In the ever-evolving world of Amazon, adaptability is key. For multinational brands selling on Amazon, 2024 is a year of both challenges and significant opportunities. We looked at some of the top brands and how they meet these challenges in our UK Amazon Sellers Report 2023 which you can download for free.
Recently, Amazon has shifted its strategy towards prioritizing profitability. This pivot is more than just a response to inflation-driven value growth; it represents a deeper, strategic move to foster genuine sales growth. Understanding and adapting to these changes isn’t just necessary for survival; it’s crucial for maintaining a competitive edge as a vendor on Amazon today.
In this guest post, Andrew Banks, CEO, Venture Forge looks at how to achieve success in a changing Amazon landscape with strategic insights for brands to maintain their own growth and profitability:
Amazon’s Profitability Challenge
Amazon’s evolution from a simple online bookstore to a global ecommerce powerhouse is a story of relentless innovation and adaptation.
The latest chapter in this journey reveals a significant shift, with Amazon placing increasing margin pressure on its vendors as it battles to drive value growth via volume growth, rather than through the inflationary price increases that have driven Amazon’s topline revenue growth for the last year or so.
This strategic pivot marks a departure from the previous growth-at-all-costs model to a more profitability-focused approach – and one where vendor’s Net PPM’s are coming under increased scrutiny.
For brands operating on vendor, this means navigating a new reality where Amazon’s profitability isn’t just a goal but an essential component of maintaining a fruitful relationship with Amazon.
Opportunities Amidst Challenges
So how can Amazon vendors mitigate this increasing pressure and continue to run, and grow, successful Amazon businesses?
Innovating with Amazon Unique Products
In response to the pricing pressure, consider introducing products that are exclusive to Amazon. This strategy not only helps mitigate price challenges but also sets your brand apart in a crowded marketplace and across your other channels. Unique offerings can cater to Amazon’s vast customer base, providing a strategic advantage.
Strategic Business Planning
Aligning your business strategy with Amazon’s pricing and promotional support expectations is more important than ever. This alignment isn’t just about meeting Amazon’s terms; it’s about proactively leveraging these expectations to create growth opportunities for your brand and managing your own business expectations of how Amazon will behave over the coming year.
Deep Dive into your Amazon P&L
A detailed understanding of your Amazon operations is crucial. Knowing where every penny goes is not just about financial prudence but strategic decision-making. This deep dive can help you identify areas for cost savings, efficiency improvements, and potential investment opportunities.
Hybrid Amazon Strategies
Consider a hybrid model of being both a vendor and a seller on Amazon. This strategy allows for greater control over your brand presence, pricing, and inventory on the platform. It offers the best of both worlds, combining the reach and infrastructure of Amazon’s vendor system with the flexibility and control of a seller.
Assessing AVS Investments
It’s time to critically evaluate your Amazon Vendor Services (AVS) investment. This assessment isn’t just about cost; it’s about understanding the return on investment.
Could reallocating these funds towards advertising, staff or an agency amplify demand for your products on Amazon, resulting in better growth?
Leverage Agency Expertise
In a fast-paced and complex environment like Amazon, leveraging agency support for specialized or on-demand expertise can be a significant advantage. Instead of building a fixed in-house team, using external expertise can provide the agility, specialized skills, and innovative strategies needed to succeed.
Conclusion and Key Takeaways
As we navigate through 2024, the key to thriving on Amazon lies in flexibility, strategic foresight, and innovation. The Amazon landscape is changing rapidly, and with it, the strategies for success.
Embracing these changes, understanding the intricacies of your Amazon business, and being open to new approaches are essential. The right strategies can turn these challenges into opportunities for growth and market leadership.
Facing these challenges can seem daunting, but you don’t have to do it alone.
Venture Forge is here to help you navigate the complexities of Amazon Vendor and Seller. With a deep understanding of Amazon’s evolving marketplace and expertise in crafting effective strategies, Venture Forge is your ideal partner in turning these challenges into significant opportunities.
Reach out at [email protected] or visit ventureforge.co.uk for a partnership that will redefine your Amazon strategy.
