Christmas trading is over – and, once again, the parcel delivery service took over more and more of the job for Santa. The online sales channel is also becoming increasingly important for the paper, office supplies and stationery market segment. Although revenues in the sector are declining slightly, the portion of total revenue realised from online sales is increasing each year. Around a fifth of revenues in the paper, office supplies and stationery segment are nowadays generated online. What is even more interesting is that many stationery customers also use the internet before their in-store purchase to compare prices and products, to look at reviews from other customers or to read product descriptions in their own time. Above all, Amazon has developed into the number one product search machine for on and offline customers over the last few years. In summer 2019, a study by IFH Köln (in German) found that around 31 percent of all turnover in the non-food sector – no matter whether online or brick-and-mortar retail – is now dependant on Amazon. By implication, this means that retailers and manufacturers who are not present on Amazon remain invisible to a significant portion of customers – and this portion is growing year by year.
Unfortunately the opposite is not also true. Just because a retailer is on Amazon does not automatically mean that they are visible to their online target group. Competition between third-party retailers who list their products on Amazon continues to get tougher. The product range on the world's biggest online marketplace has been exploding for years. The number of listed product ASINs on Amazon has been increasing in a particularly dramatic way since the start of 2019. In October 2019 alone, the data analysis provider AMALYZE, which specialises in Amazon analysis, detected 131 million new ASINs on the five European Amazon platforms.
This huge range has a devastating effect on the visibility of individual marketplace retailers. For example, if you search on Amazon.de for the term “fountain pen” in the Stationery & Office Supplies category, the platform delivers over 40,000 hits. Anyone who wants their product to stand out in this number of matches has to offer something special. Instead of jumping straight to listing their entire range on Amazon, retailers should start with a thorough market analysis – and the best market research institute here is Amazon itself.
A simple search for your own product will bring lots of interesting information to light. Retailers can use this to see how many similar items are already being sold on the marketplace, who their retail or manufacturing competitors are and what prices they summon. Those who take a methodical approach here will quickly establish which items might perhaps fill a gap in the Amazon range – and for which products it is simply not worth the price war with competitors. In doing so, retailers can select a small number of very promising items with which to try making their début on Amazon.
Once the test items for the initial sale have been identified, the listings can be set up – and in this respect retailers would be wise to proceed with a great deal of care. A meaningful title that includes as many search terms as possible which fit the product increases the attention the item can attract from amongst the search results. Products can be brought to life by using a lot of images or videos which show not just the sales packaging but also, where possible, the product’s potential uses. Descriptive texts that are detailed, well-structured and easy to understand convey the product’s capabilities to customers. All this is time-consuming, and is often not easy in practice, but it is worth the effort. Numerous studies show that fully formed product detail pages lead to higher conversion rates.
Just because the first few sales are under your belt and the first revenue is in the bank, though, does not mean that it is time to kick back and relax. Instead, it's time for the second phase of analysis. Which products perform especially well? Which products have generated customer reviews? For which products are the logistics particularly expensive and time-consuming – and is it possibly worth moving these products over into Amazon’s own “Fulfilment by Amazon” logistics programme? What does the contribution margin look like for these products? Is there any profit left after deduction of shipping costs, sales commission and return costs? Only through constant analysis, checking and testing can retailers operate their Amazon sales channel successfully and profit from their presence on the biggest product search engine.
Competitor and product range analysis: Which of my products are already being sold on which Amazon marketplaces? How many retailers are competing directly with my product range? Can I make an impact with my product range in an as yet little-occupied niche?
Price analysis: Are my prices competitive? How much room for manoeuvre do I have in the pricing before the profit margin gets eaten up by shipping costs, sales commission and return costs?
USP analysis: What can I offer my customers that my competitors don’t have? One-of-a-kind products? A particular service? Great advice? A particularly good price? An engaging product story?
Entry with your own top products: Create product listings for the products you have decided are the most promising. Make sure that you have well-developed, SEO-optimised product description pages with attractive images and detailed product description texts!
Analysis and expansion of the business: The first sales should be followed by a new analysis phase. Amazon activity can be optimised using the findings and be expanded to other products or other international markets.
About the author:
Ingrid Lommer has been writing about online retail for around 15 years. She analyses the strategies of successful online retailers for specialist publications such as INTERNET WORLD Business and shopanbieter.de and keeps a watchful eye on both large and small online marketplaces.