Amazon’s business model created a massive and loyal customer base by following one rule: make it easy for customers to find what they are looking for. Although this approach seems simple enough, Amazon’s conversion rate remains exceptionally high compared to other online retailers. In this blog post, we explore 4 ways you can use Amazon’s customer-centric approach to improve your brand’s Amazon conversion rate and make the most of this high-traffic ecosystem.
Conversion rate is the percentage of sessions that become transactions within a given time period. You can easily calculate the specific conversion rate of individual SKUs or the average conversion rate across an entire catalog of products by dividing the number of transactions in a certain period of time by the number of sessions in that same period and multiplying the result by 100 to get a percentage. According to BigCommerce, the average conversion rate when selling online is only about 1.5-3% depending on your category, which is why so many strategies focus on increasing traffic and visibility to try to boost sessions which should logically boost conversions.
But Amazon is different. According to data collected by the website traffic measurement firm Millward Brown Digital, the Amazon conversion rate for regular customers is around 13%, over four times the average for online retailers. What’s more, the average conversion rate for an Amazon Prime customer is a staggering 74%. The data shows that when these same consumers shop other major online retailers like Walmart and Target, that rate drops to 6%, and drops all the way down to the industry-standard 3.32% for all other online retailers. This shows that it’s not the customer who is the anomaly, it’s the Amazon conversion rate.
What makes the Amazon conversion rate so high? Amazon did to consumerism in the early 2000s what Starbucks did to coffee in the 90s: it created a separate space devoted to the consumption of what it had to offer. When a customer becomes a Prime member on Amazon, they have access to a number of perks unmatched or unavailable on other platforms, such as free 2-day shipping, free streaming of movies and TV shows available on Prime, and access to a library of books and music. Amazon created an ecosystem in which consumers could do what they do best: consume. But Amazon takes it one step further. They make it easy.
The Amazon algorithm is designed to help customers quickly find and purchase exactly the products they are looking for, making comparisons and suggestions only after a potential buyer has scrolled past the relevant information, i.e., not made an immediate purchase. This is why thoughtful, well-crafted, and relevant content is crucial. As we discuss in the blog post, Optimizing on Amazon: Content that Converts, your content has a huge impact on discoverability and conversion rates. Amazon pays attention to what its customers like and don’t like, and if your listings are not meeting the needs of your customers, your ranking and visibility will suffer as much as your conversion rate.
We’ve discussed content optimization many times before in this blog, so here we’ll take a page out of Amazon’s playbook and focus specifically on how to use that content to create an optimal consumer experience as a way to increase conversion rates.
The first step in conversion is to make sure your customers can find your listing. While brand names alone can work for giants like Apple and Samsung, smaller brands must rely on keyword research and well-crafted content to attract the right customers to their listings, all while riding that fine line between engaging and compliant. From the consumer perspective, clear and descriptive product titles are going to capture attention in those first precious moments, which is why the algorithm tends to prioritize these titles while ignoring or suppressing titles stuffed with keywords.
Amazon Brand registry is a program created by Amazon to provide brands who use it with several additional marketing and brand protection tools, including brand stores, brand analytics, A+ content, and targeted advertising. While registering your brand can be tedious and time consuming, the benefits are worth it not only from a protection and analytics perspective, but for conversions. As we discussed in our live Brand Stores webinar and blog post, a brand store is an opportunity to create the ideal shopping environment for your customers to browse your products away from the clutter and chaos of the larger Amazon ecosystem. Customers can browse your entire product catalog at their leisure and make comparisons between your products without the intrusion of competitors. This gives you more time to make a conversion, and more opportunities to upsell to existing customers.
Amazon doesn’t like unhappy customers any more than you do, which is why items with low reviews and high return rates tend to drop in the ranking. Your customers are your biggest resource, and you can learn just as much (if not more) from an unhappy customer as you can from a happy one. Use the information you gather from your returns and reviews set the right expectations for your customers, whether it’s by clarifying product specs and characteristics in the description (i.e., “runs small” or “handwash only”) or providing additional content (i.e., instructional videos, high-resolution images, A+ content) to answer questions about assembly and usage before the customer makes a purchase. The more the customer understands what they are getting, the more likely they are to make the purchase and be satisfied with the result.
While we’ve lamented the growing cost of FBA for sellers over the past couple years, the fact of the matter is this fulfillment option does affect your Amazon conversion rate. Thanks to the popularity of Prime’s 2-day shipping, customers expect fast shipping regardless of whether or not your brand uses FBA. And with the Prime conversion rate outperforming the industry standard nearly 25 times over, it’s no wonder many brands opt for FBA to appeal to the algorithm and increase their ranking and visibility. While the supply chain disruptions of the last couple of years have made clear the need for diversified fulfillment options, Amazon continues to seek ways to streamline the process, recently launching their new Send to Amazon workflow that promises fewer steps to create shipments and replenish your FBA inventory.
While it’s fun to complain about the big, bad behemoth that has a virtual monopoly over e-commerce as we know it, the fact of the matter is Amazon is just as eager to help sell your products as you are. They offer a variety of tools and resources to boost brand integrity and give sellers insights into customer behavior and trends. While some brands have the personnel and resources to make monitoring and understanding these metrics an in-house responsibility, Amazon agencies like Kaspien offer brands the same expert analysis and strategy along with many other tools and resources to help grow your brand. While there’s no one “right” way to sell on Amazon, the wrong way is to ignore Amazon’s guiding strategy: the customer’s buying experience must come first.
If you find this content helpful, consider subscribing to our weekly newsletter! We regularly cover the latest Amazon news and strategies.