Does Selling on Amazon Still Make Sense In 2023? Only If You Overcome These 4 Challenges
Plus, Find Out Why Many Sellers Will Barely Ride the Storm Out, While Canopy’s Partners Expect Smooth Sailing in 2023 and Beyond
As the fourth quarter of 2022 begins, for many Amazon sellers there are more questions than answers. That’s because most of us are creatures of habit. We get used to a certain way of living (and doing business), and act accordingly.
Here’s the problem.
If the advice of a lot of e-commerce experts is to be trusted, this Q4 isn’t going to be anything like last year. That’s important because many sellers and Amazon management agencies count on AI and automation to drive their advertising processes.
Unfortunately, since AI depends on repeatable data sets for its “intelligence,” the twists and turns of e-commerce (and life) over the last 24 months have created a number of challenges.
The question is . . .
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Are your processes (or those of your management agency) up to the task?
Upcoming E-Commerce Challenges for 2023
Many e-commerce brands saw record sales in 2020. With the ongoing pandemic, online sellers anticipated much the same in 2021.
That didn’t happen.
The issues were distributed throughout the entire spectrum of e-commerce. Declining sales, a lack of marketing and advertising focus, and supply chain disruptions presented a minefield for sellers over the last 12 months.
There’s no question that Amazon is still the place to sell. With the size of its marketplace and unparalleled selling platform, it’s number one. According to Amazon statistics, that’s why out of a total of nearly 9.7 million Amazon sales accounts, 1.9 million sellers are actively engaged on the marketplace in 2022.
Why are those almost eight million Amazon sellers sitting on the sidelines? It’s probably the same reason why a lot of Amazon sellers suffered through a challenging 2021.
One piece of very good news is that CANOPY Management AND our partners have crushed it in 2022. That shows that with the right processes and methodologies in place, continuing to thrive on Amazon’s ever-changing marketplace is not only possible, but predictable.
I’m going to tell you how we did that a little bit later in the post, but for now, here’s why most Amazon management agencies had a rough go of it in 2021.
Costs are rising everywhere. Energy and fuel don’t just affect consumers, extrapolated outwards, they affect every single component of the e-commerce process from raw material production to distribution.
What that means is that margins are shrinking for everyone. People are eating less meat, walking instead of driving, and importantly for Amazon sellers, are looking very closely before they press the buy button.
To make matters worse, the supply chain disruptions have added to the challenges of meeting customer’s expectations. After everything else we’ve been dealing with, waiting an extra day (or week) is enough to break the camels’ back (and produce a negative Amazon review).
2. Increased Competition
Almost 4000 new sellers join Amazon’s marketplace every single day. We all know it’s a great opportunity. Unfortunately, the growth of Amazon’s e-commerce business has dramatically accelerated the importance of Amazon’s advertising platform. In most cases, the organic promotion of your Amazon product simply isn’t enough.
Entrepreneurs and brand owners know this and are increasing their ad spend to stand out.
All that competition isn’t right in your backyard either. Quite often, over a third of those sellers are based out of China where cheaper manufacturing costs give them an automatic head start.
3. Converting Shoppers into Buyers
It’s complicated, but one thing’s for sure, Amazon’s algorithm continues to reward e-commerce sellers that take the time to thoroughly optimize their Amazon listings.
Once you’ve determined which keywords you should be using, the next step should be to incorporate them into your listing content. This will help you improve your organic Amazon ranking because it contributes to your product’s relevancy in Amazon’s eyes.
Amazon is all about creating the best possible experience for shoppers on their platform. Making sure that your product is showing up in the right search results helps create a sort of perpetual motion e-commerce flywheel.
By optimizing your Amazon listings, the higher sales that result will translate into better rankings which in turn results in increased sales velocity on Amazon and even more sales.
4. The Limitations of Artificial Intelligence
Artificial intelligence is all over the news. Most of us are used to seeing it in virtual reality (VR) gaming systems and in images of Elon Musk’s AI robots assembling his Tesla EV automobiles. But, how does it all work?
Many of the clients that come to us from other agencies complain about the automated processes that often waste their ad spend. Once they’ve been “Under the CANOPY” for a few days, they congratulate us on our “human” touch.
Amazon’s advertising platform itself features “automated” ad campaigns. When that’s paired with an automated, AI-driven PPP management agency, that creates a feedback loop in which you have two computers talking to each other while deciding the fate of a seller’s advertising spend.
With Data modeling and AI very dependent upon repetitive data sets, the pandemic, the war in Ukraine, multiple, moveable Prime Days, and the ongoing supply chain disruptions are only the latest examples of why too much reliance on predictive analytics should make e-commerce sellers nervous.
[vc_section][vc_row][vc_column][ut_parallax_quote quote_linebreak_mobile=”on” quotation_marks=”no” quote_font_size=”45″ quote_ins_font_weight=”” cite_font_weight=”” quote_color=”#81d742″]In the last twelve months, CANOPY’s partners grew Total Sales by 85%![/ut_parallax_quote][/vc_column][/vc_row][/vc_section]
CANOPY Management’s Partners Have Absolutely Crushed It in 2022
CANOPY Management’s focus on human intelligence instead of artificial intelligence has been a pillar of our business model and one of the biggest reasons why we’ve enjoyed so much success ourselves AND made so much money for our partners.
In the last twelve months, CANOPY’s partners grew Total Sales by 85%. With the disruptions that we’ve all faced, that kind of success represents strong e-commerce navigational skills sailing into a headwind, and against the current.
Furthermore, CANOPY’s partners grew their Pay per Click (PPC) Sales by 64%. Organic Sales benefitted the most, growing by a whopping 101%.
That’s the kind of sales metrics that has experienced Amazon sellers dreaming of TACoS!
I’m not talking about the tasty Mexican treat. TACoS (Total Advertising Cost of Sale) measures the relationship between ad spend and total sales. In other words, it is the ratio of ad spend to total sales or overall effectiveness of the advertising campaign.
This improvement in Profit Efficiency will be the key to not just surviving, but thriving during periods of economic uncertainty.
Want to safeguard your Amazon brand? Reach out to a CANOPY Management advertising specialist to see what we can do for you.
How CANOPY Management Can Help
CANOPY Management is a full-service marketing agency for Amazon sellers. Our team consists of former Amazonians, multi-million dollar sellers, and award-winning experts. When you consider the many ways that CANOPY Management can help you grow your business, you’ll see why selling on Amazon is much easier “under the Canopy”:
- Strategic Growth Planning
- Listing Copywriting Optimization
- Listing Photography
- Product Videography
- Advertising Management
- Customer Service
- Demand Side Platform (Amazon DSP)
- Amazon Posts
- Full Service Management
- Amazon Review Aggregation