As Amazon’s yearly performance continues to skyrocket, brands must develop new measures to keep up with increasing marketplace demands and evolving conditions. Recently, Amazon has placed limitations and prices on 3P seller services, and paid media and customer acquisition costs have risen both on and off the platform. All of this is compounded by inventory shortages, which hamper advertising efforts, decrease conversions, and compromise overall brand success.
So what trends can you observe from Amazon’s 2022 season, and how can you prepare for what lies ahead?
Amazon’s growth fluctuated throughout 2022, with peak performance observed during Prime Day and the Q4 holidays. The platform experienced an overall sales growth of 20% from the previous year, mainly attributed to fruitful Prime Day deals. Comparably, holiday sales increased by 19% year-over-year. On the business side, Amazon’s 1P sellers grew by only 7% during the holidays, whereas 3P vendors saw a staggering 28% growth rate.
While these KPIs seem to indicate success on the platform and profitable opportunities for brands, conversion rates and advertising performance experienced major setbacks. While traffic increased by 20-30% yearly, conversion rates decreased by over 14%, and click-through rates and cost-per-click declined by 8% and 14%, respectively. These measurements resulted from inventory shortages and suppressions at the end of the year, causing brands to redistribute their ad spend in a short time span.
How has this data affected brand performance in 2022?
Brands that incorporated holiday promotions into their advertising budgets observed greater exposure off Amazon, leading to higher conversion rates. Likewise, businesses who monitored their inventory and product SKUs during the December shortage could withdraw their ad spend and promotions before depletion, thereby increasing ROAS.
With 3P seller central becoming increasingly prevalent, Amazon is placing restrictions on inventory and restructuring capacity. This means that brands can view both their capacity for the month and the estimated capacity for the near future. While this appears to enhance inventory planning and replenishment for the holiday season, sellers must bid for additional space, so profitability and sales remain uncertain in 2023.
Following 2022’s reduced advertising performance, budgets are projected to increase by 25%. Nicole Reich, Co-founder and VP of Marketing and Sales at Retail Bloom, attributes this inflation to a “need for omnichannel reports and insights, meaning that as people continue to invest in digital ad spend, they want to understand where those ad dollars are going and what’s impacting the ROI.” These data-driven decisions on ad spending are essential to offset the costs of 3P seller services and drive conversions.
3P seller conditions and ad spend allocations are major factors influencing brand profitability, so driving traffic from other marketplaces is paramount to success. One way to accomplish this is through Amazon Ads. Some of these ads — like sponsored display videos — allow you to promote your brand both on and off Amazon by targeting various products, categories, or audiences and expanding your reach.
For a more data-driven approach, you can analyze your performance on Amazon, develop KPIs for targeting consumers on different platforms, and measure the resulting ROI. Regardless of your chosen method, consider how each performance metric impacts your budget and structure it accordingly to streamline success.
When the pandemic hit, Amazon brands across categories saw a huge drop in sales. The following year, sales skyrocketed as the world adjusted and people rapidly embraced online shopping. Now, brands in the fashion and apparel categories are seeing conversion rates go up by 29% compared to the previous year. However, there are still common challenges restricting apparel brands from reaching their full potential.
So, what are the best ways fashion and apparel brands can improve their Amazon strategy and drive growth?
The first step to optimizing content is planning out your strategy. You need to think about what will make the biggest difference in sales conversions. Nicole Reich of Retail Bloom suggests starting with product availability and profitability: segment your evergreen, seasonal, and discontinued products, and arrange them from highest to lowest margins. From there, you can focus your strategy on products with high retail value, which will most likely be your evergreen products.
Next, ensure you’re in the right category. Execute a competitor analysis to see which top-level category you should be in. Why is this step important? Sometimes, Amazon will place you in a category that doesn’t make sense, which could significantly impact your ranking on Amazon.
Once these steps are complete, you can begin implementing your content optimizations. Take those high-profit products and optimize for SEO, back-end attributions and subcategories, imagery and video, and product merges.
According to Nicole, product merges may be the most useful hack. “You don't want it to be overwhelming, where you just merge everything,” Nicole says, “but there is a lot of opportunity to look at your catalog as a whole and start to decide how you want to merge like products.”
NYDJ, one of Retail Bloom’s clients, is a large brand in the women’s denim category. In their Amazon listings, they have a specific style of pants called the “Sherry.” Within this style, they have slim, cropped, and flare jeans, among other variations. NYDJ had different product detail pages for each style variation, which led to fewer ratings and challenges with new styles and colors getting buried.
So, Retail Bloom took all of these evergreen variations and merged them together, placing them on one product page with different thumbnails so that consumers can easily browse other style variations. This product merge boosted views overnight for all of the Sherry products and improved product rankings overall.
Brands should make it a priority to refresh advertisements and creative assets consistently. Look at SEO and keyword trends to help you set up ad groups and campaigns. Additionally, you should update campaigns by season and use branded terms to promote new product launches.
If you want to increase ROI, sponsor display campaigns are the way to go. DSP has specific KPIs and can be expensive, but sponsor display campaigns give you the ability to target on or off Amazon, get creative with lifestyle imagery, and work with products that have many variations.
Fulfillment options can be tough with various SKUs and outliers. What do you do with products that don’t make sense for FBA?
Retail Bloom’s local selling and buy online and pick up in store (BOPIS) tools can help. The BOPIS tool is great for brands who don’t want to be on Amazon for fear that they’ll drive traffic away from their brick-and-mortar store. With this tool, brands can generate traffic on Amazon but still direct consumers to physical stores.
Available for both 1P and 3P brands, the local selling option gives brands the ability to set up one-day or two-day delivery options by region. Sellers can leverage their own delivery trucks or 3P carriers. This is a great solution for getting your entire catalog live without putting all products in FBA.
Taking on these tasks alone is a lot of work. That’s why Retail Bloom is providing tools like these to help brands plan, scale, and improve the customer experience.
The online marketplace is becoming a staple for brands to present and sell their products. But what does it take to secure your brand’s products and presence online? How can you combat violations from unauthorized sellers?
Your brand registry establishes the requirements, rights, and advertising guidelines for your products. Without this, your brand does not have a legal foundation, which means that unauthorized rogue sellers can soil your brand presence, hurt the consumer experience, and lower your product prices. This damages your brand’s revenue and margin.
By being in control of your brand registry, you can designate entities and authorized sellers — and maintain a consistent brand presentation in the online marketplace. Andy Buss of Retail Bloom says that having good brand protection in place can reduce the risk of counterfeit products being sold and secure your brand’s presence online.
This gives you the control to partner with sellers who will elevate your brand in the marketplace.
Many brands are plagued by unauthorized sellers. Without the proper policies and protection in place, the door is open for rogue dealers to violate your products. Karen Palmquist, the National Sales Manager at Stormy Kromer, says a lack of policies also makes it difficult to hold unsanctioned sellers accountable. So how can you remedy the situation?
By creating and implementing a checks and balances policy, your brand can begin to build the foundation blocks of a legal foundation. To accomplish and formalize this, you should implement software that focuses on visibility, is fully customizable, and can easily track and monitor all the different methods sellers use to market products.
Andy Buss says that you should implement a tool that can look beyond marketplaces to all the retail websites that are selling your products and deliver actionable market data. Once you can identify the problem, you can create the solution.
Dealing with problems that plague your brand’s online presence can feel like a never-ending burden. Even with protection, unauthorized sellers can still appear. When asking nicely doesn’t work, what are the next steps to effectively handle these disruptive sellers?
Once you have brand security in place, you can begin to create an effective enforcement process. Disruptive sellers that are plaguing your product and brand's buy box need to be identified and removed to eliminate the problem — but many brands are unaware of how to remove unauthorized sellers.
According to Andy Buss, most sellers will cease their infringement with a request, but sometimes it is necessary to escalate the situation to a cease and desist order. Additionally, running a full-service program that tracks the brand’s day-to-day operations and enforcement platforms is crucial for identifying, preventing, and stopping unwanted situations.
Is your brand still reeling from last year’s supply chain issues, hiring challenges, and rising product costs? To help you eliminate these obstacles and achieve your goals in 2022, we’re reviewing valuable lessons from Q4 and taking note of the trends, updates, and opportunities that are on the horizon for the year ahead.
For brands across categories, 2021’s holiday season was dampened by ongoing inventory issues due to the pandemic. With worries about stock levels and shipping delays, consumers started their shopping earlier in the season — creating a rise in traffic on Thanksgiving Day and Black Friday. Cost-Per-Click (CPC) shot up a whopping 38% during Thanksgiving for sponsored products, while ad spend declined on Cyber Monday for the first time ever.
So what does this mean for you? Ultimately, Q4 showed signs of optimism with consumer spending on the rise, but smaller brands still had to be savvy when budgeting for their sponsored product ads. If you want to break through all of the fierce competition on the Amazon marketplace and make the most of your advertising budget in 2022, it may be time to adjust your approach.
While many of the same obstacles from 2021 are predicted to persist in the new year — from supply chain issues to increasing advertising costs — there are some new and notable opportunities that eCommerce brands should be taking advantage of.
To start, Ben Ryan Schwartz from Pacvue suggests keeping your eye on shoppable video, which would allow clickable ads directly in your videos. He also notes the benefits of Amazon’s new and improved display capabilities — including updated audience targeting for Amazon DSP — and different fulfillment models, from brick-and-mortar to click-and-collect.
As Amazon and eCommerce advertising continues to evolve, the question remains: how do you leverage these updates and opportunities for your unique brand? According to Nicole Reich of Retail Bloom, the first step to determining how much to spend on advertising is to identify your strategy. Whether you want to drive awareness, expand your audience, or focus on profitability, there are different campaigns for each goal.
As Nicole says, to create winning (and on-budget) campaigns, you have to align your advertising budget and goals with your overall Amazon strategy and sales. She advises taking your approach to the next level by reviewing benchmarks in your category, understanding which campaigns and keywords connect with your goals, and maxing out the bottom of your funnel before moving up.
