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If you’re selling on Amazon, it’s pretty easy to fall into the trap that success on the platform involves checking two important boxes. 

Listing optimization that converts for Amazon’s Algorithm AND prospective shoppers positions your product to be found. Building out a highly effective Amazon advertising strategy pushes your product to the top of search results and sets your brand apart from the competition. 

Both are pivotal guideposts of online selling success. 

Product listing optimization, including compelling copy, high-quality images, and relevant keywords, enhances visibility and conversion rates, making it easier for shoppers to find and purchase products. 

A well-planned advertising strategy further amplifies this by driving targeted traffic to listings, maximizing exposure, and increasing sales. 

This post isn’t about either of those two elements . . .

Instead, it’s about understanding the less sexy, hidden factors that can make the difference between thriving and merely surviving on the platform. 

This post will explore three critical areas that Amazon sellers need to fully understand: 

• Hidden costs of selling on the platform
• The importance of Amazon review management
• How to use external traffic to multiply ecommerce sales

The Less Obvious Costs of Selling on Amazon

Most Amazon sellers are aware of basic fees such as the subscription, referral and FBA (Fulfillment by Amazon) fees. The true costs of operating on Amazon’s marketplace are often more extensive and complex.

These hidden costs can significantly impact profit margins if not carefully managed.

Storage Fees

Amazon charges monthly storage fees for inventory stored in its fulfillment centers. Importantly, these fees increase dramatically during the holiday season (October to December), making it crucial to manage inventory levels efficiently. 

Additionally, long-term storage fees apply to items stored for over 365 days, which can rapidly erode profits if inventory management isn’t optimized. You will want to implement inventory turnover strategies to minimize these costs, such as regular inventory audits and dynamic pricing to move slow-moving products.

It’s 2024, artificial intelligence is your friend. You can use AI-based tools to help manage your overall inventory strategy.

Returns

Amazon returns can significantly impact sellers’ profits through various fees and charges. When an item is returned, sellers face a refund administration fee, which is either $5.00 or 20% of the referral fee, along with losing the original shipping cost. 

Certain fees, like the FBA shipping fee based on product size and weight, are non-refundable. Starting June 1, 2024, Amazon introduced a return processing fee for products with high return rates (excluding apparel and shoes) to cover operational costs. 

Returns can consume up to a third of a seller’s monthly profit, especially if the items returned are damaged or unsellable, resulting in further losses.

Miscellaneous Fees

Other expenses include removal orders (when sellers want Amazon to return or dispose of inventory), labeling services (if sellers don’t label products themselves), and potential account suspension appeal costs.

All these expenses must be considered when calculating the true cost of selling on Amazon. Sellers should regularly review their fee structures and seek ways to minimize unnecessary costs.

The Critical Importance of Review Management

Not all costs are directly translatable to dollars and cents. Product reviews on Amazon play a crucial role in influencing customer purchasing decisions and determining your product’s overall visibility. 

At the end of the day, that’s going to have a lot to do with your search ranking, social proof, and degree of customer engagement. Success – or failure – will be reflected in your sales. 

Here’s why review management is vital:

Search Ranking

Amazon’s algorithm, which determines search rankings, considers both the quantity and quality of reviews. Products with a higher number of positive reviews are more likely to rank well in search results, leading to increased visibility and sales. At the same time, products with few or negative reviews may struggle to gain traction, regardless of their quality or competitive pricing.

Social Proof

Reviews are one the things that Amazon shoppers look at when trying to make a final decision. They have long served as social proof, building trust with potential customers. In the absence of physical interaction with products, customers rely heavily on the experiences of others to make purchasing decisions. A product with numerous positive reviews is much more likely to convert browsers into buyers. 

To make sure you’re compliant with their policies, use Amazon’s Request a Review feature that offers you a safe way to ask customers for product reviews and seller feedback.

Customer Engagement

Review management involves actively engaging with customers, addressing negative reviews promptly and professionally, and continually improving products based on customer feedback. 

This ongoing process of engagement and improvement leads to better products, increased customer satisfaction, and ultimately, more positive reviews. Take advantage of the advances in artificial intelligence to implement a systematic approach to monitor and respond to reviews. This will help you to turn potential negative experiences into positive ones.

The Power of External Traffic

Simply relying on the power of Amazon’s internal traffic and advertising tools is an easy mistake to make. While these are undoubtedly powerful, they overlook a strategy that in-the-know entrepreneurs are using to give their listings the extra boost they need to rise to the top of the rankings. 

External Amazon traffic refers to potential shoppers directed to an Amazon listing from sources outside of the Amazon platform itself. This might include traffic generated through Google ads, social media promotions, blog posts, email marketing, and influencer referrals.

Here’s how this strategy benefits sellers:

Reduced Reliance on Internal Traffic

If you’ve spent money on PPC advertising recently, you know that Amazon’s internal traffic can be highly competitive and expensive to capture through advertising. By diversifying traffic sources, you’re better able to reach potential customers who may not have found their products through Amazon’s search results. This reduces dependence on Amazon’s ecosystem and spreads risk across multiple channels.

Boost Your Organic Ranking

Amazon’s algorithm favors listings that convert well. When external traffic leads to sales, it signals to Amazon that the product is popular and in demand, potentially boosting its organic ranking within Amazon’s search results. By expanding your marketing outreach beyond Amazon, you’re more likely to gain an edge in the competitive marketplace.

Sometimes, a little edge is all you need. 

Brand Building

When you’re selling on Amazon’s marketplace, it’s easy to be overshadowed by many of the 80,000 pound ecommerce gorilla’s own inhouse brands. External marketing allows you to build your brand outside of Amazon, and leads to increased brand recognition and loyalty. 

This can translate into repeat purchases and positive reviews on Amazon. Take the time to invest in creating a strong brand presence across social media, websites, and other online platforms, then watch the sales come in. 

Audience Diversification

Have you experienced suppressed Amazon listings or account suspensions recently? If so, this one might hit close to home. 

By building an audience outside of Amazon, you’re better able to create a valuable asset that can be leveraged across multiple sales channels, reducing dependence on any single platform (I’m talking to you Amazon). 

This diversification provides stability and growth opportunities beyond Amazon’s marketplace.

How to Implement External Traffic Strategies

Driving external traffic requires skill and investment. You need to understand various marketing channels, create compelling content, and continually optimize your campaigns for the best results. Here are some effective strategies:

Social Media Marketing

Utilize platforms like Facebook, Instagram, and Pinterest to promote products and drive traffic to Amazon listings. Engaging content, influencer partnerships, and targeted ads can help reach a broader audience.

Google Ads

Running Google Ads can capture high-intent customers searching for products similar to yours. Effective keyword targeting and ad copy are crucial for driving relevant traffic to Amazon listings.

Influencer Partnerships

Collaborating with influencers – of any size – can amplify your reach and credibility. Influencers can showcase your products to their followers, driving traffic and potential sales.

Email Marketing

Building an email list allows for direct communication with potential customers. Regular newsletters, promotional offers, and product updates can push traffic to Amazon listings and build customer loyalty.

How Canopy Management Can Help

Success on Amazon requires more than just listing products and fulfilling orders. By having a better understanding of these less obvious costs associated with selling on Amazon, you’ll have an easier time creating a sustainable path forward. 

Embracing these strategies not only help you achieve immediate sales goals, they also contribute to building a strong, recognizable brand that can thrive in the ever-changing marketplace.

Want to take advantage of a shortcut that many of Amazon’s top sellers have used to rise to the top? Reach out to the Amazon experts at Canopy Management. 

Ever wonder what adding 67% more organic sales might mean for your brand?

Turns out that when you combine the massive experience of Canopy’s Amazon Experts with smart tools and tech, you get industry-leading results like this:

• 84% Average Year-Over-Year Profit Growth for Our Partners
• 2.7 Billion in Revenue Managed
• 99.1% Partner Retention Rate

Canopy Management is a full-service marketing agency for Amazon and Walmart 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