Amazon accounted for 49% of all U.S. e-commerce sales in 2018 and is predicted to account for more than 50% of the market by 2021. If you’re an e-commerce advertiser, your competitors are almost certainly already advertising on Amazon so there’s no time like the present to join the platform and win the race.
In this guide we break down the following:
To start selling products on Amazon, you need to be set-up on either Vendor Central or Seller Central – the fundamental difference between the two is who appears to be selling your products.
Vendor Central is the first-party, invite-only merchant marketplace. This is geared toward manufacturers and distributors selling products at a wholesale level. In Vendor Central, you’re essentially a supplier selling your products in bulk to Amazon. You will be considered a ‘first-party seller’ should you sell products via Vendor Central. If you notice the phrase “Ships from and sold by Amazon.com”, this is an indicator that a company is selling their product through Vendor Central.
“Having your products sold as a first-party seller through Vendor Central means that, as far as the shoppers are concerned, your products are being sold by Amazon. That seal of approval can provide a boost in consumer confidence that you don’t have as a third-party merchant.” – content26.com
Doing business through the Vendor Central is considered a simplified approach to selling on Amazon. As a supplier, you’ll focus on filling purchase orders, billing, and avoiding chargebacks. Amazon has strict logistical requirements. Vendors that have difficulties maintaining stock and/or quickly fulfilling orders put themselves at risk of significant chargebacks.
Seller Central is quite different from Vendor Central – on Seller Central you are a third-party merchant taking advantage of Amazon’s platform (think of this as a type of symbiotic relationship). Unlike Vendor Central, you are setting the retail prices yourself, rather than Amazon. As a seller you have access to a substantial amount of Amazon consumer data that can be used for a variety of purposes.
However, there are some downsides, as stated by content26.com:
“Studies have shown that items saying ‘Ships from and sold by Amazon.com’ consistently outsell products offered via FBA or ‘Shipped and sold by 3P Seller’. Also, if other 3P sellers were to list and sell against you via FBA, a significant percentage of total sales would be lost to those sellers. This is especially critical if you are attempting to use Amazon’s Sponsored Product Ad tool.”
To advertise on Amazon, you have to be in the Buy Box. The Buy Box is the outlined rectangle on the right side of an Amazon product detail page that contains the “Add to Cart” button.
How can you attain this Buy Box? To be eligible, you need to meet a few requirements and to “win” the Buy Box, you’ll need to overtake your competition whilst you’re at it.
Before anything else, you must be a Professional Seller on Amazon with a Pro-Merchant account, a purchased plan through Amazon. You can’t advertise on the platform without it, so make this your first priority.
The items you are selling must be new and in-stock. There is a separate Buy Box for used items, but it does not allow for advertising.
Your account needs to build up a history of good performance. To show in the Buy Box, Amazon analyzes your account performance metrics, including the likes of shipping method, price, delivery speed, feedback score, and available inventory.
There is also a timing consideration: it takes 90-days after launching a new product for it to be eligible for the Buy Box.
Once you are regularly in the Buy Box and want to increase the visibility and sales of your items, it’s time to start advertising.
There are two main platforms for advertising under the Amazon Advertising umbrella. Amazon Sponsored Ads, the self-service pay-per-click (PPC) option, and the Amazon Demand-Side Platform (DSP), which is Amazon’s programmatic marketing option.
Sponsored Ads serve as a more traditional PPC advertising option for brands sized all the way from start-up to enterprise level. It works just like an auction with keyword, product, and interest targeting. The resultant search & display ads appear on the Amazon site whilst a user is browsing through products. A DSP campaign is run through an agency, like Brainlabs, that has an Amazon seat. The ads can direct consumers to an Amazon landing page or to your website. This is the only advertising option currently available that takes consumers out of the Amazon ecosystem, but there’s one catch. In order to use it, you must have a minimum spend of $15K per month. The DSP is great for mid-to-large sale brands wanting to increase brand awareness.
The Sponsored Ads platform can be used by both Vendor and Seller Merchants. Think of it like Google Ads, instead the Google Search Engine Results Page is now the Amazon website.
Let’s start with the first step: setting up your first ads. There are three main types of ad you can use: Sponsored Products, Sponsored Brands, and Sponsored Display.
This is where we recommend beginning your Amazon advertising strategy. Sponsored Product ads allow you to advertise individual products using keyword targeting.
Amazon is a consideration-phase platform. Product research is primarily done elsewhere, so a user searching for your product or your competitor’s product is close to the point of sale. This ad type allows you to target bottom-funnel keywords, putting your products in front of the most qualified users at the right time.
As an initial tactic, we recommend running an auto-targeted campaign for the first two to four weeks, depending on account traffic. With automated targeting, you are allowing Amazon to show your ads for searches their algorithm believes will get the most conversions. After the campaign has adequate data, you can pull a Search Term report and find specific keywords that are converting. From there, find the top sales-generating themes amongst those keywords to begin manual targeting.
As an example, say you are a towel merchant selling plush towels. You believe your target audience is searching keywords around luxury, soft, plush themes. You run an automated targeting report and find that your towels convert well with keywords containing beach, pool, lake themes. This is a market you might not have otherwise tapped in to.
Another use of Sponsored Product ads is for brand defence. If competitor ads are showing up when you search for your brand, you can set up Sponsored Product ads on your brand terms in an attempt to out-rank competitors in the auction.
Sponsored Display ads can be used for targeting specific products or interests. They are bottom-funnel ads and a great opportunity for complimentary advertising or offensive advertising. The ads can show on product details pages, at the bottom of the organic search results, on review pages, at the top of the offer listing page and in Amazon-generated marketing emails. However, the ads will most often show on the product details pages, and your strategy should centre around those placements.
The main strategy for Sponsored Display ads is complimentary advertising. You advertise your product alongside other products that are frequently bought alongside your item. To keep with the plush towel example, after finding out the towels sell well with beach-related keywords, you would target sunscreen, beach balls, and other beach-related items. If people are already purchasing items for the beach, it is likely they would also purchase a plush beach towel. These ads are especially effective on mobile where the ad shows directly beneath the Buy Box, making it easy for the customer to add the item to their order.
Another great strategy is to use the ads to target competitors selling similar products. If you have competition that has lower review ratings or higher prices, you can target their products specifically so users will see your better-reviewed or better-priced item for comparison. This strategy is particularly effective as users on product details pages are typically close to converting.
The Sponsored Display ads also offer interest-based targeting as an opportunity to test on a larger market at a lower cost. Consider this placement option akin to Google Display Ads. With the interest targeting, the idea is to reach as many eyes as possible. The advertisement may not lead to lots of direct sales, but it has the chance to raise awareness of your product and lead to conversions later down the line.
Sponsored Brand ads are top-of-funnel ads best used for brand awareness and brand defence. These ads show at the top of the first page of the Amazon search results. The ads are keyword targeted and can show up to three of your products at once. When people click through the ads they can be sent to a custom brand store page housed on Amazon or to an Amazon landing page that showcases the specific products from the ads.
These ads are great for expanding brand awareness by acquiring prime real estate on the Amazon site. By targeting the converting keywords mined from your Sponsored Product ads, this ensures you’re bidding on the keywords most likely to convert.
The Sponsored Brand ads are also great for brand defence, as they are guaranteed to place at the top of search results on the first page of traffic. Even if competitors are bidding on your keywords, when the headline search ads trigger they will be above any Sponsored Product ads. Further, using both Sponsored brands ads and Sponsored Product ads for your brand keywords ensures your products are highly likely to show top-of-page for branded search results.
Once you have your first ads up and running, you can turn your attention to further optimization of your campaign’s performance. Like all auction-based marketing platforms, many factors are taken into consideration when it comes to the ranking of your ads.
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