To embrace Amazon or soldier on?

After much hype and anticipation, Amazon has officially launched in Australia. In the spotlight, predictions that the international retail juggernaut will undercut local prices by 30% this Christmas and beyond.

Early reports suggest Australian consumers have been slightly underwhelmed with Amazon’s prices and range, leading to retailers breathing a sigh of relief. Despite this, Amazon labelled the Australian launch as a big success, claiming its day one orders in our market were bigger than in any other launch in its history.

So, is Amazon going to transform the Australian retail market? Only time will tell.

The big question facing Aussie retailers is... How will this affect your business?

TO UNDERSTAND THIS, LET’S DEMYSTIFY AMAZON.

Amazon is a platform for local businesses to reach and sell to customers.  It operates as a search engine, with its own algorithms, searches and therefore, SEO.  ‘Sellers’ on Amazon have options surrounding how they would like to sell, either through individual or professional plans, to sell on the Amazon Marketplace, or be a Fulfillment by Amazon (FBA) supplier.

For consumers, Amazon is the opportunity to access a versatile 24/7 marketplace at their fingertips – a complete retail solution.  It offers a wide range of products, fast/free shipping, detailed product reviews and low prices. 

As with all search engines, Amazon’s goal is to optimise the buying experience for their consumers. Having lived in the US for six years and been an avid Amazon user, I can confirm the above.

So, what does this mean?..

AUSTRALIAN RETAILERS MUST DECIDE. FIGHT OR FLIGHT?

As a retailer, you really have two options. Embrace Amazon. Or don’t.  To understand which tactic is right for your business, we need to go back to the basics of marketing with one simple question.

Where are your consumers looking?

Consider your product lines. Are/will consumers turn to Amazon to buy them? Australian shoppers have been eagerly awaiting Amazon’s launch, and from other countries we know the expansive range of baby items, electronics, toys, and clothing (just to name a few) are hugely popular.

(For more detailed look at the huge range of categories, visit Amazon Sellers Categories here.)

For many of retailers, a large portion of the consumer base will be turning to Amazon as an initial search of call, even during this early period of ironing out the kinks and build the network.   

TAKE ADVANTAGE OF AMAZONS SLOW START.

One of Amazon’s most powerful critical success factors is social proofing through customer reviews. The sooner you start utilising Amazon and take advantage of the current lack of product depth, the more potential reviews you can generate.

Not only will this start building trust in your brand, reviews are also a strong influence on Amazon product rankings. Gaining a competitive advantage before your competitors establish themselves on the platform can be hugely beneficial in the long term.

SO HOW DO YOU SELL ON AMAZON?

IF you’re going to dive into Amazon head first, the next intimidating challenge is HOW will you do it. At this stage, for people who are committed to business growth, the question is not, “Is this feasible for my business?” but, rather... “How do I make selling on Amazon feasible for my business?”

Your critical success factors, questions, problems are going to be very dependent on the ins and outs of your business operations. However, there are a few important things to consider and do to get started:

1. Revisit categories and decide what you will sell

Amazon has a huge list of seller’s categories. It is worth having a look and seeing what current conditions and approval there may be for your chosen categories.

Amazon Professional or Individual Plan.png

2. Research and choose the best-selling plan for you.

Most retailers will be suited to a Professional Plan. Find all the info on Amazon Plans here.

3. Decide if you are going to Sell on Amazon or be a Fulfilment by Amazon (FBA) supplier.

Selling on Amazon means you utilise Amazon as a platform for selling and are in control of shipping your products. When acting as a FBA you store your products in Amazon's fulfillment centres and Amazon packs and ships them. This is a preferable and scalable method when you have substantial inventory.

4. Be mindful of this when selling on Amazon

You might have guessed it, but the biggest downside to Amazon is it’s pricing. It is known for its low prices (even if this hasn’t fully eventuated in Australia yet), so you may need to revisit your prices and make sure they are competitive in the Amazon marketplace but can still turnover a profit. 

So how much of your pie is amazon taking? It can be a bit confusing as they charge per item or subscription depending on your plan with a referral fee and variable closing fee.  The variable closing fee is dependant on your products category, so it is worth considering your specific categories and prices.

5. Optimise for Amazon

Like all search engines Amazon has its own algorithm, to rank and show products to consumers. Important notes:

  • The title has the most impact. According to Amazon, it should contain:  Brand, Product Line, Material or Key Feature, Product Type, Colour, Size and Packaging/Quantity. Follow the order of priority of keywords for each product.
  • Include common variations to your keywords in backend search terms. Amazon works more closely with exact matches, so consider common variations and potential ‘long-tailed keywords’ and include them in your backend search terms.
  • Bullet points indirectly impact your product’s SEO by strongly influencing conversion rate and product relevance. Bullets should include the important features and benefits of your products.
  • Product description again indirectly impacts a product’s SEO. Keywords should be utilised in a description which speaks to people’s desires/need for the product with a strong call-to-action.

Will you be embracing Amazon or has the retail juggernaut scared you away?