Amazon is the world's leading online retailer, boasting over $500 billion (£411 billion) in sales annually. As a brand looking to take advantage of this massive audience, there are several aspects you should consider when planning your Amazon selling strategy.
It only takes a few missteps to encounter significant problems as a brand selling on Amazon. So it's essential to develop a comprehensive plan that takes into account your products, target audience, and advertising budget.
With a well-executed strategy, you can protect profit margins and scale as the platform grows.
With that in mind, let's take a look at some of the most significant profitability killers for brands looking to succeed on Amazon.
#1: Unauthorised Sellers
Lax controls on your distribution channels can cause all kinds of issues for your product lines currently selling on Amazon.
While it's tempting to think your job is done after selling to a distributor, that's a very dangerous assumption. So-called “grey” stock can end up in the hands of unauthorised sellers, presenting several problems for your brand.
From short-dated, non-compliant stock, to improper storage before sale, branded products ending up in the hands of unauthorised sellers cause all kinds of issues for your brand reputation and profitability. When stock ends up in the wrong hands and appears online, you end up with products being sold as though they are the same as yours – when they’re anything but.
Those sellers who aren’t interested in adhering to your policies and brand reputation guidelines will take shortcuts to maximise their profitability at the expense of yours. In short, these unauthorised sellers are happy to drive a race to the bottom on price.
A common example is squashing packaging down so it fits into a letterbox to reduce delivery costs – delivering terrible brand experience that the customer will associate with your brand, not the specific Amazon seller.
As a brand, you might be totally unaware of these practices. Thus, it’s vital to be vigilant with your distribution channels and continuously monitor listings attributed to your products to minise damage caused by unauthorised sellers.
#2: Low Quality Listings - Low Conversion
We don't need to tell you that the world's biggest online marketplace is fiercely competitive especially in Healthcare. Today's consumers are incredibly picky and are increasingly weary of listings with missing information, little by way of pictures, and low-quality product descriptions.
Put yourself in the shoes of your customer. If you encounter one listing for an SKU that has high-quality images, an explainer video, excellent bullet points, and a full and thorough product description versus another for the same SKU with a single image, no video, incomplete bullet points, and a sparse product description, which listing would you choose?
The customer is going to think exactly the same way. While you know you're the authentic brand, you're losing the sale to the other sellers (authorised or otherwise) providing a better listing experience.
#3: Tired Amazon Advertising Strategy
Let's make no mistake; a well-executed Amazon advertising strategy can be extremely profitable.
However, a poor, ineffective strategy will erode your profit. Common mistakes include trying manual ad campaigns rather than harnessing the power of Amazon's in-built AI tools, failing to investigate ad performance, and not adjusting your strategy once the data starts to show that it's not working.
Amazon advertising is a constantly evolving landscape. You cannot simply "set and forget." It should be an activity that you and your team spend considerable time on, constantly monitoring performance and making adjustments as needed.
Failing to do so will result in an underwhelming return on investment and reduced profitability.
Maintaining Amazon Profitability is a Constant Process
While the above areas are the usual suspects when it comes to undermining profitability, it's essential to point out that it's a constant process. Making strides in the above-mentioned areas will no doubt lead to increased protection for your brand's profitability on the platform. Still, it's important to be constantly vigilant and make adjustments as needed.
Unauthorised sellers can pop up when you least expect it, new competitors can derail your previously successful ad campaigns, and even Amazon's own algorithms can change with little warning.
At World Products, we help brands ensure their Amazon sales channel is profitable and sustainable through our proprietary Protect, Deliver, and Grow methodology.
To learn more about how we can help your brand succeed on Amazon, book an Amazon Growth Audit with a member of our team today.
