Modern Retail

Making the Most of Amazon as a Marketplace

Amazon marketplace

This post first featured in the Modern Retail Guide to Retail Tech February 2019. To read the full ebook click here, or scroll to the end of the page to view on page-turning software.

Marketplaces continue to go from strength to strength in the world of retail. Modern Retail had the pleasure of speaking with Franz Jordan, Founder and CEO of Sellics. Franz spoke about the ways in which Amazon is rapidly growing as a marketplace, and how retailers can make the most of the opportunity to succeed in ecommerce.

Here’s what Franz had to say about everything sellers need to be successful on the Amazon marketplace:

MR: Why is Amazon such a popular marketplace?

FJ: “In my opinion, there are three things which make Amazon stand out as a marketplace. The first is selection, as Amazon has the most products. The second is price, as they are typically the cheapest, or certainly one of the cheapest. The third, and possibly the most important is Prime. Amazon is the only platform that really has control over delivery and this is a key part of the customer experience as a consumer. Prime members order 5 times more than non prime members, so once customers make this commitment, the number of purchases increases too.”

MR: Why should a retailer run an Amazon PPC campaign?

FJ: “Over the last couple of years, in the top spots on the Amazon search results, the paid results have replaced organic results. We did a study with 150 keywords and we found that for 120 of them, above the fold they were only paid results. This means if a consumer is searching for a product, the only thing they will see without scrolling is the paid results. So if you want to be visible then you need to run paid campaigns.”

MR: How effective is a paid Amazon campaign?

FJ: “It depends on how you measure effectiveness. In terms of driving sales, it is certainly very effective. Most of our customers drive between 30% and 50% of their total revenue on Amazon from PPC. In terms of effectiveness in a sense of how good the return is, it depends. We see categories where it is very effective. Think about supplements for example. It is a super competitive category so on the first sale, you won’t necessarily make a profit. However, in the supplements space, the assumption is that the person will not just buy it once. Every other week, they will buy it again.

“Overall, it is certainly working, but it depends if you just measure the first sale, or if you measure the sales which come afterwards. We manage several hundred million dollars of ad spend through our software, so we’ve been able to track the market with large and small clients as well as agencies, so from 2017 onwards it’s been a huge topic on Amazon.”

MR: How has the growth of ecommerce changed things?

FJ: “Ecommerce fundamentally has brought a lot more transparency and competition. These two things have increased the quality level across the board. With shipping, Amazon offer one day or two hour delivery. There is competition when it comes to prices and also the products. These days, if you want to be successful on Amazon, it’s not just about going out to some factory in Asia, sourcing any product and putting it online. It’s really about how you can differentiate the product, and what can you change with that product, building a specific product that is different before putting it on a marketplace. There are so many that are similar that you have to work hard to make it stand out. As a consumer, that’s great because you have so much choice and better service. As a brand, ecommerce is making it more difficult and raising the bar.

“The way I look at ecommerce is that if you think about the funnel. Google has been at the top of the funnel and Amazon has always been at the bottom of the funnel. So you would search on Google, click through on links and end up buying on Amazon at some point. Over the past 10 years or so, when consumers keep searching on Google and ending up on Amazon, people have started heading straight over to Amazon instead. Amazon has been working its way up in the funnel and replacing Google as a search engine, so the entire journey can now happen within one platform. It’s changing the requirements you have for a team as you must have a team which take care of the entire funnel or journey. You would previously have a marketing team that was in charge of Google and then you had a sales team in charge of Amazon. Now the team must cover the whole journey which makes it a lot more complex, but it means you can re-optimise this and there is no broken process. The people on Google wouldn’t care so much about what happens afterwards, and now it’s a lot more closely linked to the entire process, so it’s causing a lot of changes for brands.”

Credit: Franz Jordan, Founder and CEO of Sellics

Read the full Modern Retail Guide to Retail Tech February 2019 below.