THE ADVANCEMENT OF AMAZON AND ITS IMPACT ON ECOMMERCE RETAILERS

THE ADVANCEMENT OF AMAZON AND ITS IMPACT ON ECOMMERCE RETAILERS

Friday, October 17, 2014Global Administrator

Amazon, an innovative powerhouse whose brand is recognized globally, has become the largest online eCommerce retailer, accounting for approximately 23% of all online purchases made by consumers. The eCommerce icon has experienced continued growth and has opened doors for several other online retailers to follow in its footsteps. On September 30th, ChannelAdvisor held a webinar, in which their Amazon experts, Rachel Miller and Gina DeFrank, discussed the recent advancements of Amazon and their effect on online eCommerce retailers. Below are the highlights from the webinar.

Programs Offered by Amazon

Amazon offers two main programs that have proven to be a great success in helping eCommerce businesses grow. They include:

1. Amazon Prime

Amazon Prime was launched in 2005, offering customers free two-day shipping on millions of items, unlimited instant streaming of over 41,000 movie & TV episodes and over 350,000 Kindle Titles to borrow for free. Over the years, members of Amazon Prime have grown significantly from 30 to 40 million in the U.S. and 40 to 50 million globally. On average, Amazon Prime members have been spending 2.3 times more on Amazon purchases each year, compared to non-members. For users who are attracted to special incentives, Amazon has been encouraging a slower shipping method (FREE no-rush shipping) to its Prime members by offering them incentives. Recently, they changed the incentive to include a $1 credit that can be applied to buy books or eBooks.

2. Fulfillment by Amazon (FBA)

FBA is a highly recognized program offered by Amazon, helping businesses worldwide. How does the program work you ask? It’s actually quite simple! Businesses store their products in one of Amazon’s fulfillment centres and Amazon takes care of packing, shipping and providing customer service for these products. It’s a fast and easy process!

Mobile & Social Aspect of Amazon

On July 2014, Amazon launched its Amazon Fire smartphone. It has a distinctive recognition feature, known as the Firefly, that helps users scan and identify products such as books, songs, movies, etc. Users can then find the product on Amazon for a lesser price and purchase the item directly from the phone.

An effective strategy that Amazon has implemented is the usage of hashtags on Twitter. They created two hashtags – #AmazonCart and #AmazonWishList. They both work in the same way by allowing users to tweet or retweet a mention of an Amazon product, including either of those hashtags. These items are then dropped into your Amazon shopping cart for purchase. Retailers, whose products are found on Amazon, are using these hashtags to promote their products on Twitter. It’s a pretty neat concept!

Advertising Products using Amazon

As mentioned in the webinar, retailers can choose from three opportunities to promote their products on Amazon:

1. Product Ads

This option allows you to upload product information onto Amazon. Once shoppers click on the ad, they are redirected to the landing page on your website, where they may purchase the product. All you have to pay is a cost-per-click (CPC) fee every time a shopper clicks on the ad. By using Product Ads, businesses benefit from increased web traffic to their website and highly targeted placements.

2. Sponsored Products

This is similar to creating website content for search engine optimization. You upload product info and enter keywords. Once the targeted keyword is searched, the ad is displayed and shoppers are taken to the detailed page where the offer is listed. Similar to the Product Ads, you pay a CPC fee.

3. Sponsored Links

By using this advertising opportunity, ads for external sites that relate to the product or content being searched are placed on the page.

What does this mean for eCommerce Retailers?

You may be wondering how these programs assist eCommerce retailers in progressing their business. As mentioned previously, the Amazon Prime members are growing at a substantial rate and they consist of loyal and active shoppers who are accustomed to fast, free shipping, not only from Amazon, but even when purchasing from other sites. Consequently, you may want to think about offering free shipping and/or low or no cost, fast shipping, if you don’t do so already in order to attract the Prime members and appeal to new customers. Additionally, FBA is a great way to access Prime members and you may want to identify products that you can sell using FBA – theAmazon Selling Coach is a great place to start for suggestions.

We all know that the usage of mobile devices and social media is on the rise. Retailers who aren’t using these outlets are losing out significantly. It is becoming increasingly more important that your products are seen by on-the-go shoppers. As well, if your target market for your products is the millennial age group, it’s a great way to reach this market as they are highly tech-savvy! If you don’t already have a presence on Twitter, now is the time to create an account and develop a strategy. For those who do have an account, continue to promote yourself and gain followers. As well, promote your products that are on Amazon and incorporate the hashtags!

Lastly, by promoting on Amazon, new opportunities are available to be visible to more shoppers and to participate in the daily deals that take place. As well, it allows more traffic to be directed to your own webstore.

The recent and preceding advancements have taken Amazon to new heights. It will be interesting to see how Amazon continues to innovate within the eCommerce market and create new opportunities for everyone!

We would like to thank our industry partner, ChannelAdvisor, for putting together such a great webinar. For additional insights on Amazon view the on-demand recording here.