DTC Retail logo 400x400

Feed the Amazon Algorithm and Your Brand will be Rewarded

Amazon marketplace experts Daven Brodess and David Brodess of DTC Retail share essential tips to maximize sales on your Amazon site.

Amazon is by far America’s biggest online marketplace. It’s roughly 5x the size of eBay and 30x the size of Walmart.com, Esty and Wish combined. But tales of rouge sellers, excessive fees, and a capricious, all-powerful Amazon algorithm abound online and in corporate marketing departments, causing many brands to be wary of selling on Amazon. That said, we all know that “show-rooming” (the practice of checking Amazon pricing and reviews while in a retail store) exists and that the social proof provided by good reviews on Amazon can be a superpower for category-leading products.

Amazon’s leading role in America’s e-commerce ecosystem is undeniable. How does a brand utilize the Amazon platform to perform its magic so that it benefits rather than irritates? So that it supports brand voice and objectives? So that it supports multi-channel distribution? Today we discuss five key drivers of success on Amazon in practical ways that can be benchmarked against your current practices or utilized when you launch new products or brands.

Conversion is King

People often wonder why their products aren’t “showing up” higher in search results, what it takes to get on “page 1”, or why competitor products are being advertised against their own products so prevalently. The answer is usually driven by Amazon thinking that these other products are a better fit for shoppers. At its core, Amazon’s goal is to sell more products and build its customer base. For this reason, the platform and algorithms that drive search and discoverability of products are—above all—built for volume and sales. In practice, this means that Amazon tends to highlight products that have high conversion rates, a track record of historical sales, and good reviews.

While every financial advisor will be quick to remind you that “past performance is not indicative of future results”, on Amazon it’s a big part of it. The “trick” is to convince Amazon that your products will convert better and are more worthy of a page view than a competitor’s product. To do this necessitates having strong detail page content that effectively communicates key product and brand messages, an overall offer—including price and shipping speeds—that is competitive relative to the competition on Amazon, and a history of reviews and social proof that provide backing to the veracity of all the above.  Small improvements matter and tend to be exponential, such that an item converting at 15 percent will get a multiple of more sales than the same item converting at 10 percent.

All of this begs the question: how do you do this?

Write Human-Focused Content

Getting the right keywords associated with a product through copy and catalog data is important as this provides signals and tells the Amazon index what a product is and what it’s about, thus increasing discoverability and traffic. But, a word of caution, some sellers take this to the extreme by agonizing and cramming in every possible keyword and keyphrase that is related to their product into their copy with hopes of impressing the Amazon algorithm. It’s important to keep in mind that the ultimate consumer of the copy on your page is a human and that keyword stuffing and the like can make copy difficult to read, increase bounce rates, and erode brand trust by looking unprofessional.

The best and highest converting product copy tends to focus on product benefits and selling points, and is structured so shoppers can easily scan and understand the information they need to make a purchase decision, while also including a collection of keywords for the Amazon machine. Put yourself in the customer’s shoes and make sure your titles, bullets, product descriptions, and images address common questions and friction points. If your detail page gives customers the information they need, the product will convert better, and you’ll have happier customers since they know what they are getting—that also means less customer service issues and better reviews. That’s good algo food.

Prime Is A Must (Usually)

Everyone knows that shoppers like low prices and fast delivery, so don’t bring a knife to a gun fight and try to get away with “seller fulfilling” the leading items for your brand. Over 50 percent of sales on Amazon go to Prime shoppers, of which there are 95 million in the U.S. And Prime members spend 3x more than non-Prime members. Using Amazon’s FBA (Fulfillment by Amazon) ensures you automatically get all your items available for fast, free shipping to all of those customers.

Because Amazon knows for sure that they can fulfill FBA orders on-time and cheaply, it sends your pages more traffic. FBA will usually increase conversion over Seller Fulfillment (even Seller fulfilled Prime) by 2 to 4x, and FBA is usually cheaper than Seller Fulfillment once all costs are included. So, 1) more traffic, to 2) higher spending consumers, who 3) convert better, and have a 4) better, more predictable customer experience, at 5) lower cost. Sounds like a no-brainer.

What kind of items may not be a good fit for Amazon FBA?

  1. Large, slow-moving items; they may be subject to storage fees.
  2. Items with special shipping requirements or handling instructions, like HAZMAT items.
  3. Long-tail items that may sell few each year.
  4. Items that do not ship in one carton.
  5. Made-to-order or one-of-a-kind items.

Keep the Channel Clean

Why are there other offers for your brand’s products? Well, you probably sell your products into a multi-channel environment. Customers buy them from your website, from TV offers, from live shopping, and from retailers across the country. You may use distributors or re-sellers in some of those channels.

As an open marketplace, Amazon allows (virtually) anyone (company or person) to list any product no matter where they may have gotten it and Amazon doesn’t recognize “authorized distribution agreements” or “MAP” prices. So those policies and enforcements must be handled by you. There are tools, such as Amazon’s Brand Registry program, that are pretty effective for removing sellers or offers that are infringing registered trademarks (selling other items by using your TM in their listing), or sellers that are misrepresenting “used” or “refurbished” items as “new”, but Amazon won’t help you to remove other sellers of your product that bought them in other channels.

Given this, winning Amazon’s “Buy Box” (Amazon’s term for the first offer on display for any given item) is a critical component of driving and capturing sales on the platform. Over 98 percent of sales for a given product flow to the seller and offer that is in the Buy Box, and many advertising and promotional levers only trigger when the Buy Box is being won. While there is no published algorithm on who will get the Buy Box for a product, the formula is based on price, shipping speed, and seller performance metrics. Consequently, having good channel control is imperative for brands that are selling on Amazon since without it, the Buy Box, and thus marketing programs, and ultimately sales, will suffer. The most successful brands typically have Buy Box rates at or above 98 percent as this is a result of efficient channel sales policies.

Three critical questions that brand owners need to answer to ensure that they have the highest Buy Box winning rate are:

  1. Should we stop selling products to online re-sellers who then re-sell on Amazon?
  2. Are we setting wholesale pricing and promotions so that they don’t encourage bulk orders which can be broken down and sold on Amazon?
  3. Are we willing to discontinue selling to distributors whose accounts break MAP or sell on Amazon?

The answers to these questions are brand specific, but the key is to make sure you are thinking about them methodically.

Stay in Stock

Out of stock = zero sales. But going out of stock also infuriates the Amazon algorithm. Products and brands that experience out of stock positions on a regular basis are penalized by showing up lower in search results and getting less traffic. That compounds over time to reduce sales growth even if reviews and conversion rates are good.

Too many brands try to run too tight on inventory in order to save on Amazon FBA storage fees. We find that many times this is a “penny wise, pound foolish” mentality. Think about it this way: if you run out of stock on one of your better selling items for even just a few days over the course of an entire year, you can easily lose all the “savings” you made in storage fees.

We have three inventory “rules” to live by:

  1. Keep about six weeks of sales worth of inventory of each product on hand at Amazon at all times.
  2. Plan in advance: know your holidays and seasonal events and make sure there’s plenty of inventory in place so that you can take advantage of special opportunities as they arise.
  3. Expect the unexpected! There will ALWAYS be trucking delays, warehouse issues, missed pickups, and Amazon receiving issues. Don’t require perfection for your business to operate.

Inventory planning and management may be the most boring subject in this article, but it’s probably the most important.

Bonus: Stay Current with Amazon Updates and Changes

Amazon is a high-competition marketplace where market dynamics shift quickly. Amazon continually releases updates to their policies and rolls out new advertising and marketing levers. It’s critical to pay attention to these changes and updates to ensure that your brand is positioned strongly to take advantage of new opportunities, and so you don’t get caught flat-footed. Prudent sellers pay attention and keep informed by reading Amazon announcements and emails, and by consistently engaging with the broader ecommerce and marketing community.

About the author: Daven Brodess, Co-founder & Managing Partner of DTC Retail, LLC, works with brands to navigate the e-commerce landscape (with a special emphasis on Amazon in the USA and around the world), make better decisions, and grow sales and profit through consultation, manufacturers representation, and active campaign management. Prior to DTC Retail, he worked 5 years at Amazon across a variety of marketing, category management, and supply chain roles. A graduate of The University of Notre Dame with a B.A. in Economics, Daven earned his MBA at the University of Western Australia. Contact Daven at: [email protected].

David Brodess, Co-founder & Partner of DTC Retail, LLC., has 30+ years experience starting, growing and leading direct-to-consumer businesses in the USA, Europe and Asia. David works with DTC Retail’s clients to make data-driven decisions that spur growth and increase ROI on Amazon, other e-commerce and traditional retail channels. David has an A.B. in Economics from Princeton and an MBA from NYU. Contact David at: [email protected].

DTC Retail brings years of experience in manufacturing and retailing products through Amazon, HSN, QVC, Facebook, Branded Websites, and more. Having grown brands from inception to category leaders at +$1 billion in sales and customers all around the globe, we understand the retail landscape and can help you succeed. Learn more at: www.DTCRetail.com.

import vat

New VAT EU rules on imports starting July 01, 2021

VAT (Value Added Tax) rules on online sales are going to change on July 1st, 2021. Be sure to consider the following changes when making a purchase online from a seller based outside the EU like e.g. China because it will impact the final cost of your products.

Option 1
You will pay duty and VAT on your imports into the EU

The VAT exemption for imports valued of up to 22 EUR will no longer be valid.

Till July 1st, 2021 if you purchase a product of a value of up to 22 EUR, you don’t pay import VAT when clearing the customs on imports into the EU.

Starting July 1st, 2021 such clearance will add fees to your purchase – you will have to pay import VAT (most often standard rate of around 18-24% depending on the EU country you import to) and import duty (which is usually around another 3-20% depending on the type of product being imported; import duty rates are the same in all EU countries).

Option 2
Your seller will pay import VAT and duty for you on your imports into the EU

Your overseas seller may decide to register for so call IOSS – Import One-Stop-Shop which is an online platform introduced by the European Union, where foreign e-commerce businesses can register to pay import VAT and duty for you and other buyers located in the EU.

When you buy a product online which is going to be shipped from e.g. China, your Chinese seller can register for IOSS and include the VAT in the retail price.

OISS is intended for products / sales valued up to 150 EUR.

Starting July 1st, 2021 when you receive a request from your courier company to pay import VAT and duty on your shipment from e.g. China, it will mean that:

  • the seller is not registered for the IOSS platform
  • the shipping documents are not complete
  • the value of the goods in higher than 150 EUR

Please make sure to contact your foreign seller before you make a purchase, to determine if VAT and duty charges are already included in your retail price.

warehouse ecommerce

FLEX. Fulfillment welcomes all new clients

For the past few months we have been working hard on scaling up our B2C fulfillment capabilities – both on the software part, workforce and storage space.

I am happy to inform we have successfully implemented and tested a scalable, automatic order processing software which allow us to provide our clients with B2C fulfillment services for Amazon, eBay, Allegro, BigCommerce, WooCommerce, Shopify, Magento and many more marketplaces and e-commerce web engines, which works with courier integration, ERP systems etc as well.

FLEX. Fulfillment is now open for new clients!

Please feel free to contact us with any of your B2C fulfillment needs in the EU.

warehousing

Avoid Brexit effect, move your stock to FLEX.

How will Brexict impart my warehousing and supply chain?

Does my company have the relevant experience in clearing the customs?

How long will it take to deliver the goods from the UK to my clients in France, Germany, Italy and the rest of the European Union?

Can I handle additional paperwork needed in terms of additional labelling or updating technical files?

How can I continue servising the remaing EU Member States?

Do I have necessary assets and data to deal with a new customs border between the UK and the EU?

All the questions come down to the location of your warehouse, where do you store your goods and how do you fulfill your orders. With so many questions remain unanswered across countless industries and businesses. Don’t get suprised – contact FLEX now to discuss how we can prepare your business and what are the options for moving your goods away from the UK and keeping it inside the European Economic Area.

ecommerce1

Popular ecommerce platforms

Ecommerce platform will allow you to establish, customise and host an online store to sell and market your products, manage inventory, accept and process payments and much more.

Your choice should come down to the following popular all-in-one ecommerce platforms:

  1. Shopify
    Website: www.shopify.com
    Pricing: Basic Shopify: 29 USD, Shopify: 79 USD, Advanced Shopify: 299 USD (per month)
  2. BigCommerce
    Website: www.bigcommerce.com
    Pricing: Standard: 29.95 USD, Plus: 79.95 USD, Pro: 249.95 USD, Enterprise: Custom (per month, billed monthly)
  3. Magento
    Website: www.magento.com
    Pricing: Quotation needs to be requested on the website
  4. WooCommerce
    Pricing Quotation needs to be requested on the website
    Website: www.woocommerce.com
  5. 3dcart
    Website: www.3dcart.com
    Pricing: Startup: 19 USD, Basic: 29 USD, Plus: 79 USD, Pro: 299 USD
  6. PrestaShop
    Website: www.prestashop.com
    Pricing: Free with limited features, PrestaShop Ready: 19.90 EUR (per month, billed annually)
  7. Volusion
    Website: www.volusion.com
    Pricing: Personal: 26.10 USD, Professional: 71.10 USD, Business: 269.10 USD, Prime: Custom (per month, billed annually).
  8. Squarespace
    Website: www.squarespace.com
    Pricing: Basic: 26 USD, Advanced: 40 USD (per month, billed annually)
  9. Wix
    Website: www.wix.com
    Pricing: Free with limited features, Ecommerce: 16.50 USD, VIP: 24.50 USD (per month)
  10. Weebly
    Website: www.weebly.com
    Pricing: Free with limited features, Pro: 12 USD, Business: 25 USD (per month, billed annually)
warehousing1

How to find a perfect 3PL for your ecommerce business?

Outsourcing ecommerce warehousing and order fulfillment to third party logistics providers (3PL) is a popular solution which can bring several benefits to your business.

Please find a list of important factors you should consider when selecting the right partner for your 3PL needs:

What business goals do you have when looking for a fulfillment partner?

What is the characteristics of my products? Do they require any special processing?

What WMS (warehouse management software) is the warehouse using?

Do you have a flexible contract agreements?

What are your monthly order minimums?

Do you provide inventory management & control services?

How quickly will my inventory be received & ready to ship out?

What happens if my inventory arrives at your warehouse(s) already damaged?

What valu-added services do you offer e.g. kitting, labeling, custom boxes, inserts?

Do you offer Returns processing services?

Do you offer multiple shipping carriers to choose from?

Do you provide international shipping?

Do you have a risk free trial period so we can test out your services?

Do you offer free account setup?

Do you offer free system integration?

Do you provide shipping discounts?

In all, a 3PL can be a huge time and budget saver for start-up and growing businesses, just be sure to find the right partner for your business needs.

warehousing3

How to choose your fulfillment warehouse location?

When looking for a fulfillment warehouse, you need to take several factors into consideration:

1 Location

Some say: location, location, location because it all comes down to the distance to your customers. You want your products to be delivered quickly. It doesn’t have to be your local fulfillment warehouse located next to where you live. Nowaday it is quite easy to sell your products online on the other part of the world. A fulfillment center that’s close to your customers will serve your business better than one that’s close to you.

2 Concentration

Don’t spread your products among too many warehouses – your costs will go up and most probably, you will have to deal with different tax regimes. It is also hard to coordinate your stock between multiple warehouses and establish effective sales and delivery patterns.

3 Delivery time

Online shoppers expect to receive their products within a couple of days and at a low cost. Ecommerce fulfillment warehouse can move your goods closer to your clients which will allow you to offer same-day shipping or even delivery within a matter of couple of hours.

4 Shipping costs

Shipping rates are based on so called – zones. The greater the distance between your fulfillment warehouse and your customer, the more zones your package will have to cross, the higher your shipping costs will be. Choose your warehouse close to your customers to save on shipping and fulfillment costs.

Consider asking yourself the following questions before talking to your fulfillment warehouse provider:

What do my customers want and expect?

How imporatant is same day dispatch for me and my clients?

Do I want to offer free shipping?

What is the most economical choice?