Amazon is by far the largest online store in the world. In most countries, Amazon accounts for a large share of overall online transactions. The Amazon marketplace allows outside sellers easy access to its vast potential. The question remains how to become a successful Amazon seller? How can I increase my sales on Amazon?
How can I increase my sales on Amazon?
The answer to this is that it is not very simple, but it is not that difficult either. It’s obvious that you can become a successful seller on Amazon only if your sell-through rate is high. We’ll start with the basics of selling on Amazon to provide a clearer picture. To do this, let’s look at a typical purchase process on Amazon. It explains the factors that determine the success of selling a product. We will then look at the adjustment strategies available to Amazon sellers to positively impact the success factors. Some of these very critical factors must be grasped in a timely manner.
Two decisive success factors for an Amazon sales strategy are good positioning of products with relevant keywords and share of cart. For some products, keyword ranking is more relevant, while for others, having a shopping cart
Sellers have more opportunities to improve the ranking of their products. Also gain ownership of the shopping cart by lowering the price.
Search, Click, Buy – Amazon’s Buying Process
To understand Amazon’s success factors, we’ll look at the buying process from the user’s perspective. This helps in understanding the relevant decision steps for deciding on or targeting a product. Through these decision steps, sellers must ensure that users choose their products.
The buying process for an Amazon business strategy consists of three simple steps. A user searches for a specific product, they click on some products, and eventually buy one of them.
1) Search
The purchasing process usually begins with a search on Amazon. The user enters a search term ("keyword") in the search field and clicks Search. Amazon will then show the user a list of all products that match the requested keywords. Product categories are in line with what Amazon considers relevance. There are 16 products per page in the user's search results. By clicking, the user arrives at the next search results page where the next 16 products are displayed.
2) Click
As a second step, the user clicks on the product that arouses his interest. These are the products he wants more information on. Extensive studies of click behavior on search engines show that over 90% of users only look at the first page of results. Therefore, the further back you list a product, the less likely it is that a user will see and click on it. You cannot buy a product without clicking on it. To be successful on Amazon, a product must rank as high as possible in relevant search terms.
3) Purchase
Once a user clicks on a product, he or she will be transferred from the search results page to the product page. There he can find more information about the product and its characteristics. But the most important thing is that he also bought the product on the product page! Since many sellers can sell the same product at different prices, the question arises as to which seller the user will buy from. In principle, the user can click further to display a list of all sellers and offers in order to make his own selection. According to research, 85% of users purchase from merchants who are automatically placed in Amazon’s shopping cart (“Buybox”). Therefore, to be successful on Amazon, sellers must be the ones pre-selected in the shopping cart.
In summary, the user decides (in the second step) which product he wants to buy. In the third step (buy), he decides from which seller to buy. From the analysis of the purchase process, a seller maximizes his sales on Amazon when his products appear in the top positions for all relevant search terms and he always appears in the buy box.
Amazon's two core success factors
1) Product ranking for related keywords
2) Own the Buybox
To increase sales, sellers must optimize these two success factors, namely, optimize ranking and optimize ownership of the "Buy Box".
Ranking optimization and Buy Box optimization are different for each product
However, an important aspect of optimization is that ranking optimization or Buy Box optimization is often different for different products. Only in special cases can sellers in a product optimize ranking and buy box. The optimization of a product depends on the type of product. All products on Amazon fall into these two categories.
Own products/private label (only one seller): ranking optimization
If it is your own product or a private label product (i.e. the product has only one seller), search ranking optimization is the focus. For in-house products, sellers usually have sovereignty over product titles, product descriptions, product information, and product images – a prerequisite for ranking optimization. Buy Box optimization is redundant, after all, there are no other sellers. Ranking optimization will increase sales of your own Amazon products.
Third-party products (at least two vendors): Buybox optimization
For third-party products (i.e. products with at least 2 sellers), the focus is on buy box optimization. Of course, sellers can also actively optimize the rankings of third-party product-related keywords. However, the problem is that sellers – if they do not have ASIN priority – have no control over product display (title, description, etc.). This makes optimization less predictable. Additionally, sellers often don’t take the extra effort and optimize rankings just to get another seller into the buy box and get an extra sale.
An exception to this rule are, for example, products of (known) brands. Brand manufacturers should also be ranked optimized, even next to other sellers. Finally, they also benefit from sales through middlemen.
So it is clear that the correct classification of products into two product types is very important for optimization. For own products/private brands, clicks will be improved through better rankings. For third-party products, merchants should gain more purchases from existing clicks by having a buy box.
Typically, sellers have products of both product types in their product line. However, many sellers focus on products in a specific product type. For example, if a shoe manufacturer sells his own brand of shoes and other shoe accessories from other brands, then ranking optimization for his own shoes may be the focus. If a wholesaler has 20,000 electronics products in his assortment, including 50 that he has exclusive marketing rights for, then the focus is on optimizing for the Buy Box.
What are the adjustment factors for sellers to optimize Amazon product ranking and buy box?
After sellers have significantly increased sales of their own products by optimizing the buy box and ranking and selling third-party products, they will have the following questions:
What can I do to optimize my product ranking or increase my ownership of the buybox?
The following section describes all the set points that merchants can influence on Amazon. Contrary to widespread belief, there is apparently more to adjusting screws than price. Unfortunately, the myth has been erroneously spread among merchants that Amazon “optimization” means price reduction. This is not true. (Note: Which adjustment screw must be changed in order to optimize rankings, or the buy box is determined by several factors.)
Price, variety and shopping experience determine Amazon's profits
Sellers actively use set screws to increase their own success, which can be inferred from the priorities set by Amazon. For every successful transaction, Amazon receives a variable seller fee of 7-20% of the sale.
Amazon's profit = sales x seller fee
Sales again consist of the quantity purchased and the purchase price.
Amazon profit = (purchase quantity x price) x merchant fee
The amount purchased depends on many factors, but Amazon mainly influences purchases through two main factors. The first factor is scope. If a user wants to buy a product and doesn’t find it on Amazon, then no transaction can take place and Amazon gets no revenue from seller fees. The larger the scope, the more transactions Amazon and Amazon have, and the more profitable it will be.
The second factor includes several sub-factors, but for simplicity, we summarize it as shopping experience. This includes, in particular, shipping conditions (duration and cost), product presentation (images, descriptions…), redemption conditions, comfort (no new accounts), user-friendliness (reviews), customer service (reaction time), etc.
If the user has already set up an account, and enters the store where the product is displayed in detail, the product is delivered within a day, no complications, fast customer-friendly interactions and more providing a very high shopping experience to the customers. If you compare this store with one that displays products without pictures and descriptions, where users have to register extensively, where the products arrive only 2 weeks later and then cannot be returned, it should be clear which store customers are more willing to buy from. In the short term, a positive shopping experience leads to more purchases and in the long term increases customer loyalty, which leads to more purchases.
For Amazon to make money, this means:
Amazon profit = [(scope shopping experience) x price] x merchant fee
Amazon is interested in the fact that the set screw is optimally adjusted because Amazon maximizes its profits. It is those adjustment screws that are also crucial for the success of a seller on Amazon and his store and should therefore be set as perfectly as possible. A successful store not only looks great to retailers, but it also looks great on Amazon. For this reason, Amazon rewards sellers who use the aforementioned screws through their underlying algorithms in keyword ranking and the buy box.
Sellers can optimize not only price, but also range and shopping experience
For sellers, aside from price, they have two bigger settings they can use to increase their sales on Amazon.
Long Tail
With a unique collection that is not yet listed on Amazon, sellers will automatically enjoy good rankings with relevant keywords. If a retailer is the only one offering rare Ming vase, then he will rank first for the search term "rare Ming vase". Also, he will automatically have the buy box since there are no other sellers for this product. With good scope, competition can be reduced or circumvented. However, if one is in direct competition, the shopping experience and price are the deciding factors.
Shopping Experience
Not all elements of the shopping experience are in the control of the seller. For example, sellers have no influence on the checkout process or user-friendliness. However, sellers have a clear influence on other elements of the shopping experience. In particular, product presentation, shipping conditions and customer service fall within the scope of the seller. Since Amazon itself profits from a good shopping experience, it will reward retailers for their efforts to improve that experience accordingly.
price
Many retailers believe that in order to rank higher on Amazon, they must lower their prices. This is not true. Nor is the best product deal the best deal for the keyword in question, nor is it always the one that offers the best price in the buy box.
This can be explained with the help of Amazon’s profit function: the lower the price, the less profit Amazon makes. Of course, the high price leads users to either not buy at all or buy from cheaper competitors. Therefore, Amazon must find the right balance between price and quantity in the market. The balance means making the price that Amazon pays the most as high as possible, while being low enough that Amazon doesn’t damage its reputation as a price leader and demotivates users and gives its competitors an advantage. An important point for sellers is that Amazon doesn’t always win the best price, but can also raise prices to increase sales.
in conclusion:
Sellers looking to increase their Amazon sales depend on two factors for success. Depending on the type of product (self-made/private label or third-party product), good positioning for relevant keywords or possession of the buy box is very important. To influence Amazon conversion rates, Amazon sellers can use the following factors:
Shopping Experience
Product introduction (title, description, product information, reviews, pictures...)
Delivery terms (shipping, duration, use of FBA)
Customer service (e.g. response times to customer requests)
Price
On all of these factors, optimization can be done proactively and purposefully to optimize for ranking or to optimize for the buy box.
