Thousands of new eCommerce sellers continue to join Amazon’s marketplace each and every day. With over half of all Amazon sales coming from independent sellers, it’s easy to see why.
It’s hard to think back to a time before Amazon. It’s ridiculous really. Both of my VW Westfalia camper vans were older than Amazon. Heck, I own a classic Italian road bike that’s older than Amazon. Still, with Amazon’s humble start in Bellevue, Washington on July 5, 1994, global commerce turned a page.
According to Marketplace Pulse research, more than 2,000 new sellers have joined Amazon’s twenty global marketplaces every day since 2016, with over 700 of those sellers based in the U.S.
In spite of the fact that some of those sellers might never become active, the numbers are still hard to ignore. As reported by MarketPlace Pulse, that level has remained stable since 2016, a few months after Amazon began aggressively recruiting Chinese sellers.
Selling on Amazon is not without drama. The industry has suffered through continued growing pains that center around the surge of counterfeit products, knockoffs, and intellectual property infringement. Then there are the series of supply chain challenges that have affected eCommerce over the last 24 months. Shipping bottlenecks, ongoing inflation on raw materials, labor shortages, and spiraling trucking costs have affected everyone from Amazon itself, right on down to the newest, smallest seller.
When you factor in Amazon’s continued changes to their rules and regulations, it creates a situation where selling on Amazon often requires a more sophisticated business skill set.
Let’s See What Jungle Scout Says
Jungle Scout, a SaaS (Software as a Service) company happens to be a leading platform for eCommerce sellers. Their Amazon selling tools constantly rank at the top for accuracy and effectiveness.
While previously working for the competing Amazon-selling software company, Helium 10, I remember “oohing and ahhing” over Jungle Scout’s State of the Amazon Seller Report.
It’s that good.
Every year Jungle Scout releases their State of the Amazon Seller Report which reveals insights from 3,500 entrepreneurs, brands, and businesses on Amazon to help understand sellers’ diverse business strategies, profits, pain points, and plans for the upcoming year.
New research from their latest Amazon Seller Report indicates that 76% of Amazon sellers are starting off 2022 on the right foot by showing profitability. When you consider that according to their data, 90% of Amazon sellers experienced some form of negative impact due to the supply chain challenges, that’s a strong indication of the eCommerce power of Amazon’s marketplace.
More data from Jungle Scout’s report:
- 45% of sellers reported their profits increased from 2020 to 2021
- 95% of Amazon sellers plan to expand their businesses in 2022
- 25% of new sellers plan to sell their business to an aggregator (a company that acquires eCommerce brands with the goal to scale them and gain revenue for investors)
- 32% of sellers will increase marketing and advertising spend in 2022
- Increased shipping cost are a top concern for 64% of sellers
- 39% of sellers will grow their brand through social media, influencer marketing, or other marketing efforts this year
- 53% would consider working with an Amazon agency to build and manage their business
With 95% of sellers looking to expand their businesses and 53% considering using the help of an Amazon management agency to separate themselves (and their brand) from the competition, it makes me think that everyone might have to level their game up a little bit to keep pace.
Why Are Shoppers So Committed to Amazon’s Marketplace?
After a dip in the first quarter of 2021 to $108.52 billion, Amazon has rebounded to reach quarterly revenue of $137.41 in Q4 of 2021. A combination of factors including the world-wide repercussions of the pandemic as well as the (ongoing) supply chain crisis had tamped down global economic growth. The majority of Amazon’s revenue was via net product sales.
According to Statista, 66% of surveyed respondents stated that their main reason for shopping on Amazon was due to the “availability of almost anything they needed.” Additionally, 56% reported that “free shipping offered with Prime subscription” was their primary reason for shopping.
Near the bottom of the results were “Amazon features robust product information” at 7%, and “Amazon offers a personalized shopping experience” at 6%. When you combine “Amazon always innovates on behalf of its customers” at 4%, I’m tempted to say that these last three low-ranked reasons to shop on Amazon indicate an opportunity for B2C sellers to level up their own marketing strategies.
Differentiate, Differentiate, Differentiate
As a real estate broker in Aspen Colorado, I probably heard the phrase, “location, location, location” every single day; it’s that important. Although, when you get right down to it, there really isn’t a truly bad location in the chic little mountain town. Still, you get my drift.
With over 12 million products, Amazon has a nearly endless variety of products for shoppers to choose from. How does an individual seller have any hope at all of standing out?
Differentiation is how.
As I’ve written in a previous blog post, Amazon is perfectly happy if everyone is a little bit successful. After all, they are going to get paid one way or the other. However, Amazon sellers are uniquely focused on the success of their own products. They are in COMPETITION with the rest of the sellers in their niche.
Amazon’s ecosystem is full of YouTube videos and online courses offering easy-to-follow directions that promise to get new eCommerce sellers onto Amazon’s first page.
There are a lot of Amazon sellers doing a pretty good job with their eCommerce business. But, that leaves a lot of room for Amazon marketing agencies like CANOPY management to help sellers take things to the next level.
In the following webinar replay, CANOPY Management’s Brian R Johnson talks about something that many sellers aren’t doing. It involves thinking OUTSIDE OF THE BOX and it’s a process that CANOPY Management uses to optimize every one of our partners’ Amazon product listings.
Thinking About Other Marketplaces?
Over the last three years, both Amazon and Walmart have enjoyed a steady increase in eCommerce sales. Still, the sheer scale of Amazon’s success dwarfs their would-be challengers. In 2021, Amazon’s sales accounted for approximately 57% of eCommerce sales in the United States. Walmart’s eCommerce sales were far behind with a total of just 6.2%.
It’s important to note that Amazon and Walmart might be playing two different eCommerce “games.” From 2019 to 2021, Amazon’s share of electronics and appliance eCommerce sales in the U.S. never dipped below 20 percent, while Walmart’s share of eCommerce sales in this category never rose above six percent. However, Walmart’s share of food and beverage eCommerce sales in the United States far surpassed Amazon’s over the same time period.
By most expert accounts, Walmart’s eCommerce sales are seeing exponential growth. Forecasts of the corporation’s eCommerce sales show an expected value of nearly 45 billion U.S. dollars by 2023, a significant increase from the 27.1 billion U.S. dollars recorded in 2020.
The Walmart gang have been successfully selling merchandise (and navigating economic currents) for a long time. Still, it’s hard to imagine betting against Jeff Bezos’ mammoth company.
Most Amazon selling experts advise that it makes sense to gain A LOT of traction on Amazon before you decide to branch out onto other marketplaces.
How CANOPY Management Can Help
That maturity of Amazon’s marketplace has made it a little harder for eCommerce sellers to be successful. If you listen to eCommerce podcasts, you’ll often hear the phrase, “treat selling on Amazon like a real business.” Everything from your Amazon listing optimization to your PPC, and DSP advertising require an increased level of sophistication to scale past a certain level.
That’s the main reason why there’s been such a big increase in the number of Amazon sellers taking a closer look at Amazon brand management.
CANOPY Management is a “full service” Amazon marketing agency, and our team consists of former Amazon executives, multi-million dollar sellers, and award-winning experts. When you consider the ways in which CANOPY Management is able to help you grow your Amazon business, you’ll know why.
- Strategic Growth Planning
- Listing Copywriting Optimization
- Listing Photography
- Product Videography
- Amazon Advertising Management
- Customer Service
- Demand Side Platform (Amazon DSP)
- Amazon Posts
- Full Service Amazon Management
- Amazon Review Aggregation
Are you looking to expand your income stream, or transition away from your primary career? It’s a new year and with the growth of eCommerce, now is a great time to reap some benefits yourself!