Nick Galante, VP of eCommerce at Direct Agents, attended the March 2022 Prosper Show; the networking hub, educational authority, and leading conference and trade show for established Amazon sellers. Outlined below are his top five key takeaways from the event.
- Amazon, the leading digital marketplace, is now predominantly Pay to Play.
The top 12 placements in the search engine results pages are now primarily Ads, with the remaining 30 – 40% as organic. This has big implications for the future of Amazon, and with more sellers needing to advertise to secure Top of Search, Nick predicts CPCs will continue to rise to make it harder for new sellers to establish themselves without significant upfront investment. Going forward sellers can anticipate higher costs heading into 2023, which Amazon may or may not offset with reduced referral fees so new brand adoption remains high.
- Amazon Aggregators are on the rise.
Just 5 years ago Amazon businesses were considered illiquid assets, now people are knocking at the door with offers to buy. So far, 14B in funding has been raised for US-based aggregators or buyers of profitable Amazon businesses. Increased M&A also exacerbates the competition/cost factors mentioned above, as aggregators will have more significant buying power than startups to dominate ad space. Look for mass consolidation to occur in the months and years ahead, as larger aggregators buy smaller ones.
- Supply Chain, Supply Chain, Supply Chain.
After 6 years of supporting China as the origin country, Amazon has begun to feel political pressure to expand the list of countries for Amazon Global Logistics beyond China. Ultimately Amazon is thinking about resilience in a world where supply chains have been so disrupted. Brands should set a goal to have more than 50% of production take place outside of China in congruence with these changes.
- With AntiTrust approaching quickly, regulatory bodies have been forced to ramp up oversight.
Online marketplaces act as a single point of contact for regulators to enforce taxes, and the Federal Trade Commission has long seen the writing on the wall. Amazon has now taken on the role of policeman for the world’s regulators, making it illegal to buy fake reviews. In the future, Nick believes that there will be more features for brands to flag themselves as authentic, perhaps through badges, or other areas on the storefront to help reinforce trust with customers.
- Walmart is Amazon in 2012, with all the opportunities that come with it.
The relevancy algorithm of Walmart is tightly constrained compared to Amazon, making organic a critical first route to grow in the marketplace. Walmart’s marketplace rewards quality listings in a big way, so it is imperative for new brands to follow their rules and guidelines, and don’t use blackhat tactics! For advertising growth, Sponsored Placements primarily show the image and title of a listing, so Nick recommends focusing on winning with high-resolution imagery + titles first, before other SEO elements to increase click-through rates to your listings. In the future we believe that WFS (Walmart Fulfillment Service) will give brands a competitive edge similar to FBA in Amazon, so make sure your brand is testing this fulfillment type looking ahead this year.
For more information on the latest Amazon industry trends and how you can position your eCommerce brands for growth, reach out to firstname.lastname@example.org.
Nick Galante, VP of Growth