Amazon Weekly News Digest
Price-gouging claims; Amazon private label brands DO use your data; Google Shopping now free; will there be Prime Day 2020? and new advertising tools.
Happy Friday, readers!
It has been a huge week in Amazon news, specifically in dealing with a handful of brands who’ve fallen victim to incorrect ‘price-gouging’ claims by Amazon (news item #1). These are strange times, and more than ever we need to stay on our toes! With that in mind, the purpose of this newsletter is to get smart about Amazon.
So let’s move onto this week’s news:
Amazon incorrectly suspends products for price-gouging
Amazon Scooped Up Data From Its Own Sellers to Launch Competing Products
Google Shopping is now free for sellers in an effort to counter Amazon's surging ad sales
New tool in Brand Analytics: Repeat Purchase Behavior
Will there be a Prime Day in 2020?
Amazon advertising news with Stefan Jordev: Amazon Sponsored Display gets yet another new feature; and “Brands related to this item” placement on product pages available on some listings
Other news in brief
Amazon incorrectly suspends products for price-gouging
Amazon is suspending products for price-gouging, when the price of the product has not changed! This has happened to a few of our clients and dozens more merchants. I find this very concerning because:
Amazon cites a "Marketplace Fair Pricing Policy" in these suspensions, but refuses to explain which part of the policy have been violated.
In our experience at Bobsled, these are products that haven't changed their price before or during the crisis, and aren't priced lower anywhere else online
One common thread I've noticed is that often these are brands which have a premium price point in the market. It appears that Amazon is taking this opportunity to suspend products because they don't like the price point that they sell at.
What this means for brands
In response to the lack of clarity, we've had to resort to randomly lowering prices by small increments to see if it gets rid of the error. This appears to work for some products, while others got suspended again. Regardless of whether that tactic works long-term, it has the following effect:
Creates huge channel conflict issues for the brands who are is selling products at a lower price point on Amazon than elsewhere.
Reduces profit margins at a time when these brands are trying to stay afloat and cope with other shopping channels closing down.
Amazon Scooped Up Data From Its Own Sellers to Launch Competing Products
Nobody reading this should be surprised to hear that despite many years of claiming the contrary (including in its response to the U.S. Congress), Amazon has been using sales and cost data from 3P merchants to select and design Amazon’s own private label products. An investigation by the WSJ found Amazon employees willing to admit that they accessed data that should have been off-limits to figure out which products would be best to knock off.
What this means for brands
Finally, there is evidence of what many brand suspected for years. Now that their dirty laundry is out in the open, Amazon will be forced to face this, and curtail this behavior.
Be aware that by refusing to sell on Amazon, you’re not avoiding the problem. While Amazon will not have the same detail of sales & cost data if you avoid the platform, they still create knock-offs based on search data, as cult DTC footwear brand Allbirds found last year.
Finally, know that the vast majority of Amazon’s PL products fall flat, per Marketplace Pulse data.
Google Shopping is now free for sellers in an effort to counter Amazon's surging ad sales
Google just announced that merchants can advertise on Google Shopping for free. Here's the details:
Beginning next week, search results on the Google Shopping tab will consist primarily of free product listings. Shoppers will see more products from more stores (including in theory smaller stores / those who would otherwise not be advertising).
It's free exposure for brands: "paid campaigns can now be augmented with free listings."
Timing: launch before the end of April in the US and "we aim to expand this globally before the end of the year". No end date specified.
Close partnership with PayPal makes it sound like merchants using Paypal will have faster access.
Why are they doing this?
Data. If merchants pull back on their ad spend, google will miss out on the river of data that they need to sustain future ad spend from advertisers who want to tap into google's data set. Historically the shopping tab makes up 3-5% of traffic with purchase-intent.
Digging their heels in against Amazon. This is a good way to get merchant onboard Google’s shopping platform, particularly those who have never thought to bother in the past. This increases Google's product coverage. This is an area where google has struggled to gain traction in the past. The Information reported that in 2018, when Google Shopping was still known as Google Express, it did $1 billion in sales, while Amazon did $142 billion in product sales that year.
Ad revenue. While most placements will be free, the premium placements in Google Shopping will still be paid! Google can slow-roll its advertisng program, upselling these merchants to paid opportunities later.
So, should you get on board? In my opinion yes. There’s no practical downside if you have an operational ecommerce store. If you need help setting this up, reply to this email and I’ll point you in the right direction.
Enjoying this digest? You can get the Amazon News Digest delivered to your email inbox every Friday for just $20/month! As a bonus you’ll also get access to the Bobsled team’s bi-weekly private 'Office Hours' sessions to discuss Amazon questions candidly.
New tool in Brand Analytics: Repeat Purchase Behavior
Or as one of the team members called it - The holy grail of LTV modeling
‘Repeat Purchase Behavior’ is located inBrand Analytics Dashboard in Seller Central (under Consumer Behavior Dashboards) and it can help you strategize and assess your marketing campaigns to drive repeat purchases and acquire new customers.
Will there be a Prime Day in 2020?
Let’s go back to basics: why does Amazon have Prime Day? There are 2 main reasons: boost sales during a typically slow sales period, and boost its Prime membership base. To do this, Amazon runs bargain-basement deals on its own Alexa-enabled tech products and encouraging sellers and vendors to run their own promotions. Only Prime members are able to shop many of the deals, causing a bump in membership.
Based on these assumptions, does Amazon need Prime Day this year?
The first objective, to boost sales outside of the core Q4 selling period, has been arguably been accomplished. Many data sources point to massive sales volume prompted by COVID-19:
Amazon has seen an ‘enormous increase in demand’ as shoppers are forced to stay home, essentially creating an extended Prime Day/Black Friday type of situation.
Analysts forecast Amazon to report first-quarter revenues of $73bn (£58bn). That would be up nearly 22% on the same quarter last year, and works out as sales of $10,000 every second, day and night.
Analysts at the US investment bank Cowen likened the impact of the lockdown to the Black Friday shopping frenzy in November, or Amazon’s own Prime Day sale in July. “Amazon has seen an ‘enormous increase in demand’ as shoppers are forced to stay home, essentially creating an extended Prime Day/Black Friday type of situation,” they wrote.
So what about Prime members?
Recode cites a couple of new data sources in a story this week that suggests the Prime program is continuing to see strong adoption:
Sales of Amazon Prime memberships in the US increased 10% YOY for the weeks of March 16 and March 23, according to estimates from the research firm Second Measure. These are the largest for Amazon since early November 2019 (peak Prime adoption time)
A Consumer Intelligence Research Partners (CIRP) survey shows that the rate at which Amazon shoppers converted from a free Amazon Prime trial into a paid Prime member in the first quarter of 2020 was the highest it’s been in two years.
Based on this information, I’d hazard to say that Amazon doesn’t need Prime Day. Amazon is still trying to recover from operational and inventory issues related to COVID-19. And many merchants are likely to be extremely cautious about running big promotions and media campaigns.
It’s nearly unthinkable that Amazon would completely cancel Prime Day in 2020, but we might be looking at a scaled-back version. Perhaps one that focuses on Amazon devices (which are reportedly over-stocked) and digital products, like Amazon Music subscriptions.
Amazon advertising news with Stefan Jordev
Amazon Sponsored Display gets yet another new feature
Sponsored Display advertising campaigns within Seller Central and AMS now feature a choice between letting Amazon include 3 products with a high amount of visits of their choosing, or advertisers choosing which products to be included in their campaign themselves.
What this means for brands:
This is a choice between ease of use and control over paid campaigns. The feature can easily help brands increase their investment in Sponsored Display. Since these campaigns are retargeting existing visitors or customers, traffic to the listings included in Sponsored Display campaigns is crucial to their spend potential and potential paid traffic delivery. On the plus side for brands, the top 3 products which have high amounts of traffic are usually the best converting products, and products that already have some advertising dollars behind them from other campaigns, so this could end up being a win-win solution.
“Brand related to this item” placement on product pages available on some listings
Not yet a standard placement, only available on some product listings Sponsored Brands with custom image make an appearance outside of their regular top of search, left hand side or bottom of search placements.
What this means for brands:
This is yet another opportunity to go after competitors or bigger brands that may have inventory or operational issues during this time; or simply a way to go after a brand you have unique advantages over. Implementing all new features that Amazon has implemented for Sponsored Brands (creating campaigns with custom images or editing your existing ones) is imperative for staying up to date with the new placement opportunities Amazon offers.
Other news in brief
3P seller news:
Many 3P sellers that used ‘Fulfilled by Merchant’ recently seemed to gain share, since they were often able to offer shorter delivery times compared to 1P and Fulfilled by Amazon.
Amazon had a temporary glitch this week which showed $0 in sales for a short period. This has been resolved.
Restock Inventory Report not showing all the eligible products. Some of our team members reported that they started seeing products eligible for inbound shipments even when they're not on the Restock List so we would advise to double-check for products that are not on the list, if you're relying on the Restock Inventory report only. You can also see the date when the Product List was updated.
Amazon Seller Newsletter: April 2020: COVID-19 Update is out - pretty much an overview of operational challenges and adjustments that Amazon made in April.
1PVendor news: Amazon appears to be encouraging vendors to develop drop ship capabilities more recently. They also have placed more PO’s for pallets, including temporarily waiving fees for the pallet program. We have also seen more pre-orders to help vendors plan production.
The troubled Luxury & Apparel categories see post-stimulus rebound. Ecommerce agency Within is doing some interesting benchmarking by category and channel. A noticeable bump in sales and conversions was seen this last week as stimulus checks hit mailboxes. It will be interesting to see the long-term trend.
Target sees value in shipping from stores. Target’s CEO, Brian Cornell, says that so far in April, comparable digital sales have increased by more than 275% from a year ago. He also said that stores are responsible for fulfilling 80% of the online sales.
That’s all for this week. We’ll be back with our private Office Hours conference call in 2 weeks time - look out for details coming soon. In April our clients & paying members joined Office Hours sessions that included a general covid-19 and Amazon general Q&A, a supply chain workshop, and a workshop on how to adjust your advertising budgets at this time.
Thanks for reading, and see you next Friday.