In 2020, there is nothing more important in ecommerce than Amazon. If you’re an Amazon Seller, keeping up with Amazon trends is vital. The pace of change and the number of new introductions to Amazon Marketplace and Advertising even seems to be increasing. Some of the changes will impact the way you work now; others will create new and exciting opportunities.
Right now, we are obviously in a period of great global uncertainty. Some Sellers have been hit with such high demand that products have gone out of stock (leading to shipment limits), and some Sellers have even been temporarily locked out of FBA. How evolving trends will impact Amazon is a developing situation that is changing on a week-by-week basis.
What we have put together here is a list of far more certain and long-term trends that we believe will impact Amazon Sellers this year and for years to come.
1. The power of video
Video is no longer just one piece of an overall marketing plan. It's central to outreach and campaign efforts. It’s estimated that the average person will spend 84 minutes every day watching online videos in 2020. It’s also clear that video marketing is effective. According to a report from HubSpot Research, more than 50% of consumers want to see videos from brands — more than any other type of content. Amazon first launched video as an ad option in 2019, and you can expect to see a lot more video in search results in 2020.
US-based Sellers enrolled in Brand Registry can already engage with customers in real-time and drive sales using interactive livestreams with Amazon Live. Customers can now follow brands that stream on Amazon Live, allowing Sellers to connect directly with customers about their products and brands, and build an audience on Amazon.
It appears that Amazon has evolved its Video in Search beta which began in 2018 and was priced at $35,000 to a pay per click Sponsored Brands video service.
Sponsored Brands video is intended to help ads stand out in desktop and mobile shopping results. Ads are keyword targeted, cost-per-click, and link customers directly to the product detail page. It is also currently in beta and is supported on iOS and Android.
2. Brand building and off-Amazon advertising
Amazon's share of global digital ad spend will grow to 8% by 2023, from 3% last year.
In the early days, most advertisers looked on Amazon as a direct response type vehicle, due to Sponsored Products typically being the first format used. Marketers are now moving to take advantage of the brand-building potential of Amazon.
Amazon has become the first stop for many consumers looking to buy a product, so a search and resulting display ad could drive sales elsewhere.
Not only do Amazon ads attract advertisers whose products are sold on Amazon, research indicates that 70% to 90% of the impact from Amazon display ads drive non-Amazon sales.
One of the key tools, also in beta, which will see the increase in ad spend on more awareness and consideration advertising is Amazon Attribution. By measuring the impact of non-Amazon Advertising media such as search ads, social ads, display ads, video ads, and email marketing, advertisers will be able to explore and refine which audience strategies increase the performance of individual campaigns.
Watch out for Amazon offering more social opportunities. Amazon Posts will help shoppers discover new products and see what’s new from brands by browsing feeds of brand-curated content. It can help you get new products off the ground.
By adding “Posts” to your product launch checklist, you can deliver your news to new and existing customers. This feature can offer more exposure, not just to your new products, but existing ones as well. If you have products that have not seen much traffic or have low sales velocity, creating Posts can help customers rediscover — and buy them.
3. Clampdown on fakes
If there is one trend to be sure of for Amazon in 2020, it’s that Amazon’s quest to end fake reviews, fake listings and bad products will go on.
Lawsuits and public options have laser-focused Amazon on better policing how Sellers interact with the platform. For example, Amazon’s ongoing push to incentivize Sellers to join its Brand Registry by limiting access to certain ad types (Sponsored Brand ad, for example) and analytics tools (Amazon Brand Analytics) to registered brands is part of this ongoing trend.
A focus on removing fake reviews isn’t new either. Amazon’s terms-of-service change of October 2016 first prevented Sellers from sending incentivized products in exchange for review. Now it continues to update its terms of service to maintain the fight.
Without much fanfare, Amazon introduced one-tap ratings for product reviews late last year, making it possible for shoppers to provide a star rating without needing to write a review to accompany it.
The change has already led to an increase in overall customer feedback with new products generating feedback sooner. This is a welcome change for new product launches, as Amazon’s algorithms always favored historical performance and led to a chicken and egg approach of not being higher in the ratings due to lack of reviews — and not having more reviews because you weren’t higher in the ratings.
There is also the hope that with a significant increase in authentic ratings, it will make it harder for fake reviews to break through the noise. However, the downside of this for Sellers is that Amazon is restricting direct contact with customers even more.
4. Increased sharing of data by Amazon
US Federal Trade Commission Chairman Joseph Simons recently hinted that regulators could come to a decision on one or more antitrust probes of large tech companies in 2020. If regulators find evidence that Amazon engaged in anti-competitive practices and file a federal complaint, the company could face enforcement actions ranging from new regulations to an order to split up assets.
If a federal case is filed this year, the more likely legal remedy would not be a breakup — more a change of behavior. The court could, for example, require Amazon to give third-party retailers more period of notice before changing a policy or order the company to put up “Chinese walls” to prevent business units from communicating.
More likely, to head off any claim of bias, we expect to see more examples of Amazon offering its data for free to third party Sellers via its Marketplace Web Services (MWS) platform. Amazon recently announced it had launched more than 225 tools and services in 2019 to help third-party Sellers. It’s claiming these tools and services were part of a more than $15 billion global investment in third-party Seller success last year.
Using the right analytics tools, improved data access already allows Sellers to better understand buyer behavior, personas and total customer value — delivering a far more detailed analysis than standard keyword and bid pricing analytics. The influx of data access means Sellers need to take analytics more seriously than ever in 2020 and look beyond standard Amazon tools to third-party vendors in order to capitalize on this change.
5. Increased competition
The equivalent of 2,975 new Sellers join Amazon every day. Currently, there is a scramble to take advantage of global uncertainty when it comes to particular products. However, the unethical elements of this are likely to fade away over the coming months — and we would certainly encourage your brand to focus on the quality products attached to your brand. It’s worth noting that most of the biggest Sellers joined Amazon years ago, and despite increasing competition, are still at the top.
The figures are impressive or possibly daunting. Feedvisor predicts that:
- 72% of brands will be on Amazon in the next five years: 54% of brands are already on the platform.
- 44% of companies selling on Amazon earn more than half of their total e-commerce sales on the site — the attraction is obvious.
- 32% of brands on the platform report that sales on the site make more than three quarters of their total online sales on Amazon.
What this shows is that being on Amazon gives brands great selling potential. As more Sellers join Amazon, we expect to see fiercer competition for ad placements. That is going to mean potentially higher cost-per-click (CPC).
Amazon will probably devise more creative ways to contain the growing demand for advertisers with more advertising opportunities, but they can only go so far. Customers are already starting to be frustrated by the number of sponsored ads in search results, so they are limited on what they can do and still call themselves a customer-centric company.
6. Improved third-party analytics tools bringing clarity to customer data
As the number of suppliers continues to grow, the opportunity for organic ranking in search will keep shrinking. The returns will go to those who can best understand the data and combine the increasing number of Amazon ad offerings into a cohesive marketing strategy.
Brand decisions will have to stem from a deep understanding of Amazon customers; how their preferences change over time and how their behavior evolves with their preferences. The purchase funnel is a journey, using analytics will be the only way to better understand Amazon customer shopping behavior.
2020 will see systems capable of not just managing ad bidding and keywords but altering target audience and content based on the demographics, situation, interests and buying intent. Data will portray what the ideal customer looks like and enable you to spend the optimum amount of money to reach that customer.
Expect Amazon to keep rolling out tools, ad types, and inventory in 2020: expect more sophisticated AI and machine learning based tools to be available to turn the output of these data and tools into amazing insight.
Towards the future
There are areas that seem ripe for the picking in the coming years that we haven’t touched on.
Globally, online sales of food and beverages are predicted to expand — growing to 15%-20% of the market, a 10x jump from 2016. Amazon and Walmart are both fighting for the top spot.
The impact of voice search will be another interesting area, especially give the privacy and regulatory scrutiny Amazon is under. Voice services, such as Amazon Alexa, have to be watched carefully if you are an Amazon Seller as they are becoming the bridges for consumers to buy into other Amazon services.
We can also expect Amazon to dip its toe into business real estate across different industries and sectors – including bricks-and-mortar retail and health services. By noting these trends, and being in a position to exploit them, you will be well placed to ride on the great Amazon wave for 2020 and beyond.