Amazon CPG Digest - 07.13.2024

Author

Irina Balyurko
July 13, 2024

Cadences of a well run Amazon business

Business fundamentals do not get enough credit into a recipe of a profitable, growing Amazon channel.

Since it’s a complex, highly technical platform, it is understandable that we would gloss over the fact that brands need to run a business that happens to be on Amazon channel, rather than manage many technical functions that Amazon requires, and chase Amazon-centric metrics of success in isolation from the business’ bigger picture.

Communication and consistency are on of such fundamentals: a lot of success rests on it, yet it is taken for granted, or not systematized enough.

Yet it’s one of those areas where you fall to the level of your systems, rather than rise to the level of your gals

Cadences of a well run Amazon business is my take of placing business-centric systems for your Amazon channel.

Full article here.

Need help with Amazon? I help brands with planning, strategy, channel management, revenue and profitability optimization of Amazon channel. Schedule an intro conversation here

Roundup of Amazon News

Jungle Scout Q2 Consumer Trends Report gives a pulse on online shoppers sentiment in the the US. Highlights:

  • Most popular stores shopped:

    • online: Amazon (53%), Walmart (32%), Temu (18%)

    • in-store: Walmart (53%), Target (25%), Home Depot (25%)

  • Top economic concern: rising inflation has affected spending (84% of surveyed consumers)

  • Where do consumers start online searches: Amazon (55%), social media (45%)

  • Most popular social media engine for online searches: YouTube (are you surprised it’s not TikTok?)

  • What influences shopping on Amazon: lowest price (71%), ratings and reviews (66%), Prime shipping (62%), reviews that contain photos or videos (61%)

This is a signficant access upgrade to Amazon’s already favorable welcome of Chinese sellers to the platform. And it will shake up competition stack again this fall. But more importantly, it’s a big shift of Amazon’s focus on FBA as an advantage, to be still the online store for all, but it the current version of rising fulfillment costs (‘cost to serve’), and competition of Temu, Shein, and TikTok Shop

  • Amazon's New Competitor: Amazon will launch a competitor to Temu, Shein, and AliExpress, featuring low-priced items shipped directly from China.

  • New Marketplace Section: This new section will be part of the Amazon app and website, offering low-priced, slow-shipping items directly from Chinese warehouses.

  • Product Range: The marketplace will include unbranded fashion, home goods, and daily necessities priced under $20 and weighing less than one pound.

  • Fulfillment: Unlike the current Fulfillment by Amazon (FBA) model, the new marketplace will ship items from Amazon’s warehouses in China directly to U.S. shoppers, with delivery times of 9-11 days

How and whom it will impact

  • North American brands that less brand story, and price being the biggest competitive advantage

  • Low-price, low-cost products - Direct-from-China model WILL push weak branding, heavily dependent on Amazon only, low price and low cost Amazon businesses

  • Ironically, items that are less e-commerce friendly (perishables, heavy, custom) will be less impacted

  • Brands with channel diversification (other marketplaces, retail, wholesale, their own DTC) will be impacted less

  • I have said for years: Amazon is a distribution channel, it’s not a business. Amazon only, FBA businesses will be the most vulnerable to Direct-from-China Amazon marketplace

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Amazon Prime Day Reminders

In the last edition I did a full breakdown of Prime Day planning. You can find that here

Amazon temporarily doubles maximum bid adjustments to 100% for Prime Day (instead of usual 50%). That means, during Prime Day maximum bid for $1 bid will be $2.  

Amazon released Prime Day keyword targetting - take advantage of that

As in the past, other e-tailers feel pressured to run their own version of Prime Day. Here are some key ones, completed and planned:

  • TikTok “Deals for You Days” starts July 9

  • “Walmart Deals” July 9th-July 11th

  • Best Buy’s “Black Friday in July” July 15-17

  • Target’s “Circle Week” July 7th - July 13th

  • Temu “Temu Week” July 12- July 19th

  • Amazon “Prime Day” is July 16 and 17

Lastly, for CPG Prime Day is important, but not critical to the full year success. So if you don’t feel quite prepared, don’t feel FOMO. Focus on what you can do best, and the basics: being in stock, monitor your pages, and ad budgets.

Need help with Amazon and DTC marketplaces? I help brands with planning, strategy, channel management, revenue and profitability optimization of their online marketplaces. Schedule an intro conversation here

Saludos,

Irina