It began as an online bookseller way back in 1995 by a relatively unknown by the name of Jeff Bezos. Bezos believed there was a lucrative future for those marketing and selling products over the internet. Today, Amazon is the most recognized name in ecommerce with revenues exceeding $470 billion in 2021.
Amazon e-book sales still account for as much as 85 percent of all e-book sales worldwide, but the online platform has grown to sell more than 564 million products to 300 million active Amazon users who make 2.45 billion monthly visits to the Amazon website. Over 51 percent of Amazon sales are made through third-party retailers who compete for 90 percent of the world’s consumers. With so much competition, optimizing marketing strategies and tactics are critical for achieving sustained profitability.
For new entrants, establishing fundamental marketing strategies and tactics before entering the race for consumers is important. Create high-quality photos, engaging videos, and strong, authentic content for a targeted audience. Focus on differentiating the brand from the competition by establishing an effective and competitive pricing policy with an emphasis on service ranking, sales fulfillment, velocity, and inventory. Choose identifying keywords that drive potential consumers to your product listings by matching a prospective shopper’s interest and purchase intent.
Amazon’s ad revenue last year topped $31 billion, more than triple the 2018 revenue. Advertising has become an increasingly profitable element in Amazon’s overall profitability because third-party sellers know that developing an effective Amazon ad campaign is critical for success. Internal Amazon ads will also help generate improved organic placement and favorable rankings, but sellers should not limit consumer outreach to internal Amazon advertising.
Attracting traffic from other online social media sites like Google and Facebook will enhance marketing efforts. Amazon’s Brand Referral Program will pay commissions for a seller’s efforts to attract off-Amazon platforms and earn higher organic listings for your products. The goal of third-party sellers is to become profitable by optimizing advertising and marketing spend, earn potential consumers’ trust, and build confidence in the brand.
While third-party sellers generate half of Amazon’s sales, just 17 percent are profitable. As more sellers enter the ecommerce marketplace that is expected to trend downward. Amazon collects seller fees of 15 percent of sales and a 10 percent fulfillment fee. Advertising can cost an additional 15 percent of a seller’s revenue, so optimizing marketing costs is essential to achieving profitability and success in the online marketplace.