When it comes to finalizing your Amazon launch strategy 2021, it’s worth brushing up on what’s ahead for Amazon this year. Whether you’re just getting started selling on Amazon or you’re a long-time vendor, read on for insights. Let’s investigate Amazon’s trajectory for 2021.
In this article, you’ll find informed predictions about:
- • The rise of live video marketing
- • The fall of private-label brands
- • The fate of small brands among larger holding companies
- • The future of tech-centric grocery shopping
Personalization: Amazon Influencers
The social media marketplace welcomed plenty of growth in 2020. One of the biggest advancements was the introduction of shopping capabilities on Instagram. Users can now browse products and make purchases without leaving the app. We can expect Amazon to adopt this method of convenient, fun, on-platform shopping.
Amazon first enabled video ads in 2019. Since then, the company has expanded its video capabilities. Sponsored Brands, for instance, can upload snappy video ads onto a product’s landing page. This newer form of advertising looks great and adds personality. Plus, this unexpected media helps to distinguish the brands that use it.
Video marketing is generating a lot of interest because of its profound impact on consumers. By supporting video options for brands, Amazon helps its customers make buying decisions. An explanatory video can go a long way on the sales path. In other words, users are more likely to buy after watching a video ad than after reading a product description. A recent marketing report found that:
- • 69% of consumers stated that they’d prefer to watch a product video rather than read a text post, infographic or manual.
- • 96% of consumers have watched explanatory videos to learn more about a product or service.
- • 84% of consumers report they’ve been convinced to purchase a product or service by watching a video.
- • 93% of marketers who use video ads say they are an essential part of their marketing strategy.
- • The number of brands employing video marketing has increased by 41% since 2016.
Clearly, video represents a wealth of potential for Amazon, sellers and consumers alike. We can look forward to Amazon further developing its video marketing strategies. This is especially pertinent as YouTube and Facebook grow ever more saturated. As they do, Amazon will emerge as a place for brands to achieve a high ROI on video ads.
The Amazon Influencer Community
Amazon is also trying to make a name for itself in the lifestyle space. Through Amazon Live, customers can watch livestreams and view lifestyle content from the Amazon influencer community. This facet of Amazon exists through its Associates program. Associates is designed to bring creators and publishers together in the Amazon space.
To become an influencer on Amazon, a creator must already have a popular YouTube, Twitter, Instagram or Facebook profile. Amazon will then:
- • Look at the number of followers an influencer has on other platforms
- • Assess how engaged they are with their audience using proprietary engagement metrics
- • Decide whether that creator is suitable for the Associates program
- • Assign that influencer a vanity URL on Amazon
Influencing operates as usual on one of these Amazon pages. The influencers will post content, including livestreams and video reviews, recommend certain products and share their brand stories.
Amazon’s dip into the influencing space is intriguing, as it foretells a more advanced use of video and lifestyle content. Cleverly, this program lets influencers earn money when customers purchase affiliate products. This streamlines the payment process for content creators. Moreover, these influencers help drive traffic from their highly engaged audiences to Amazon. The platform thus extends its reach and builds its brand simultaneously.
Restriction: Amazon’s Private-Label Products
You might remember when Amazon was outed for ranking its private-label brands above third-party products. This news broke in late 2019, and it created somewhat of a publicity storm for the brand. The repercussions of this will likely impact the way Amazon behaves.
Private-label products are goods or services produced by one company only to be sold under another’s label. In 2019, Amazon insiders revealed that the company’s private-label products received extra ranking boosts, thanks to its algorithm. Experts, sellers and consumers alike voiced their concern over this news. The consensus seemed to be that Amazon was unfairly propping up its products.
Before, the products in the top-ranking spots carried a sense of outstanding performance. Consumers could assume that these products had earned a place on the first search engine results page (SERP) based on:
- • Product quality
- • Keyword ranking and relevance
- • Prime eligibility
- • High user ratings and positive reviews
- • Sales volume
After the news of Amazon’s preferential algorithm broke, though, consumer trust plummeted. This opened the door for regulation, restriction and impending antitrust investigations. Now, as governing bodies around the world crack down on big tech, Amazon will probably be a little more careful with its public relations.
Potential Profit Losses
In addition to this public disappointment, Amazon may have experienced a drop in profits through its private-label brands. According to an article from Forbes, these products were often much cheaper than those of third-party competitors. This meant that Amazon’s 15% cut from third-party sales would be greater than the price of, say, an Amazon Basics product.
It seems like the math doesn’t quite add up. Or, it doesn’t add up to enough to be profitable in the face of public backlash. Therefore, Amazon will likely restrict its investment in its private-label goods. Once again, the top spots on the SERPs will belong to sponsored, relevant and top-quality products.
Acquisition: Tougher Competition
Whether you’re a small-time company or you’re Amazon itself, it’s all about the bottom line. Here’s why you can anticipate greater competition and more acquisition on Amazon in 2021.
Larger Players on the Platform
It’s common to hear about individual sellers turning to Amazon to try to earn passive income. In 2021, we’ll hear a lot more about larger companies playing the same game. An industry report posits that 72% of brands will have Amazon pages within the next five years. This means that even established brands will look to Amazon to make sales and gain customers.
Consider the following figures from the report:
- • 97% of brands on Amazon believe they actively acquire new customers by selling on Amazon
- • 84% of brands that do not sell on Amazon think they could earn new customers by selling on Amazon
- • 32% of brands on Amazon report that sales on the platform account for up to three-quarters of their total digital sales
- • 61% of brands are trying to develop a relationship with Amazon to access a larger audience
We can see that brands are recognizing Amazon’s potential concerning exposure, technology and convenience. Expect to see more and more businesses jumping on the platform to mine these benefits.
Bigger Fish on the Marketplace
Last year saw many holding companies buying up smaller, third-party brands on Amazon. These acquisitions gained momentum due, in part, to the pandemic’s impact on e-commerce.
While many other industries flatlined in 2020, e-commerce ballooned. According to Modern Retail, Amazon’s third-party seller services grew by 53% compared to numbers from the same time in 2019. These sellers offered safe, distanced alternatives to conventional shopping. Now, consumers continue to propagate this growth.
Naturally, larger holding companies began to pick up the pace of acquisitions. Even though this strategy has existed on Amazon for years, the action potential of a single third-party brand has skyrocketed. Giant companies are accelerating the clip at which they buy out these smaller brands. These companies include:
- • Thrasio
- • Perch
- • Boosted Commerce
This shouldn't necessarily alarm consumers. Thrasio, for instance, implements quality checks on its newly acquired products to avoid legal issues down the line. Plus, the company might redesign, repackage or reprice items to suit customer preferences.
Sellers, on the other hand, have more to consider. A hefty buyout offer might be a no-brainer for some. Other sellers may want to observe these acquisitions more closely. How will the Amazon marketplace develop if these holding companies continue to consume small sellers? Keep a close eye on this in 2021 if you’re an Amazon FBA seller.
Expansion: Everyday Grocery Shopping
When Amazon acquired Whole Foods in 2017, people weren’t exactly sure what would happen to the grocery store chain. Though we did see plenty of changes, the real genius of this acquisition is only seeing the light now. Whole Foods help set the stage for Amazon’s latest foray into everyday grocery shopping.
Amazon Fresh and Prime Now
Amazon’s grocery delivery service has slowly matured since its inception in 2007. The service now operates in most major cities in the United States. It also operates in such major global cities as Tokyo, London and Berlin. In 2017, with Whole Foods now under Amazon’s belt, the platform could expand its Fresh brand. Then, in 2020, Amazon unveiled its first physical Fresh grocery store in Los Angeles.
The new store features Amazon’s exciting Dash Cart technology. This smart cart allows shoppers to skip the cashier line altogether. The cart uses sensors, a scale and advanced technology to detect what shoppers have picked up. Once the shopper leaves the Fresh store, they’re charged on the card they’ve linked to their Amazon account.
One area that can still improve, however, is user integration across various channels. Consider that Amazon currently offers Prime Now in addition to the Amazon Fresh delivery service. Let’s examine the differences between the two.
- • Free for Prime members (used to be $14.99 per month)
- • Offers mainly groceries
- • Delivery and pickup options
- • Free delivery with minimum order spend
- • Free for Prime members
- • Offers practically anything: groceries, home goods, meals from restaurants, electronics
- • Delivery and pickup options
- • Free delivery, with exceptions
The similarities between these two services foreshadow an eventual merger. This would make a lot of sense for Amazon. If it can streamline its grocery services, the customer experience will improve as a result.
In 2021, you can predict that Amazon Fresh will gain traction in more cities across the globe. Furthermore, its integration with other aspects of the Amazon platform will improve. A merger of Prime Now and Fresh could occur.
Amazon’s new high-tech way to grocery shop sounds revolutionary. Be aware, though, that other brands have been moving in this direction. In fact, in 2020, Instacart and Walmart both outperformed Amazon in the groceries sector.
Walmart is exceptionally competitive here due to its prominence as a brick-and-mortar chain. It accounts for 26% of grocery spending in the United States, according to Finances Online. Moreover, during the early days of the pandemic, Walmart adapted to contactless, curbside pickup. This positioned it as a durable figure in the evolving world of digital grocery shopping.
You could say that in many ways, Walmart is trying to become more like Amazon by pushing its online presence. At the same time, Amazon is trying to become more like Walmart. Amazon will likely keep investing in its roster of physical stores:
- • Whole Foods
- • Amazon Fresh
- • Amazon Go
- • Amazon Go Grocery
- • Amazon Books
- • Amazon 4-star
We’ll likely see Amazon add to the number stores it operates under one or each of these names. It could even expand into other areas, developing new concepts to compete with brick-and-mortar bigshots. Be prepared for Amazon to have a larger stake in the digital groceries marketplace.
Snapshot of Amazon in 2021
Numerous experts have done their best to forecast the projects Amazon will take on this year. That said, no one can deny that the company is excellent at being unpredictable. Amazon seems to keep dipping into every imaginable industry. Don’t be surprised if we see Amazon dominate in the influencer and physical retail spheres this year.
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