How will the Amazon ecosystem pivot to react to new trends in 2023? Market Defense is ready for the change.
Amazon Marketing (Dave Karlsven, SVP Data Science & Advertising)
1. More Advanced Automated Bidding Options in the Ad Console
Amazon has recently been playing catch up to Google and Meta (Facebook) with new features in the advertising console. Amazon just launched a Beta test for automated bidding based on a Target ACOS. We predict Amazon will continue to enhance and create more advanced features in their advertising console such as Automated bidding towards different goals and objectives.
For example, in addition to Target ACOS we hope to also see options for optimizing Amazon ads towards Target CPA, Max Impressions, Max Clicks, Max Conversions, Target CPC and other goals that advertisers already have access to when managing Google ads. These new automated bidding features will make it easier and faster for brands and agencies to optimize and scale ad campaigns to a variety of goals and objectives.
2. DSP advertising and Off Amazon advertising will become a more important part of a brand’s overall Amazon growth strategy.
As Organic Rankings and PPC search ads continue to get more competitive and more expensive, brands will be looking for additional ways to grow on Amazon. Amazon has been investing heavily in its DSP Ad solution that allow brands to drive new customers to their products both on and off Amazon.
Brands are also being rewarded with higher organic rankings when they use off amazon marketing to drive more sales velocity and better conversion rates on their listings.
If DSP ads and Off Amazon marketing are not part of your brand’s Amazon Growth Strategy in 2023, then we suggest you revisit your plan, because the brands that will be winning are going to be doing much more than just relying on Sponsored Product Ads for driving sales growth.
3. Amazon Marketing Cloud reports will provide brands with more and better data.
Understanding marketing campaign performance at all stages of the customer journey and making better decisions on where to scale ad budgets has been very difficult for brands because of the way Amazon only reports on Last Touch Attribution sales in the Advertising Console.
Amazon now provides an API to more data through the Amazon Marketing Cloud but without a nice reporting dashboard it is difficult for most brands to access or create meaningful reports from the data that can be used for making better marketing decisions.
We predict Amazon will continue to develop out more and better reporting dashboards for the Amazon Marketing Cloud data to make it easier for brands to get better view of how their marketing campaigns are performing together to drive sales both on and off Amazon. Rather than just relying on Last Touch attribution for determining campaign performance, brands will be able to get better view of performance at all stages of the customer journey with Multi-Touch Attribution reports. This will especially be critical for brands who want to scale their DSP advertising and Off Amazon campaigns and need to better understand how their campaigns are performing and working together at all stages of the customer journey.
Warehousing & Logistics (Taha Celik, Supply Chain Director)
1. Technology-based improvements and a focus on green logistics are continuing to positively impact supply chains.
Eco-friendly warehouses, AI cloud-based inventory management software, and increased use of robotics in facilities will help ease the burden of an increasingly complicated worldwide supply chain, as well as offset increased costs.
2. Predictions that 2023 will see “the coldest winter on record” may have a direct impact on Amazon FBA sellers.
There are already indications that weather will slow down carriers, result in unanticipated warehouse closures, and result in receiving delays.
Sellers must factor this into their decision-making processes as failures to account for this will result in stock outs, increase costs, and reduce visibility into overall workflows.
3. Amazon has delayed, or is closing, 60 warehouses.
There is concern in the wider logistics sector that Amazon’s shrinking retail operation might have a knock-on effect on Amazon Freight and third-party logistics operations. The current limitations at Amazon FBA receiving centers may remain an issue through Q1 of 2023.
Brand Protection (Shelley Swallow, Director of Brand Protection)
1. Small retailers will be forced to close to their doors due to the current state of our economy. What will they do with their excess inventory?
They will sell it at a discount to wholesalers and to consumers with no limits on the number of units sold to consumers. These products will end up on Amazon being sold at a discount, causing buy box suppression and lost sales on top of harming the brand image. Brands can mitigate this by maintaining positive relationships with retail partners and offer to buyback product. This is more cost effective in long run because the brands do not see a disruption in sales on Amazon when they offer buybacks. A brand can assume they will lose 75% of sales every time their BuyBox is suppressed to pricing issues (Discounts being offered off of Amazon).
2. Updated packaging and update formulations will be big in 2023; brands will often sell off discontinued products and products in old packaging to discount retailers for pennies on the dollar.
If you look at the impact to sales on the brands Amazon channel that these types of sales have it can often times, be more cost effective to repackage the inventory or discount it on the brands own D to C website or Amazon store front. The brand can also do promotional GWPs with these products. When a brand offloads products to discount retailers there is always an uptick in reseller activity on Amazon.
Shelley’s Top Tips to help mitigate reseller activity in 2023:
Clean up distribution.
Are the brands products being sold in the appropriate retail locations? Are the brands current partners, international and domestic adhering to the brands guidelines?
Track Lot Codes.
A lot of times when this process is brought up to brands it is instantly thought of as costly. This process does not require extra equipment or personnel. It can simply be data entry done at the end of the day when shipping is complete. Keeping a live document of what lot codes were shipped to what customers is all that needs to be done. This is great information to have when doing test buys from unauthorized resellers. This information will let the brand know where the products originated and what partners they may need to have conversations with. This practice can also be helpful if there is ever a product or ingredient recall.
International Ingredient Bans.
Swap “Good” products for “Bad” with your international partners. If the products can no longer be sold in an international market those retailers have no choice but to sell off the products to wholesalers and distributors back into the US. Often times these products will end up being sold at discount retailers or sold at a discount on Amazon and Walmart. Brands should weigh the cost of lost sales (75% for Buy Box suppression) with the cost of a product swap when making these decisions.