Amazon Trends and Topics to Watch out for in 2019!
It’s hard to believe we’re well past the Q4 craziness and are already halfway through Q1. With that being said, we thought it appropriate at Channel Key to share some of the big trends and topics we’re monitoring closely for 2019 that will have big impacts on Amazon business’s (positive and negative) in the coming quarters.
Pay to Play
As Amazon’s advertising business finished around 10 billion in revenue for ’18 beating analyst projections by 3x and as the proliferation of new sellers and brands continues to grow it’s become clear that Amazon’s advertising flywheel is spinning. Buying traffic is now a minimum requirement for sellers that want to have relevant products in search that have staying power. Simply put, Amazon is now a pay to play model and that means the cost of doing business on Amazon is going up. At Channel Key, we saw average CPC bid amounts for our clients increase 20% from ’17 to ‘18.
Additionally, we’re seeing a continued push to add new ad placements and targeting options like category, individual product and/or specific brand targeting for sellers. In the last 6 months, we’ve also seen the AMG group release a self-service DSP option for Agencies and select sellers.
Push to Seller Central – One Vendor?
Amazon is actively deprecating dormant and slow-moving Vendor Central Accounts and with the Strategic Vendor Services program no longer around, creating a self-service model for Vendors not in the top 5-10% in their product category or those doing less than $10 million annually in Shipped COGS. Top vendors will still continue to get human love from their Vendor teams and they are creating new programs like “Born to Run” designed to give vendors better opportunities to launch new products. They are simultaneously giving Brand Registered Sellers more tools, better ad targeting and access to much better data with the recent beta launch of “New-to-Brand metrics” for Sellers. This is basically ARA Premium for vendors which carried a minimum charge of $30k from Amazon now being offered for free to sellers.
This tells us 2 things:
- If you are a brand not in the top 5-10% in your category then you are being pushed to Seller Central
- Amazon has begun their transition to the highly speculated One Vendor (or whatever they’re going to call it) platform
There are many questions that come to mind on how the blurring of the 1P/3P lines will ultimately manifest itself. Will Amazon really have their choice of buying only the best products? Will they force sellers to become Amazon vendors? Time will tell and we will be watching this very closely.
We look for Amazon to continue to keep their foot on the gas pedal for the B2B business in 2019. While still a bit clunky with the separate B2B login and blurred shopping lines for buyers, the business is growing fast, surpassing $10 billion in revenue in 2018. We’ve also seen recent additions of new B2B ad targeting beta programs and foresee more built out and defined ad programs for B2B sellers become available in 2019.
SFP vs FBA for Sellers
Amazon is making it very clear that the Prime badge is king for Sellers trying to determine their best method of fulfillment. Recently, they surprisingly changed their policy on long-term storage fees for FBA inventory removing the 6-month long term storage fee making it easier for sellers to maintain FBA stock levels and mitigating fees that were in some cases prohibitive. They have also recently removed guaranteed delivery date badging for seller-fulfilled orders that are not enrolled in the Seller Fulfilled Prime (SFP) model. One of the constants for Amazon is their obsession with providing the best customer experience and they are making it very clear that Prime is their preferred method of fulfillment.
So that’s our list! It’s certainly not everything but we think it encapsulates some of the big drivers that will affect Amazon businesses in 2019. Hope it helps and Good Selling!
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