Why it's so hard to compete on Amazon as a seller - Infographic
Amazon is the world's biggest online platform for selling, and it's only getting bigger. The company sells more than 40 million products, with over 100 million daily visitors and over 500 million active customer accounts – that’s almost a quarter of the US population! That’s why so many people are looking to sell on Amazon: as one of the biggest e-commerce companies in the world, it’s an incredibly valuable place to do business. But it's no longer as easy as setting up a storefront and hoping that people will come: in order to compete on Amazon successfully, you need to understand how their marketplace works and what some of the pitfalls might be. In this infographic we'll take a closer look at some of the factors that make selling on Amazon so challenging.
60% of US online purchases were made via Amazon in 2021
- Amazon is the largest online retailer in the world. With 60% of US online purchases being made via Amazon, as well as an estimated 90 million Prime members globally, there aren't many other e-commerce companies that can compete with them in terms of sales volume.
- Amazon offers more than 150 million products and has over 2.6 million sellers worldwide (including their own brand).
- Consumers trust Amazon because they have a wide selection of products at competitive prices and also provide reliable reviews from other customers which make it easier for buyers to make informed decisions about what they're buying from them or not buying at all!
CPCs have risen by over 50% in the last year
CPCs are the amount you pay per click. It’s a key metric for sellers and plays a large part in how much profit you make on Amazon.
The results are startling: CPCs have risen by over 50% in just one year, and they’re still rising! That means that it is increasingly difficult to compete on Amazon as a seller.
80-90% of purchases are made from listings appearing in the top search results and, of course, many of those results are ad placements. With the high cost of PPC on Amazon, unfortunately, it's very easy for new Amazon sellers to be outpriced from the start, making it hard to build traction for your brand.
Over 3,700 new sellers join Amazon globally each day
With over 3,700 new sellers joining Amazon globally each day, it can be tough for new sellers to compete. In fact, in 2018 alone it was estimated that there were 135 million unique product listings on the marketplace.
This influx of competition means that if you're looking to get your product on Amazon and make a profit - you need to know how to stand out from the crowd.
Over 50% of all Amazon sales are from third-party sellers
In the last quarter of 2018, Amazon's third-party seller base grew by over 35% and now makes up over 50% of all sales on the platform. In fact, in 2019 alone there were more than 1 million new sellers on Amazon who registered to and started their own business within 5 minutes.
The numbers behind this massive growth are staggering: if you add all these new sellers together with all existing ones, there are currently almost 3 million active third-party sellers on Amazon! And that number is growing rapidly - it has increased by over 50% since 2016.
Amazon is a trusted brand, around 30% of all purchases are repeat customers
Amazon's reputation as a trusted brand is well-earned. They are the largest retailer in the world, and therefore have a lot of customers that come back again and again. This is because:
- Amazon has an excellent return policy
- Amazon provides fast shipping to all corners of the globe
- The user experience on Amazon is easy to use for sellers
As with any other brand, building up a base of loyal customers means you're more likely to succeed, since you can rely on a proportion of customers to always come back...but this doesn't mean you can sit on your laurels! Creating a customer retention strategy should include building the number of repeat customers and maintaining your existing ones. Businesses that have a high retention rate are usually more profitable in general. In fact, in Nozzle's own study, we noted that increasing customer retention by just 1% can result in an increase to profits of 7%,
You need to understand your Amazon customers to get beat the competition
The first step to competing on Amazon is understanding your customers. That means you need to understand how they shop and what they are looking for, as well as the other factors that influence their decision-making.
Understanding your competitors is also important because it will help you understand where you fit in with the market, and how you can make yourself stand out from the crowd.
Understanding your business helps so much when it comes to selling online because there are so many things that need to be taken into account before launching any kind of business or product onto an e-commerce platform like Amazon.
I hope this infographic has given you a better understanding of why it is so hard to compete on Amazon. With so many sellers vying for their share of the pie, there are some things that you can do to try and stand out from the crowd. It starts with understanding your customers' behavior and what each individual customer is really worth to your bottom line. Check out Nozzle's customer analytics tool for Amazon sellers to start seeing what makes your customers tick today.