We don’t like to do predictions, because let’s be honest, they are accurate only to the point of the predictor’s ability to see trends and some amount of happenstance.
But we do our best to combine insights of working with thousands of clients through various economic cycles and stages of their business, and evolution of Amazon itself.
My recommendation is to take 3 themes below not as a prediction, but as a potential adjustment to how you think, plan, and execute on your Amazon business in 2023.
- Year of fundamentals
Whether you agree we are in a recession or not, we are seeing inflation, pricing pressures, and a lot less accessible capital. This is a test for fundamentals of business:
product offers, channels, inventory management, marketing need to be scrutinized for true ‘evergreen’ nature and profitability.
2023 is a year of perfecting the essentials, rather than exploring the untested
What it means for your Amazon business:
Assess your Amazon catalog to cut out slower selling and/or less profitable items
Review your assets – images, videos – on your pages and storefront to make sure they are working hard for you
Get intimate with inventory management if you are using FBA
- FBA Inventory Management will compete with Marketing for the amount of attention needed to run a successful Amazon business
We are past the vows of the COVID induced supply chain issues, but the ripple effects of that continue. Amazon expanded their warehouse capacity during the pandemic, and now it is pulling back, also fueled by its shift from growth to optimization phase of its own conglomerate business.
Amazon has come out with a number of changes that will punish frivolous FBA inventory management (additional storage fee for over 26 weeks, bidding for increasing FBA storage limit, to name most recent ones).
You don’t want to be making gains on your top line, while losing money in your inventory management.
What it means for you on FBA:
- Scrutinize what SKUs to send to FBA
- Send smaller and faster inventory replenishment cycles
- Toggle between pallets and boxed shipments, if needed
- Use hybrid merchant fulfilled and FBA method where possible
- Embrace the 80/20 mental framework
80/20 principle has become core of our approach to getting results for our clients.
Most common application of the 80/20 rule is: 80% of your results derive from the 20% of your efforts. But it’s a law that works through nature, personal life, business.
In Amazon world we see majority of sales produced by a handful of SKUs, regardless of category, level of sales, etc.
Majority of returns in ads are produced by a handful of well working assets or keywords.
It does not remove the need for testing. But it forces you to scrutinize for leverage in every dollar invested, every item made, and every hour of human resourcing spent.
2023 will force all of us to strip out the non-essential, cut out the clutter, embrace the boring work (such as inventory management, apologies to any operational aficionados there!). Because Amazon, which has never been easy to thrive on, will be placing even more constraints on sellers, as it starts focusing on its own profitability and costs optimization.