Internal data from Amazon is currently being examined by Reuters, including emails, strategic documents, and business plans designed to create a private label product for Amazon's brand portfolio. The documents also contained schemes for manipulating the search term results for their benefit. Surprise?
It's a common practice for e-commerce sellers in the product launch phase to avoid Amazon-dominated categories. However, the threat of a company that owns a commerce platform designed to squeeze out margins in the market is prevalent even in the brick and mortar space. Huge retail stores and wholesalers like Walmart, Target, and Costco have been gouging out markets within their platforms to increase their revenue, so why is Amazon under fire in the US, Europe, and India?
Data. Amazon has an unfair advantage of being the best e-commerce platform globally and, thus, a mass amount of consumer information is available to them. Private labels created by Walmart and other retailers don't have the advantage of quickly organized and accessible data. The documents that Reuter is examining describe how Amazon uses its data collection to create these knockoff brands.
In India, a famous retail brand called "John Miller" suffered from Amazon's project "The Solimo Project." The Solimo Project applied a process that used information obtained from sellers to develop Amazon products and then leverage them on their platform.
Amazon executives delivered ambiguous responses to the accusation, stating, "As Reuters hasn't shared the documents or their provenance with us, we are unable to confirm the veracity or otherwise of the information and claims as stated. We believe these claims are factually incorrect and unsubstantiated." Even if data didn't back up the claim as Amazon suggests, Amazon still could exercise anti-competitive practices.
Why is this important to brands that want to launch products on Amazon?
As a registered brand owner on Amazon, you should be hyper-aware of the information that Amazon requests on its platform. More often than not, data is collected, and information required within the Seller Central console should be weighed in with a cost to benefit ratio relative to the benefit of the consumers. So keep one eye open and consider employing these practices to mitigate the risk of Amazon swooping in and dominating your niche.
At a certain point in every sellers' Amazon lifetime, they'll experience a period of stagnation in one form or another. As a solution, Amazon released a program called Growth Opportunities. Growth Opportunities provides sellers with an overview of opportunities to take advantage of and to grow your business on Amazon further. It outlines the different features available to optimize your selling strategies better.
Here are the programs in the new Growth Opportunities feature:
How to use Optimize on High Potential ASINS with Growth Opportunities
High Potential ASINs are products with high potential but don't currently contribute to a high amount of revenue. Amazon uses machine learning algorithms to estimate whether an ASIN is "high potential" by looking at the estimated potential increase in customer traffic in your products and other engagement metrics. Applying the suggestions by Growth Opportunities to these High Potential ASINs can provide your products with a higher chance of success.
As a seller, it's essential to be strategic and selective when implementing the changes Amazon's growth opportunities suggest and see if it aligns with your overall brand goals. The growth opportunities that the program presents are not a one-size-fits-all, but it gives sellers a stepping stone in their ongoing journey on Amazon.
A fine line has always separated Amazon and Shopify entrepreneurs in the online marketplace; however, many Amazon sellers will use both rather than making a switch to Shopify entirely. Sellers haven't fully diffused to Shopify because shifting sales from Amazon to Shopify would decrease their existing sales volume in Amazon.
Why? Amazon uses specific metrics to determine if a product is relevant or not in its marketplace. Arguably, the best relevancy metric is sales; if a seller shifts their recurring sales over to a different platform, the algorithm will determine a decrease in Amazon conversion. This is evident as their marketing strategies include Amazon incentivizing sellers to drive outside traffic to Amazon; however, TOS prohibits links that lead outside of Amazon.
That said, selling on Amazon is not a 100% guaranteed venture, and many Amazon sellers use Shopify as a fallback to gain additional traffic outside the marketplace giant.
Driving forces that lessen the gap between the Amazon and Shopify marketplace:
Multi-channel fulfillment: In May 2020, Amazon developed a Multi-Channel Fulfillment (MCF). This fulfillment service uses Amazon's warehouses to store products and fulfill orders on and off Amazon platforms. For example, with MCF, a Shopify seller can use Amazon's logistics systems to fill their store orders.
Tools and Services Offered by Shopify: As an Amazon seller, the data and tools in the seller central console that you have at your disposal are limited to Amazon sellers. Having access to Shopify tools and services provides sellers with crucial information to help progress their selling journey online.
Amazon Aggregators: With the rise of Thrasio, Amazon aggregators thrived within e-commerce. Now, as the trend continues, many have shifted gear in attempts to acquire profitable e-commerce brands outside of the Amazon marketplace. It's only logical that investors will maximize their gains in the market, and having a Shopify site is a good contingency plan.
But as evidence shows, unless you drive more traffic to your brand and market share, the risk of diluting your sales in either marketplace will be the biggest hurdle for both platforms. Therefore, to remain relevant on both, sellers need a strategy that will focus on a primary platform while maintaining their presence and reputation on the other.