With only a few weeks into Q1, it’s important that Amazon Sellers take a step back and evaluate the economic reality. 

Inflation has been in full swing for over a year, the FED raised interest rates seven times in 2022 (with more on the way this year), and the market can’t seem to make up it’s mind on a bull or bear run. During periods of uncertainty, the cost of goods (I mean cost-of-everything) for your brand has likely increased, even though last year’s supply chain shortages have started to stabilize. 2022’s Prime Day broke records despite the economic uncertainty, but what we eventually came to find was that consumers were simply waiting for the big discounts to buy.

So what does all of this mean for your business? Profitability likely just became your #1 priority. 

Direct Agents has had the pleasure of working with brands of all sizes, yet they share a similar theme in 2023: How can we increase profit margins when discretionary spending is down? Reevaluate your supply chain, pricing, and SEO strategy in 2023.

Inventory: You’re Probably Not Shipping Fast Enough

What frequency have you been shipping into Amazon? Is that ideal? Is your order velocity improving over time? Or is a higher percentage of your inventory sitting and collecting dust. 

In uncertain times, sellers of all sizes have to re-evaluate the frequency of shipments, and with rising FBA costs already published by Amazon, we recommend doing a top/down analysis for potential reductions. Many sellers of ours have seen success with more control — higher frequency, less units per shipment. While not a guarantee, we have seen savings of up to 5 – 7%, funds which can add to your brand’s net margins or be re-invested in product R&D. 

While certain product categories do have higher or lower FBA, storage, and ancillary costs for Amazon’s FC, a simple analysis can ultimately help guide your decision.

Product Strategy: Price. Price. Price.

Brand loyalty? Market downturns don’t stop purchase habits, but they do change the type and frequency of those purchases. Even the idea of customer loyalty becomes fickle under these types of conditions.

According to Emarsys’ Annual Customer Loyalty Index, “Three in five (60%) respondents said that inflation has made them leave brands in an effort to save money. When asked what drives their loyalty to retailers, the #1 response among those surveyed was discounts, incentives, and rewards (58%), ahead of great customer service (49%) and high-quality products/services (45%). Of the things a brand would have to do to lose their loyalty, increased prices tops the list – with 54% of respondents listing this as their reason for abandoning their loyalty to a brand.”

While price is a large contributor to a purchase decision, there are other considerations. In 2023, it is increasingly important for a brand to understand their customer, to become customer obsessed. Aim to create an experience that raises a new bar with customers and you become irreplaceable. 

For new product research, consider looking at the top sellers within your product category, scan for 1-2 star reviews, and notice what features of the product customers are saying they were hoping for. Those insights can bring about new products for the mass market, with product features that stand above the rest.

As we like to say to our partners, you can compete on price or you can compete on experience, but if you do can both, you win.

SEO: Maximize Sales Beyond Advertising

The lifeblood of your brand is content. Your Value Proposition. Your message to your customers. 

You invest countless hours idealizing, concepting, doing keyword research, creating optimized titles, product benefits, storefronts, all to ensure a customer can find and buy from you. The foundation of your revenue of your established brand is SEO. While this is part and parcel with advertising, at Direct Agents we see between 50 – 80% of Ordered Sales coming from organic traffic for our clients. 

So the question becomes: If 50 – 80% of your company’s revenue is coming from organic, are you fully quantifying your SEO strategy and maximizing sales potential? 

Amazon has pivoted in recent years to become more of a brand destination with Storefronts, A+ content, and soon the INSPIRE app, but the SERP is still king for product discovery and acquisition. New A/B testing options are also available to help measure impact from SEO, although previously there was no tool in the market that allowed brands to quantify those effects. So, Direct Agents set out to create one. 

Our Feedback for On-Page Management & Optimization tool, dubbed “FOMO,” is the industry’s first and only technology that monitors all product page updates, such as price, content changes, reviews and more, against real time performance metrics such as glace views, keyword rankings, sales and BSR. The end result is a real-time feedback loop of any Amazon listing change that allows the user to find quick, data-backed optimizations to a brand’s listing and help grow sales beyond just advertising.

FOMO Technology

Despite being recently released to the public, our beta tests have shown +59% Growth in YoY organic sales from tracked ASINs, identified the right discounts that incentivized customers the most, and also found maximum Sale Price a product could list at without impacting CVR.

Direct Agents believes 2023 can be a successful year for you brand, but recommends first re-evaluating your pricing, inventory, and media strategy. If you’re interested in learning more about Direct Agents’ Amazon offerings and how our eCommerce team can help your brand grow on Amazon, email marketing@directagents.com to learn more.

Nicholas Galante, Vice President of eCommerce, Direct Agents

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