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Amazon Marketing

Amazon PPC is a powerful method to increase product visibility, boost conversion rates, and ultimately generate more sales. This beginner's guide highlights strategies and best practices in the field of Amazon PPC.

The Ultimate Amazon PPC Beginner Guide

Amazon PPC marketing (Pay-Per-Click) is a cost-effective advertising strategy in which sellers only pay when a customer clicks on their ad. These ads appear in Amazon search results and on product detail pages. They offer a targeted way to present your products to a broader audience and increase traffic to your product pages. 

Without Amazon advertising, it is nearly impossible to gain visibility with Amazon customers. Figure 1 shows the number of ad placements on the desktop version of Amazon search results pages, as well as product detail pages.

Before you dive into the world of Amazon PPC marketing, it is important to understand the basics. First and foremost, almost everything revolves around keywords. Choosing the right keywords is crucial, as they determine when and where your ads are shown. The keywords should closely correlate with your products and your customers’ search queries.

Automatic and Manual Amazon PPC Campaigns

With Amazon advertising, you have access to various campaign types to promote your products in a targeted way. The main distinction is between manual and automatic campaigns. Both variants offer different advantages and disadvantages, which we will examine in more detail below.

Automatic campaigns are particularly recommended when you're just starting with Amazon advertising. Here, Amazon handles much of the work for you, as the platform automatically selects relevant keywords and aligns your ads accordingly. These keywords are determined based on your product information and descriptions. Amazon's artificial intelligence identifies which keywords might fit your products.

For a detailed and targeted advertising strategy, manual campaigns are ideal. Here, you select the keywords you want your ads to target. You can set bids and determine exactly which products will appear in the ads.

Whether automatic or manual – both campaign types have their own advantages and disadvantages. Automatic campaigns offer a simpler approach, especially for beginners. Manual campaigns enable greater control and customization. Using a mixture of both types can also be sensible. Regular monitoring and adjustments to your campaigns are crucial to ensure you get the most out of your Amazon advertising.

Amazon PPC – Campaign Types and Structure

With this type of campaign, sellers or brands can highlight their individual products by placing ads that appear in search results and on product detail pages. These ads are labeled as "sponsored." They work based on keywords selected by the advertiser. When a customer enters a relevant keyword into the Amazon search bar, the sponsored ad for a product may appear. If a customer clicks on the ad, they are redirected to the product detail page.

This type of campaign enables brands to showcase their products, logo, and custom text within an ad. The ad can consist of several products and is usually displayed above the search results. It helps increase brand awareness and direct customers to a custom landing page or an Amazon Store page for the brand. Sponsored Brands are especially useful for brands aiming to build a broader presence on Amazon.

This type of campaign allows advertisers to place ads for their products on Amazon sites as well as on external websites. The ads are displayed based on Amazon customers' behavior and interests. They can appear on product detail pages, search result pages, and in Amazon ad placements outside the platform. Sponsored Display targets customers who are already interested in similar products, making it a good way to increase visibility and drive sales.

The structure is almost the same for all campaign types. A campaign generally consists of several ad groups with various targeting options. Ultimately, the final ad (the product being promoted) leads to a click that takes the customer to an Amazon product detail page, where, ideally, the purchase takes place.

Targeting Options in Amazon PPC Campaigns

The different Amazon PPC campaigns offer various targeting possibilities to present your ads to the right customers. Basically, your customers either search in a general (generic) way for products or look directly for your brand or your competitor’s brand. This already creates a variety of strategies and goals for your Amazon advertising.

Below, we provide a general overview of the different types of targeting. We use the so-called targeting triangle to visualize the targeting strategy. The ad groups within a campaign should be structured according to the targeting options.

Keyword targeting: Select relevant keywords where you want your ads to appear. When a customer enters these keywords in the search bar, your ads will be shown.

Product targeting: With this option, you can specifically place your ads on certain product pages. Your ads are shown to customers who are already interested in similar products.

Interest targeting: Here you select your audience based on their interests and behaviors. This allows for precise targeting of potential customers.

Audience targeting: Use this option to display your ads to specific customer groups, such as “new customers” or “returning customers.”

Placement targeting: You can choose on which Amazon pages your ads should be displayed. This allows you to be specifically present in certain product categories.

As mentioned above, Amazon PPC campaigns are, among other things, managed using keywords. Keywords are key terms that match what potential buyers enter in their search queries. The ad will only be shown if the keywords match the search terms. By choosing the right keywords, you can determine exactly which searches your product ads should show up for – and which they should not.

There are different types of keyword match types (alignment between customer search term and advertised keyword) that allow you to control more precisely which searches trigger your ads:

Exact match: The keyword must exactly match the search term.

Phrase match: The keyword must appear in the search phrase, but may be accompanied by other words.

Broad match: The keyword may appear in various forms in the search query.

Negative keywords help ensure that your ads are not shown for irrelevant search queries. For example, if you are selling a very high-priced, premium product, you may want to exclude “budget brands” or keywords like “cheap product XY” so that your ad is not displayed for those terms.

Understanding keywords, their types, and negative keywords is important to ensure ads are shown for relevant searches and reach the right audience, while also avoiding unnecessary costs from irrelevant clicks.

Step-by-step Guide to Creating a Manual Amazon PPC Campaign

Audience research: Who is your target audience, what problems does your product solve for them, and just as important: how does your ideal customer search?

Campaign type: Which campaign type best supports your goal?

Keyword research: Conduct thorough keyword research to identify the most relevant and suitable keywords for your products.

Set a budget: Define a realistic budget for your campaign. Consider your goals and the competitive environment.

Set bids: Place bids for your keywords. Make sure your bids are competitive to ensure adequate visibility.

Create ad groups: Structure your campaign by grouping relevant keywords into ad groups. This makes control and optimization easier.

Create ads: Select the most relevant products for the search queries and write compelling ad texts, depending on the campaign type.

Activate the campaign: Launch your campaign and regularly monitor performance. Use Amazon's reporting tools to gain insights into your ad performance.

Running a successful Amazon PPC campaign does not end with activation. Ongoing monitoring, evaluation, and optimization of your campaigns are crucial to achieving the best possible outcome.

Monitoring your campaign performance allows you to assess your ads' success and identify opportunities for improvement. Here are some important metrics to keep an eye on:

Ad revenue: This value indicates the revenue generated through advertising. Note that this refers to GROSS revenue.

Ad spend: Shows the NET advertising expenses.

Advertising Cost of Sales (ACoS): The ratio of expenses to revenue. The lower the percentage, the better.

Return on Ad Spend (RoAS): The opposite of ACoS. This value shows the ratio between revenue and ad spend.

Click-through-rate (CTR): The ratio between the number of clicks on your ad and the number of impressions. A higher CTR indicates your ad is relevant and attractive.

Conversion rate: The conversion rate shows how many clicks actually led to a purchase. A higher conversion rate indicates effective landing page design and relevant keywords.

Cost-per-click (CPC): CPC shows how much you pay per click. A low CPC is desirable as it minimizes your costs.

Optimizing your Amazon PPC campaigns is based on analyzing the collected data. Here are some proven strategies:

Keyword optimization: Remove poorly performing keywords or increase bids for keywords that convert well.

Ad optimization: Test different ad copy to see which works best. Emphasize product benefits and include calls to action.

Budget allocation: Distribute your budget among keywords and ad groups that deliver the best results. Maintain the budget for top performers.

Product page optimization: If you notice certain customer search terms are performing well in advertising, integrate them into your product pages. As a rule, you should always optimize your pages before launching Amazon ads (“Amazon Readiness”).

There are various tools that can make analyzing and managing your Amazon PPC campaigns easier:

Amazon Advertising Console: The Amazon Advertising Console provides detailed insights into your campaign, keyword, and ad performance. You can manually adjust bids or set rules for the Amazon algorithm.

Third-party tools: There are numerous third-party tools that offer advanced analyses and automation features. Most of these tools are rule-based. This means specifications are set for certain KPIs and corresponding actions upon reaching them. For example, if a certain ACoS is reached, you can preset instructions for changing CPCs. The tool makes the adjustments automatically, with no manual effort required.

For more information and helpful resources, we recommend taking advantage of training opportunities. Feel free to reach out to us at any time for workshops and training sessions.

Attending Amazon webinars or using the knowledge bases of third-party tools is also highly recommended to deepen your Amazon PPC knowledge. The Amazon advertising field evolves weekly, presenting both opportunities and risks.

As an Amazon agency, we are always up to date on the latest developments, ensuring you gain a competitive advantage. 

Amazon has not only established itself as the number one sales platform, but is also the ultimate search engine for online shopping. However, when it comes to selling successfully on the marketplace, a good ranking in the search results lists is essential to increase product visibility, boost purchase rates, and generate more sales.

Amazon SEO: The Ultimate Guide

The majority of customers on Amazon only buy products on the first two pages of search results. Products that are placed further down the list become less and less interesting and achieve lower sales rates. This is partly because customers usually only search the first few pages. On the other hand, Amazon enjoys a high level of trust among customers. Products that Amazon presents in the top positions are considered worthwhile by customers. Amazon SEO has now developed into a discipline in its own right, which online shop operators should definitely consider.

Amazon's A9 algorithm determines the ranking of search results for a specific search query. The algorithm sorts the results based on the descending probability of a purchase. Amazon keeps the exact functioning of the A9 algorithm and the weighting of the various factors to itself. However, based on various sources and experience, it can be determined that the algorithm is influenced by both direct and indirect factors.

The direct factors, also known as relevance factors, can be directly influenced by sellers. These include factors such as product title, product description, bullet points, and search terms. Updating and optimizing these relevance factors therefore offer great potential for improving Amazon rankings.

Indirect factors, also known as performance factors, are influenced by external circumstances and cannot be directly controlled. These include factors such as sales figures, reviews, and return rates. Although these factors cannot be directly manipulated, sellers can take measures to improve their performance and thus indirectly influence their Amazon ranking.

Overall, the main optimization potential for an improved Amazon ranking lies in the relevance factors that can be directly influenced by sellers.

Direct ranking factors have an immediate impact on a product's ranking. These include various relevance factors such as product title, bullet points, backend keywords, product category, and delivery terms. Performance factors such as click-through rate, conversion rate, sales frequency, return rate, and seller ratings also play a decisive role.

The product title is the most prominent position for relevant keywords in a product listing. For this reason, the most important keywords should be included in the title. However, care should always be taken to comply with Amazon's style guides and not violate them. In addition to the length of the product title, which depends on the product category, the correct order of the elements in the title is also important, e.g., the brand name should come first.

Furthermore, the most important features of the product, such as size, weight, material, and flavor, should be placed at the beginning of the title if possible, as only the first 80 characters of the product title are displayed when viewed on smartphones.

In most product categories, sellers have the option of defining 5 bullet points or attributes (in some exceptions, up to 7 bullet points can be used). In addition to the targeted placement of relevant keywords, the bullet points should primarily serve to highlight the unique selling points and product features.

When formulating bullet points, it is particularly important to keep mobile optimization in mind. On smartphones, a maximum of 3 bullet points are usually displayed, sometimes even fewer. Therefore, the most important product information should be placed in the first three bullet points.

The length of each individual bullet point should not exceed 15 words.

The Amazon product description is often neglected or even forgotten by sellers during the optimization process. However, the product description offers the opportunity not only to place keywords, but also to convey relevant information that did not find a place in the bullet points and title.

Product descriptions should be carefully maintained and optimized, especially for products that require explanation. The maximum length of a product description is 2,000 characters, which provides plenty of space to communicate product features in detail.

Product descriptions are particularly important for sellers without trademark rights who cannot use A+ content for their products.

Each product can be individually tagged with backend keywords or general keywords. The maximum length of general keywords is 249 bytes and should not be exceeded. It is important not to use competitor brand names, ASINs, filler words, numbers, or punctuation marks. Instead, it is recommended to include synonyms, functions, occasions, and English keywords in the general keywords.

The product characteristics that need to be entered are often neglected, yet they vary greatly depending on the product category (e.g., taste, ingredients, units for food or materials, color, energy efficiency class for DIY products). It is important to enter as many characteristics as possible correctly, as this increases relevance.

High-resolution product images from different perspectives build trust in the product and answer many customer questions. First impressions are crucial: the image and title are the first elements customers see, and they have a significant influence on whether the product is clicked on at all. Choose an image size that allows customers to use the zoom function and see details clearly. It is important to convince customers of the quality and features of the product with the product images alone.

Amazon tracks the entire history of a product and takes this into account when determining its ranking. Factors such as click-through rate (CTR), conversion rate, total sales, return rate, and sales performance since release all play a role. Products with a long-term poor sales history have a harder time climbing the rankings, as Amazon strives to place the best-converting products at the top. Based on past performance, Amazon assumes that other products will sell better. For this reason, it takes more patience for “older” products to climb the rankings than it does for new products.

Although performance ranking factors are not directly included in the creation of the ranking, they do have an influence on the direct factors. These indirect factors can often have a positive effect on the conversion rate and click-through rate in particular, which in turn are highly significant for positioning on search results pages.

Amazon analyzes the conversion rate of a product for each search term in order to draw conclusions about its relevance and performance. The higher the conversion rate of a product for a specific search term, the better the organic ranking of that product.

In addition to the conversion rate, the click-through rate is also crucial for assessing the relevance of a product for a search term. Clicking on a product result after a search indicates that the product is considered suitable. Optimizing the click-through rate, for example by improving the main image and revising the title, can improve organic placement in the long term.

The number of units sold plays a decisive role in the organic ranking of a product. The more units a product sells (regardless of whether this is organic or through paid advertising), the better its organic ranking.

Therefore, established sellers with successful products have a clear competitive advantage over new sellers on Amazon.

By placing targeted paid advertisements, the organic ranking of a product can also be improved in the long term.

Delivery terms (delivery times & shipping costs)

Customers on Amazon are accustomed to fast delivery times and free shipping. Therefore, Amazon compares the delivery conditions of individual products and prioritizes products that can be shipped quickly and, if possible, free of charge.

Delivery conditions therefore play a role as both a direct and indirect ranking factor. Directly, because Amazon favors products that offer customer-friendly delivery conditions. Indirectly, because customers are more likely to buy products (which leads to a higher conversion rate and click-through rate) that have low shipping costs and short delivery times.

Amazon's goal is to display the best products for a specific search term. Therefore, it is short-sighted to focus exclusively on sales, click-through rates, and conversion rates. Amazon also takes customer feedback into account, especially with regard to return rates. If a product's return rate is too high, Amazon may proactively deactivate it.

Even if Amazon does not deactivate a product, it generally favors products with a lower return rate compared to the competition. More targeted advertising and a detailed product summary aimed at reducing the return rate can therefore not only save money, but also improve organic rankings in the long term.

The number and quality of seller and product reviews have an indirect influence on the product listing. Problems with customer support or delayed deliveries can lead to poor performance and have a negative impact on the ranking. Therefore, it is important to ensure high customer satisfaction in order to achieve a better ranking.

To get positive reviews, similar tips apply as for a low return rate: provide sufficient honest information in the text and realistic product images so that customers know what to expect. There are various methods for generating as many reviews as possible, but not all of them are in line with Amazon's guidelines.

Improving Amazon rankings: Further measures

To improve organic ranking, there are additional measures that can be considered:

When new products are launched, inventory issues arise, or a product performs poorly, its ranking may drop. In such cases, a targeted Amazon PPC strategy can help to quickly improve the Amazon ranking and thus increase organic sales.

By using Sponsored Products Auto campaigns, it is easy to generate additional reach without having to conduct your own keyword or ASIN research. With manual Sponsored Products campaigns (Broad, Phrase, Exact), you can bid on previously researched and relevant keywords to achieve a higher conversion rate than with Auto campaigns. With the Sponsored Products campaign type with product targeting (PAT), competing products can be used directly as landing pages to strengthen your own product and weaken the competition.

In addition, new or weaker products can be promoted alongside already well-performing products using Sponsored Brands campaigns to benefit from their strengths and strengthen brand awareness. After successful brand registration, Sponsored Display campaigns are also available, which can make a positive contribution to rankings through their wide reach and retargeting campaigns, converting clicks into purchases and turning one-time buyers into repeat buyers.

A well-designed campaign setup is therefore crucial for a good Amazon ranking and for increasing organic sales to the highest possible level.

A+ Content or Premium A+ Content (available under certain conditions) is playing an increasingly important role in the ranking of products on Amazon, albeit indirectly. A+ Content provides detailed information about product characteristics, quality, functional features, special features, and the brand in general. A+ Content improves the conversion rate and ultimately the Amazon ranking, especially for mobile displays and users who are attracted by visual elements such as images and videos. Optimal A+ Content contains a variety of information formats, including text and images, to answer potential customers' questions in advance. In addition, A+ Content offers the option of linking to other products for cross-selling and upselling, allowing best-selling products to support the ranking of other products. Providing compelling A+ Content can therefore improve visibility, sales figures, and ranking on Amazon.

Deals offered by Amazon to marketplace sellers are important tools for improving the ranking of your products. These include participation in major shopping events such as Spring Sales, Prime Day, Black Week, and Fall Prime Event, as well as regular deal promotions in between. These measures ensure that your products rise in the rankings in the short term and can benefit from this in the long term.

The increased buying interest generated by discounts usually leads to a rapid improvement in rankings. Through the targeted use of Amazon SEO (search engine optimization) and Amazon Advertising, deals can also influence rankings in the long term. It is important to adjust the amount of discounts to margins and competition and to choose the right time periods. The optimal approach varies depending on the product, seasonality, and competition.

Product availability is one of the most important factors influencing a good ranking on Amazon. A product will only appear in Amazon searches if there is sufficient stock available. During periods when a product is unavailable, other products may overtake it in the rankings.

If you use the Amazon FBA (Fulfillment by Amazon) program, it is important to note that shipping to the Amazon warehouse and storage can take some time. Therefore, you should always ship several weeks in advance to ensure continuous product availability.

Continuous product availability is crucial to achieving a good ranking on Amazon and ensuring that your products are visible to customers and can be purchased.

Amazon does not automatically favor products with lower prices, but rather places value on customer satisfaction. Since customers generally tend to favor lower prices, products with attractive prices are often clicked on and purchased more frequently and generally have a higher conversion rate than competing products. It is therefore important to offer competitive prices in order to convince customers of the attractiveness of your product and improve your ranking in search results.

The main image plays a crucial role in your product images and is often the first visual contact between potential customers and your product. It should encourage customers to click on the product detail page. A professional and high-quality presentation of the product leads to an improved click-through rate. In addition, the main image should clearly and unambiguously display the most important product features so that potential customers know exactly what the product is before clicking on it. Poor and inaccurate presentation, on the other hand, increases the risk that visitors will leave the page without taking a closer look at the product. An improved click-through rate and conversion rate both have a positive impact on Amazon product ranking.

A video has no direct influence on the assessment of a product's organic ranking. However, product videos can play a significant role in the purchasing decision, especially for products that require explanation. Videos enable potential customers to better understand the product, learn about its features and benefits, and strengthen their confidence in the purchasing process. It is therefore advisable to consider the possibility of an informative and appealing product video for such products in order to positively influence the conversion rate and ultimately the ranking.

Optimizing your Amazon ranking takes time, knowledge of the Amazon ranking algorithm, and thorough keyword research. There are various ways to improve your organic Amazon ranking. One recommended option is to seek support from a specialized Amazon agency that can help you optimize your Amazon ranking. With professional advice and support, you can invest in the long-term visibility of your products and further expand your success as an Amazon seller.

In 2021, 54% of total e-commerce sales in Germany were generated via Amazon. Given this potential, more and more brands and retailers are aiming to join the platform in 2023.

Amazon Consulting - The Amazon Consulting Framework

The cornerstones of a successful strategy

The cornerstones of a successful Amazon strategy are explained in the following paragraphs:

When managing an Amazon account, it is not uncommon for the seller or vendor account to be unclear and for the legal and tax requirements in e-commerce, and especially at Amazon, to be high. For this reason, an audit of the relevant areas of the account should be carried out at the beginning of each project. This includes questions about invoice dispatch, legal texts, shipping settings, and storage. This prevents warnings or expensive tax problems.

If you already have sales in e-commerce, especially on Amazon, the first step is to analyze which products are the best sellers. This is done at the ASIN level. Based on this, the product portfolio, suitable complementary products, or products with potential (e.g., for new collections) are analyzed.

The status quo in the areas of SEO, brand content, and Amazon advertising is then determined.

If you want to start selling on Amazon and don't know which products are likely to be bestsellers, you can identify them through competitive and target group analysis.

Amazon Brand Analytics allows you to analyze the most frequently visited and clicked competitors for your products. This goes hand in hand with an initial analysis of the most relevant search terms for your products. Based on this evaluation, the sales and prices of competitors are examined along the most important search terms. Ultimately, prices and sales can be classified, direct competitors identified, and benchmarks defined.

Search term evaluations on Amazon can provide valuable insights into the behavior of your target group. Are customers already searching for your brand, or are they focusing on competitors? Are products only being searched for using general search terms, and do these keywords receive the most clicks? All of this provides valuable information for advertising and SEO, as well as graphics for A+ and Brand Store, for example.

Using success standards to quickly implement the Amazon strategy

After analysis comes implementation. Building on the research and concepts, rapid implementation is made possible in order to add value as quickly as possible. Essentially, four areas are addressed:

Through targeted SEO measures (search engine optimization), your own products can be placed as high as possible in the platform's search results, improving your Amazon ranking and ensuring that more potential customers see your offers and ultimately make a purchase.

To make the most of the Amazon algorithm, the factors that are directly visible to your customers are particularly important. These include, for example:

A clear list of the most important features of the product in bullet points

It is also advisable to seek advice regarding so-called "Amazon readiness." This means that product offerings should meet the following requirements before they are advertised:

The price is competitive in the competitive environment.

The A+ pages are located at the bottom of the Amazon product detail page, just before the customer reviews, but increasingly, especially in the app, directly below the bullet points. Using various elements specified by Amazon, a small website-like appearance is created within the Amazon product page.

The A+ Content Manager, available in Vendor or Seller Central, creates brand-specific and customized content for brands. This provides additional information about your brand.

This aligns the overall appearance of the A+ page with the brand CI.

A brand store on Amazon offers a customized presentation space for your brand. Your brand store is designed according to your own ideas, using pre-built modules. The brand store allows you to present your products in an appealing way and get your own Amazon URL.

Creating a brand store is free of charge and can be done by both sellers and vendors in the Amazon advertising console. To create a brand store, you must have completed brand registration on Amazon.

However, one of the biggest advantages of the brand store is that customers are not shown competing products, which means that bounce rates are lower than on a product detail page, for example.

With Amazon SEA (Search Engine Advertising), your products are placed directly on Amazon as paid search results. This gives you a targeted and prominent presence in Amazon search results, where potential customers are actively searching for products. With Amazon SEA, you can effectively increase your visibility and sales on the platform.

There are various performance marketing campaigns that can be carried out to place your product at the top of Amazon's search results:

Sponsored Product Ads: Sponsored products that appear at the top and bottom of search results.

Sponsored Brand Ads: Product ads that appear above, below, and alongside organic results.

Sponsored Display Ads: Aims to target customers who are already interested in similar products, thereby helping to increase visibility and sales.

In the area of Amazon advertising, separate concepts are created that are individually tailored to your products. A distinction is made between different campaign goals (e.g., product launches, protecting the brand against competition, etc.), which are set up and implemented using successfully tested standards. Amazon Advertising is the most strategic and fastest-growing area of the Amazon marketplace. Used efficiently and strategically, it contributes to sustainable sales growth.

A successful Amazon business requires continuous support in order to identify challenges early on and take appropriate action. As an Amazon agency, we offer comprehensive and long-term support in the areas you require to provide holistic support for your Amazon business.

Based on the above aspects, concrete recommendations for action will be derived and a detailed roadmap will be created.

There are two different models for companies to choose from when working with Amazon: Vendor Central and Seller Central. However, retailers and manufacturers often opt for the hybrid model, which combines both options. Since both models have their advantages and disadvantages, it is important for companies to find out which model is right for them.

The Amazon hybrid model – Vendor and Seller Central combined

Amazon Seller or Vendor – What are the differences?

If you decide to use Amazon as your marketplace, you have the option of selling through either Vendor Central or Seller Central. There are a few differences between the two models:

In the Seller model, the seller is responsible for selling the goods. They retain ownership of the products and use Amazon as a sales platform. They retain full control over inventory, prices, and shipping, and are also responsible for handling returns.

An Amazon vendor transfers part of their responsibility to Amazon. They sell their products to Amazon in the B2B sector and assume the role of a supplier. Amazon becomes the owner of the goods and is responsible for shipping, sales, and returns. There is no longer any direct contact between end customers and vendors, which makes the work easier. However, pricing is in the hands of Amazon, and a vendor has no influence over it.

The Amazon hybrid model offers the opportunity to combine the advantages of both models. This gives both sellers and vendors more customization options, flexibility, and increased security. But how does this hybrid model work?

In short, in the Amazon hybrid model, vendors sell directly to end customers via their own seller accounts. At the same time, however, they also supply Amazon with products via their vendor accounts. The parallel use of both accounts gives vendors control over sales to end customers, while retailers and manufacturers benefit from Amazon's reach and resources as a sales platform.

The hybrid model generally offers greater flexibility and security. With a well-thought-out marketplace strategy, you can reap the benefits of this model:

The hybrid model thus offers many opportunities to ensure product availability, control prices, list products more quickly, obtain meaningful analytical data, leverage logistical advantages, and circumvent profitability issues.

Disadvantages & risks of the hybrid model

A combined sales strategy in a hybrid model requires careful planning, as it also presents a number of challenges. Here are some pitfalls that brand manufacturers may encounter:

Although the hybrid model offers advantages, it also requires increased effort, ensuring customer satisfaction, compliance with country-specific laws, and dealing with competition from your own wholesale customers. Thorough planning and a strategic approach are crucial to successfully overcoming these challenges. An Amazon agency can provide additional support here.

In summary, choosing the right distribution model depends on your company's e-commerce and distribution approach and should be considered on a case-by-case basis. With the hybrid model, brand manufacturers need to be aware of the challenges and high workload involved, which is why the model is particularly worthwhile for companies with higher annual sales. Nevertheless, in certain cases, the hybrid model can offer a sensible distribution option for benefiting from the advantages of the vendor and seller programs. However, it is important to note that the differences between the two models are becoming increasingly blurred and Amazon is limiting the freedom of choice between them by dictating to suppliers whether they should sell as a seller or a vendor.

Sellers often wonder which sales model on Amazon is best suited to their business. With Seller Central and Vendor Central, Amazon offers sellers two ways to sell goods using the world's largest product search engine.

Amazon Seller vs. Vendor: Which model is right for you?

Differences between Amazon Seller & Vendor

One of the most fundamental differences between the two programs is whether merchants sell their goods on Amazon directly to end customers or to Amazon: Sellers sell their products on the platform directly to end customers (B2C) and are therefore responsible for the sales process, marketing, and logistics in every respect. They have full control over pricing, product listing, sales, and customer support.

In contrast, vendors supply Amazon with their products (B2B) and act more like pure suppliers. Vendors are therefore only responsible for product selection and relinquish full control to Amazon.

Since manufacturers remain responsible for content maintenance and marketing activities in the vendor program, switching to the seller program offers significant advantages at a comparable cost.

While no negotiations with Amazon are necessary for the Seller Program, vendors usually have to agree to opaque and sometimes unfavorable terms. As a result, vendors become extremely dependent on Amazon, leaving little room for their own decisions. Sellers not only pay significantly lower fees to Amazon, with a standard rate of 7-20 percent. While sellers can set and control their own sales prices, vendors transfer all rights relating to pricing to Amazon and lose the associated influence on sales margins. As Amazon repeatedly exerts pressure on market prices in the battle for the Buy Box (shopping cart field) with other retailers, high price erosion is generally possible. In some cases, Amazon offers products below the respective RRP, meaning that sellers on Amazon Vendor Central have to adjust to comparatively lower margins. The note "Sold by ..." on the product detail page below the shopping cart field shows customers with whom a transaction is being concluded and under what conditions the goods will be shipped. Since the Amazon brand is usually trusted more than a potentially unknown third-party provider, it is assumed that customers prefer to buy directly from Amazon and that vendors can expect higher sales as a result. However, it is questionable to what extent customers actually base their final purchase decision on this note and whether it compensates for the lower margins. Ultimately, vendors also have to be prepared for payment terms of up to 90 days in some cases, while sellers can look forward to receiving payment after just 14 days.

Sellers have full control over listings, the products offered, and thus product availability. Accordingly, proactive inventory management is necessary. Since vendors supply Amazon with their products, the listing and availability are ultimately in Amazon's hands. It is not uncommon for Amazon to place small orders with different warehouses several times a week. In addition, Amazon imposes penalties if vendors do not deliver products to the desired warehouse properly and on time. Amazon handles all logistics for vendors and offers end customers the Amazon Prime service at no additional cost to vendors. In addition to its own shipping service (Fulfillment by Merchant – FBM), Amazon also offers all sellers the option of participating in the Fulfillment by Amazon (FBA) program for a fee. Similar to a consignment warehouse, goods in Germany are stored in one of the 12 Amazon Fulfillment Centers (AFC), but remain the property of the seller until they are sold, with Amazon only handling shipping and returns management. FBA allows sellers to take advantage of Amazon Prime shipping benefits, so participation in the FBA program is always recommended. Since Amazon Prime customers are more likely to order from participating sellers thanks to free and fast shipping, FBA also offers decisive advantages in the competition for shopping carts, resulting in a significant increase in sales.

In order to present their products in the best possible light, sellers and vendors have similar presentation options at their disposal. Sellers with a brand registered on Amazon, as well as vendors, have the option of using A+ Content, i.e. enhanced content for product descriptions, in Amazon Seller Central or Vendor Central, and of creating their own Amazon Brand Store. While Amazon Advertising Services were previously only available through Vendor Central, sellers now also have the option of increasing visibility and boosting sales with Sponsored Products, Sponsored Brands, and Demand-Side Platform Display advertising campaigns. Both sellers and vendors are responsible for the presentation of products and, if applicable, the brand store, as well as the creation and management of advertising campaigns. Accordingly, sellers in both programs must pay advertising expenses to Amazon. While Amazon receives advertising revenue from vendors and the sales generated by the advertising campaigns are additionally generated on Amazon's side, sellers can book the direct sales on their own company's side.

Since sellers manage sales independently, they have access to significantly more information via Seller Central than via Amazon Vendor Central. With shopping cart statistics, customer and transaction data, and shopping cart field quotas, they receive relevant information that can also provide important target group insights beyond the sales channel. However, sellers must be prepared to regularly review the relevant quality metrics. This also means that sellers are responsible for customer service and must respond to customer inquiries within 24 hours. In addition, returns should be processed promptly when shipped by the seller. While Amazon provides this service in Vendor Central, sellers are required to put in more effort. However, this gives sellers the opportunity to obtain direct feedback on their products and, if applicable, their brand through contact with end customers.

As an Amazon seller, you have the advantage of setting your own prices. However, it is important not to neglect proper pricing and thorough research. Amazon takes care of this task in Amazon Vendor Central, but there are often differences in pricing between Amazon and manufacturers.

Manufacturers must therefore prepare themselves for declining margins, as Amazon often aggressively pushes down purchase prices. In addition, Amazon has 100% control over the sales price in the Vendor Program. Products are often offered significantly below the RRP, which can lead to the destruction of the market price.

An Amazon seller is a person or company that acts as a retailer or third-party seller on the Amazon Marketplace. The seller uses Amazon's marketplace model, which means that they are responsible for the price, listings (offers), inventory, shipping of their products, and customer support.

Amazon sellers have two different options for shipping products: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). With the FBA service, sellers store their products in an Amazon fulfillment center and Amazon handles shipping, returns, and customer service. With Amazon FBM, sellers take care of the storage, packaging, and shipping of their products themselves.

Note

Any company can register for Amazon Seller Central without a special invitation. Using an Amazon agency can significantly speed up the registration process.

Amazon's Vendor Program is generally aimed at larger manufacturers, brands, and sellers, and is only open by invitation. Compared to the seller model, there is a significant difference in the relationship with Amazon. As a vendor, you act more like a supplier and sell goods in large quantities directly to Amazon. Amazon, in turn, offers the products under its own name on the platform. Once the goods have been handed over to Amazon, Amazon is solely responsible for shipping, sales, and customer support to end customers.

Amazon Hybrid Model - Vendor & Seller Combined

The Amazon hybrid model is ideal for combining the advantages of both models. With this strategy, both sellers and vendors can benefit from greater customization options, flexibility, and increased security.

The vendor sells directly to end customers via their own seller account, but also supplies products to Amazon as a vendor. This allows the vendor to retain control over pricing, product presentation, and marketing activities, while at the same time enjoying the benefits of a vendor agreement with Amazon.

The hybrid model makes it possible to leverage the strengths of both sales models and develop a customized sales strategy that meets the company's requirements and objectives.

The choice of Amazon program depends on the focus and strategy of your company. In general, the vendor model is designed for larger manufacturers and brand owners who want to concentrate on their core competencies and do not want direct customer contact. The Amazon Vendor Program requires sufficient planning of human resources for administrative tasks and marketing activities. In addition, Amazon takes control of pricing in this model.

The Seller program, on the other hand, is aimed at companies that want to avoid such dependence. As a seller, you retain control over pricing, product presentation, and advertising measures at all times.

Amazon is launching a TikTok-inspired social commerce shopping feed in the US in December 2022. With this move, the e-commerce giant is revolutionizing its digital shopping experience and turning the tables on the well-known social media platforms.

Amazon Inspire - Ecommerce meets Social Media

The boundaries between social media and commerce platforms have been blurring for some time now. While platforms such as Instagram and TikTok are increasingly entering the commerce sector, Amazon will soon be offering video and image content based on personal interests. Customers will discover products and trends tailored to them directly in the Amazon app, where they will ultimately make their final purchase.

Proven commerce platform meets young target group

Amazon's latest feature is designed to attract the attention of a young target group. Generations Z and Alpha move intuitively and naturally on platforms such as TikTok and Instagram. Purchasing decisions are made there based on recommendations from influencers and content creators. However, the focus is not on the purchase itself, but on entertainment. Through Inspire, Amazon is attempting to reach this target group while simultaneously retaining existing customers in the app and on Amazon.

The Inspire feed can be accessed via a light bulb icon within the Amazon Shopping app. Customers specify their interests within the 20 existing product categories. The look and feel is very reminiscent of the Pinterest interface. Everything else is tried and tested: users can like posts and, similar to TikTok, swipe up from the bottom of the vertical feed to see the next post.

Brands and authorized dealers can post their content and products on Inspire. They can access content from brand ambassadors or develop their own content, among other things.

To participate in the Inspire feature, you must be registered with Amazon Brand Registry and have an existing Brand Store. Traffic is ultimately directed to these stores, where customers make their purchases.

Amazon has been testing the new shopping feature for selected customers and influencers in the US since mid-2022. From December 2022 and in the following months, the service is to be extended to all customers in the US.

It is not yet known whether and when Amazon Inspire will also be available in the EU. However, initial preparations are already visible in the Amazon backend. If the test phase is successful, a launch in Europe is likely. Working with an Amazon agency can help you get involved in the new program at a particularly early stage.

With its image and video content and user experience, the new format is strongly reminiscent of internationally renowned social media platforms such as TikTok, Instagram, and Pinterest. Amazon aims to tap into new, primarily younger target groups and retain them in the long term. The shopping experience is to be made more entertaining and thus become an experience in itself. Whether the marketplace will compete with the leading social media champions remains to be seen at this stage.

Amazon is the world's largest online retailer. In Germany alone, there are over 55,000 active retailers (as of 2016). These offer more than 229 million products in over 35 main categories on the German market. Amazon is therefore an attractive target for counterfeiters.

Amazon Transparency – Combating counterfeiting with transparency

The basic principle behind how Amazon bundles this wealth of products offered on its platform is simple. Unlike eBay, where each listing is assigned its own eBay item number, Amazon assigns each product an individual identification number – the Amazon Standard Identification Number (ASIN for short). Any retailer who wants to sell this product on the Amazon Marketplace must necessarily offer it under the same identification number. However, there are a large number of competitors on the Amazon Marketplace who sell the same products. As a result, several retailers usually attach their offers to a product, and ultimately the price war decides the sale. Since Amazon wants to counteract monopolization through this bundling, this approach is completely unproblematic.

It becomes problematic for both retailers and customers when counterfeiters use the same ASIN to sell inferior knockoffs. In addition to negative customer reviews, this can even result in legal action. The company itself states that it does not tolerate counterfeit products. According to the terms and conditions of participation, such products are prohibited on the Amazon Marketplace. However, it has not yet been possible to completely prevent counterfeit products on the platform. According to Amazon, however, it is "the responsibility of the seller and supplier to source, sell, and ship only authentic products." Amazon has been criticized on several occasions for the fact that the principle of personal responsibility applies on the Amazon Marketplace and that brand owners must independently monitor the use of their own brands by third parties.

A prominent case occurred at the end of 2017: The traditional German manufacturer Birkenstock left the German Amazon marketplace at the turn of 2018. The company had already withdrawn from the US marketplace in 2016 due to repeated product counterfeiting. The manufacturer justified its withdrawal by citing a breakdown in trust with Amazon. The US corporation had not done enough to prevent legal violations on the marketplace. Birkenstock had expected Amazon to eliminate and prevent legal violations independently and without being asked to do so. However, the online giant had "not taken the initiative" to prevent counterfeit products from being sold on the marketplace. Ultimately, the management duo of Bensberg and Reichert decided to sever all business ties with Amazon. Since then, the company has stopped supplying the online store worldwide.

However, even though Amazon has so far only removed legal violations once a rights holder reports them, Amazon supports retailers with various tools for monitoring their own brand and tracking possible legal violations. Amazon brand registration has been offering protection on several levels to owners of word marks and/or word/figurative marks since May 2017. This allows them to "protect their intellectual property and create a correct and trustworthy experience for their customers on Amazon" on the online trading platform. Registration is definitely worthwhile, as trademark owners also receive exclusive writing rights with regard to all product descriptions and images distributed under the trademark. This also helps to protect the image of the trademark.

Amazon is constantly working on new technology-driven solutions to increase transparency and protect brands and customers from counterfeits. With Transparency, Amazon has recently launched its new item-level authentication service: using uniquely generated codes, Amazon, brand owners, customers, and other supply chain stakeholders can authenticate each product unit. According to Amazon, unique authentication of each product unit is "the most effective way to combat and prevent counterfeiting across the entire supply chain."

A key factor in the authentication process is that the Amazon Transparency Code is unique for each product: to ensure that the product is not counterfeit, Amazon scans the codes as soon as products participating in the Transparency program are delivered to a fulfillment center. If a duplicate code is discovered, Amazon immediately removes the counterfeit goods from circulation and destroys them. Transparency also enables customers to verify authenticity, regardless of whether the product was purchased from Amazon, another online store, or a brick-and-mortar retailer. Customers can use the free Transparency app to check the code on the product. The app verifies the authenticity of the product and, if authentication is successful, also displays the stored information at the item level.

The program has already been tested with promising results in the US. With over 4,000 participating brands and over 300 million codes generated, Amazon was able to proactively remove 250,000 counterfeit products from circulation. Transparency has now been extended to Amazon marketplaces in Germany, France, Italy, Spain, the UK, India, and Canada. To register with Transparency, brand owners must have a Global Trade Item Number (GTIN), such as an EAN or UPC barcode, affixed to their products. Amazon then generates unique Transparency codes for each item, which must be affixed to the respective product unit in addition to the GTIN. The 26-character encrypted identification number is unique for each item. In addition to the date and place of manufacture, it contains additional product information such as materials and ingredients used. As a specialized Amazon agency, we provide comprehensive advice on this topic.

The topic of selling on Amazon and the associated international expansion opportunities is becoming increasingly interesting for many sellers. But how important is Amazon today, and what global marketplaces are currently available?

Selling on Amazon – worldwide

Jeff Bezos founded Amazon in 1994 and turned what was then an online bookstore run out of his garage into one of the world's most successful online retailers. In 2018, more than 300 million different products were offered on the German Amazon Marketplace alone. Given this abundance, it is not surprising that the Amazon Marketplace has become the first port of call for more and more people when searching for products and information, and that approximately every second e-commerce order is processed via Amazon. In Germany, more than 44 million customers click on "Buy now" several times a year. According to statistics from IFH Cologne, there is a rising trend: while in 2004 a German Amazon customer ordered from Amazon around eight times, by 2017 they were clicking on "Buy now" an average of 41 times. Amazon's German trading platform generated a trading volume of more than €20 billion in the 2018 financial year. Around 45% of this trading revenue was generated by more than 300,000 third-party retailers on the German market. For this reason, there are now numerous Amazon agencies that support both small and large companies in their expansion.

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