Navigating the Amazon Jungle

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If you’re not selling your brand on Amazon, chances are someone else is and that money could be in your pocket. With increasing competition for every SKU, it’s more important than ever to learn how to navigate your business in the Amazon jungle. Ignore it at your peril.

Amazon doesn’t sell what people don’t want. The good news for the naturals industry is that products needing replacement (toilet paper, diapers) sell well online. “Amazon is where you buy, not shop,” says Amazon specialist William Tjernlund, co-founder of Goat Consulting.
“Whether you make money or not, Amazon does,” warned James Thomson, former head of Amazon Services and now a partner at Buy Box Experts. [Listing on Amazon is] like opening a brick and mortar store in the middle of a cornfield.”

In order to win on Amazon, sellers need to focus on profitability. You don’t necessarily make money by selling a lot. If you’re losing money with every product you sell — especially if you sell a lot — you will lose a lot. What matters is how much profit you make per dollar sold.
Throw out the old notions of how to run your business and build a brand if you want to compete.

Amazon knows all. They know which products customers search for. They know who the customers are, what they buy, how many they buy and at what price they buy. While you’d glean this from your own ecommerce site, Amazon’s scale of audience and velocity of change is unparalleled and none of this intelligence is shared with sellers. Amazon does use it to make decisions. While some third-party companies claim to provide useful data, it can’t be validated against the real thing.

Developing a distinct brand and line of products is a necessity. Making people want it, that’s the magic.

Thomson recommends eliminating SKUs with negative cash flow and negotiating costs with wholesalers and suppliers. Fair enough. He also suggests buying top keywords so you appear first on customer searches and over-invest in listings to answer uncertainties a customer may have, before they realize they had them. Excellent photography and video of customers using products are also important.

We live in an experiential society and people expect to be able to search their way to knowledge.

“Hope rarely gets you where you want to go,” says Thomson. “On Amazon you need to buy your way into the game. The reality is 20 – 40% of items sold on Amazon lose money. Invest in eyeballs. And don’t lose money.”

What it costs to rank varies depending on competition for the keyword, just like Google, and can cost 20 cents a click or $6. What you bid on for Google Pay Per Click has no effect on your bids for Amazon PPC. Also, you can’t retarget with Amazon PPC, as you can with Google PPC.

“Amazon is an engineer’s paradise. They hire statistics math nerds not retail buyers,” says Rachel Greer, partner/principal consultant at Cascadia Seller Solutions. Greer helps brands develop new products and brands to sell on Amazon. She also helps existing brands get launched there. The on-boarding experience is not for the tech-averse. Greer says it’s common for a novice to stumble across parts of the platform clearly written and designed for engineers, not creative brand owners and entrepreneurs.

Don’t rely on your sales reps for help. “Reps have social skills but being social doesn’t help at Amazon. Relationships don’t matter here. The company is highly siloed. Someone who works in Marketplace won’t interact with or know about working for Amazon.com Retail Division,” says Greer. Due to company structure, staff move up or turn over every one to two years. There are various types of reps — the most common are brand specialists in Retail, but there are also sales reps for Fulfillment By Amazon (FBA) sellers.

The level of investment Amazon is putting into category expansion, drone delivery and seller marketing tools sets them up to swallow even more business from traditional brick-and-mortar retail, says Nico Cabral, product marketing manager at Tech Armor. He notes the recent Whole Foods Market acquisition could develop into an efficient distribution center for Amazon’s online goods and services.

Here are the basics you need to know.

Calculating Pricing
You can’t control what price Amazon charges when you sell it to them in the Retail division. In the Marketplace, until quite recently, you set your own price.

There are many factors to consider when pricing for Amazon:
• How much you make per product
• Your overhead
• Return rate
• How much it costs to process returns
• Your margin before or after taxes
• The cost of buying keywords and listings

Many brands with retail brick-and-mortar customers create an Amazon-only line to avoid problems.

The Listing
As with any sales and marketing tools, you need to understand your audience before you connect with them. “Explaining the value-adding features of your product in the main imagery and bullet points is key along with creating a title that not only works well for search, but prompts a user to click,” advises Cabral. Facts like size, weight, etc. that don’t relate to the main benefits should not be played up because they use up valuable copy space that can be “hard selling.”

It’s all in the positioning of the product you are selling. Develop a message that resonates with an increasingly jaded audience. Then deliver that message in an entertaining and engaging way that does not compromise the integrity of your product or brand.

Conversion rate is your indicator of success. You get people to Amazon with search terms and that’s the creative, fun part for Greer. Once you get them there, you need to convert them.

Greer considers 25% or better to be an excellent conversion rate. “Conversion rates that would make ecommerce web store managers cry with happiness and relief are considered terrible and an embarrassment on Amazon because people go to Amazon with the intention to buy,” explains Greer. “You need to convince them that YOUR widget is the right widget for their needs. We have one product right now with a 215% conversion rate, because many people are buying more than one unit of the product who land on the page.”

Most of Amazon’s marketing tools are now available on Marketplace. Those tools include storefronts. “You want to have great copy on your storefront and great lifestyle photos with saturated bright colors. Alternate between video and pictures,” suggests Greer. “People shop based on feelings not specs so your bullets better clearly show what problems you solve.”

Dermarose 100% Organic Oil tells a strong story about its Skin Revitalizer on Amazon in this format. http://amzn.to/2yhWI5d

“You don’t get to see who looked at your page, just the overall rates of conversion,” said Greer. “If Amazon.com is the Seller on the Marketplace, they control their own listings, you can make suggestions but they ultimately control the listings. If you’re a brand-registered seller, you control your own listings. Amazon will only interfere if you’re breaking the rules and someone reports you. You can see customer information, but you’re not supposed to market to them. In fact, you can’t even download the full address.”

Any products with regulatory requirements are subject to document review at any time — so, for example, Amazon could ask you for your Certificates of Analysis on supplements to sell in the category, or as part of an “appeal” if someone complains about your product and you have to prove it’s safe. Same for food, and other regulated products such as baby care items or medical devices.

Anecdotally, we’ve heard of no one who has been asked to produce this information.

Discoverability
Just because you list it doesn’t mean anyone will see it. You want to create demand for the product, not hope that people will want it, so plenty of work comes before you even put the product on Amazon.

“Now is the time to leverage third-party influencers to increase sales velocity and garner reviews,” says Cabral. It takes time to get those third-party endorsements from journalists, bloggers, Instagrammers, celebrities, experts and ambassadors.

In fact, it can take 7 to 11 times longer for someone to hear something they haven’t heard before so the discoverability campaign is something that should be started at least 6 months out and run year-round.

Hovering
When a product starts to make money on Amazon, you need to up your game. The Amazon environment is volatile, warns Cabral. Amazon algorithm changes come often — and often without warning. You also need to be aware of market trends and cultural shifts. Always be nurturing your brand awareness to increase demand. This is how fads turn into trends. Fads start fast, are all over, and then disappear.  It’s profitable to piggyback on a fad but it’s more lucrative to nurture a trend which develops over time, has roots, sprouts up everywhere and has non-stop growth and durability.

Prime
You can’t navigate Amazon without understanding Prime.

Recent estimates put the number of Prime subscribers at 90 million globally. If your competition is there, you need to be there. The Prime customer is more likely to buy if they see the “Prime” badge.

“Before you jump in, run a profit analysis on your products and see if you’re willing to absorb the fees from this program. Depending on the category, you could be handing Amazon 30% of your revenue, so make sure it’s worth your while,” says Cabral.

Greer crunches the numbers for Prime. “If you’re doing Retail, you can be giving Amazon 30-60% of the sale, depending on your price arrangement. For FBA, a standard account gives 15% for the “Referral fee” then whatever the cost of shipping is, which can be very small or quite a large percentage of the sale, depending on your list price and the weight and dimensions of your packaging. If you ship something yourself, you only pay Amazon 15%. Exclusive sellers pay an additional 5% (20% total referral fee), and certain categories have lower fees, such as some parts of Grocery costing 8% right now.

Search
According to Cabral’s expertise, the A9 algorithm (Amazon search) is a very powerful, but secretive beast that takes into account your listing text and bullets (search terms), along with recent sales velocity, listing conversion rate, image count and reviews. It weighs all these factors together across its vast network of products to arrive at a final, ordered list that is presented to users.

Ratings can make or break your product listing on Amazon, so it’s vital to acquire as many positive reviews as possible and prevent negative exposure.

“PR and social media are how you get people to click. Once they click you get ranked for specific keywords. The search results are set up by keywords, not product. This is hard for people who are used to traditional retail to grasp. It’s not good enough for people to know your brand, you need to increase your rank on your search terms,” Cabral adds.

Endorsements
People buy what people want. People want what other people tell them about. They want what makes them feel good. The third-party endorsement is the most valuable asset on Amazon. In business today, it’s not what you say about your company that counts, it’s what others say that leads to sales.

When you see a product on the Today show, read about it on Refinery29, notice it’s been on the O List or shows up in your Instagram feed — that’s when you start to believe you really need it. If you already have it, it reinforces your appreciation for it and makes you want to share your experience with it, too.

Thompson works with large brands trying to perfect their Amazon game. He knows from experience that most searches start by category and food does well on the platform, especially items with repeat purchases.

“There are over 400 million products on Amazon,” he says.  “You need to be prepared and give it time.”

“Having a solid external to Amazon PR strategy along with well optimized pages and strategic keyword bids for your ads is the trifecta for success on Amazon, “offered Greer. “When customers search for your brand specifically along with the product name, such as “[brand name] facial cream,” you rank both for your brand name and ‘facial cream’ so that future customers who just search for ‘facial cream’ are now more likely to see you. So PR helps you on Amazon, and since so many people start their search for products on Amazon, Amazon helps you get known to new customers, too.”

Cheat Sheet to Amazon’s Inner Lingo
“Anyone who’s been on the inside at Amazon admits they have their own quirky language and ideas and they are encouraged to invent more,” explains Greer.

Seller Central vs. Vendor Central. This is the most critical thing to understand about Amazon. Vendors are first-party vendors, which means selling items in bulk to Amazon and Amazon can sell under its own brand name to customers. It will have a description that reads “shipped and sold by Amazon.” Sellers are a third-party vendor. You can use Amazon to ship for you or ship yourself.

You can either sell to Amazon’s retail division, which then sells under the seller name “Amazon.com” on the Amazon Marketplace, or you can sell directly on the Amazon Marketplace yourself, under your own seller name. Amazon created the marketplace and made itself just another seller on it more than 15 years ago, as an alternative to eBay’s auctions model for sellers. Instead of every seller having their own page, on Amazon you have a “single detail page” which everyone has to share.

Buy Box. Whichever seller is winning the buy box will get the sale. This is important for retailers selling popular products. It rotates based on price and seller rating and can change based on who is searching.

Storefront. A brand website, internal to Amazon, where a brand can tell the same kind of story as is expected on a website.

FBA. An acronym for “Fulfillment by Amazon,” FBA is a third-party logistics (3PL) provider. This gets rid of all your shipping and logistics headaches but gives Amazon full control over your inventory and returns. Make sure your SVA global button is turned off by default if you are not labeled to sell internationally.

Sell on Amazon Business. Here you can sell in bulk or at wholesale to other businesses that have purchasing departments. If you sell natural supplies to retailers and wholesalers, consider a store here.

Subscribe & Save. Customers can sign up to receive your products on a regular basis. It automatically creates an order. “What’s great about subscription services is that people forget about them and you have a repeat sale without acquiring a new customer,” says Greer.

Associates. This is affiliate marketing often used by media outlets, bloggers and other influencers. They can link back to Amazon and get a cut of the sale. Brand owners with a media portion on their website can also benefit from selling other products there.

Prime Day. Amazon’s own national sales holiday, like Black Friday or Cyber Monday, customers are combing Amazon for bargains. Greer has a check list for Prime Day. 1) Make sure you are listed for any Lightning deals you can afford and that are applicable. 2) Advertise on all of your products. 3) Optimize your primary image and title. Think of them as a searched advertisement.

Woot. An Amazon subsidiary that sells fun, trendy and on-point items that are a little more quirky. WF

Nancy Trent is a writer and speaker, a lifelong health advocate, a globe-trotting trend watcher and the founder and president of Trent & Company, a New York-based marketing communications firm with an office in Los Angeles. Trent & Company grew out of Nancy’s personal commitment to helping people live longer and healthier lives. A former journalist for New York magazine, Nancy has written seven books on healthy lifestyles, serves on the editorial boards of several magazines and travels around the world speaking at conferences and trade shows on trends in the marketplace. She is a recognized expert in PR with more than 30 years of experience creating and managing highly successful campaigns. Nancy can be reached at (212) 966-0024 or through e-mail at nancy@trentandcompany.com. You may also visit www.trentandcompany.com.

Published in WholeFoods Magazine December 2017

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