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Expansion into Ecommerce has Accelerated

Before 2020, ecommerce had been steadily growing its share of all retail. But when the coronavirus hit and countries around the world issues stay-at-home orders, it forced consumers and businesses to turn to online sales channels in numbers never seen before. As a result, we’ve seen an acceleration in brand and consumer adoption of ecommerce.

Road Bumps Along the Way

But, 2020 also saw brands face many hurdles on online marketplaces. Amazon struggled to keep pace with the surge in purchases, and they had to restrict which types of products they would accept into their fulfillment centers for a time. Amazon’s first-party (1P) division, Amazon Retail, and third-party sellers (3Ps) alike struggled to remain in stock as supply lines locked down, manufacturing was interrupted, and consumer demand skyrocketed for products well outside of their typical peak season.

Charting a New Course

After the turbulence of 2020, many brands are reconsidering their approach to ecommerce. To help brands make an informed decision, we’ve put together a list of the key factors that brands should consider when deciding if they should work with an Amazon retailer (1P or a 3P) or transition to working with an Amazon agency.

Should You Work with an Amazon Retailer?

Now that we’ve covered the primary options, let’s dig into key factors for making a decision about working with an Amazon retailer, an Amazon agency, or transitioning from one to another.

What is an Amazon Retailer?

Starting from the top, when a brand partners with a retailer, the retailer buys product from the brand at wholesale prices, then sells it for retail prices on Amazon.

The brand’s profits are payment for their product, minus the cost of manufacturing. The retailer’s profit is the consumer’s payment for the product, minus the wholesale expenses and channel management costs, which includes things like shipping, storage, fulfillment, commission, and marketing fees.

When it comes to Amazon, brands that sell through a retailer can partner with Amazon directly (first-party or 1P) or with a third-party seller (3P). Learn about their key differences in our blog post, Amazon 1P vs 3P.

Many brands choose to sell through a retailer because it provides cash up front, and the brand doesn’t have to get involved in the hassle of actively managing an Amazon channel.

Pros of an Amazon Retailer

Let’s start with the pros for partnering with an Amazon retailer (1P or 3P):

Paid upfront via a retailer’s purchase order, which can be useful for funding manufacturing costs
Not responsible for managing consumer-facing sales channel (fewer infrastructure costs)
They handle online sales tax
They are already registered for international value-added taxes (VAT), making international expansion much faster
They provide the expertise and resources
Perhaps the simplest way to start selling on Amazon

Cons of an Amazon Retailer

Now for the potential cons of working with an Amazon retailer (1P or 3P):

Limited control over your brand’s representation online
Limited control over product pricing
Limited visibility into channel performance

It’s worth noting that some of the cons of working with a retailer can be mitigated by partnering with a trustworthy partner. If you’re interested in this business model but concerned about the cons, seek out a retailer that’s committed to building a healthy relationship with your brand.

Costs of an Amazon Retailer

As mentioned, in a retail model, the retailer pays the brand for their product. However, retailers may ask for various discounts from the brand so they can pay the numerous Amazon fees (commission, shipping fees, tiered storage fees, and fulfillment fees) while still having some margin left over to generate revenue for themselves.

Making a Decision

Work with an Amazon retailer if:

You want to focus on the manufacturing and brick and mortar side of your business, while they handle taking your products to market
You don’t want to be responsible for paying shipping, storage, fulfillment, and commission fees
Your business’s cashflow model relies on large purchase order payments
You want to expand sooner rather than later into foreign markets

Should You Work with an Amazon Agency?

If you’re not interested in starting with a retailer or you’re working with a retailer and want to take more ownership of your Amazon channel, you may consider working with an Amazon agency.

What Value does an Amazon Agency Add?

Now, let’s say a brand doesn’t want someone else representing them on Amazon; they want to sell their products themselves. That’s an increasingly popular decision, and one that we’ve seen more and more brands transition to in recent years.

However, there’s a challenge in representing yourself. Managing an Amazon channel requires three things that can be hard to come by:

Personnel: You need bodies dedicated to managing your Amazon channel. If you’re using existing personnel, what projects are you pulling them off of? If hiring new personnel, you need the budget for salaries and benefits.
Expertise: At over 25 years old now, Amazon is a mature marketplace that requires complete attention. With millions of sellers on the platform, you must enter the platform with a strong understanding of the landscape and strategies if you want to succeed.
Time: If you manage your brick-and-mortar relationships, do you have time to also manage your ecommerce relationships (and critically, keep the two in balance so that one relationship doesn’t sour the other)?

If you lack in any of the above, then you may need outside help to fill in the gaps. That’s where Amazon agencies come in.

What is an Amazon Agency?

Amazon agencies can typically offer services in two ways: complete Amazon management or selected services. The former means that they provide everything needed to run every aspect of your Amazon channel. The latter means they provide only a handful of services that you specifically need help with, such as managing your Amazon advertising campaigns, while you handle the rest.

Pros of an Amazon Agency

Pros for partnering with an Amazon agency:

More control over your brand’s representation online
More control over product pricing
Increased visibility into channel performance
Your profit margin may exceed that of a retail model
They provide the expertise and resources

Cons of an Amazon Agency

Cons for partnering with an Amazon agency:

You’re paying the agency instead of having a retailer pay you
You may be responsible for inventory and supply chain management (some agencies offer this service, but not all)
Since you are selling through your own Seller Account, you are responsible for collecting and remitting online sales taxes
You’re also responsible for VAT in international markets, slowing your ability to expand internationally

When determining if you’re willing to pay for an agency’s help, think of it as an investment. If you pick the right investment, it may set you back at the start, but soon, it will pay for itself and then some.

Costs of an Amazon Agency

In an agency model, the brand pays for all the Amazon fees themselves (commission, shipping, storage, fulfillment, marketing), but you have more margin to work with. Because the brand holds the inventory risk in an agency partnership, the agency fee can be significantly lower than the retailer’s margin. The agency then collects either a monthly retainer or a commission.

Making a Decision

Either start by working with an Amazon agency or transition to one if:

You want more control of your brand’s representation online
You want a greater share of product margin
You need additional personnel, expertise, time, or resources to effectively manage your Amazon channel
Your budget allows for you to pay a retainer or commission
Your business’s cashflow model can adapt to using revenue from end-consumer sales

Should You Sell Yourself (Direct to Consumer)?

If you want to represent your brand yourself on Amazon and you have the personnel, expertise, time, and resources to do so, then you don’t need to partner with a retailer or an agency.

This route is the end goal for many brands, but it has by far the most and greatest requirements. As such, we often see brands start in retail or agency partnerships, then transition toward selling themselves.

In this post, we’re focused on comparing working with a retailer to working with an agency, but you can learn more about a Direct-to-Consumer model in this blog post.

Amazon Retailer vs Amazon Agency: Which is Better?

The annoying but honest answer is that it depends.

Retail is generally the better choice for brands that need immediate cash flow to fund their manufacturing. Working with a retailer also simplifies domestic and international taxes, as brands do not need to deal with VAT or sales tax when selling online through a retailer; the retailer handles it for them. This also enables brands to expand into foreign markets quicker, since the legal infrastructure is already in place.

Agency is generally the better choice for manufacturers with tight margins, want larger margins, and/or want more ownership over their brand’s presence in online marketplaces.

Service That Grows with You

Kaspien holds a unique position in brand services for online marketplaces, as we’re able to serve brands in both capacities: We can be a brand’s Amazon retailer, Amazon agency, or help them migrate from one to the other. Through our platform, brands can continue building upon the same foundation of data, products, services, and solutions, no matter how their ecommerce needs evolve.

Communications Updates

Permitted Buyer-Seller Communications

Sellers are permitted to communicate with buyers for the following three reasons:

If an order cannot be shipped or if it will be delayed. This must be communicated via Seller Central using the Manage Orders feature.
If additional information is needed to complete a return or if the seller is offering a partial refund. This must be communicated via Seller Central using the Manage Orders feature.
Communicate with buyers proactively (communication initiated by the seller instead of the buyer) to:
1. Resolve an order fulfillment issue
2. Request additional information required to complete the order
3. Ask a return-related question
4. Send an invoice
5. Request product review and/or seller feedback
6. Schedule the delivery of a heavy or bulky item
7. Schedule a Home Services appointment
8. Verify a custom design
9. Any other reason where the contact is required for the buyer to receive their purchase

Proactive messages may be sent using email, Amazon’s templates in Seller Central, third-party applications, or via API. These messages must be sent within 30 days of order completion, include the 17-digit order ID, and be in the buyer’s preferred language. Amazon retains the authority to modify subject lines as it deems necessary.

Learn more about how customer reviews impact Amazon sales or how to generate new customer reviews compliantly.

Forbidden Message Types

Amazon’s policy update states that sellers may not send the following message types to buyers:

Order or shipping confirmations
Messages that say only “Thank you” or that you are here to help if buyers have any problems
Marketing or promotional messaging, including coupons
Language that either incentivizes or persuades the buyer to submit positive product reviews or seller feedback, including by offering compensation, money, gift cards, free or discounted products, refunds, rebates or reimbursements, or future benefits
Language that requests removal or an update of an existing product review
Language that requests a product review only if they have had a positive experience with the product
A repeat request (per order) for a product review or seller feedback

Forbidden Message Features

Seller-buyer communications must not contain any of the following:

External links unless they are secure working links (https, not http) necessary for order completion or links to Amazon
Attachments except for product instructions, warranty information, or invoices
Logos, if they contain or display a link to your website
Link to opt-out of messaging
Sensitive content in images or text (e.g. bare skin, violence/gore, adult/offensive language)
Tracking pixels or images
Email addresses or telephone numbers
Images of purchased products as Amazon includes those on your behalf
Images that do not relate to your brand or company

Forbidden Message Styling

Likewise, the policy update also forbids seller communications from containing any of the following:

Accessibility issues as specified in the Web Content Accessibility Guidelines from the Web Accessibility Initiative
Emojis
GIFs
Message margins over 20% max width
Image or graphic sizes larger than 80% max width
Overrides of Amazon’s default line height, font family, or font color
Fonts in more than three sizes
Message bodies that are centered or that otherwise override default text alignment settings
More than two line-breaks (spacing between paragraphs) in a row
Unsecure images (http instead of https)
Spelling errors or grammar issues

Compliance Required by November 3, 2020

Sellers that fail to comply with Amazon’s updated guidelines by November 3rd may face temporary restrictions in proactive seller-buyer communication or a suspension of their seller account.

Today, we’re thrilled to announce that we have rebranded from “etailz” to “Kaspien.” Our parent company, Trans World Entertainment, has also rebranded to Kaspien Holdings, consolidating the two brands into Kaspien.

Even more important than streamlining the corporate structure, this rebrand also reflects the next era of our journey. Our company has been evolving ever since our founding in 2008. We grew from a niche third-party seller of eco-friendly products into a top FBA retailer, created proprietary software for our internal teams that are now SaaS products, and launched an agency division to manage brands’ marketplace channels. We were creating fantastic tools but realized that we were limiting their potential and efficacy by only leveraging them for internal needs.

When Kunal Chopra joined the company as our new CEO in September 2019, he brought a new vision, one that harnessed all the different components we had built, expanded them, and brought them together in a unified, cohesive system.

Guided by a strong executive team, we underwent a metamorphosis, evolving from a top Amazon third-party retailer to a robust platform of ecommerce services and software. Through the platform model, we now provide leading services, software, and strategy for all aspects of an online business, regardless of what, where, or how a brand chooses to sell.

Why is etailz Rebranding?

In short, we outgrew our old name.

“Kaspien is in a different place in the market than we were 1 year ago, much less 10 years ago,” said CEO Kunal Chopra. “Today, there are thousands of third-party sellers, agencies, and software providers offering brand services for online marketplaces. It’s a fragmented market. As etailz, we were one of those fragments. As Kaspien, we are defragmenting the market, pulling together all the services, tools, data, and integrations brands need to succeed on ecommerce under one roof. We’re a one–stop shop.”

“By defragmenting the market, we enable brands to grow and evolve without having to change systems. Through Kaspien, brands can continue building upon the same strong foundation of insights, results, products, services, and committed relationships no matter how their ecommerce needs change,” Chopra said.

etailz’s name was synonymous with third-party retail, and after 12 years of experience, we’ve become exceptionally effective at it. Our success was built upon our software and strategies, and these tools have now become the core of our platform as we know it today. While we’re still a third-party retailer, it’s only one of many parts. As Kaspien, everything we’ve developed to drive our past success is now available in flexible models to suit your business’s needs.

Listen to our CEO, VP of HR, and Creative Director discuss our rebrand to Kaspien on our podcast.

What does Kaspien Mean?

The Name

The name “Kaspien” was inspired by the Caspian Sea, the largest inland sea in the world. Like many waterways, it’s a hub of commerce. There is also debate whether it’s a lake or a sea; it’s more than it appears to be, and so are we.

Unlike a traditional retailer, we operate in three sectors – as a retailer, agency, and a software provider – and we wanted a name that can grow with us in the future. Kaspien does this.

The Logo

The logo utilizes an abstract ‘K’ as a graphic element. The negative space subtly incorporates a forward pointing arrow, representing forward thinking, innovation, and leadership – traits that etailz was founded upon and Kaspien will continue to embody. The hexagon behind the ‘K’ is inspired by patterns prevalent in nature due to the hexagon’s efficiency, from bees’ honeycombs to the Giant’s Causeway. Our value proposition is rooted in maximizing efficiency, and Kaspien’s logo is an homage to this.

The Future of Kaspien

We’re as committed as ever to being “partner obsessed” and providing the best possible service for our partners. That mission and promise will never change.

We’ll continue expanding our services and software through internal development, integrations, and partnerships, unlocking greater efficiencies and performance. It’s an exciting time at Kaspien, and our partners will reap the benefits.

We’re thankful for all that we have learned over the last 12 years and to the etailz name for getting us here. Now, we’re excited for our bright future – together – as Kaspien.

Originally published in the Forbes Technology Council. Read the article here.

Despite its incredible growth and undeniable popularity with consumers, I’ve noticed that some brands are hesitant or even outright opposed to the idea of selling their products on Amazon. With major brands like Birkenstocks and Nike having pulled their products off Amazon, these brand owners have reason to feel even more justified in their feelings.

Truth be told, there are likely good reasons for Nike and Birkenstocks to have withdrawn from Amazon, but these brands are the exception to the norm (not to mention the fact that they already had established large and loyal followings before joining Amazon). However, in my experience as a general manager at Amazon and now CEO of a company that helps brands sell online, the overwhelming majority of brands I’ve worked with have seen tremendous benefits from expanding their brand onto Amazon.

So, today, I’m sharing a list of reasons your brand probably should begin selling on Amazon, even if you’re not over the moon about it.

1. If You Don’t, Someone Else Will

Let’s start with the risks of not taking your brand to Amazon. Amazon is an ungated marketplace, which means nearly anyone can create a seller account and begin selling products on the platform. Between retail arbitrage, counterfeits and unauthorized sellers acquiring inventory, your products are likely to end up on Amazon, even if you don’t take them there.

When someone else takes your products to Amazon, you don’t have the chance to dictate how your brand is represented, which puts your brand’s reputation online and offline at risk. They can present little or inaccurate information about your brand and products, use poor quality or misleading images, and provide poor customer service, all while your brand name is displayed front and center on the listing. While some consumers are familiar enough with Amazon to note the difference between brand and seller, many are not, and it’s your brand name they remember when they buy your product online.

By taking your brand to Amazon yourself, you retain control of your brand’s representation on the largest online marketplace in the world. That’s power you don’t want to relinquish.

2. Shoppers Are Already On Amazon

After that first point, it may feel like you’re being held hostage by Amazon’s ubiquity. To a degree, you are. But Amazon is so much more than that, and it would be a disservice to your brand to not recognize the enormous opportunity Amazon represents.

Now more than ever, consumers are using online marketplaces to purchase essential and discretionary goods. By the end of 2019, Amazon had over 112 million Prime members in the U.S.and over 150 million Prime members globally. By selling on Amazon, you tap into a massive and growing audience, increasing revenue and expanding your customer base.

3. Amazon Is Expected To Remain The E-Commerce Market Share Leader

That growth is expected to continue in 2020, even with the current pandemic. Although Walmart is making strong efforts to capture ecommerce market share, Amazon is indisputably the dominant market share leader. Even during this pandemic, Amazon is expected to not only retain its market share, but actually grow it by another 1%. If you want to expand your brand online, Amazon is the place to do it, and that’s unlikely to change any time soon.

4. Amazon Is Improving Brand Protection Services

Perhaps you’ve resisted selling on Amazon because you’re concerned about retaining brand control after joining the platform. Amazon has earned a reputation for not penalizing unauthorized sellers in the past, but that’s been gradually changing. In recent years, Amazon has introduced several programs designed to help brand owners and their registered agents maintain control, including Brand Registry, Brand Gating, the Transparency Program and Project Zero.

Amazon is also facing increased external pressure to address the issue of counterfeiters on its platform. The department of Homeland Security released a counterfeit report that advised the government to take action against counterfeits appearing on e-commerce platforms that threaten the health and safety of consumers and harm the economy. This report contributed to the progress of the SHOP SAFE Act, which, if passed, could hold online marketplaces responsible for counterfeits sold on its platform.

In short, Amazon is and will continue to improve services for brand control as external pressure mounts.

5. Diversification Makes You Resilient

If all of the above failed to convince you, then consider this final point: eMarketer recently revised its forecast for retail and e-commerce growth in 2020, with consumer spend in e-commerce expected to grow 18%, while spend in brick-and-mortar stores is expected to decrease 14%. The revised forecast indicates that Covid-19 has accelerated the long-anticipated uptick in e-commerce spending as more consumers turn to online shopping.

The change in consumer spend patterns also means that brands that sell in both brick-and-mortar stores and online have been better positioned to weather the economic hardship. Diversification of assets is a tried-and-true means to protect investments, and retail is no different. Expanding to other sales channels can help brands endure unexpected headwinds. Even if you don’t want to list your entire catalog on Amazon at the start, establishing at least some small foothold on the marketplace will keep the door open, should you ever need it in an emergency.

The Benefits Of Starting Late

While in many ways starting earlier is more advantageous, joining Amazon for the first time at this stage does have some benefits. Amazon offers more and better marketing and brand protection tools than ever before, and you have more ways to launch on the channel (1P, 3P, direct to consumer or with an agency). Even now, Amazon is still growing. There’s a lot of competition, but the opportunity for growth remains as high as ever.

Amazon advertising represents one of the most cost-effective tools to advertise products. Experienced sellers and marketers know that every opportunity you get to optimize your ad spend and keywords is a way to increase your bottom line. This means it’s extremely important to manage your Amazon ads properly. Due to the time and complexity of ad management, many businesses outsource their Amazon advertising to a third-party, such as a marketing agency, contractor, or freelancer. The amount of third-party Amazon advertisers is growing, and the market is getting crowded. The large number of choices can be overwhelming for anyone, let alone a brand entering the Amazon advertising space for the first time.

When you’re paying someone to manage your ad campaigns, you should know if they’re worth their price. Unfortunately, too often, they’re not. They may be charging you hundreds of dollars per month when they only check on your campaigns monthly. That’s not okay.

The problem is, it can be hard for business leaders to assess their agency’s or contractor’s true performance if they’re not versed in Amazon advertising fundamentals. To help, we’ve put together this blog post to help you determine if your Amazon search marketer is worth their salt.

Watch the video to learn how to create high-performing Amazon Sponsored Product campaigns.

5 Questions to Ask Your Potential Search Marketer

1) How Often will Bids, Budgets, and Search Terms be Optimized?

Is it every day, every week, or every month? Is it every six months? Frequency of optimizations is a critical consideration. Some folks are going to be affordable, but they may only log in to “optimize” your Amazon advertising campaigns once a month. The reality is that’s not optimization. The Amazon landscape fluctuates too greatly and too frequently to implement optimizations that rarely.

On the other hand, some may say that they will optimize your advertising campaigns every day. At that point, they may be over-responsive and over-managing. Amazon changes frequently, but it takes time to see what effect your previous optimizations are having. The sweet spot is somewhere between these two examples, in many cases being two to three times per week.

2) What Cadence will We Receive Performance Reports?

Your Amazon advertising agency or freelancer should provide reports regularly. As with the frequency of optimizations, there’s a sweet spot. Checking reports too rarely can result in poor performance and missed opportunities. Conversely, checking reports too frequently can lead to unnecessary stress and micro-management. Optimizations take time to take effect, so your reports should be spaced far enough apart to provide a true picture of what your last optimizations did.

Performance reports are like your child’s report card. If you review their report card only once per quarter, it may be too late to implement the changes needed to bring the grade up from a D to an A. Likewise, if you review their report card every day, there won’t be enough of a difference to suggest what, if any, changes are needed.

To start, we recommend a monthly cadence for performance reports. This prevents overreactions, while still being frequent enough that you can make strategic adjustments.

3) How Do You Plan to Manage Budget and How Will We Hold You Accountable?

Your budget may be based on a percentage of sales, or you may have a $10,000/month marketing budget. How is your Amazon advertising agency going to manage and optimize your budget effectively? Are they using an ACoS target? Are they going to try to reduce costs as much as possible? Are they going to be targeting only sales? Your Amazon advertising agency should have well prepared answers backed by data for these questions.

One type of relationship to watch out for is pay-for-performance oriented relationships. While your sales may increase, you may be increasing your ad spend by an inordinate amount, diminishing efficiency and ROI.

4) How Much of Our Budget is Spent on Branded Keywords?

Are there any high-value keywords that you’d like your products to place higher on the SERP for? Is it a branded term, a competitor’s term, an industry-specific term, or a category-term? If so, you should discuss that with your potential Amazon advertising agency or contractor because those types of targeted keywords may have a higher cost or higher conversion rate.

It’s easy to spend more than 50% of your budget on branded terms, but that can inhibit your advertising campaigns’ ability to reach new shoppers. Ask your partner how they will manage and optimize between your branded terms and non-branded terms. Ultimately, you’re trying to find consumers who aren’t only searching for your brand because that’s how you reach new people and acquire more customers.

5) What Organic Sales Lift can be Attributed to Your Marketing Efforts?

When you’re paying someone for a service, you have a right to know what results you can reasonably expect from their work. Excellent Amazon ad management products, used with reasonable effort, proper inventory, good positioning, and excellent logistics, should raise sales by 30%. Some people will claim they can go even higher than that. If they say they can increase organic sales by 35%-40%, thatI’s not too crazy, but if any agency or marketer says they can guarantee 50%, 60%, or 70% organic sales growth, you should be worried.

Here at Kaspien, we offer AdManager to help businesses optimize their Amazon advertising campaigns. If you want to use it yourself, SaaS is available. If you want us to manage your ad campaigns for you, we can do that too.

6 Telling Factors You Can Check On

Once you have hired an agency or freelance search marketer to manage your Amazon advertising campaigns (or if you already have one currently employed), you should continue to monitor their work. We recommend checking the following 6 factors as a way to assess how well they’re managing your advertising campaigns.

1) Are All Campaigns Set to Automatic Targeting?

If they are, that means your search marketer is not actively managing the campaign. They’re letting Amazon’s autopilot handle the work while they collect a paycheck from you, and your campaigns are missing significant optimization opportunities.

2) Are Automatic Campaigns Greater than 20% of Total Spend without any Search Terms being Added to Other Campaigns?

You should always be running both automatic and manual campaigns. However, if your automatic campaigns are generating significant parts of your spend, you should be worried because it indicates your manual campaigns are not being properly optimized. (One caveat to this is if it’s a new campaign. For new campaigns, automatic campaigns may account for the majority of spend while they build relevancy.)

3) Do Automatic Campaigns Have Negated Search Terms?

Negating search terms in automatic campaigns after migrating them as keywords in manual campaigns is a matter of good hygiene. Negating search terms from automatic campaigns prevents them from competing with your manual campaigns. If your search marketer is not doing this, that should be cause for alarm. Not doing this is bad etiquette and muddies your metrics, making it harder to manage the given manual campaign, your specific ideal customer acquisition rate, and ideal cost-per-click.

4) Are Small Groups of Products Utilizing the Majority of Spend?

If a majority of your spend is from a small list of high velocity products, then you’re missing opportunities for your other products. Your search marketer should be attempting to spread your ad spend across your whole catalog, rather than focusing it on a small group.

5) Are Branded Keywords Accounting for the Majority of Spend?

Branded keywords accounting for a majority ad spend is a huge red flag because it indicates your campaigns are not targeting new shoppers. Consumers will never search for your specific brand if they have never interacted with it before. For example, a consumer might search for “dog toy” or “soft dog toy”, but never “ZippyPaws” unless they have interacted with “ZippyPaws” before. Spending your money on branded keywords to attract new customers is wasting money.

6) What are Your Highest Performing Keywords?

If you have a high cost-per-click (CPC) but you’re winning the bid for your generic competitive keywords, you’re in good shape. It does make you a target for competitors, but it’s a good problem to have.

Find the Right Amazon Advertising Agency

Don’t let someone take advantage of your trust. If you’re paying someone, make sure you have mechanisms in place to hold them accountable. Ask prudent questions and check on your campaigns.

While you’re here, here are some other resources you can use to educate yourself on Amazon advertising:

Amazon Revenue Soars in Second Quarter

Today, Amazon published their earnings report for the second quarter of 2020. Their earnings exceeded expectations, with Amazon reporting a revenue of $88.91B and a net sales increase of 40% compared to Q2 in 2019. Other notable results include:

Net income increased to $5.2B, doubling their net income from the second quarter of 2019
North American net sales were up 43% YoY, while international sales were up 38% YoY
Amazon’s “Other” category (which consists mostly of Amazon advertising) grew revenue 41%
AWS grew 29%, the lowest growth rate since Q1 2017
Operating cash flow increased 42% YoY
Free cash flow increased from $25B to $31.9B YoY
Operating income increased from $3.1B in Q2 2019 to $5.8B in Q2 2020
Third-party sales growth outpaced first-party sales growth
Grocery delivery capacity grew by over 160% and online grocery sales tripled, YoY

Amazon’s guidance for Q3 anticipates slightly more modest growth, with net sales expected to increase between 24% and 33% YoY.

Amazon’s COVID-19 Efforts

In Q1, Amazon promised to spend $4B on COVID-related costs during Q2. In Amazon’s earnings report, CEO Jeff Bezos stated, “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand.”

Bezos added that since March, Amazon has created over 175,000 jobs, 125,000 of which are planned to transition to full-time positions.

Amazon promised to invest an additional $2B in COVID-19 related costs during Q3. As noted by Venture Beat, Amazon does not wish to appear to benefit too much from the pandemic, even as their $5.2B quarterly profit marks the highest on record in their 26–year history.

Key Takeaways from Q2 for Sellers

By looking at where Amazon is experiencing the most consistent, strongest growth rates, we can see where Amazon is likely to continue investing in the future. This report marks yet another strong quarter for third-party seller growth and Amazon advertising.

Third-party seller sales yet again grew faster than Amazon’s first-party sales, indicating that Amazon is continuing to embrace the third-party approach to the marketplace. This makes sense, as holding inventory carries greater risks. By expanding the third-party network, Amazon reduces its inventory risk while still generating more revenue in the form of fees.

Those fees include advertising. Amazon’s “other” category by and large consists of their advertising business. Revenue grew 41%, making it yet again one of their fastest growing segments. It’s likely that Amazon will continue expanding their offerings and capabilities for their ad platform, making it an even more appealing tool for brands selling on its platform.

Read our breakdowns of Walmart’s Q2 Earnings Report and Target’s Q2 Earnings Report.

Jeff Bezos Testified Before Congress

Amazon’s Q2 earnings report comes one day after Jeff Bezos testified before the US House Committee on the Judiciary. Amazon, along with Facebook, Google, and Apple, were brought before the Subcommittee on Antitrust, Commercial, and Administrative Law to answer questions for an antitrust case.

It did not appear to go well. Members of congress grilled Bezos about Amazon’s alleged practice of using third-party data to create copycat products, then undercut the brands selling on its platform. The same accusation was made regarding AWS, with members asking about allegations that Amazon stole third-party data to create competitor products, as well as identify and then target competitors’ customers.

Congress members also pressed Bezos to explain why sellers bear the burden and costs of combating counterfeiters instead of Amazon, implying that Amazon has taken too passive a role because Amazon still profits from sales even if the products are counterfeits.

Bezos’s answers seemed unsatisfactory for committee members. In many cases, he stated he could not remember the details or was unaware of the alleged events.

Mr. Cicilline shared the following story from an apparel company that compared Amazon’s first-party division, Amazon Retail, to a drug dealer:

“Amazon strings you along for a while because it feels so good to get that paycheck every week. And in the past, for a lack of a better term, we called it, ‘Amazon heroine’ because you just kept going, you had to get your next fix, your next check. And at the end of the day, you find out that this person, who was seemingly benefiting you, making you feel good, was just ultimately going to be your downfall.”

Bezos responded by saying that he “completely disagrees with that characterization.” However, the anecdote rang true for third-party retailers. It is not a rare occurrence for a brand to seek out partnering with trusted third-party retailers after having a similar adverse experience selling through Amazon Retail.

What the Antitrust Hearing Means for Brands on Amazon

The antitrust hearing could be a huge win for brands selling online. If Amazon is indeed exploiting brands selling on its platform through copycat tactics, actions taken as a result of this hearing could put a stop to it. Likewise, if the burden of combating counterfeiters is placed on Amazon, brands may not have to bear the costs.

Unfortunately, both of the above are big “ifs” and will take months or years to be acted upon. As Amazon’s Q2 earnings report shows, Amazon is and will remain the dominant marketplace in US ecommerce for the foreseeable future.

Start Selling on Amazon

Brands that wish to sell online will need an Amazon strategy if they wish to grow their online sales. If you’re wary of doing that, work with an experienced Amazon retailer like Kaspien who already has the infrastructure and safeguards in place to protect your brand.

If your business is not selling on Amazon yet, read this article on why your brand should probably be selling on Amazon, even if you don’t want to be on Amazon.

With the unexpected onset of COVID-19, many brands and manufacturers faced a production standstill ranging from weeks to months, jeopardizing and even killing their businesses. The coronavirus restricted supply chains, exposed structural fragility, and revealed a severe lack of emergency resources. In short, many companies just weren’t prepared. Even now, many states are not yet back to business-as-usual.

The impact on supply chains and fulfillment was one of the most pervasive and damaging effects inflicted on businesses. To safeguard against this in the future, brands and sellers alike have been exploring new fulfillment options.

At Kaspien, we’ve spent the last 12 years working with brands of every level, size, location, and structure as a third-party retailer. During that time, we’ve created a robust fulfillment network. From a small processing area in the back of our corporate office to now utilizing 7 fulfillment centers across the United States, we’ve built an efficient and resilient fulfillment network that has protected our partners’ businesses.

In this post, we’ll outline some of the key benefits of and advice for expanding your fulfillment network.

3 Benefits of a Dynamic Fulfillment Network

1) Mitigates Geographic Risks

If we’ve learned anything over the past few years, it’s that the world is unpredictable. Our partners are in every corner of the country, and as such, there are many different environmental and situational obstacles that can impact product fulfillment.

Whether it’s wildfires, hurricanes, or a pandemic, any business is subject to interruption when catastrophes arise. The West Coast Port Strikes of 2015 was one of those situations for us; we didn’t see it coming, and the sudden inability to process imported goods through west coast ports certainly impacted our normal business functions, and many of our partners faced similar issues. Lead times lengthened and we faced out of stocks.

The port strikes showed us that we needed fulfillment centers on the east coast in order to protect our and our partners’ businesses. Now that we have fulfillment and processing centers around the country, including both coasts, we can minimize the impact of geographically constrained events.

2) Lead Time and Freight Cost Improvements

Many manufacturers are facing tighter margins these days, as well as an added sense of urgency to have shipments turned around to Amazon quickly. By diversifying and growing our fulfillment network, we’ve seen a favorable upswing in lead time and freight cost.

According to Kaspien’s Strategic Warehouse Director, Jeff Bernatz, “In 2020, we’ve seen a ~20% decrease in overall turnaround time at our warehouses, directly tied to the increase in available locations and available staff to handle the workload.”

We work with many manufacturers who do not have the capacity or expertise to complete product preparation in compliance with Amazon’s fulfillment center requirements. For them, shipping to one of our processing facilities is essential, and that could translate to longer lead times and higher shipping costs. But, because we have a large fulfillment network, there’s always a processing facility close by, no matter where our partners are shipping from in the US. As a result, our partners pay a lower freight cost and shorter lead times since they’re shipping shorter distances.

For brands seeking to partner with retailers and/or logistics providers, always ask about their fulfillment network. A larger network will position you to get better margins and run a more efficient sales channel.

3) Handle Higher Volumes and Scale

A large fulfillment channel always enables us and our partners to scale faster, pushing more products at a higher rate. “Since expanding to 7+ warehouses, total unit volume through our warehouses has increased ~15% vs the same time YTD period in 2019,” said Bernatz.

More locations and a higher staffing capacity have allowed us to process more orders in less time. With this added capacity, we have room to expand into previously infeasible programs, such as direct to consumer fulfillment, distribution, etc. It also eliminates the backlog we can sometimes see during peak sales seasons, such as Q4 and summer.

The Benefits will Outlast COVID-19

For many companies, this pandemic has highlighted the extraordinary value of a diversified fulfillment channel. However, all the aforementioned benefits of a large fulfillment network will continue even after the pandemic ends. Though the coronavirus may have prompted you to explore new fulfillment options, it’s worth continuing that research so you can position your brand to weather future storms and continuing growing.

We’re always happy to share our learnings from the past 12 years. If you want to learn more or discuss a partnership, get in touch through our contact form or schedule a call with one of our ecommerce experts.

Updated 9/1/2020: Walmart officially announced that Walmart Plus will become available to all members on September 15th.

What is Walmart+ (Walmart Plus)?

Walmart will be launching a new service in July called Walmart+, according to Recode. Walmart+ is a subscription-based service that will provide members access to unlimited same-day delivery for eligible items, discounts at Walmart gas stations, and early access to Walmart deals.

Walmart+ is set to launch in July for $98/year, roughly $20 less than Amazon Prime. The service is meant to rival Amazon Prime as Walmart continues expanding its ecommerce operations. Walmart has yet to clarify whether the service will launch nationally or in select regions to start. According to Recode, a Walmart+-branded credit card will also be introduced after launch.

What Does Walmart+ Signify?

Walmart+ is the latest move in Walmart’s efforts to challenge Amazon for market share in online retail. Earlier this year, Walmart announced Walmart Fulfillment Services (WFS), a Walmart owned and operated fulfillment network for goods sold on Walmart.com. Walmart Fulfillment Services offers many of the same benefits as Fulfillment by Amazon (FBA).

Walmart Fulfillment Service Benefits

100% nationwide coverage
Increased product visibility
Significant sales lift
Fast & affordable fulfillment
Free & easy returns, including in-store returns
Consistent storage rates

Download our free eBook all about Walmart Fulfillment Services.

Walmart+ and Walmart Fulfillment Services make it clear that Walmart is taking advantage of Amazon’s successes and failures. They can see which services have proved most useful for online sellers and shoppers, and they are actively working to create comparable services for their own platform.

How Will This Affect Shoppers and Sellers?

Shoppers and sellers alike will benefit from the competition between Amazon and Walmart. Amazon Prime was largely unchallenged in the online marketplace space. With the introduction of Walmart+, the two services will vie for sellers’ and customers’ patronage, resulting in better features and deals.

How does Walmart.com Compare to Amazon?

Walmart has made excellent progress this year on their ecommerce platform. Along with Walmart Fulfillment Services and Walmart+, Walmart also offers brands better protection from counterfeiters and unauthorized sellers than Amazon.

Walmart is a gated marketplace, meaning that sellers must be approved before they can sell on the platform. Amazon, on the other hand, is an ungated marketplace, so anyone can create a seller account and begin selling. Amazon’s approach contributed to its staggering growth, but it also made it vulnerable to exploitation. Counterfeiters and rogue sellers have long plagued brands on the Amazon platform, and the problem has even received attention from the Department of Homeland Security.

Walmart also has the upper hand in the online grocery business. Walmart+ will offer benefits for grocery purchases as well, helping defend Walmart’s position as Amazon works to take control of the grocery sector.

Despite their progress, Walmart still has a lot of catching up to do. Walmart’s paid marketing services do not yet offer the same control as Amazon’s, resulting in lower ROI, nor do they offer the same breadth of services.

Sell on Walmart Sooner Rather Than Later

As Walmart continues building out its ecommerce platform, they are improving their ability to pull market share from Amazon. In their earnings report, Walmart shared that their ecommerce sales are up 37% year over year (partly due to the coronavirus).

Walmart is learning from Amazon’s history; brands should too. Establishing an early foothold on the ecommerce platform will position brands for long-term success.

Kaspien is a preferred solutions provider for the Walmart marketplace. If you’d like to discuss expanding your brand onto Walmart, reach out through our contact form.

Want to learn about selling on Walmart.com? Check out our free eBook!

Download the eBook

WFS: Walmart’s Gamble to Challenge Amazon FBA

On July 8th, Amazon Services notified sellers in the US that, effective September 1st, 2020, Amazon will display a seller’s business name and address on their Amazon.com “Seller Profile” page. For individuals, Amazon will display the individual name and address.

This change will help eliminate seller anonymity on Amazon’s US marketplace, bringing it into alignment with their European, Japan, and Mexico marketplaces.

In their notice, Amazon Services states, “[…] We are making this change to ensure that there is a consistent baseline of seller information to help customers make informed shopping decisions.” You can read the full notice from Amazon at the bottom of this post.

Why Does This Amazon Update Matter?

This update will increase transparency on the Amazon platform. Though Amazon has not stated as much, they may be making this change as a result of the Department of Homeland Security’s counterfeit report, which was published in January 2020. The report exposed the full scale of the counterfeit problem on Amazon, stating, “global employment losses due to counterfeit goods were between 2 million and 2.6 million jobs in 2013, with job displacement expected to double by 2022.”

Among the many recommendations in the report was a call to publicly display seller identities, which would make it easier for consumers and businesses to file legal action in the event of a counterfeit, IPR infringement, or other violation.

Kaspien’s Compliance Manager, Jed Nelsen, commented, “Amazon is making a big step forward in transparency. This update will make it easier for brands to track down the 3rd party sellers who are selling their products.”

How Will This Affect Shoppers and Sellers?

The anonymity update is unlikely to significantly impact online shoppers, as few take the time to research the seller they’re patronizing.

Sellers, on the other hand, are much more likely to take advantage of the update. As mentioned above, access to more business information will make it easier for brands and sellers to take action against counterfeits and cases of IPR infringement.

As Marketplace Pulse notes, sellers can fake business details to circumnavigate Amazon’s enforcement, so the update will not eliminate Amazon’s issues. But it’s a step in the right direction to protect consumers and businesses in the US.

What Steps Do Amazon Sellers Need to Take?

Sellers do not need to take any action, unless they’d like to update view and update their contact information. Amazon Services provided directions on how to do so in their notice:

Log into your Amazon seller account.
In the “Settings” menu at the top right corner of Seller Central, click “Account Info” to view your “Seller Account Information” page.
In the “Business Information” section, click the links for the information you want to view.
To change your business name, click “Display Name” and to change the address, click “Business Address”. Enter the new information or edit the current information.
Once completed, click “Submit” to save.

Read the Full Notice from Amazon

Dear Seller

Beginning on September 1, 2020, we will display a seller’s business name and address on their Amazon.com “Seller Profile” page. For individuals, we will display the individual name and address. This is consistent with “Seller Profile” pages across the Amazon stores in Europe, Japan, and Mexico.

Why are we making this change?

Over the years, we have developed many ways for sellers to share more about their business, including through features like the “Seller Profile” page, “Store” pages for brand owners, and Handmade “Maker Profile” pages. These features help customers learn more about the businesses of a seller and the products they are selling. We are making this change to ensure that there is a consistent baseline of seller information to help customers make informed shopping decisions.

Can I share more information to help customers beyond my business name and address?

Yes, you are welcome to add additional information about your business and products that you think would be helpful to customers. However, remember that you should not include an email address in order to prevent spam and abuse. We ask customers and sellers to use our Buyer-Seller Messaging system to communicate electronically.

How do I ensure that my information is up to date?

You can view and update your contact information by following the steps below:

Log into your Amazon seller account.
In the “Settings” menu at the top right corner of Seller Central, click “Account Info” to view your “Seller Account Information” page.
In the “Business Information” section, click the links for the information you want to view.
To change your business name, click “Display Name” and to change the address, click “Business Address”. Enter the new information or edit the current information.
Once completed, click “Submit” to save.

Regards,
Amazon Services

If you’re shopping for an Amazon agency but aren’t sure if now is the right time, consider this: Consumer spend in ecommerce is expected to grow 18% this year, while spend in brick and mortar retail is expected to drop by 14%. This forecast supports two important trends we’ve seen since the start of the coronavirus pandemic in the US:

1) More shoppers are buying more of their goods online.

2) Shoppers who previously did not shop online are now using ecommerce sites.

We fully expect both of these trends will outlive the pandemic, which means that brands who aren’t selling online are going to be at an increasing disadvantage.

Now is the time to sell online, Amazon is the place to do it, and an Amazon agency is one of the best ways to do it. To help you decide if you want to work with an Amazon agency, we’ve prepared a list of the top four considerations and benefits of hiring an agency.

#1 – Working with an Amazon Agency is Simply Convenient

Selling online is challenging. Managing the supply chain, inventory, marketing, listing optimizations, case management, customer reviews, and reporting requires a full-time team. If you don’t have the personnel, expertise, and/or software in-house to successfully manage these programs, it’s far easier to hire outside help. An Amazon agency provides the staff, experience, strategy, and software needed to grow a profitable and secure Amazon business. Furthermore, hiring an agency will likely be cheaper than hiring comparable personnel in-house.

Even if you’d prefer to manage your online sales channel independently, an agency can be a good stepping stone, laying a strong foundation for your online business while you prepare resources internally to eventually take over.

#2 – Amazon Agencies Keep You in Control

When you work with an Amazon agency, you maintain an inventory position; in other words, you’re the seller. No one else is between your brand and your customers. Shoppers will see that the product is made by you, sold by you, customer questions are answered by your brand, and that can build trust.

Now, how does that work when partnering with an agency? When you work with an agency, they’ll manage the backend of your Amazon channel through your brand’s seller account. This means all their expertise and resources are applied from within your own account, so consumers see only your brand on the frontend of a listing. This is one of the many differences between working with an agency and working with a retailer. A retailer will optimize your listings through their seller account, whereas an agency does so through yours.

Ultimately, maintaining inventory control and optimizing your sales channel through your own seller account results in greater transparency and control. You can access your account to review performance whenever you want. The agency can (and should) advise, but you have the final say on all things.

#3 – You’ll Save Time to Focus on Other Areas of Your Business

Getting the most out of your online business requires hours of attention. Amazon is not a “set it and forget it” marketplace. Each ASIN (Amazon Standard Identification Number – an alphanumeric code Amazon uses to identify each product) requires regular review and management if you want to maximize your sales.

We serve as an Amazon agency for many leading brands with varying catalog sizes. On average, we invest 60 hours per week in channel management for brands with 100 or more ASINs. That time includes inventory management, sales forecasting, customer review management, listing optimizations, paid marketing optimizations, and more. But as a result of investing so many hours on a weekly basis, we drive continual strong growth.

Now, if you don’t have such a large catalog, you’ll naturally require less time for channel management. Just keep in mind that hours per ASIN is not a linear chart. The time commitment per ASIN typically reduces as the number of ASINs increases because, in most cases, groups of ASINs share similarities, so the same content can be adapted to suit multiple ASINs.

#4 – The Costs Pencil Out

One of the most important questions is price. How much does it cost to work with an Amazon agency?

At Kaspien, our agency partnerships start at a $3,000/month retainer. However, if you’re seeking assistance for only specific services, such as marketing, all of our offerings are also available as managed services. Our managed services start at $100/hour.

If you think about it, that means working with an agency is actually less expensive than hiring a full-time employee to run your online sales channel. Furthermore, you gain much more than a single employee by working with an agency; you tap into the collective knowledge of hundreds of professionals and a suite of software (at least, if you work with Kaspien). That expertise, strategy, and automation translates into more sales and greater profitability, to the point where your Amazon agency pays for itself and then some.

Learn more about Kaspien’s Agency or request a free brand consultation to see what we could do for your brand.

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Warning: fwrite() expects parameter 1 to be resource, boolean given in /var/www/kaspien_site/wp-content/plugins/wp-retina-2x/core.php on line 906

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Warning: fwrite() expects parameter 1 to be resource, boolean given in /var/www/kaspien_site/wp-content/plugins/wp-retina-2x/core.php on line 906

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Warning: fwrite() expects parameter 1 to be resource, boolean given in /var/www/kaspien_site/wp-content/plugins/wp-retina-2x/core.php on line 906

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Selling and marketing on Amazon involves dozens of moving pieces. To help with this problem, we’ve compiled a list of 100 terms every Amazon seller should know, including terms related to digital marketing, logistics, finances, and the fundamentals. For ease of use, the terms are listed in alphabetical order.

Also check out our list of 20 Terms Every Walmart Seller Should Know.

1. A9 Algorithm: Amazon’s proprietary search engine algorithm for determining search results on Amazon.com.

2. A/B Testing (Split Testing or Bucket Testing): An online marketing strategy used to see which of two versions of marketing collateral yields the best results. The difference between the two versions is typically limited to a single element, such as the subject line of an email, so that testers can confidently attribute differences in performance to the changed element.

3. Ad Management Software: Software used to streamline management of Amazon ads, typically by improving data visibility, the user interface, and automation. In the case of Amazon, most ad management software is for pay-per-click (PPC) ad types, such as Sponsored Product Ads.
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4. Advertising Cost of Sale (ACoS): The cost of ad divided by the sale. For example, if a product costs $10 and it takes $1 worth of ad spend to generate a sale, the ACoS would be $1 divided by $10, or 10%. ACoS is often used to assess the efficiency of advertising campaigns on Amazon.

5. Amazon A+ Content: An extra feature for product detail pages available to brands that are enrolled in Amazon Brand Registry. This feature allows brands to add additional copy and images below the bullet points in a product detail page. Amazon claims they increase conversion rates by up to 10%.
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6. Amazon Ad Groups: On Amazon, Ad Groups are a subsection within a sponsored ads campaign that contain ads, targets, and a default bid. Ad Groups can contain a single ad or multiple ads grouped by like products, brands, or campaign goals. Targets can be either keywords, ASINs, or categories. Ad Groups are available for Sponsored Product and Sponsored Display campaigns.

7. Amazon Attribution: An Amazon service that allows sellers to measure the impact of different sales channels, such as email, video ads, and display ads, by creating unique URLs that enable attribution tracking. The Attribution dashboard in Seller Central allows users to see conversion metrics, such as “page views,” “add to cart,” and “purchases.”
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8. Amazon Best Deals: One of several types of promotions that sellers can run on Amazon where a product is offered with a 15% discount over a 2-week period. During the deal, the product is featured on the Today’s Deals page. The product must have an average rating of at least 3.5 stars and selling price of at least $10.
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9. Amazon Brand Gating: An invite-only Amazon program that allows manufacturers and private label sellers to control who can resell their products. This program helps prevent unauthorized third-party sellers from listing products.
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10. Amazon Brand Registry: An Amazon program that enables brands to gain additional protections and access to additional marketing services. Enrollment in Brand Registry is free, but requires a trademark registration number. Brand Registry provides access to Amazon’s infringement reporting tool, brand stores, A+ Content, Sponsored Display Ads, Sponsored Brand Videos, and more.
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11. Amazon Brand Store: A curated digital storefront on Amazon where brands can list their entire Amazon catalog in a convenient and branded experience. This feature is available only to brands enrolled in Amazon Brand Registry.
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12. Amazon Buy Box: The top right section on the product page where consumers can add items to their carts. The Buy Box is awarded by Amazon to sellers based on product price, availability, seller performance, and whether the product is offered with FBA or Prime shipping.
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13. Amazon Coupons: Advertisers can enroll up to 50 ASINs into a single coupon and offer either a dollar amount or percentage off. The coupon cost to the advertiser will equal the discount + $0.60, both of which are subtracted from the coupon budget. Each coupon must have a minimum of $100 for the budget, however, advertisers will be charged only for redeemed coupons.
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14. Amazon Damage Allowance: To cover the cost of handling and disposal of damages, Amazon charges vendors a damage allowance. Vendors can choose not to agree to this damage allowance, but they then must fund the cost of returning the item themselves.

15. Amazon Early Reviewer Program: The Early Reviewer Program is an Amazon-run initiative that can generate up to five new reviews on a selected product. Amazon randomly contacts verified buyers of an enrolled product and offers the customer an incentive to leave a review within the specified offer period. Amazon offers the buyer a small Amazon account credit (typically $1-$3) that can be used on future Amazon purchases. To qualify for the program, products must have a price point of at least $15 and fewer than five reviews. The product can remain in the program up to one year or until it receives five new reviews, whichever comes first.
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16. Amazon Enhanced Brand Content: A feature offered to Amazon’s vendors and Brand Registered brands that allows them to add additional information to their product detail page. This extra real estate appears below the bullet points on a product detail page.
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17. Amazon Headline Search Ads: Renamed to Sponsored Brand Ads, this ad type displays a banner ad at the top of the search results page. The banner ad contains a brand image and features up to three products. This ad type is typically best suited for generating brand awareness.
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18. Amazon Lightning Deals: Deals that run for several hours on and appear on the Today’s Deal page. This deal type offers a limited quantity of units determined by the seller. To be eligible, the brand must have a proven track record of selling well, a minimum 20% discount off the lowest price in the trailing 30 day price or lowest price YTD (whichever is lowest), sales history, and a 3–star rating or higher.
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19. Amazon Live: Through Amazon’s app, Amazon Live Creator, sellers can broadcast livestreams where they demonstrate products usage, features, and benefits. Featured products appear directly below the live broadcast.
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20. Amazon Marketing: Marketing services that are available on the Amazon platform, including Sponsored Product Ads, Sponsored Brand Ads, Sponsored Display Ads, Sponsored Brand Videos, Amazon Coupons, Deals, Amazon Live, Amazon Posts, DSP, Brand Stores, A+ Content, and more. Amazon continuously adds and retires marketing services.
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21. Amazon Product Categories: Amazon groups products by specific categories and has different selling requirements for each. These requirements can include additional fees, performance checks, and other qualifications. An example of a product category is “Apparel,” which includes Outerwear, Athletic Wear, Innerwear, Belts, and Wallets.

22. Amazon Prime Exclusive Discounts: A price discount exclusively for Amazon Prime members. Products with Prime Discounts display strike-through pricing. To be eligible for this promotion, a product must be Nationally Prime Shipping Eligible, have a rating of 3.5 stars or above or no reviews, offer 20% off current price, the discount must beat the lowest price offered for the ASIN in past 30 Days by 5%, and the seller must have at least a 4-star seller rating.

23. Amazon Seller Central: An Amazon platform used by Amazon sellers to market and sell products to Amazon customers.

24. Amazon Sponsored Brand Ads: Formerly called Headline Search Ads, this ad type displays a banner ad at the top of the search results page. The banner ad contains a brand image and features up to three products. This ad type is typically best suited for generating brand awareness.
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25. Amazon Sponsored Brand Videos: An Amazon ad type that displays a video on the Amazon home page and in the search results. The videos display on mobile and desktop. Amazon recommends including subtitles in the video.
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26. Amazon Sponsored Display Ads: Pay-per-click (PPC) ads on Amazon and Amazon-owned websites and apps that target shoppers by searches, views, purchases, or products.
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27. Amazon Sponsored Product Ads: Pay-per-click (PPC) ads that appear in strategic areas on Amazon, such as the top of the search results page and within a product detail page. These ads give brands’ products more visibility and increase the likelihood of purchase by consumers.
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28. Amazon Spotlight Deals: Deals that run for 24 hours on the Amazon Today’s Deals page or until stock runs out. These Deals are subject to minimum revenue and units sold thresholds. Criteria for Spotlight Deals include whether the item is Top Selling Product, the lowest price trailing 365 days, and a 4-star rating.

29. Amazon Standard Identification Numbers (ASINs): A unique alphanumeric code for a product listed on Amazon. The ASIN can typically be found in the URL of an Amazon product detail page and in the further details section of the product detail page.

30. Amazon Vendor Central: The Amazon platform used by manufacturers and distributors to sell product directly to Amazon’s first-party (1P) retail division, Amazon Retail.
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31. Amazon Vine: An invite-only program for Amazon customers who regularly leave reviews marked helpful by other customers. These customers are deemed trusted reviewers and gain access to free products, for which they provide customer reviews. These reviews are identifiable by a green stripe and labelled with Amazon Vine Program.

32. Amazon Web Services (AWS): Amazon’s cloud computing platform that offers services such as infrastructure as a service (IaaS), platform as a service (PaaS), and packaged software as a service (SaaS). AWS also offers solutions for database storage, compute power tools, and content delivery services.

33. Automatic Campaigns: A campaign type within Sponsored Products in which the advertiser sets a default bid at the Ad Group level and Amazon places ads automatically for customer search queries it deems to be relevant. These are commonly used to find new keywords that Amazon’s algorithm views as relevant for the products being advertised.

34. Average Order Value: The average amount a customer spends at a digital storefront in a single order. You calculate this by dividing sales revenue by the number of orders taken.

35. Average Time on Site: The average amount of time a visitor spends on a website. Usually defined within a specific timeframe.

36. Bid: The maximum amount an advertiser is willing to pay in order to get an ad to place for a specific search term.

37. Bid Optimization: The act of adjusting the bid for keywords in Amazon ad campaigns in order to improve performance. Bids may either be increased because ads are not competitive enough for important keywords, or they be can be decreased because ads are utilizing budget too quickly.
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38. Brand Awareness: The degree of consumer recognition of a brand based on the brand’s copy, colors, logo, products, qualities, and style.

39. Business to Business (B2B): A transaction in which a business sells products or services to other businesses.

40. Business to Consumer (B2C): A transaction in which a business sells products or services to an end consumer.

41. Call to Action (CTA): The action that marketing materials are trying to encourage the audience to take, such as “subscribe,” “add to cart,” or “sign up.”

42. Certified Service Providers (CSP): A person or organization that is certified under the Streamlined Sales and Use Tax Agreement to perform sellers’ sales and use tax duties (excluding the obligation to remit tax on its own purchases).
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43. Chargebacks: When a customer contacts their bank about a charge they don’t recognize or dispute, rather than contacting Amazon or the seller about the issue.

44. Click-Through–Rate (CTR): The percentage of visitors on a page who first view then click on an advertisement.

45. Copywriting: The writing of marketing, advertising, and promotional materials.
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46. Conversion Rate: The percentage of visitors to a page who take a desired action, usually in the form of purchases.

47. Cost of Labor: The sum of employee wages that have been paid. This also includes employee benefits and payroll taxes.

48. Cost-per-Click: A method of billing determined by the number of times a visitor clicks on an advertisement. This is Amazon advertising’s primary billing model.

49. Demand Side Platform (DSP): Amazon’s advertising platform that enables advertisers to use Amazon’s consumer data to target shoppers on Amazon and Amazon-owned websites and apps with display and video ads.
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50. Dropshipping: A method of retail fulfillment where the seller does not keep product in stock. Instead, the seller waits until a consumer purchases the product online, then the seller buys the product from the manufacturer and has the product shipped directly from the manufacturer to the consumer. This method is often used for products not eligible for preferred fulfillment methods, like FBA.
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51. Discount Code (Coupon Code or Promo Code): A code that shoppers use during checkout to redeem special offers or discounts.

52. First-Party Seller: A seller who owns the marketplace upon which they sell. Amazon Retail, for example, is the one and only first-party seller on Amazon.com.
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53. Fulfillment by Amazon (FBA): An Amazon service in which third-party vendors keep their product at an Amazon fulfillment center. Amazon will pick, sort, pack, ship, track, and handle shipping, returns, and refunds of these products for a fee.

54. Fulfillment by Amazon (FBA) Fees: A fee charged by Amazon for each unit processed through FBA. The fee is based on the product’s size and weight.

55. Fulfillment by Amazon (FBA) Storage Fees: A fee charged by Amazon for your inventory that occupies space in an Amazon Fulfillment Center. This fee is based on the daily average volume (in cubic feet).

56. Fulfilled by Merchant (FBM): A fulfillment method where the seller manages and controls their handling and shipping process, as opposed to Amazon or a third-party logistics provider.

57. Fulfillment Centers: A physical location where third-party logistics (3PL) providers, like Amazon Fulfillment, fulfill customer orders for online sales.

58. Gross Margin: The revenue a business retains after subtracting costs, calculated by subtracting cost of goods sold from net sales revenue. The higher the gross margin, the more working capital a company has.

59. High-Converting Keywords: Keywords in a pay-per-click (PPC) advertising campaign that drive high conversion rates. Identifying these keywords and adding them to sponsored ad campaigns is an essential part of optimizing an ad campaign.

60. Influencer Marketing: The promotion and selling of products or services by having people with social influence and followings promote the product on their social media accounts.
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61. Invoice: An itemized record of a transaction between a seller and a buyer.

62. Key Performance Indicators (KPIs): Metrics that are actively tracked in order to gauge a company’s long-term overall performance. These are usually set to compare the company’s performance to other companies within the same sector and to previous years’ performances.

63. Keywords: Words or phrases that shoppers frequently use when searching for a given product. Including keywords in the copy on the product detail page or in Amazon sponsored ad campaigns helps products place higher in the search results and drive more traffic to listings.

64. Landing Page: A webpage created solely for an advertising campaign. It is where visitors “land” after clicking on an ad or a link.

65. Listing Optimization: The process of revising the copy and images on a product detail page in order to improve organic placement in the search results and conversion rates. This process often includes adding keywords to the listing title and bullet points, revising copy to improve readability and highlight key features, and including images that demonstrate product use, features, and benefits.
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66. Low-Converting Keywords: Keywords that drive particularly low conversion rates within a pay-per-click (PPC) advertising campaign. Identifying and negating these keywords is an essential step in improving the efficiency and performance of a sponsored ad campaign.

67. Minimum Advertising Price (MAP): The minimum price for which sellers can advertise a product, typically issued by the manufacturer.

68. Minimum Order Quantity (MOQ): The minimum number of products or units that a supplier will produce at one time. This number helps ensure that the supplier is producing enough products or units to drive a profit after the costs of production.

69. Marketing Campaign Management: The planning, executing, tracking, and analysis of marketing campaigns from the beginning to the end.
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70. Marketing Co-op: An agreement between a manufacturer and a seller where the manufacturer pays for a portion or the entirety of paid marketing efforts for their product.

71. Marketplace Facilitator: Businesses or organizations that arrange with third parties to sell products and services on its platform. Through this they can facilitate retail sales.
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72. Marketplace Facilitator Laws: Legislation around sales tax responsibilities of Marketplace Facilitators.
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73. Manufacturing Cost: The cost of materials and production borne by the manufacturer.

74. Media Gallery: The section at the top of an Amazon product detail page containing images and videos.
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75. Net Profit Margin: The percentage of revenue that a company retains as profit after subtracting all costs.

76. Net-Terms: The amount of time that passes between a seller acquiring inventory from a manufacturer and the seller paying the manufacturer for that inventory. This delayed payment enables sellers to generate revenue to help pay for the purchase order.

77. Paid Social: Paid targeted advertisements run on social media platforms, such as Facebook and Instagram.
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78. Pay-per-Click (PPC): A type of digital marketing in which marketers pay a specific amount each time their ads are clicked. This model is used in most types of Amazon ads.

79. Purchase Order (PO): The order a retailer places with a vendor to acquire product. This includes the quantity of product ordered and the price paid for it.

80. Product Description: A section near the bottom of the Amazon product detail page where additional product information can be shared.

81. Product Detail Page: Also called a “listing,” the page featuring a specific product that includes a title, bullet points, product description, media gallery, enhanced brand content, and customer reviews.
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82. Product Profit Margin: The difference between how much the product sells for and the actual cost of the product itself. This is sometimes referred to as a “markup.”

83. Product Rank: A product’s rank compared to other products in each category as determined by Amazon’s algorithm. A lower rank is better, indicating higher customer reviews, more traffic, more sales, and better organic placement on the search results page.

84. Production Costs: The cost for manufacturing products or services. These can include labor, raw materials, supplies, delivery costs, and general overhead.

85. Retail Arbitrage: The practice of buying products from distributors, wholesalers, retailers, and so on, then reselling those products at higher price. The resale usually takes place online.
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86. Retail Price: The price of product when sold to an end consumer.

87. Return On Advertising Spend (ROAS): A measurement of the effectiveness of a digital advertising campaign. Very similar to ROI, this metric is specifically for paid advertising campaigns and helps online business determine best methods and improvements for future digital advertising campaigns.

88. Return-On-Investment (ROI): A comparison of the amount invested to the amount generated by that investment. ROI is frequently used when measuring the value of paid marketing in generating overall revenue. To calculate ROI, divide the amount generated by the cost of the investment.
89. Sales Tax: A tax on a sale, transfer, or exchange of a product or service. Usually this tax is applied to the end consumer and not the seller.

90. Search Engine Optimization (SEO): The science of making web pages more attractive to search engines by implementing highly searched keywords in a page’s frontend content and meta content, optimizing content length, and more. On Amazon, SEO typically involves implementing keywords into product detail pages to improve their organic placement on the search results page.
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91. Search Engine Results Page (SERP): The page that is generated from a system after the user inputs their query. An example of SERP would be the Google results page.

92. Seller Agreement: A contract signed by businesses that sell on Amazon wherein they agree to comply with all of Amazon’s policies.

93. Social Media Marketing: A type of marketing conducted on social media platforms such as Facebook, Instagram, Twitter, LinkedIn, Pinterest, Snapchat, and more. This marketing typically seeks to connect brands with their target audience, build brand name recognition and loyalty, increase sales, and drive website traffic. Social Media Marketing often involves content creation, engagement with followers, analysis, and running paid social media advertisements.
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94. South Dakota v. Wayfair, Inc.: A landmark supreme court decision that holds sellers responsible for collecting and remitting sales tax in any state where they surpass a certain sales threshold, even if the business lacks a physical presence in the state.
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95. Third–Party Seller(s): An independent company that sells products on a marketplace they do not own, such as Amazon. Third-party sellers are common on Amazon, accounting for over 50% of all sales on Amazon.com.
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96. Third-Party Logistics Providers: A business that provides services for inventory management, distribution, warehouse storage, product preparation, labelling, and fulfillment for other companies.
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97. Today’s Deals: A page on Amazon that features products currently running Deal of the Day, Lightning Deals, or Best Deals. This is the second most visited page on Amazon.
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98. Use Tax: A tax on a storage, use, or consumption of a product or service which has not had sales tax applied to it.

99. Vendor Fees: A fee collected by vendors to cover the cost of processing sales taxes and transferring them to state and local governments.
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100. Wholesale Costs: The price of products purchased in bulk from the manufacturer, as opposed to the retail price, which is an increased price charged to end consumers commonly used by retailers/resellers.

Amazon recently published its Q1 2020 Earnings Report. The report posted positive results for Q1, with the anticipation of high expenses in Q2 as Amazon responds to COVID-19 impact.

KEY TAKEAWAYS FROM AMAZON’S Q1 EARNINGS REPORT

Amazon saw strong YoY sales growth, coming in at 26% growth in Q1 net sales. This growth comes in the face of COVID-19, and may be partly attributed to the stimulus checks.
However, Amazon’s profits were down YoY, with operating income reported at $4B compared to $4.4B last year.
North America and AWS segment saw strong performances, while the International segment saw a loss of $398M, compared to a loss of $90M in Q1 2019.
Third-party sellers drove $14.5B in profits in Q1, compared to $11.1B in Q1 2019.
The ‘Other’ segment, which consists mostly of advertising revenue, saw 44% growth comparing Q1 2020 to Q1 2019.
Amazon anticipates spending approximately $4B in Q2 for COVID-related expenses, which places its operating income at risk of reporting a $1.5B loss in Q2.

Read Kaspien’s Assessment of Amazon’s Q4 2019 Earnings Report.

WHAT DOES THIS MEAN FOR BRANDS SELLING ON AMAZON?

Amazon’s results in Q1 would surely have been stronger if the coronavirus had not hampered the global economy; however, the results are still positive, indicating that Amazon will remain a key component of any successful online strategy.

However, while Amazon managed to push through strong results in Q1, the journey was not entirely smooth. Brands were repeatedly, and often adversely, impacted by Amazon’s unilateral decisions as it struggled to respond to COVID-19‘s impact on its operations.

Amazon Restricted Shipments, Indicating Stress Fractures

Amazon’s fulfillment and distribution infrastructure buckled under the sudden and dramatic increase in online purchases. In response, Amazon restricted which types of products it would accept to its fulfillment centers. Brands that were in non-essential categories were left out to dry as Amazon’s overloaded fulfillment centers raced to fulfill orders. Amazon’s capacity was so overloaded that they began hiring for 175,000 new jobs.

Nevertheless, Non-Essential Categories Performed Better than Expected

Kaspien’s partner brands were able to recover from the restrictions, but the fact that Amazon restricted shipments in the first place is cause for concern. Brands unable to respond quickly enough could see significant harm to their business stability caused by the decision, however necessary it was.

Although stay-at-home orders were issued across the nation in mid-March, online sales remained steady in most categories, regardless of whether they were labelled essential or non-essential.

Amazon Then Restricted Unit Capacity at Fulfillment Centers

While the category restrictions have been lifted and new recruitment is underway, we do not anticipate that Amazon will have resolved the issue by the end of Q2. In fact, we’ve seen a new restriction arise: Amazon is capping the number of units that brands can keep in their fulfillment centers. At Kaspien, we’ve seen one brand’s monthly storage limit be reduced to 3,000 units, despite typically selling through 10,000 units per month.

Amazon has not clearly communicated the reason for the unit restriction, but there are two probable causes:

1. Amazon’s processing centers are still overloaded and will likely remain so for several more months.

2. Storing fewer units is more efficient for Amazon because it helps reduce the financial risk of storing stagnant inventory that does not generate profits.

For sellers, this change means that their sales forecasting and lead time prediction models need to be highly accurate so that they can optimize inventory turn rates. If sales remain steady but Amazon limits the unit volume, sellers will need to move smaller numbers of units more frequently in order to maintain sales capacity.

Brands May Need to Explore Supplementary Fulfillment Options

These back-to-back restrictions indicate that Amazon may not always be a reliable fulfillment partner, at least not in the near future as it responds to COVID-19. Brands may need to explore supplementary options, such as Fulfilled by Merchant (FBM) or third-party logistics providers like Deliverr, to support their Amazon business.

Dropshipping also proved to be an extremely beneficial tool for brands that were impacted by the category restrictions. As Amazon’s shipping times for non-essential items grew, dropship-enabled products even began to win the Buy Box against FBA offerings. Kaspien saw triple digit YoY growth in dropship orders while the category restrictions were in effect.

WHAT LIES AHEAD: Q2 MAY BE ONE OF THE STRONGEST ON RECORD

Amazon expects net sales to grow between 18% and 28% compared to Q2 2019. However, operating income is expected to range from -$1.5B to $1.5B, compared to $3.1B in Q2 2019. Amazon provides this guidance with the plan that they will spend approximately $4B in Q2 for coronavirus testing, revised safety policies, increased pay for hourly workers, and other measures. As Amazon explicitly notes, the above expectations are only that – expectations – and are subject to change due to a number of factors.

Although Amazon may expect their operating income to be negative in Q2 due to COVID-related expenses, experts predict that this quarter may be one of the strongest in Amazon’s history. This prediction is based on several factors, but the two biggest are related to the government’s stimulus package and pervasive, lasting changes in consumer buying behavior.

Amazon Benefits from Stimulus Checks

Amazon has and will continue to benefit from the stimulus checks the government began distributing in April, with experts predicting that Amazon will capture a leading share of consumer purchases made with the stimulus money. Some forecasts estimate that April will see approximately 50-60% growth YoY in the North American Retail segment, due in large part to consumers spending their stimulus checks on Amazon.

The fact that Amazon has captured the majority of stimulus purchases is a positive sign for brands on the marketplace. While brick & mortar stores have been hard hit by stay at home orders across the nation, brands are still able to capture sales and provide for their customers by listing online.

Consumer Buying Behaviors Will Change

In addition to capturing a large share of the stimulus package, Amazon also stands to gain from pervasive shifts in consumer buying behavior. More shoppers than ever before are buying online, and even after the stay-at-home orders are lifted, we expect to see a lasting impact in where and how shoppers purchase.

Amazon’s Advertising Revenue May Dip

While Q2 may be one of Amazon’s best, at least by some metrics, advertising revenue is unlikely to be among them. Ad revenue has been one of Amazon’s fastest growing segments in recent years, but experts predict that their advertising revenue growth rate will dip in Q2, a trend that Kaspien has seen in our own data.

The average cost-per-click for Amazon Sponsored Product ads has decreased by 6% YoY, compared to a 38% increase in 2018 to 2019. This shift from rising costs to falling costs suggests a reduction in competition as more brands pull back their advertising budgets. This reaction is likely a mistake, but you can read more about why in another post. For Amazon, brands pulling back ad spend will diminish their advertising revenue growth rate.

Expansion into Ecommerce has Accelerated

Road Bumps Along the Way

Charting a New Course

Should You Work with an Amazon Retailer?

What is an Amazon Retailer?

Pros of an Amazon Retailer

Cons of an Amazon Retailer

Costs of an Amazon Retailer

Making a Decision

Should You Work with an Amazon Agency?

What Value does an Amazon Agency Add?

What is an Amazon Agency?

Pros of an Amazon Agency

Cons of an Amazon Agency

Costs of an Amazon Agency

Making a Decision

Should You Sell Yourself (Direct to Consumer)?

Amazon Retailer vs Amazon Agency: Which is Better?

Service That Grows with You

Related Content

Communications Updates

Permitted Buyer-Seller Communications

Forbidden Message Types

Forbidden Message Features

Forbidden Message Styling

Compliance Required by November 3, 2020

Why is etailz Rebranding?

What does Kaspien Mean?

The Name

The Logo

The Future of Kaspien

1. If You Don’t, Someone Else Will

2. Shoppers Are Already On Amazon

3. Amazon Is Expected To Remain The E-Commerce Market Share Leader

4. Amazon Is Improving Brand Protection Services

5. Diversification Makes You Resilient

The Benefits Of Starting Late

5 Questions to Ask Your Potential Search Marketer

1) How Often will Bids, Budgets, and Search Terms be Optimized?

2) What Cadence will We Receive Performance Reports?

3) How Do You Plan to Manage Budget and How Will We Hold You Accountable?

4) How Much of Our Budget is Spent on Branded Keywords?

5) What Organic Sales Lift can be Attributed to Your Marketing Efforts?

6 Telling Factors You Can Check On

1) Are All Campaigns Set to Automatic Targeting?

2) Are Automatic Campaigns Greater than 20% of Total Spend without any Search Terms being Added to Other Campaigns?

3) Do Automatic Campaigns Have Negated Search Terms?

4) Are Small Groups of Products Utilizing the Majority of Spend?

5) Are Branded Keywords Accounting for the Majority of Spend?

6) What are Your Highest Performing Keywords?

Find the Right Amazon Advertising Agency

Amazon Revenue Soars in Second Quarter

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Key Takeaways from Q2 for Sellers

Jeff Bezos Testified Before Congress

What the Antitrust Hearing Means for Brands on Amazon

Start Selling on Amazon

3 Benefits of a Dynamic Fulfillment Network

1) Mitigates Geographic Risks

2) Lead Time and Freight Cost Improvements

3) Handle Higher Volumes and Scale

The Benefits will Outlast COVID-19

What is Walmart+ (Walmart Plus)?

What Does Walmart+ Signify?

How Will This Affect Shoppers and Sellers?

How does Walmart.com Compare to Amazon?

Sell on Walmart Sooner Rather Than Later

Download the eBook

WFS: Walmart’s Gamble to Challenge Amazon FBA

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Why Does This Amazon Update Matter?

How Will This Affect Shoppers and Sellers?

What Steps Do Amazon Sellers Need to Take?

Read the Full Notice from Amazon

#1 – Working with an Amazon Agency is Simply Convenient

#2 – Amazon Agencies Keep You in Control

#3 – You’ll Save Time to Focus on Other Areas of Your Business

#4 – The Costs Pencil Out

WHAT DOES THIS MEAN FOR BRANDS SELLING ON AMAZON?

Amazon Restricted Shipments, Indicating Stress Fractures