No matter where you go for facts and figures, whether independent research houses, online platforms themselves, or marketing agencies, there is consensus that while the world is navigating a difficult period, e-commerce is going to continue growing at breakneck speed. Emarketer’s Global Ecommerce Forecast for 2021 expected worldwide e-commerce sales to hit 4,921 trillion in 2021, estimating growth beyond 5,5 trillion for 2022.
It’s common knowledge that brands wanting to reach the biggest audiences internationally in such a rapidly growing industry must venture into the world of Amazon at some point. Successful brands and vendors have enjoyed massive success on the platform for many years. However, let’s call a spade a spade: There is a huge misconception out there that just because it’s the biggest marketplace in the world, all a brand needs to do is get onto it and the rest is plain sailing.
In order to succeed, a brand must take its A-game to Amazon to make a difference and then keep adapting that game plan to maintain momentum. To be blunt, if you want to succeed on Amazon you must be neurotic and a stickler for detail, and have the perseverance to stick to it for nothing short of 12 months to build your presence, get reviews, build sales velocity and climb the organic and paid ranking ladder. In other words, you must build momentum on the famous, but not widely understood, Amazon flywheel.
The flywheel has gained notoriety over the years as Amazon’s way of using its algorithm to leverage customer experience to drive sales velocity. The flywheel is made up of various elements that are weighted differently by the algorithm, and one must get each slice of the pie right in order to overcome inertia and start building perpetual momentum on the flywheel.
The core concept of how the flywheel works haven’t changed and will always remain true to its fundamentals. However, as the platform matures, what has changed is that there is less flexibility and leeway on how to drive the flywheel. Over the years, people have come up with tactics, tricks, and shortcuts to work the algorithm in their favour, whereas now there is far less leeway as the algorithm has become refined.
At the end of 2021, Amazon changed the algorithm again, but rather than being an entirely new version, it’s more of an update of the existing algorithm. Some in the industry are calling it version 10, but it’s not an official release.
Optimising on Amazon
Whenever Amazon makes updates or releases new versions of its algorithm, it doesn’t explain how to optimise your listing, which is achieved through studying how the algorithm is weighted, the ecosystem as a whole and what is and isn’t working to create a pre-launch, launch and post-launch strategy. When attempting to sell on Amazon you need to stimulate the algorithm to notice that you’re there, and then proactively work on building your ranking to speed up the flywheel and keep it going.
180 day sales velocity and conversion rate
The biggest change in the algorithm from version nine is the 32% weighting on the 180-day sales velocity. This is directly targeted at the best-seller rank or BSR. Just below this, in terms of weighting, but almost equally important, is the conversion rate: of all the traffic actually visiting your page, how many convert and buy products?
Everything else still matters and makes up about a third of the weighting, if only worth around 6% each, and is crucial to stimulating the algorithm to get moving.
You simply must optimise the rest too
Your clickthrough rate
Pay-per-click and paid conversion rate
Your prime offering
In other words, the first is your seller rating and your Amazon rating, which are based on your reviews and fulfillment of orders, among other things. The Click-through rate is also there, so your strategy must try to get this as high as possible. Pay-per-click (PPC) advertising and the ever-more-expensive bidding on keywords, and their relevance, are crucial, too, because beyond bringing this paid traffic to your page, you will also be measured on your paid conversion rate. Another consideration is your prime offering – do you have one? How do you set up product line variations? As is evident, there is a lot of work to fight for that 30% of the algorithm, but it is non-negotiable if you’re to get the flywheel moving and start building momentum towards your BSR and conversion rate.
So why the new changes, and what can you do about it?
You’re incentivised to bring traffic to Amazon
It is evident that Amazon is incentivising brands to bring traffic onto the Amazon ecosystem that would not ordinarily be there. So, creating Facebook and Google advertisements and building landing pages – that tell potential customers more about the wonderful product – is crucial. The importance of this goes beyond merely “finding people”. There are certain topical terms that are banned on Amazon but allowed on Google and Facebook, and your agency will help you get around this instead of being blocked by Amazon bots.
Get your variations right
The other reason for the changes is that Amazon is clamping down on various strategies and tactics that people have employed that aren’t what Amazon wants to occur. An example of this is how brands use variations. We always recommend that clients have strong variation structures because the Amazon sales rank is calculated off a variation as a whole and not just of individual listings. This is a legitimate way to fast-track the flywheel and get yourself an accelerated starting point. This is what Amazon wants.
What many companies did before was create illegitimate variations of products that didn’t fit well together. If a product used to be a bestseller but is less relevant now, companies would add them to the variation structures to try to hijack that ranking. However, despite the higher volume, it meant they ended up with a lower converting page. To counter this, Amazon has put a premium on conversion.
Stay on the right side of the bots from the outset
There are similar nuances and strategies to fast-track reviews legitimately within the framework of the new algorithm, meaning brands would do well to take the time and seek counsel because as with all things on Amazon, if you get it wrong and become blocked by a machine, the admin to try affect positive change can be daunting, to say the least.
Ultimately, brands make more margin on their direct-to-consumer sites such as Shopify or their WordPress e-commerce sites. On Amazon, fees are roughly in the region of 30% for a seller and a bit less for a vendor. The only time you will get human interaction is when, as a vendor, you are negotiating the structure of the terms and margins of your listing. It’s crucial here to work with the right expertise because an army of bots will shut down anything that looks like a price increase. Navigating this needs hard work and very careful phrasing to get to human interaction. It’s better to get the terms right at the outset.
Develop a hawk-eye for detail
Ultimately, the message is clear. Amazon is the right place to reach the biggest audience for your product. However, what’s made Amazon the biggest marketplace in the world is also what makes it a complicated playing ground for brands and vendors. It’s crucial to approach every phase of an Amazon adventure, from pre-launch, to launch, to post-launch, with as much real-time and relevant expertise as possible, combined with a hawk-eye approach to detail. The detail matters very much to drive the Amazon flywheel.