking about. But this is the conversation today. The conversation is whether it’s worth it or not. Casey, you’re passionate about this. Take it away.
Casey Gauss:
Yeah, so I mean it’s pretty much like public knowledge at this point that – or general consensus: Okay, I need to diversify away from Amazon as soon as possible because Amazon is going to ruin my business. And I totally get it, right. So everybody assumes it is like okay, I have a business on Amazon. I have to diversify right away. And there’s just a lot of issues with that. So basically – but I get it, right.
Cameron Yoder:
But why do people think that right away?
Casey Gauss:
Yeah, yeah
Cameron Yoder:
Why is that?
Casey Gauss:
I mean it totally makes sense. At the end of the day if you are amazing at Google PPC and/or Facebook ads and this is just a talent that you have, then it completely makes sense.
Cameron Yoder:
Sure.
Casey Gauss:
And I totally get it, right. So the area of seller that we see this happen the most are the guys that are doing, you know, they hit that million dollar a year mark, or maybe the 1 to like 3, maybe 1 to $5 million a year mark, and then they really, really want to protect what they have.
Cameron Yoder:
You’re saying diversify – like those are a lot of people that you see consider diversifying?
Casey Gauss:
Yeah, yeah, yeah. So once they get to this mark they’re like wow, I really want to protect what I have, and so what is the biggest threat? Well, the biggest threat is that I’m on the Amazon platform. I don’t control the customer, which is a totally valid consideration, right? Those are definitely – I totally see where you’re coming from. But there’s a few issues with that.
So what I typically see happen is that those sellers that try to begin diversifying – one, they’re paying all this money for these courses teaching you how to diversify, which generally don’t work. But the thing is that people forget what got them to that 1 to $5 million a year mark, and what got them to that 1 to $5 million a year mark is launching more products on Amazon and/or really just figuring out that launch process on Amazon. If you’re doing, you know, $2 million a year, you know how to launch products on Amazon. And so how do you go to $4 million? How do you go to $10 million? Well, you just launch more products through that same exact process you’ve already established. The answer is not to go and diversify. Anyways, so –
Cameron Yoder:
Well do you think having – do you think having a presence on these other platforms does contribute to extending your – as other people would say – brand reach?
Casey Gauss:
Yeah, so I think that you should have at the very least a Shopify store. I think that you should go and have – you should have somebody on your team go and list your products on these other platforms. I mean just by happenstance, you know, if you are the only vitamin C serum – which isn’t the case – but if you’re the only vitamin C serum on Walmart, yeah, you’re going to get some traffic.
Cameron Yoder:
Sure.
Casey Gauss:
Right? But you – I don’t think that you should be consid — spending a considerable amount of time on these other platforms. But again, we’ll get into that –
Cameron Yoder:
Sure.
Casey Gauss:
– in a minute. So basically at the high level people want to protect what they have. I totally get it. There’s a lot of gurus that are pushing for people to diversify. We’ll get into that in a minute. But again, you know, if this guru that is, you know, absolutely killing it is telling you that they’re doing this or that you should be doing this, no, you know I totally understand why you think that. And again, logically it makes sense. Okay, I’ve had this success on Amazon. People like my brand or whatever. Brand is in quotes. Then like I will be able to go and replicate this in these other platforms. And the answer is just no. It just doesn’t happen that way. So, yeah.
Cameron Yoder:
Let’s take a look at – so one main aspect of what other people are saying in this argument for diversifying is that a seller can control the buyer experience more, right? So in Amazon – you touched on this at the beginning, but when a seller is on Amazon the control of the buyer experience is not – it’s not that much. You can’t control it as much as you would in your own website, for example. So people, again, are saying, right – and correct me if I’m wrong – but people are saying that oh, my argument for diversifying is that I can control my buyer experience.
Casey Gauss:
Yeah, and I totally get what you’re saying, but my answer to that is, for how many people, right? Oh yeah, you can go and control the conversation for 100 new customers a day.
Cameron Yoder:
Right.
Casey Gauss:
But I’m going to go sell 5000 units a month on Amazon, right?
Cameron Yoder:
Right.
Casey Gauss:
The problem is yeah, you get to control the buyer experience, but for how many people?
Cameron Yoder:
Yeah.
Casey Gauss:
You know what I mean? Like sure you can have control of 100 people a month that are coming and visiting your Shopify store or that you’re paying an insane amount of money to get to your Shopify store or wherever. But I’m going to be on Amazon selling 5000 units a month while you’re selling 100 units a month on Shopify. We’ve seen, you know, we’ve seen this happen so many times where basically sellers, they’re doing really well on Amazon. Again, these are the guys doing that 1 to 5 million, sometimes a little bit more, but then they try to diversify. They try to get into retail, or they try to push heavily into Shopify, and they spend all of their time or a good portion of their time not growing their Amazon business. And so what happens is yeah, maybe you grow revenue by 5% or something, but what we see happen a lot of times is in the meantime their Amazon business starts to lose traction. It starts to lose market share. They get out of tune with what’s working. And they’re just, you know, out of touch. And so competitors just start to pass them by.
So yeah, they started making a little bit extra money on their Shopify store or whatever, but they’ve really started to lose out on their Amazon business. They are trying to avoid the very situation they end up creating, which is they are trying to protect their sales for the long-term by diversifying, and calculating opportunity costs they lose out on sales in the long term.
Cameron Yoder:
Right. Other arguments that people have, which I think there is kind of one main answer and you already touched on it to all of these, a couple reasons that sellers opt into listing on different platforms, there’s a pretty comprehensive list. One is a lower barrier to entry. So again, Walmart is an example. Walmart has a much lower barrier to entry than Amazon. There’s less competition. There’s no monthly fees or startup fees, lower listing or product fees, and you own your own storefront, right? But, but like you said, I feel like all of these arguments can be honestly just like crushed with the fact that all of the traffic is on Amazon.
Casey Gauss:
Yeah, okay. Lower product fees, okay, yeah. I’ll pay – versus paying let’s say it costs $5 to ship my widget and sell on Amazon. But it only costs $1 to sell on Walmart. No, that’s great, but you’re still only selling 100 units. And so –
Cameron Yoder:
But dude, you don’t have a $35 monthly fee.
Casey Gauss:
Those things just don’t make sense. So really I mean we’ve worked with over 5500 brands. I have really good relationships with guys that are doing 100 million a month. Whoa.
Cameron Yoder:
Holy –
Casey Gauss:
100 million a month would be insane.
Cameron Yoder:
I’d like to meet them.
Casey Gauss:
Yeah, me too. 100 million a year, 50 million a year, guys that are doing – plenty of guys that are doing around 20 million a year, and everybody in between, right? And the thing is is I do not know – I’m not aware of any seller that has successfully taken their success on Amazon and then brought or built a considerable revenue stream outside of Amazon from their private label business. Like it just absolutely doesn’t make sense. These guys that have a major $35 million brand, it’s the third-largest brand in their category, in the top-level category: I’m talking cell phones and accessories or beauty or health and household. Like these guys have the third-largest brand by volume, and their sales on their website, they’re spending – they have a huge team, and they’re spending a good amount of money trying to drive those sales on their website. And they’re just not seeing the volume.
So what – you know I have some friends that they do 50 million a year, and they tried pushing on their website, and they realized it just didn’t work. And they saw a dip in revenue when this happened like two years ago. And now they’ve just doubled down on Amazon because they know exactly how to launch products when it comes to Amazon. So they just doubled down on that.
The opportunity is on Amazon, and if you are spending, you know, a week – let’s just say a day. You’re spending a day out of your week trying to build these other sales channels. Well that’s a day a week that you’re not building your Amazon business. And so for every dollar, you know – these are arbitrary numbers, but it’s something like for every dollar you spend building your Amazon business you get $10 back, let’s just say. But for every dollar you spend building your Shopify business you’re getting like $1.50 back. Maybe you’re getting $2.00, but probably not. You know, net net across your Amazon sales in everything you’re seeing maybe $1.05, or you’re seeing $0.95 out of that dollar spent.
And so, you know, I do think that you should diversify. Like I said at the beginning, you know, if you have the team or you have the skill set – if you have the skill set to drive an insane amount of Facebook ads or whatever, yeah, definitely check out that model. But you still need to run the math and calculate: Do I make so much more money when I’m spending that same amount of time and that same amount of money pushing my Amazon brand? Well, then do that. You know, like – and again –
Cameron Yoder:
Keep on going
Casey Gauss:
So the other argument for diversifying is everybody’s afraid of getting banned from the Amazon platform, and now their revenue stream dries up. That’s what these guys that are selling $1 million, $5 million a year, that’s what they’re so afraid of. And the thing is is we’ve worked with 5500 brands, right, and we know of a lot more, of course, right? I only know – we only know of one brand that has actually gotten banned from the platform, and these guys were asking for it. Like these guys had gotten suspended so many times. They just kept doing, you know, whatever it was that was getting them suspended, and they were pushing the envelope in every direction. And you know, eventually Amazon said no, we don’t trust you guys to reinstate you because you’re just going to keep doing this stuff. You guys are banned. You guys are not able to sell on the Amazon platform.
And so at the end of the day, again, thousands and thousands of brands – we’ve definitely seen people get suspended, but they get pushed right back up. And so I don’t know how legit that fear of getting banned is. I understand why you’re afraid, of course. I totally get it. But at the end of the day, how likely is it to happen? Well, according to our sample size –
Cameron Yoder:
Not very.
Casey Gauss:
– one in 5500, which is pretty low. I would like to think that it’s more. And again, the thing is is sure, you can go spend a ton of time trying to diversify. But in reality will you be successful at it? You know, I really doubt it. The data just does not show us in the 5500 brands that we have worked with. That it is likely that you can take your Amazon success and turn it into external success.
Cameron Yoder:
I like to relate, I like to relate this subject to – and Casey, you’ve heard this before – I like to relate this, the idea of diversifying, to the gold rush, right, like the classic American gold rush where once people heard that there was a ton of gold in one place they all rushed to it, right? I feel like Amazon is that source of gold right now. More and more people are starting to hear about it, and not that – I mean there was a limited amount of gold, right, and not that Amazon is going to run out or go out of business or anything, but the game is changing as time goes on.
Casey Gauss:
And it’s getting more difficult.
Cameron Yoder:
And it is getting – it is. It is. The gold has not run out yet at all. If you see this huge mine of gold that you know is there, it’s Amazon, then why would you go to another gold mine, like Walmart or Etsy, that you can’t see the gold? Like sure there’s some benefit there, and there will be benefit in the future. I think, just in terms of taking advantage of the moment, that’s the best thing.
Casey Gauss:
Yeah, you know, I think maybe if you have that 1 to $5 million brand and you have a team, then maybe you can hire somebody that’s great at customer acquisition or digital advertising or whatever. And they can try to build those sales, and you know, they can be compensated accordingly. And you can have them focus on that, but what you need to be focused on is on what you know how to do really well, and that is selling on Amazon.
Cameron Yoder:
Right, right. And opportunity cost, right?
Casey Gauss:
Yes.
Cameron Yoder:
Like it’s going to cost something. If you choose to focus on another platform, it’s going to cost time
Casey Gauss:
Yeah, and again, every minute that you’re spent focused outside of Amazon, a competitor is focused on Amazon, and they’re just going to steal that opportunity or that potential from you down the road. But I think that people are really underestimating the value of the Amazon business right now.
Cameron Yoder:
Yeah, I agree.
Casey Gauss:
I think that time will show us that your brand is actually more valuable than you think. And again, going back to Cam’s comment of reviews being the currency, like this is the way to go. Yeah.
Cameron Yoder:
It is.
Casey Gauss:
So basically to sum everything up, Amazon is huge right now. It’s still growing. It’s supposed to be growing an insane amount. They’re just snagging such a big portion of the e-commerce sales.
Cameron Yoder:
Remember. Remember what got you here, right?
Casey Gauss:
Yeah.
Cameron Yoder:
Remember what got you here and triple down on it.
Casey Gauss:
Right. Yeah. So yeah, basically at the end of the day we don’t know anybody—doesn’t matter if they’re doing 100 million a year, 50 million a year—it doesn’t matter. We don’t know anybody that has successfully gone and diversified. Does it mean it’s not possible? No, it’s definitely possible. But that’s not what’s happening. That’s not where you should be focusing. You need to be focusing on building your Amazon business. Are we biased in saying that? Yes. Is it the truth? Is that what the data is saying? Yes.
Cameron Yoder:
Yes.
Casey Gauss:
Does it make logical sense? No, not really, but it’s the truth.
Cameron Yoder:
Well hey, that is all for this week. Thank you so much for joining us on Follow the Data. For more reliable information about what’s really happening on Amazon subscribe to the podcast and check out the Viral Launch blog at Viral-Launch.com
Casey Gauss:
And don’t forget to leave a review on iTunes if you like the podcast. We really appreciate your feedback. We love, love honest feedback. We love to hear what your thoughts are. And if you enjoyed the podcast and want other people to hear it, please share. Reviews also help other people to understand how good or terrible of a job we’re doing.
Cameron Yoder:
We’ll link to all of the information and sources that we referenced in this episode in today’s blog post. Check out the blog and subscribe to our email list to stay up-to-date on all the latest Amazon updates and best practices.
Casey Gauss:
Want to be featured on the show? Leave us a voicemail and tell us your thoughts on today’s episode, or ask us any of your Amazon questions. Our number is 317-721-6590. Join us next week when we dispel the myth of suspension. Until then, remember, the data is out there.
Cameron Yoder:
Hey! I wanted to let you know about a webinar that Casey and I hosted last night where we made an exciting announcement. We’ve updated our product research tool, Market Intelligence, with a brand new look, easier navigation, and a built-in FBA calculator. If you missed us last night, you can find our announcement and our walkthrough of the tool on our YouTube channel. The calculator feature is super slick, essentially calculating how much it costs to break into a market showing you upfront costs, month expenses, monthly profit, and total profitability.
Market Intelligence offers sellers the most accurate sales estimates in the galaxy and up to 2 years of historic sales data so you can see big market trends like price and overall sales. With the newly integrated FBA calculator, this latest version of Market Intelligence really does have everything that you need to research your next product. Visiti viral-launch.com/newMI to check it out and to start your free trial.
Amazon Enhanced Brand Content (EBC) and A+ Pages are now visible on main product pages on Amazon mobile and the Amazon mobile app for many products.
During the 2016 holiday season, Amazon reported that more than 72 percent of Amazon customers worldwide shopped using a mobile device. Now that Enhanced Brand Content and A+ Pages are available for many products for this massive load of sellers, EBC and A+ may prove to be a key ingredient to increasing conversions.
EBC and A+ on Amazon Mobile
Enhanced Brand Content includes enhanced images and text placements on a product listing. A+ Pages include high quality photos, video, and comparison charts.
Previously, Amazon hid all Enhanced Brand Content and A+ Pages from mobile shoppers. To view the enhanced content on mobile, shoppers needed to click into the Product Description.
Now for many products, Enhanced Brand Content and A+ Pages is showing up just under “Have a question?” as the first “About this item” element. They even show up ahead of the description, features & details. There are still products that require clicking into the description, but Amazon may continue rolling out this feature to all.
For those products with enhanced content showing on the main page, with just a few scrolls on a mobile device, Enhanced Brand Content and A+ pages are available to convince a shopper to buy. This is an awesome opportunity to show off your product in a super simple and visual way to shoppers looking for more information.
Enhanced Brand Content still is not indexed, meaning Amazon does not pull the copy for search queries. So far, we have not seen an incredible uptick in conversion rates with EBC. But according to Amazon, A+ enhanced marketing content “increases sales an average of 3-10% by increasing conversion, SEO relevance, and customer purchase confidence.”
As you’re prepping for the 2017 holiday season, optimizing for mobile is crucial. Shopping on the Amazon mobile app grew by 56% in 2016 from the previous year, and that number will likely only continue to climb.
This addition of EBC and A+ on the main mobile page for tons of products could certainly have a positive impact on how these listings convert on mobile.
How to Get Amazon Enhanced Brand Content or A+ Pages
Enhanced Brand Content is only available for approved brand owners, which requires enrolling in Amazon’sBrand Registry program. Requirements include a registered trademark and product/packaging that carries the registered brand name.
A+ Pages are only available to Amazon Vendors. Vendor Central requires an invitation from Amazon, and Vendor Express allows sellers to sell products directly to Amazon.
The Latest Benefit to Brand Registry
Amazon has been aggressively adding to its Brand Registry program benefits. Notable features of Brand Registry 2.0 include:
Enhanced Brand Content (now on mobile main pages for many products… and Amazon may continue rolling this out)
If you aren’t brand registered yet, it’s time to talk with your lawyer about registering a trademark. We’ve got a good feeling that there is a lot more to come for brand registered sellers.
“Good design is making something intelligible and memorable. Great design is making something memorable and meaningful.” – Dieter Rams
In e-commerce, aesthetics is EVERYTHING!!!
The package and design of your product, packaging, and/or label affect:
Perceived quality of the product.
Perceived prestige of your brand and product.
The potential customer’s emotions towards your product.
The amount customers are willing to pay!!
How easily you are able to catch a prospective customer’s eye, driving them to click into your listing.
The number of customers that visit your website post purchase (key to building your own email list and brand following).
Long Lasting Brand loyalty (future sales)
A quick test
When scrolling through Amazon looking for a castor oil, which are you more likely to click on from a pure design standpoint…
Or perhaps…
Which of the above brands do you perceive as higher quality? Which product seems more likely to produce great results? Which is more likely to catch your eye when scrolling through search results?
You Get What You Pay For
There is a difference between checking off the to-do list on design and design that sells. We’ve watched product after product struggle with design and packaging clearly created by a cheap freelancer. In an attempt to save money and get a product up and running, the seller ends up severely limiting their sales potential by settling for a quick and cheap product/packaging design. The poor quality design quickly sets the perception of the brand as cheap, low-quality, and untrustworthy.
The Keys To Successful Amazon Package And Label Design
Appeal: The most important aspect of a product, package, and/or label’s design is making sure that it is appealing. The more appealing the design, the more it will catch customer’s eyes causing them to click into your listing. The more appealing the design, the more reassured people will feel regarding the satisfaction they will get from buying/using/consuming your product.
Target the Right Demographics: A shampoo and conditioner is likely going to appeal to a different demographic than a crossfit jump rope. Each design is going to require a completely different train of thought including color palette, typography, graphics, and theme. Making sure to produce a design targeted specifically to your target market is important to creating a brand your customers can identify with. This is important to driving sales as well as creating brand loyal customers who are going to buy again and again.
Brand Cohesion: Create designs that accentuate your brand and the story you are using to connect with buyers. If you’re a high quality product, you will use typography, design, and a color palette to illustrates that. If you are a kids brand, you may want to use a bright and lively color palette, typography, and set of designs to show the joy and fun in your brand and that customers will enjoy engaging with your products.
You Can’t Polish A ……
We touched briefly on the importance of Amazon product photography last week here. Photography is crucial to developing a click driving high converting listing. Photography is so important because it allows you to properly show off your product to customers. If your product/packaging design is poor, then there is only so much a good photographer can do. In a lot of cases, you end up having a really good picture of a bad thing.
The Secret Benefit of Controlling Your Design
As the manufacturer of your products, you, not Amazon, reign over the content placed on your product packaging. Packaging and labels are prime real estate / opportunity to provide incentives to drive customers to your website.
Having a group of brand loyal buyers should be a goal of every seller regardless of what e-commerce platform you sell on. The possibilities are endless once you have a group of your own.
Make sure that you are doing this tastefully and without too much intrusion as it can quickly create a poor user experience.
Beat Your Competition To The Punch
Each day the Amazon market becomes more competitive. As competition increases, more and more sellers are finding out just how profitable investing in great design is. As your competitor’s products begin to look better and better, gaining/holding your market share only becomes more difficult. The sooner you invest in a highly appealing product and packaging, the quicker you can grab a hold of the market and the easier it will be to fight off the competition. Succeeding in business is all about finding the competitive advantages. Design is one such advantage!
We Would Love To Help!
Because product aesthetics are so important, we knew we had to start putting together a team that would be able to handle all of your design needs. We’ve been able to build some beautiful click-driving designs for people.
If you don’t decide to upgrade your designs with us, please do yourself, your partners and your customers a favor, and find a talented designer to help you upgrade your brand and take your sales to another level! Remember, as Steve Jobs said, “design is marketing!”
“Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.” – Albert Einstein
Working with thousands of brands across Amazon has been an incredibly insightful journey. We’ve generated over 1,000,000,000 data points and garnered an incredible amount of experience. We’ve worked with thousands of sellers in a wide variety of capacities. Sellers ranging from $100’s/month in revenue to $100m/year in revenue and capacities ranging from simply running promotional giveaways to managing entire accounts. It’s this data and experience we leverage to build insights into the Amazon market and make decisions for our clients and Viral Launch as a company.
How Amazon is Shifting
(I want to first preface with the fact that these insights are largely regarding private label merchants and product manufactures as they comprise approximately 97% of our customer base.)
A few years ago selling on Amazon was easy. If you sourced it, they would come. Meaning, if you threw a product up on Amazon, with little to no work, you could capture a healthy portion of the market. Standing out in the spacewas easy.
Fast-forward to present day and now everyone and their mother is in on the gold rush called Amazon PL. With some search terms having thousands even millions of results (please save yourself a mistake and thousands of dollars and do not get into the cell phone case market), standing out above the competition can be insanely difficult.
Go back to 2014 when simply having your product ranking on page 1, meant you were selling well. Back then what was the trick to ranking page 1 for your keywords? Keyword stuffing your product title, running some decent PPC campaigns and getting a couple of friends and family to buy and review your product. Depending on your market, it could take anywhere from a week to a couple of months to get a product up and selling well.
In late 2014, Viral Launch and other promotional giveaway services came into the market and started to expedite the ranking process by driving high volume sales. At this time landing your product on page 1 almost always meant a major increase in sales. We were literally helping people get rich overnight!
At present day, landing your product on page 1 no longer guarantees a major increase in sales. Has Viral Launch become worse at doing our job? Not at all, we’re actually really good at this and have become more effective as you can read here.
How Viral Launch Fits In
Viral Launch’s job has always been to increase the keyword ranking of your product, which can still do quite easily. By improving ranking, we increase exposure to potential customers and give your product more opportunity to sell. Driving the actual sale depends on a multitude of factors, only you as the seller can control.
We’ve seen it time and again, and more frequently, where a product lands on page 1, but the product does not take off in sales.
We’ve also seen older products and brands watch their sales start to slip and new competition moves in and quickly dominates the market.
Standing out becomes even more difficult when you realize that the majority of your competitor’s products are relatively the same. If you search on Amazon for fish oil, you’ll see 100,000+ search results. Most of those results are relatively the same offering at approximately the same price.
Amazon’s Magic Bullet
So what is the secret magic bullet to getting your product to stand out and sell insane amounts of units? Why were you never able to turn your existing products into successful big earners? Why is competition passing you by? How can I streamline my product launches?
We have the data and experience to tell us exactly what that magic bullet it is.
We’ll give you all the answers tomorrow…(and hint: there is no secret magic bullet..)
“The definition of insanity is doing the same thing over and over again, but expecting different results” – Unknown (not Albert Einstein)
For nearly two years we’ve been helping business owners achieve their dreams by launching their products, brands, and businesses to Amazon’s coveted page one.
It has been an absolutely incredible experience to listen to elated client feedback and see the results of our hard work impact thousands of business owners. We love it. We thrive off of it.
To date we’ve:
Performed over 9,000 product launches
Worked with over 4,000 various products
Built a user base of over 200,000
Aggregated over 1 billion data points on the Amazon marketplace
Helped thousands of business owners reach page one of Amazon search
Been featured on industry leading webinars and podcasts
Have been asked to speak at industry leading events/conferences
Helped a single company reach the $100,000,000/year mark on Amazon!
Learned a ton about Amazon and our clients
Never been more hungry and well equipped to help Amazon sellers take their businesses to the next level!
The figures are great, but we’ve never been completely satisfied.
Why?
Because we aren’t able to help our clients enough!
Of course landing a product on page 1 of the world’s largest e-commerce platform is nothing shy of amazing, but selling well and being successful requires so much more than just ranking for particular search terms. And that is where we want to come alongside our clients to help them achieve new levels of sales and success.
With the incredible amount of data and experience we’ve garnered over the last two years, as well as the team we have assembled, no one is better positioned to help you dramatically increase your sales.
Tomorrow we will talk more about the changes we are seeing in the Amazon market and what steps we believe successful sellers will need to take to stay ahead of the curve.
