A REVIEW OF AMAZON'S E-COMMERCE: TYPES, TACTICS, MARKET DYNAMICS AND BUSINESS INSIGHTS

 

WHAT IS E-COMMERCE?

E-commerce is like the online mall where people buy and sell stuff. You can do it on computers, tablets, phones, and other smart gadgets. It's a huge marketplace with lots of things to choose from, making it super competitive. You can practically get anything you want online, making shopping easy and convenient. Some businesses only sell online, while others have both online and physical stores. E-commerce covers different ways people and businesses trade with each other, like businesses selling to customers or people selling things to each other. It's a big digital world where transactions happen between businesses, from businesses to customers, between people, and when customers sell to businesses. It's everywhere and can adapt to different situations in our connected world

INTRODUCTION OF AMAZON

In the world of online shopping, Amazon is the go-to place. It's like a big online store where you can find almost anything you need. Imagine a place where it's easy to shop and there are tons of options – that's Amazon, the biggest online store out there. Did you know that in the year 2022 alone, Amazon's annual revenue soared to a staggering $386 billion? This figure not only reflects the sheer magnitude of its influence but also underscores its unparalleled dominance in the global market. As the industry giant of online shopping, Amazon has not only revolutionized the way we shop, but it is now widely associated with unmatched ease of use and a vast selection of products. Amazon's unprecedented success can be attributed to its user-friendly design, quick shipping choices via Amazon Prime, and the important data it gains from customer feedback. The company currently holds a dominant market share of over 40%. Embark on an extensive journey as we examine every part of Amazon's e-commerce empire, from its great reputation in customer service to its diverse range of products and user experience. Together, let's explore Amazon's complex environment and learn what makes it the clear leader in online shopping.Top of Form

A BREIF HISTORY OF AMAZON:

The evolution of Amazon, since its inception in 1995 as a humble bookselling platform, is a testament to its dynamic growth and innovation. Expanding beyond its origins, Amazon introduced third-party services in 2000, empowering external vendors to thrive within its ecosystem. The groundbreaking launch of Amazon Web Services (AWS) in 2002 marked a pivotal moment, establishing Amazon as a technological powerhouse. In 2005, the introduction of Amazon Prime revolutionized online shopping with expedited shipping and exclusive benefits. The acquisition of Whole Foods in 2017 showcased Amazon's venture into the grocery market. Fast forward to 2023, Amazon Bedrock emerged as a new frontier, reflecting the company's ongoing commitment to diversification. As we peer into the future, the concluding section offers insights into what lies ahead for this e-commerce giant. This journey through Amazon's milestones underscores its adaptability, innovative spirit, and ongoing commitment to shaping the future of online retail.

AMAZON'S FULFILLMENT MODELS: UNRAVELING THE DYNAMICS OF FBA AND FBM BUSINESS MODULES:
FBA (Fulfilled by Amazon) is an Amazon service that allows sellers to send their inventory to Amazon. Amazon then takes care of storing, shipping, and managing returns for a fee. On the other hand, FBM (Fulfilled by Merchant) is when the seller independently manages the storage, shipping, and returns of their products.

1. 1.     Fulfillment by Amazon (FBA):

• Module of amazon where you list your product on amazon seller account
• Send your product to amazon fulfillment center
• Amazon stores it
• When the customer makes a purchase, amazon picks and pack it up
• Deliver it to customer and like that sell your product without you making all the effort because all the work will be done by amazon for you. 

GOALS: Find profitable product: high sales volume, low/ No competition, you can do custom branding, easily shipped to amazon, optimize the listing, launch a product and be on no 1 page.

1. 2.     Amazon Fulfillment by Merchant (FBM):

• With FBM, sellers have more control over the fulfillment process. They handle picking, packing, and shipping the products to customers.
• Sellers can choose their preferred shipping carriers, methods, and shipping speeds. This flexibility enables them to customize the shipping experience for their customers.
• FBM typically incurs fewer fees than Amazon's Fulfillment by Amazon (FBA) service. Sellers are responsible for their own storage and shipping costs.
• Sellers must manage their inventory and ensure products are in stock. This includes updating product availability on the Amazon platform.
• While FBA offers Amazon Prime eligibility for products, FBM sellers need to handle their own Prime shipping requirements to offer Prime benefits to customers.
• FBM sellers are responsible for handling customer inquiries, returns, and any issues related to the order fulfillment process.
• To use FBM, sellers need to meet Amazon's performance and shipping standards. They should ensure timely shipping, provide accurate tracking information, and maintain a positive order defect rate.
• FBM is often suitable for sellers with unique or handmade products, sellers with their own fulfillment infrastructure, or those who prefer to have more control over the shipping process.

Goals: Efficient Order Fulfillment, Cost Control, Customer Satisfaction, Listing Optimization, Competitive Pricing, Custom Branding, Inventory Management, Fast and Reliable Shipping, Positive Seller Metrics: Diversification, Adaptability.

WHAT DO YOU NEED TO START?

BUSINESS MODELS OF AMAZON

• Retail Arbitrage:

In this type seller buys discounted items and flip them on amazon, e.g. buy item with discounted price like 50 dollars and flip them on amazon at 100 dollars and make a profit of 35 dollars after cutting Amazon fees, Low Risk, low cash needed, not reliable source, par-time work, not scalable. Bad business model

·        Wholesale:

In wholesale business type seller Buys items on wholesale from brands and sell on amazon, easy job but with high competition, require brand authorization letter, GST number and large inventory.

·        Private labeling:

Find a winning product, a product from already manufacturing companies and swap your brand on it and sell it on amazon, hard to find product, old school private label is almost dead and over-saturated (china and million sellers, Amazon basics), GST number, register trademark and logo.

·        Creating your own Product:

In this type seller create a new product with some ideas that are new and not existing, sell it on website amazon and shopify, less competition. Create Unique, Branded and product you feel passionate about, make it a Brand.

WHAT IS STEP BY STEP STRATEGIES TO DO BUISNESS ON AMAZON?

1.    STEP 1: Find a Product:

Criteria high sales (free JS sales estimator and 999 trick) and low reviews, bad listing, low competition, lightweight, brandable, room for improvement, Unique, consumable, Viral, Trending upward, Premium.

HOW TO DO PRODUCT RESEARCH?

• Best method: Create a unique your own product.
• Product research by paid tools: Helium 10 (Blackbox and cerebro) and jungle scout (estimate daily, monthly and trend of sales, competition score, opportunity score)
• Amazon best seller List: Brand analytic sheet, amazon best-selling products, highly competitive and high searched products, check ASIN
• Amazon search Bar: Negative string or random searching.
• Free method: Google keyword planner, Google trends, Amazon searches, Amazon product oppurtunity explorer if you have brand registry. You search and product did not show that will be your light bulb for idea.

THINGS TO CONSIDER WHEN PRODUCT HUNTING:

1. a)      Reviews and ratings:

When assessing product performance on Amazon, an integral step involves a detailed examination of reviews and ratings. Specifically, it is crucial to scrutinize any negative reviews, especially those that contribute to 1-star and 2-star ratings. By delving into the reasons behind these low ratings, sellers can gain valuable insights into customer grievances and pinpoint areas that may require improvement. Understanding the specific issues raised in the negative reviews allows sellers to address concerns, enhance product quality, and potentially mitigate future negative feedback. Additionally, this proactive approach demonstrates a commitment to customer satisfaction and can contribute to building a positive reputation on the platform. Regularly monitoring and responding to customer feedback is an essential practice for maintaining product integrity and fostering trust with potential buyers.

1. b)      BSR and listing AGE:  

Leveraging Best Seller Ranks (BSR) to estimate monthly sales is a valuable strategy in gauging a product's market performance. By inputting the BSR into a sales estimator tool like Jungle Scout, sellers can obtain an approximation of the monthly sales volume for a particular product. However, it's crucial to note that while BSR offers insights into sales velocity, listing age is another vital metric that demands attention. The age of a listing indicates how long a product has been listed on Amazon, and older listings may enjoy a certain level of preference from the platform. In some cases, Amazon tends to favor products with a more established presence. However, this doesn't diminish the potential for competition against products with younger listing ages, such as those that have been listed for only 1 year or 6 months. Effectively navigating the interplay between BSR and listing age allows sellers to make informed decisions in a competitive e-commerce landscape.

1. c)       Buyers History:

When delving into the buyer history through reviews, a keen examination of top sellers' scales becomes pivotal. The focus lies in evaluating the consistency of sales across the top sellers. For instance, if the top seller has 20 sales, the second seller has 18, and the third seller has 15, it signifies a consistent distribution, creating an opportunity for a strategic entry by creating a distinct market gap. On the other hand, if the top seller boasts 20 sales while the second seller has significantly fewer, say 5-10 sales, it indicates a market dominance by the top seller, leaving limited room for new entrants. Understanding buyer history through this lens aids in identifying potential niches or areas where competition is more balanced, enabling savvy sellers to carve out their space within the market.

1. d)      Analysis of competitor:

In conducting a thorough analysis of competitors within the Amazon marketplace, it is imperative to delve into multiple key aspects that provide valuable insights. Begin by comprehensively examining pricing strategies employed by competitors, understanding the daily and monthly sales volumes, evaluating the age of their product listings, and scrutinizing customer reviews and ratings. The Amazon FBA fees incurred by competitors should also be taken into consideration to gauge their fulfillment costs. Additionally, analyzing monthly revenue can offer a comprehensive view of their financial performance. A critical metric to assess is the average rating, and a rating below 4.5 may signify a higher likelihood of returns. It is noteworthy that around 70% of top sellers should ideally boast a rating of 4.5 or above, indicating a satisfied customer base. Furthermore, when evaluating the top 10 sellers, it is advisable to ensure that none of them accumulate more than 1,000 reviews, as this could indicate a skewed or potentially manipulated feedback system. This holistic competitor analysis lays the foundation for strategic decision-making and positioning within the competitive landscape.

1. e)      Cerebro Product Rank (CPR):

The Competitive Power Ranking (CPR) serves as a crucial metric in assessing the competition to rank a product on page 1 of Amazon search results. This metric provides an estimation of the sales required over a specific duration, typically 8 days, to secure a position on the coveted first page. For instance, if the CPR is calculated at 196, the daily sales required to achieve page 1 ranking would be 196/8, equaling 22 units. In essence, sellers aiming for page 1 visibility must strive to sell at least 22 units daily to meet the competitive threshold. Therefore, identifying products with a lower CPR becomes a strategic imperative, as it implies a more manageable level of competition and enhances the likelihood of achieving the coveted page 1 ranking. Sellers are advised to prioritize products with lower CPR values for a more effective and successful Amazon ranking strategy.

2.    STEP 2: Make a Brand:

In the realm of product creation and branding, several key elements contribute to shaping a unique and compelling identity. It all begins with the story – a narrative that captures the essence and purpose behind the product. This story, coupled with a defined creed or set of beliefs, forms the foundation of the brand. The choice of a name, accompanied by a memorable logo and icon, adds visual and symbolic elements to the brand's identity. Additionally, incorporating specific rituals and using a targeted language of keywords helps create a cohesive and recognizable product image. To strengthen the brand further, having an anti-believer or a challenger mindset can spark innovation and differentiation. Finally, having a leader or brand ambassador who embodies the values and vision of the brand adds a human touch, fostering trust and connection with the audience. In essence, the interplay of these elements crafts a distinct and resonant identity for a product or brand in the market.

3.    STEP 3:  Create Raving Fans:

Foster a community of dedicated fans who not only rave about your product but actively spread the word and leave glowing five-star reviews. Engage potential advocates through various channels such as product launch groups, targeted Instagram advertising, strategic email campaigns, compelling blog content, captivating YouTube videos, informative podcasts, and an engaging presence on Facebook. Offering free samples can be a powerful way to generate interest and create a buzz around your product. Remember, a better story not only captivates but also inspires loyalty, turning satisfied customers into passionate advocates who become integral to your product's success.

4.      STEP 4:Test your Idea/ Raise money:

Before diving into full-scale implementation, rigorously test your idea to ensure its viability. Conduct market research, gather feedback, and assess the feasibility of your concept. Simultaneously, explore avenues to raise necessary funds for your venture. Whether through traditional methods like loans or innovative approaches such as crowdfunding, this step is crucial in laying the financial groundwork for turning your idea into a reality. Balancing idea validation with securing funding sets the stage for a more informed and resource-backed journey toward bringing your vision to life.

5.      STEP 5:Find A manufacturer:

After finding your right product, you have to find a manufacturer which can make and supply your product to Amazon inventory. The major key points to find a supplier are following:

·         Find a manufacturer on Ali BABA, Google and local manufacturer

·         Identify the best supplier

·         Get pricing and negotiate

·         Design your product

·         Get a sample

·         Payment and inspection of your product

·         Shipping (sea shipping requires long time but cheaper, DHL and FEDEX by air less time but expensive)

6.    STEP 6: Create exceptional Listing:

Creating exceptional listing of your product with keyword rich title, description and bullet points which include all information about products to make customer understand your product. Better listing with exceptional Search Engine optimization will help Amazon algorithm to understand your product and amazon will show your product to relevant audience who is interested in purchase. The major key points to remember while creating listing of your product are following:

·         Add product with all the information on Add a product through inventory dashboard of amazon.

·         Create exceptional and presentable main image and others images.

·         Create high quality title enrich with keywords related to your product

·         Add Bullet points to explain your product benefits

·         Add Description of product

·         Add Variations if have any

·         Vital info

7.    STEP 7:  Launch a Product:

Launching a new product on Amazon provides a unique advantage during the initial 30-60 days, often referred to as the "honeymoon period." Amazon grants preferential treatment to new products, offering better organic and advertising positions. Successfully utilizing this period is crucial for easier ranking and visibility. This window allows you to establish a strong foundation by sending the right signals to Amazon, making it easier to rank on various keywords. However, once this period passes, the challenge of achieving high rankings becomes more complex. Careful planning, starting from the selection of the launch date, is essential to make the most of this advantageous time frame.

Here are some Key Points to remember before launching product:

1. a)      Have a Great Product:

Success relies on the quality of the product.

1. b)      Craft an Exceptional Listing:

·         Optimize product images and pricing.

·         Implement robust SEO for indexing and ranking.

·         Leverage A+ content for a presentable listing.

·         Integrate an impactful brand story.

·         Plan strategic Q&A to support SEO efforts.

1. c)       Understand the Ranking Matrix:

·         Relevance (SEO) and conversion rate are crucial.

·         Anticipated sales, sales count, and total revenue matter.

·         Click-Through Rate (CTR) influences ranking.

·         Price adjustments can send signals to Amazon.

·         Consider FBA/FBM, Reviews & Ratings, BSR, and Listing age.

1. d)      Utilize PPC for Rankings:

·         New products have a "honeymoon period" for preferential treatment.

·         Send right signals to Amazon in the first 30-60 days for easier ranking.

·         Define your goal to rank among the top products in your sub-category.

·         Calculate budget and estimate TACOS (Total Advertising Cost of Sales).

·         Master keyword research by analyzing competitors and using tools.

·         Utilize the network effect and consider CPR for keyword selection.

·         Develop SOPs (Standard Operating Procedures) for launching PPC campaigns. 

8. STEP 8:Advertising:

Advertisement on Amazon refers to the various paid promotional opportunities available for sellers and vendors to promote their products and increase their visibility on the platform. Amazon offers several advertising options, and these advertisements can appear in different locations on the site. 

Here are some key points for Amazon advertising:

·         You must do exceptional Search engine optimization (SEO) Title, description, bullet points and search terms keywords

·         Start Social media advertising

·         Create Facebook group to engage audience and make them aware about your product before launching and build some hype.

·         Click through rate is the calculation of how many customers have impression of your product and how many clicked on your product. Increase in CTR boost your sale and ranking

·         Make strategy to increase Purchase rate

·         Make effort to increase Sales velocity

·         Make e-mail listing of the customer who may be interested in buying your product and start e-mailing them to spread awareness

·         promote your brand/ product through influencers

·         buildup of hype before launching product

·         Do advertising on amazon Pay Per Click (PPC)

·         Promotions and coupons 

Enhanced brand content (A+ Content)

CONCLUSION:

In conclusion, Amazon is an online market and is a part of E-commerce business module where people come make their purchase through electronic media online. The step-by-step strategies for a successful Amazon business encompass meticulous product research, brand creation, and strategic planning. Beginning with finding a product that meets specific criteria such as high sales potential, low competition, and brand ability, the process involves utilizing various tools and methods for comprehensive product hunting. Evaluating reviews, Best Seller Ranks (BSR), listing age, buyer history, and competitor analysis are integral steps in making informed decisions about product selection. The creation of a brand involves weaving a compelling story, establishing a creed, selecting a name and logo, and engaging in rituals and keywords that define the product's identity. The cultivation of raving fans, testing ideas, finding a manufacturer, and creating an exceptional product listing contribute to a holistic approach to success. The launch phase, especially during the honeymoon period, is crucial, and mastering the ranking matrix and employing Pay Per Click (PPC) advertising are key components. Finally, advertising on various platforms, enhancing brand content, and building anticipation through social media and influencers play pivotal roles in driving visibility and sales. These comprehensive strategies provide a roadmap for navigating the complexities of the Amazon marketplace, ensuring a strong foundation for sustained success.