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The Marketer’s Guide to Amazon A report by Sellwin, a dentsu company 03 STATE OF ECOMMERCE
The Dominance of Amazon 4
MAXIMIZE REVENUE 05 ON AMAZON
Build Foundations 6 Assess Brand Health 7 Activate Advertising 11 Measure & Optimize 17
22 WHAT’S NEXT
Commerce Innovation TABLE OF CONTENTS
2 STATE OF ECOMMERCE + 2020 was the biggest year for ecommerce to date
In fact, ten years of growth were achieved just in three months. Companies with embedded ecommerce practices were best able to quickly pivot and capitalize on the opportunity.
U.S. Ecommerce Penetration, % 33
10 years’ growth in ShawSpring 3 months
16 14.4 13.2 11.8 10.7 8.8 9.7 7.2 8 5.6 6.4
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20-Apr Commerce, of Department U.S. America, of Bank Source: Research, Forrester Analytics, McKinsey Retail Practice
U.S. shoppers learned new behaviors and even lagging ecommerce categories saw a boost. Online grocery sales were estimated to grow nearly 53% in 2020 as consumers gravitated to the convenience and safety of online ordering. 43% of consumers tried curbside pickup for the first time, highlighting the evolving role of brick-and-mortar stores in the omnichannel approach to commerce.
Back-end ecommerce infrastructure moved to center stage. Retailers will continue to invest in supply chain enhancements, to best fortify their position and protect against future disruption.
Online pharmacy is the category to watch. Amazon Pharmacy launched in November 2020, two years after Amazon’s acquisition of PillPack for $753MM. Amazon is jumping into the fray of online and mobile prescription ordering and fulfillment services, a highly competitive space led by traditional brick-and-mortar retailers like CVS, Walgreens,
Walmart and Target. 3 STATE OF ECOMMERCE + In a year of economic instability, Amazon cemented its dominance in ecommerce
Amazon became the go-to destination for consumers to shop safely and reliably as the pandemic accelerated overall ecommerce growth. Investors noticed as well with the Amazon stock price skyrocketing to $3,275 by year end, up +76% from January. After delivering its largest quarter of all time in Q4 2020 at $125.6B, Amazon continues to project historic 2021 numbers across its retail presence, AWS and Advertising businesses.
U.S. Top 10 Retail Ecommerce Sales Share
Amazon 39.0%
Walmart 5.8%
eBay 4.9%
Apple 3.5% $386.1B Amazon The Home Depot 2.1% Sales
Amazon’s strength is in its infrastructure and logistics network that is constantly improving speed-to-customer delivery and building ever stronger loyalty and dependency. Within the past five years, Amazon has quadrupled its warehouse count, with a 61% year-over-year increase in number of warehouses in 2020 alone. This logistics network will not only improve last-mile functionality but expand product category availability as well.
*Amazon Advertising grew 64% YOY in Q4 alone, climbing to $21.5B in ad revenue for FY 2020 and stealing share from the Google/Facebook duopoly. Amazon’s portfolio has grown significantly from on-site sponsored advertising to lucrative media channels like Fire TV, Twitch, Kindle, Alexa/Audio, Display and Video DSP as well as new ad units launching in 2021. Even non-endemic brands are cashing in on Amazon’s rich audience data, proving you don’t have to sell on Amazon to succeed with Amazon.
*“Other” Category within earnings, widely perceived as Advertising + Maximize revenue on Amazon: Our approach
BUILD SOLID FOUNDATIONS
Establish operational best practices to fuel a successful and profitable Amazon business:
• Sellwin Ecommerce Audit • Policy & Pricing • Retail Readiness • Brand Stores
ACTIVATE ADVERTISING
Deploy a full-funnel media strategy: attract, engage, convert and retain
• Scalable across diverse portfolio of media channels • Deterministic first party data powers audience- based strategies
MEASURE & OPTIMIZE
Access and analyze rich data sets:
• Amazon Retail Reporting • Advertising Reporting & Insights • Amazon Marketing Cloud +
Build Solid Foundations
Back-end operational efficacy is foundational for driving long-term success. Amazon is a vast and complicated marketplace and focusing on critical business elements is a worthwhile investment. An audit of your current brand presence is a strong starting point no matter where you are in your journey: just starting out, preparing to launch products in a new category or simply wanting a refresh.
. BUILD SOLID FOUNDATIONS + Success starts with a Sellwin Ecommerce Audit, an actionable report that assesses your brand presence
ADVERTISING
• Sponsored Ads • Share of Shelf / Share PRODUCT DETAIL of Voice PAGE
• Media efficacy • Copy Review • Buy Box Improvement • Reviews & Ratings
SUPPLY CHAIN
• Inventory Performance FINANCIAL
• Demand Forecasting • P&L Assessment • Price Sensitivity • MAP Violations
CREATIVE • A+ Content INNOVATION • Brand Stores Maintaining competitive • Image quality and advantages video usage • Driving Incremental commerce opportunity • Testing & betas • Research & Insights
Our audit suggests recommendations for improvement, analyzes the level of effort required and anticipates the impact of each change. To request an audit for your brand, contact us at [email protected]. BUILD SOLID FOUNDATIONS + Create strong policies around authorized sellers and pricing
Authorized Sellers
Who can sell your product?
Amazon is a vast marketplace with a large and complex grey market. For that reason, many brands fear brand dilution from resellers and how it can impact customer experience. We suggest implementing authorized seller policies, which include an understanding of possible business names and websites that chosen sellers can operate on. The goal is to limit distribution of your brand’s product and create a legal foundation to protect your brand and clean up the distribution channel.
MAP (Minimum Advertised Price)
At what price can they sell?
A good research starting point will be to assess the competitive landscape to set the optimal MAP policy across retailers and selling partners. While Amazon (as a retailer) does not recognize MAP agreements for most brands, a strong policy to authorized sellers will prevent pricing violations on grey market goods and provide a defensive strategy in case you need to pursue legal action. BUILD SOLID FOUNDATIONS + Perfect your product detail pages
As customers on Amazon, we’ve all come across detail pages that offer terrible shopping experiences. Lack of information, misleading or confusing images or out-of-stock items result in customers being unable to complete their purchase.
Even among seasoned brands and sellers, there’s a huge opportunity to improve the detail page experience. This concept of digital merchandising is known as Retail Readiness and it’s necessary for any seller or brand on Amazon to launch product and advertising campaigns successfully.
Components of Retail Readiness
Product Detail Page Content • Relevant titles, SEO-optimized copy and clear product images
A+ Content • Enhanced branded content on a PDP, created through self-service tools
Inventory • Maintain 95% in-stock rates to win search algorithm and Buy Box
Buy Box • “Win the Buy Box” through Prime offering, pricing and inventory
Customer Reviews • A PDP must have 15 verified customer reviews to promote products
Star Ratings • A 3.5-star rating or above is ideal
Click here to see a comprehensive guide to Retail Readiness on our website. BUILD SOLID FOUNDATIONS + Maximize your Amazon Brand Stores
Brand stores are an equally important complement to the PDP, representing a virtual, multi-page storefront on the Amazon website. They are created through a free, self- service tool that allows brands to tell a unique, branded story and stand out from competition.
Stores allow brands to:
Utilize branded rich content to highlight product and collection features
Generate new traffic sources for the brand and increase organic ranking
Create a multi-device experience across desktop and mobile
It’s important to note that stores are only available for vendors and sellers enrolled Amazon’s Brand Registry. This program enables brand owners to control their product listings and content and improve the customer shopping experience. In addition to Brand Stores, Amazon’s Brand Registry unlocks multiple marketing and advertising opportunities like A+ Content, Sponsored Brand tools, Amazon Brand Analytics and more.
Click here to see Amazon’s Brand Registry, Explained on our website. +
Activate Advertising
Amazon is forging aggressively ahead with their plans to dominate digital advertising market share. Ecommerce media spend is one of the fastest growing categories and Amazon is leading the charge. Brands can leverage Amazon’s reach, unique platforms, impactful formats and unmatched shopper audience data in impactful ways both online and offline. ACTIVATE ADVERTISING + A great Amazon strategy covers every step in the consumer journey
AWARENESS
CONSIDERATION
PURCHASE
LOYALTY
It’s important to develop a full-funnel strategy. Performance works best when supported by branding and every performance ad reinforces and shapes how customers perceive the brand.
There is more in-depth information about this on our website. Check out Mastering Your Media Strategy: Why Amazon is So Much More than a Sales Channel ACTIVATE ADVERTISING + Amazon’s predictive data helps brands reach consumers across the funnel
AUDIENCES
AWARENESS Mass Reach or In-target demographic but not browsing products or category
Have browsed category but have not CONSIDERATION browsed or purchased brand products
PURCHASE Have browsed products but not purchased or subscribed
LOYALTY Currently purchasing but not subscribing
The importance of building a data-driven audience strategy
Defining audiences is critical. The biggest benefit to advertisers is Amazon’s ability to capture customers’ behaviors across the Amazon ecosystem. This rich, granular data creates opportunities to reach and acquire new customers, serving relevant ads wherever they are in their shopping journey.
Conversion is important but a sole focus here limits your overall market potential and scale. Stay true to KPIs by stage and resist the urge to solely optimize to the lowest efficiency metrics. Brands should build an overarching audience strategy to be successful at multiple stages of the funnel. ACTIVATE ADVERTISING +
Amazon’s diverse media portfolio reaches consumers across platforms and devices
Here’s how brands can activate across the Amazon ecosystem:
Amazon.com
• Sponsored Ads: Sponsored Products, Brands and Display (est. 70% of Amazon’s ad revenue is spent here) • DSP: Display & Video Advertising • Custom Display & Share-of-Voice Takeovers • Content: Stores, PDPs & Post
Owned Media Properties
• Fire Devices: OTT & Tablet • IMDBtv, Live Sports (Thursday Night Football, Premier League, etc.) • Audio Ads – Amazon Music and Podcasts (Wondery acquisition) • Alexa/Voice Integrations • Experiential & OOH: On-box Ads, Treasure Truck , Pop-ups & Lockers • Custom Advertising: Campus/Events, Amazon Go Stores • Twitch/Gaming • DSP: Amazon Publisher Services (APS) & Third-Party Exchanges ACTIVATE ADVERTISING + Bring meaning and intent to your ads as Amazon innovates this space
Dynamic Ecommerce Ads Bring in native product detail elements and dynamically optimize to users based on behaviors. Examples: 40% coupon for deal-seeker, review creative for researcher and add to cart for shoppers ready to purchase.
Machine Learning Looking ahead, the new dentsu partnership with VidMob can enable enhanced optimizations when evaluating creative elements beyond what’s available in the Amazon reporting platform.
Voice Actionable Ads à Interactive Ads “Alexa, add Celestial Seasonings to my cart!” Voice actionable ads include calls to action that prompt the consumer to engage with Alexa.
Shoppable Video An extension of dynamic ecommerce ads, Video Creative Builder creates 15s video assets using pre-set customizable templates; allowing for customized imagery, verbiage and featured ASINs.
Amazon Live consists of both editorially driven live show programming and self-produced content that sellers can directly upload. All livestreamed videos are also shoppable and include the products featured directly below the video feed. ACTIVATE ADVERTISING +
Deterministic data fuels the flywheel in the Amazon ecosystem
A persistent ID uniquely allows Amazon to find audiences across devices and platforms. With their logged-in ecosystem, Amazon is well situated for the coming deprecation of the third-party cookie and insulated from Apple’s upcoming ad privacy policy changes.
Entertainment: Video, Music, Books
Shipping, Voice Interactions Location and Credit Card Information
Shopping Behavioral Amazon Patterns Garage
Clients can also leverage dentsu’s market-forward identity solution called M1 Our people-based identity platform that allows for the targeting of over 242MM U.S. individuals. Brands can enhance their first-party audiences onboarded into Amazon with M1 attributes, upload standalone M1 audiences into Amazon or layer M1 attributes on top of existing Amazon data. This pairing unlocks exciting targeting capabilities and allows brands to test and learn from data-driven audiences in actionable ways. +
Measure & Optimize
Amazon is known for its robust data capabilities and brands selling to Amazon can benefit from its rich data sets. Sales reporting may differ depending on how a brand sells (Vendor or Seller) but advertising metrics are standard, available directly in console or through API partnerships. MEASUREMENT & OPTIMIZATION + Amazon’s selling portals offer retail insights to help brands drive strategy
Traditional retail reporting is available to assist with sales and inventory operations. However, the reporting metrics differ across Vendor and Seller Central to cater to the specific methods of fulfillment and how the business is managed.
The reports are vast in number but some examples are below:
VENDOR CENTRAL SELLER CENTRAL 1P 3P • Product Catalog • Business Reports • Sales Diagnostics • Traffic Reporting • Net PPM (Pure Product • Fulfillment Reporting Margin) • Order History • Forecast & Inventory • Customer Concessions Planning • Inventory Health
Amazon Brand Analytics
Amazon Brand Analytics (ABA) provides valuable insights on customer data and trends across Amazon.com. To receive ABA, brands must first be enrolled in Amazon’s Brand Registry program, designed for trademark owners only. Brands will receive the below reports, whether you’re selling on Vendor or Seller Central:
Geographic Sales Search Terms Data
Market Basket Repeat Purchase Item Comparison Analysis Behavior MEASUREMENT & OPTIMIZATION + The Amazon Advertising console leads in real-time, actionable reporting to advertisers
Amazon empowers brands to better understand campaign performance for insights and optimizations. Whether a brand is solely running in Sponsored Advertising or taking advantage of opportunities across the funnel, there’s a full suite of reporting capabilities available.
Closed Loop Reporting
Tracking front end media spend and metrics to sales in real-time. Unique reporting variables include:
Purchase Consideration Awareness
• Average cost of sale (ACoS) or • Cost-per-Click (CPC) • Reach Return on Ad Spend (ROAS) • Cost-per-Detailed- • View Views • Promoted/Brand Halo Sales Page View (CPDPV) • Brand Lift/Purchase • Purchase Rate • Branded Searches Intent (3P Measurement) • New to Brand Rate
Interactive Dashboards & APIs
Allows brands the flexibility to view and understand performance and traffic sources:
Sponsored Ads: Offers real-time reporting and optimization abilities in console. Brands can choose to leverage the API to utilize bid management platforms to optimize more effectively. DSP: Real-time reporting and optimization in console; bulk reports and API available Brand Store Analytics: Gain insights into overall traffic, sales, page depth and sources for brand store activity that is available within Sponsored Ads Dashboard. Amazon Attribution: Free beta measurement solution that allows brands to measure non- Amazon campaign impact on activity and sales on Amazon, now available via API. MEASUREMENT & OPTIMIZATION + Amazon Advertising Reporting & Analytics
Third-Party Measurement
Leverage external reporting and research to validate performance beyond Amazon KPIs.
Major brands rely on third-party measurement studies when evaluating the success of their campaigns:
Brand Effect Offline Sales Lift Location-Based Marketing Mix Studies Studies Foot Traffic Analysis
Audience Reports & Insights
Access to audience data has advanced planning across all channels by providing advertisers with rich customer insights.
These audience reports are valuable for pre-planning, defining targetable audiences and campaign optimizations:
• Overlap Reports: Learn shopping behaviors and discover audiences for targeting • Audience Segmentation Reports: Optimize audiences within your campaigns • Audience Insights Beta: Understand your audience demographics, temporal and buying behaviors vs. competitive set • Audience Insights Premium (AIP): Deepen knowledge of customer through custom analysis MEASUREMENT & OPTIMIZATION + Amazon Marketing Cloud
Holistic Measurement & Analytics Solution
Finally, the data has been unlocked. Amazon is providing access to robust and rich data sets for brands to do their own modeling and customized analysis.
The Amazon Marketing Cloud (AMC) is Amazon’s cloud-based solution for marketers to enhance analysis and insights. AMC is a flexible and privacy-friendly environment, powered by Amazon Web Services (AWS).
AMC provides access to event-level data to help clients and partners pull customizable reporting for their brands and to understand more detail across the consumer journey.
Use Cases
Advanced Audience Reporting Insights
Supply Privacy-Safe Path to Transparency Clean Room Conversion
AMC is best for advertisers with the following:
Complex brand Overlapping Omni-channel Regional variances portfolio audiences media strategy & approaches & activations +
Commerce Innovation
Consumers will expect brands not only to solve their problems but anticipate them in real time. Commerce will be everywhere and truly omnichannel and media innovation will be powered by new technology and data sources. COMMERCE INNOVATION + Advancements in technology make shopping experiential, adding new data sets and behaviors for audience reach
5G & Frictionless Shopping
Creating and normalizing Augmented/Virtual Reality and AI in- store and online
Technology like AR/VR is only as good and fast as the connection available. The expansion of 5G allows retailers to build infrastructures necessary for highly interactive transactions. Major retailers such as Walmart and Amazon have already introduced in-store and voice shopping assistants, adding layers of branded content accessibility to audiences at mass.
Technologies to watch: “Just Walk Out” from Amazon, Intelligent Retail Lab by Walmart
Humanized Data
Moving from transactional to behavioral data (reading emotions, biometrics, accessibility) across devices and experiences
Affective computing allows for emotion-sensing technologies within devices, creating actionable insights for brands to understand how consumers make decisions i.e. interpreting stress signals, confusion, sleepiness, inebriation. As a result, content and interactions can adapt and be proactive to real-time customer needs.
As voice-activated devices are becoming a norm in households, AI-driven speech recognition will power voice advertisements and interactions with skills. Voice technology is quickly adapting to unique voice recognition and can adapt to multiple user profiles on a singular device.
Technologies to watch: In-cabin Sensing by Affectiva COMMERCE INNOVATION +
Customers will not only hold brands accountable for ethically responsible product but also shift loyalty to those who align with their values
Responsible Commerce
Building trust with consumers who care about environmental and social footprints
Consumers are increasingly making ethically-minded shopping decisions, assessing every aspect of the retail experience, from product sourcing to final consumption. Retailers and brands adopting ethical practices can ensure quality control and testing standards are matched directly to sustainable claims. As a result, brands will highlight responsible claims from source to store through marketing activations (e.g. QR codes on product packaging), displaying a fully transparent supply chain to the customer.
Initiatives to Watch: Amazon’s Climate Pledge Friendly program
Digital Representation
Inclusivity and representation of audiences across brand campaigns and advertisers
Brands and retailers will prioritize historically under-represented audience segments. Major retailers such as Amazon and Walmart started accepting SNAP benefits online in 2020 and both are aggressively launching healthcare initiatives to address low-income and uninsured populations. Ulta and Apple both made commitments to racial equity and implementing diversity initiatives across leadership.
Brands, retailers and advertisers must ensure campaigns are authentic and empathetic to meet the needs of these intended audiences. Advertisers will have to address their own workforce diversity and representation while considering the voice of the customer.
Programs to Watch: dentsu’s The Code and Female Foundry Thank you.
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