There is no doubt that Amazon is the king of eCommerce, accounting for more than 50% of the total online sales in the US.
What’s more staggering is that over 63% of all product-related searches start in Amazon’s search bar.
Amazon is on track to becoming the new Google for physical products.
From how fast a page should load, to how quickly a product has to arrive in the hands of a customer, and even how smooth the return process has to be. They subtly push the expectations of an average consumer and raise the barriers for small and new eCommerce stores.
Even the big players such as Walmart, Wayfair, eBay, Etsy have a tough time competing.
So do you even stand a chance?
Well, you don’t. At least not against their biggest strengths.
The good news is that this “everything store” isn’t good at everything.
If you dig deeper, you’ll discover many small eCommerce and dropshipping stores with stable sales operating in their own little niches with their own unique twists.
As an eCommerce brand selling on Amazon’s marketplace, their strengths become your advantage. But as soon as you go solo and start your own online store, you’re on your own to build and organize the whole infrastructure. From the fast-loading website, customer service, payment processing, refund process all the way to warehousing and logistics.
I’ll share some strategic concepts that we learned from successfully implementing them in our clients’ stores at our digital marketing.
But first, let’s start with the bare minimums without which your business won’t survive in 2021.
Minimum viable store
Markets have matured and competition exists in every niche. Gone are the days where you can discover a worthwhile opportunity without any sellers already taking advantage of it.
Big players have set the ground rules and benchmarks that everyone has to follow from day one.
Don’t expect success if:
- It takes more than a couple of days for a customer to receive a product – Amazon delivers some products in less than 24 hours, how do you think to compete if your delivery time is 30 days, or better yet, how do you expect customers to buy from you again? Lifetime value of a customer will be low, hence you’ll have less money to spend on advertising to acquire new customers.
- Store is designed like it’s 1997 – Follow the best eCommerce user experience guides, spy on funnels and landing pages from the big players, espcially from those who actively spend money on advertising, and split test different variations of the same page in order to gradually improve conversion rates.
- Website speed is slow (everything below 3 seconds is considered good). TIP: when testing page speed, make sure to test your competitors speed as well, especially for the keywords you want to outrank them.
- Refund process is complicated or non existent. Recipe for a trustworthy store is a stronger refund policy and hassle-free return process. This is especially important for new stores that have yet to prove their legitimacy.
- Products are overpriced and quality is poor – No, dropshipping from Aliexpress is not a wise strategy!
- Customer support doesn’t exist – Yes, you’ll have to display your phone number!
- Shipping is too expensive compared to the product price. To have a successfull store you don’t need free shipping, but rates have to be reasonable. Don’t expect high conversion rates by offering DHL shipping from China. Work on your logistics plan to lower the costs and speed up the delivery.
To sum up.
Would you buy from your own store?
If not, then back to the drawing board.
Now that that’s out of the way, let’s dive into the good stuff… How to get Amazon out of the business. Just kidding 😀
Invest in organic search traffic
Search traffic is the most valuable type of traffic you could possibly get.
A friend once asked me: “You’re new, why would anybody trust your website?!?”
I said: “Because people trust Google”
Think about it, someone types exactly what they are looking for, and you present them with the solution. That’s why conversion rates for query-based visitors are much higher than for interruption-based visitors from social media, display ads, etc.
It’s almost like mind reading.
Keywords with high commercial intent are usually hard to tackle, especially in competitive markets and industries. Also, it’s not uncommon to see Amazon ranking at the top two or three positions on Google for a competitive keyword.
As a small eCommerce store with limited resources, what you can do is go a level deeper in the customer buying journey and target long-tail keywords with less competition that are less commercial, but still relevant to the potential customer.
For example, instead of targeting “buy gaming headset“, create content around topics such as “what to look for when buying a gaming headset“. The second phrase is less commercial and has lower search volume, but for a novice web store, it’s something you stand a chance to rank for.
Organic search traffic doesn’t have to result in a sale immediately. It’ll help with increasing brand awareness, and building an email and retargeting list, which can be used for further communication with the prospects.
Also, content created specifically for SEO purposes tends to bring visitors for a longer period of time compared to content created for social media, which usually stops getting attention after a day or two, unless it goes viral.
Besides having high valuations, believe me when I say that online businesses with predictable traffic sources are far less stressful to manage.
Now, in case you decide to compete in a country where Amazon isn’t the dominant shopping destination, then you might have a chance to achieve high rankings for highly commercial keywords. That is if you play your SEO cards right.
Otherwise, digging deeper and discovering topics with less competition that are relevant to customers’ buying journey is the next best approach.
SEO isn’t just Google
YouTube is the second-largest search engine in the world. If there is a way to educate or entertain a potential customer so you can present your offers, then definitely consider creating video content for Youtube and optimizing it for both Youtube and Google.
Amazon is the biggest buyer search engine. If you are a private label seller with a handful of branded products, then do not hesitate to list your products there. Amazon’s website has huge authority in the eyes of Google. With the parasite SEO approach, you can optimize a product listing page to rank high on Google search results and enjoy query-based traffic from both search engines.
Yandex is the biggest search engine in Russia. In case you decide to start a country-specific store, then definitely learn which is the most dominant search engine in the region where you intend to sell.
This leads us to the next point…
Be the media
Targeted traffic is the lifeblood of every online business. You can either buy it or earn it. Buying traffic simply means paying to get someone to visit your website, while earning means getting a visitor through free methods such as organic search, social shares, word of mouth, etc.
Do you remember the days when Google search traffic could be bought for pennies?
It was impossible not to make a profit.
For those of you that are new to the world of online advertising, this might seem surreal as now search traffic for some niches such as real estate or insurance, goes as high as one hundred dollars per click (in certain locations).
Try not to have an optimized page for that campaign 😀
As the markets mature and offline businesses transition online, the fight for user attention intensifies, and so does the cost of traffic. Logically, the more advertisers bid to get the attention of the same person, the higher the attention (click) will cost.
Technology has evolved and there are many ways to precisely optimize your targeting. Soon, due to the rapid development of artificial intelligence, machines will optimize campaigns probably better than humans.
Currently, the most profitable type of paid advertising campaign is retargeting. Those are the most annoying ads that follow you around. This type of campaign is initialized by some previous interaction, ie. someone visited your website.
No matter if you are selling physical products or information, building a media outlet with a strong content marketing strategy can pay dividends for years and increase the valuation of your business. This can be a podcast, blog, Youtube channel. Not only that you’ll transition from a faceless store to a more personal level with which customers can resonate, but you’ll have the opportunity to capture leads, build lists and acquire traffic and customers at a lower cost.
Amazon doesn’t put a lot of effort into becoming a media outlet for the products they sell. Their focus is to have the biggest selection, lowest prices and the most efficient infrastructure.
Content marketing can be one of the strongest weapons against Amazon.
Building a media outlet and content marketing strategy relevant to the product and services is currently the best long-term strategy in my opinion. Don’t just take my word for it, look at the website valuations of businesses that focused on organic traffic and content marketing.
A great example of an eCommerce website disguised as a magazine is Survival Life. They attract hundreds of thousands of visitors through organic and social sources, then silo them to physical product offers and subscriptions.
For most US and UK shoppers, Amazon is the number one destination to shop online.
But what about other countries?
eCommerce is growing at a rapid pace in every part of the world.
Selling in a smaller market doesn’t necessarily have to be a disadvantage. Contrary to that, being located in a less crowded market can be an advantage and an easy path to profitability, especially in the early stages.
Big markets tend to faster bring dependent services that help sellers streamline their business. That’s why Amazon’s FBA program attracted so many people from all over the world.
In small underdeveloped markets, it’s more complicated to set up an automated business unless you have a direct presence.
Many people that don’t live in the EU, US or UK, want to sell there while ignoring big opportunities laying in front of them.
I suggest that you explore your local opportunities first.
Do you know which online businesses have the highest valuations?
The ones with predictable recurring revenue, aka subscriptions.
That’s why you’ll see absurdly high multiplications for software businesses. However, this type of revenue source isn’t reserved only for informational products and software providers, it can be successfully applied to eCommerce as well.
Take for example Amazon’s Prime membership. They have over 200 million Prime members worldwide. Multiply that by a $120 annual fee and you’ll get $24 billion in recurring revenue.
The “Subscribe & Save” program incentivizes customers with discounts to establish a monthly subscription for a product they regularly consume or use.
The subscription-based model not only improves cash flow and liquidity but increases the loyalty and lifetime value of a customer.
Subscription box businesses like Dollar Shave Club had rapid expansion over the past few years. This company was acquired by retail giant Unilever for $1 billion only five years after it was founded.
Memberships are not only about sending a monthly bill to a customer.
Think about it.
Does your average customer regularly buy the same product over and over again?
If the answer is yes, then definitely consider creating a recurring payment plan with a slight discount to incentivize someone to subscribe.
Otherwise, if your product isn’t naturally a recurring deliverable, you’ll have to dig deeper into the mind of a customer to understand what would make them hop into your membership.
For example, this website uses exclusive discounts and premium content to attract members. They use this association to form a relationship and sell products that are not recurring deliverables by nature.
eCommerce can not be faceless anymore. It has to nurture a long-term relationship, especially as the cost of customer acquisition rises rapidly.
Buy now, pay later
Unless it’s a cheap product that people buy impulsively, the “Buy now” button is the step with the most friction in the buying decision process. Especially if it’s an expensive purchase.
Your job is to lower the risk of purchase and make the process as easy as possible.
On Amazon, everything you want you to have to pay immediately.
AfterPay is a company that provides a service to eCommerce stores where customers can buy now and pay later in form of monthly installments.
If you are selling an expensive product, this solution will be perfect for your store.
This tactic can help you increase conversion rates.
Whenever we split test product listings, price is the element that has the most impact on conversion rates.
Most affiliates have a love-hate relationship with Amazon’s affiliate program.
Payouts are low, but conversions tend to be high.
But one thing is for sure, affiliates are one of the secret weapons that Amazon uses to achieve high search rankings on Google and to get so much targeted traffic for free.
The beauty of affiliate marketing is that as a vendor, you pay affiliates only once a sale occurs. Otherwise, you can enjoy free traffic and links.
If you don’t know what affiliate marketing is, it’s basically a commission-based reward system where a vendor pays an affiliate a small commission for referring a customer or a sale. In other words, an affiliate puts a special link on its website, and after a customer buys a product through that link, the affiliate earns a commission based on that sale.
Pretty straightforward process.
Compared to information products and services, in the eCommerce world, because profit margins are lower, affiliate commissions tend to be only 5-10% of the selling price.
Affiliates are usually attracted to high ticket products (think: furniture, technology), because commission for a two thousand dollar sofa can be enough to pay web hosting for the whole year.
Recently Amazon has decreased the affiliate commissions for almost every product category, which caused anger in the affiliate marketing community.
If your products are high-ticket with profit margins of over 20%, then this is your window of opportunity to find affiliates that are desperately looking to move away from Amazon’s affiliate program.
Unless it’s a private label brand of some big chain store, have you ever seen a brand available only in one place?
Companies work on positioning their brands in the mind of potential customers through various marketing approaches. But when it comes to distribution, every brand owner wants to push it to as many locations where their customers pay attention and spend money.
Why would you limit your reach to only your web store or only one traffic source?
You almost certainly can’t beat Amazon, and you shouldn’t.
They have a fanatical fan base that’ll buy only there and nowhere else. So besides marching your way up on search rankings on Google, it won’t hurt to list your products on dominant marketplaces, especially if you sell branded private label products.
According to SEMRush, the biggest traffic source for eCommerce sites is direct traffic. It’s the one where people type a website directly in the browser bar. This is typical for stores whose name is present everywhere.
Think about listing your branded products on as many relevant marketplaces.
Amazon isn’t great nor does it focus on every traffic channel.
Influencer marketing is a perfect way to increase brand awareness and generate direct sales. Pinterest is great for brands whose target audience is women. Twitter is great for tech products. TikTok for millennial customers. Remarketing is a cheap way to strengthen the brand position…
This marketing mix leads to an increase in direct traffic and ultimately the valuation of brand and business.
Remember the famous napkin sketch that Jeff Bezos draw in the early days of Amazon?
To this day, product selection is one of their four core principles of growth.
Without wide selection, there is no growth. Without small brands, there is no Amazon.
I would recommend that you read “The Everything Store” by Brad Stone. Pay close attention to the part where he talks about how and what Amazon will do to get famous brands to sell on their platform.
Yes, more than half of the online sales happen on Amazon, but keep in mind that about 55% of those sales come from third-party sellers.
So if you are a brand with a handful of unique products then definitely don’t ignore Amazon as a large awareness channel. Adopt the omnichannel approach and build your audience off of Amazon, while strengthening the positions at the biggest buyer search engine.
This has a synergy effect. The bigger the audience, the easier it is to rank on Amazon. The higher you rank, the more people will search for your brand.
AmazonBasics might be a threat to some niches, but overall, their sales are only about 10% of the total sales of third-party sellers. And also, as its name suggests, those are relatively basic products with no uniqueness. Mostly, its purpose is to fill a few demand gaps. This strategy is nothing new. Wallmart, Costco and almost every market chain have their own private label brand of basic products. Have you seen it dominate the whole store? No! Because that would go against the wide product selection principle.
eCommerce is not just about listing a product on a marketplace or making that one sale through Facebook ads. It’s about being there through the whole buying cycle and nurturing every lead before and after the sale.
Hope you got some value out of this 🙂