In Part I we talked about contrarian truths – assumptions and beliefs check that I suggest to do as the baseline for 2024 planning of goals, budgets, resourcing for your brand’s Amazon channel.
In Part II we will talk through 7 trends we see as emerge in the Amazon space in 2024.
1. Ecommerce market growth for the category
In many ways Food and Beverage category is the last category frontier when it comes to the adoption of e-commerce as a channel. For obvious reasons: it is harder to sell food online, both logistics and economics reasons. But Covid pandemic really made headway in consumers adoption of Amazon for their granola bars, matcha tea and other non-perishables. Amazon has also made significant progress the ‘last mile’ delivery, cutting average speed of delivery for food, including perishables, to few hours in the US metropolitan areas.
According to Statista, online grocery category will grow18% from 2023 to 2024, from 159 to 187 billion $ in sales. That is an impressive double digit growth.
2. More insights and data analytics from Amazon
This is a very exciting trend – Amazon continues to release data into brand relevant insights, such as customer journey, searchability, stacking against competitors, repeat buyer. It also gives brands an ability to market to brand followers or segments of customers on Amazon. While this is not free form email marketing (communications are very templated and rigid in what you can say). Yet, it is still an ability to announce new launch or announce a promotion to your brand followers on Amazon
3. More transparency and attempt of fairness from Amazon
Government-backed pressure on Amazon culminated in the FTC filing of the anti-trust lawsuit against Amazon in September 2023. While trial is more than a year away (early 2025), between now and then Amazon is under tremendous pressure to show both goodwill and real actions in fairness towards sellers and buyers.
Our ultimate ‘wish’ for the sellers is freedom to set their price to customers without a risk of being punished or suppressed on Amazon. While somewhat sceptical it will materialize, we are confident that some tangible improvements in the area of transparency and fairness to sellers will happen.
4. Continued Amazon domination in the ecommerce for North America
Amazon owns 38% of All ecommerce sales in the US, and almost 50% of all product searches go to Amazon.
Even with the looming FTC suit, we do not see Amazon relevance for brands decrease, only increase. That makes consideration and strategy for Amazon a ‘must’ for any brand selling products to end consumers.
In simple words, whether you like it or not, your products will be sold on Amazon, and ignoring Amazon means not just lost opportunity, but risks to brand equity and brand control
5. Increasing complexity of Amazon catalog management
Catalog structure, specifically, managing and making changes has gotten more complex and also less forgiving. Catalog tasks, such as adding child, updating variation name, re-structuring parents now requires more work. Additionally, Amazon more and more dictates which categories within catalog browse node can have variations and not. We experience more listing splits.
6. FBA management improves
In the last two years we have seen encouraging improvements in the overall Amazon FBA management category. Its internal forecasting tool has improved significantly. While we do not rely on that solely, it has improved in accuracy, and thus, usefulness. Shipment creation process has been streamlined, now making manual ‘typo’ errors almost impossible. Lastly, reconciliation of lost/missing units has gotten more accurate as well. In simple words, we see less discrepancies units shipped vs. received, which makes follow up reconciliation a lot lighter.
6. Engagement, segmentation and brand following on Amazon become relevant
Going hand in hand with the trend of brand analytics, ability to do something with that customer and purchase patterns data is what making interacting with customers as our (very exciting) trend #6.
On the 3P side, Brand Tailored Promotions allow marketing to various segments of customers, such as top tier, at risk, repeat buyer, frequency of repeat purchases, psychographics (age, income, etc.). This translates to almost immediate sales lifts.
Ability to send announcement on new launch, or a promotion to brand followers makes a goal of growing brand followers on Amazon a meaningful one.
Amazon will never be a social media platform. It has, and remains a platform where keyword and rankings do the heavy lifting of getting results. However, these insights help brands have glimpses of brand audience on Amazon, and understanding of their customer and their buying journey.
We look forward to seeing an ongoing expansion of these marketing capabilities in 2024.
7. Amazon channel support model will be revolutionized
How do you manage, and grow your Amazon channel? Who does that, how it is incorporated within your business? All of that will be truly revolutionized, with big, visible shifts happening in 2024.
The previous 6 trends I spoke about are continuation of what has already been happening.
This one is a complete paradigm shift of the current model of Amazon support and management options.
The main force driving it is the ultraspeed of evolvement of the AI capabilities. Then the present environment of less VC and investor funds access, inflation and consumers watching their spending means more scrutiny by businesses of how they invest their money, and really squeezing more ROI from those investments.
That creates a perfect storm.
AI will replace a lot of technical expertise, streamline operational processes, do stuff that humans, expert humans have been doing and other humans paying to get done. A huge opportunity of businesses to save on their non-revenue producing lines of P&L.
Because of this huge shift in actual work and value re-defining, we anticipate needs for Amazon support to narrow to an advisory or a strategic role that comes with Amazon expertise.
As well as growth of the ‘do it with me’ model: internal resource can manage some pieces, AI will handle most of the tactical work, and brands will seek an outside expertise for an occasional help in solving problems, interpreting data, or doing an expert audit of their Amazon channel.
But the need of a human brain and expertise will not go away in 2024. So if Amazon is a strategic channel for you in 2024, and you know you will need an outside advisory or management expertise, then contact us via this link
Partner at Red Rocks Ecommerce