Decoding Amazon’s Success: Trends, Predictions, and What’s Next

Amazon has made an indelible mark in the e-commerce space since its humble beginnings in 1994. And with the company raking in a remarkable $386 million in revenue in 2020 alone, it’s not anymore shocking to see Amazon work a lot harder to keep its winning streak — particularly in customer experience.

Now, if you’re an FBA seller, this is both good and not-so-good news for you. Good news is, with the Amazon marketplace teeming as ever with activity, there are more opportunities for you to grow your business through the platform. The slightly bad news? This will also mean more competition — and a fiercer fight to stay relevant in the space.

Trends and Predictions: Did Amazon Live Up to Expectations?

Companies battling it out in e-commerce almost have the same persistent goal: to stay ahead in the race and win customers’ attention. To achieve these, innovation constantly tops every CEO’s must-do list; hence, trends and predictions are always forecasted before the current year could even end.

Amazon certainly isn’t spared from these. As an FBA seller, these trends and predictions could affect you in many ways — especially in the areas of customer acquisition and experience.

So did the online retail platform live up to expectations? Let’s revisit some of the Amazon trends for 2022 and see which forecasts worked out, and if there are any that didn’t.

Trend #1: Amazon Advertising

With the pandemic forcing people to stay in their homes when it started in 2020, there was an uptick in online shopping as customers relied heavily on e-commerce platforms for their needs. In fact, the rate went from 16% to 19% in the same year, an exponential growth compared to past years.

With this, Amazon doubled down on its advertising strategies. In early 2022, it was predicted that Amazon would rely mostly on FBA sellers who purchase impressions on a cost-per-click basis across the company’s retail properties. One of the main goals was to appeal more to sellers and make the platform a cut above the rest.

And dominate the digital advertising space it did. According to Sellics’ 2022 Amazon Advertising Benchmark Report, Amazon stays unrivaled in terms of ROI growth advertisers gained. This, despite a tougher competition when it comes to ad generation, with 2021 seeing a 22% increase in cost per click.

The cost by which ads are run on Amazon definitely contributed to this. In recent years, Amazon was able to catch up with the other Goliaths: Google, Facebook, Instagram, and even LinkedIn. Its main edge? International cost per click was parked at $0.75, and $0.87 in mainland U.S. for sponsored products — costs that are significantly lower than those of other PPC channels.

These all put the e-commerce frontrunner at a strategic advantage — it has now become the go-to for product searches. Amazon managed to combine high purchase intent with immense traffic and engagement, something that sellers and advertisers could all benefit from.

Fortunately, a number of digital advertising firms in recent years such as Incrementum Digital offer data-driven PPC ads management on Amazon. It’s a must to partner with an advertising team who uses a holistic approach in reaching audiences, and helps you formulate a strategy that will help elevate your brand’s marketplace impact.

Trend #2: Amazon Marketing

With the continued growth of digital advertising, Amazon is one of the top companies that has so far maximized the potential of video marketing. It was initially predicted that 2022 will be the year of Gen Z shoppers — a generation constantly on the lookout for unique and engaging experiences.

But, as it turns out, every age group is equally important in penetrating the digital marketing and advertising space.

According to recent data from Amazon’s partnership with market research firm Ipsos, there are three audience segments that stood out from their survey of 2,000 Americans between the ages 18 to 64: Social Streamers, Immersive Explorers, and Video Voyagers.

Let’s take a look at how these segments are connected in the streaming world:

• Social Streamers — This segment makes up 28% of the total sample surveyed, and 42% of Amazon video streaming consumers. They’re the customers who have watched ad-supported streaming TV content on the platform at least once every month. They consider themselves as “opinion leaders”; these consumers value experience and influence, particularly on social media.
• Immersive Explorers — Considered the youngest of the three audience segments, the Immersive Explorers are known to be curious, innovative, and well-versed with all things technology. So it’s not surprising that a vast majority owns a gaming console (88%) compared to the rest of the respondents (47%). This group pays extra attention to every minute detail of what they buy — research plays a crucial role in their purchase decisions.
• Video Voyagers — Sixty-three percent of respondents represent the highest age range out of the three segments: the Video Voyagers. If there’s one thing this bunch is proud of, it’s being able to live an already full life, decorated with fulfilled milestones and achievements. This consumer group values independence and relaxation — they are the ones most likely to subscribe to cable and watch ad-supported video content in their free time.

In essence, video content is a huge part of audiences’ everyday lives at present time. Now, advertisers are trying to keep up with the demand — the goal is to be wherever their audiences are. Through sponsored content, Amazon Ads provides audiences with a richer viewing experience, while still meeting them where they are in the customer journey.

When using sponsored ads, center your strategy on highlighting which of your products customers buy the most. Remember, you’re allowed to display only one video ad at any time, so choose your product wisely.

Trend #3: Fulfillment By Amazon

Amazon’s fulfillment process is fundamental to the company’s day-to-day operations, and as an FBA seller, you’d know how vital fulfillment services are.

However, fulfillment costs are constantly affected by the current global economic climate. Earlier this year, a rise in the number of FBA sellers was forecasted; unfortunately, an increase in fulfillment fees was also predicted.

True enough, fulfillment rates shot up. Amazon FBA announced the changes on March 31, 2022, along with the removal of a few sizing and shipping weight tiers.

To date, a peak fulfillment fee will apply to core FBA excluding apparel; apparel; and those considered to be dangerous goods. This will take effect from October 15, 2022 to January 15, 2023; fees will go back to non-peak period rates on January 15, 2023.

What makes this a bit more bearable for FBA sellers like you is knowing that you get the quality of service they pay for. With the end-to-end delivery service Amazon offers, it’s worth paying a little extra for convenience (but one can only hope that the skyrocketing fulfillment prices will go down sooner than later).

What’s More For Amazon?

Just as Amazon indeed fulfilled its predicted growth in multiple aspects this year, there’s still so much in store for the e-commerce giant.

As U.S. online retail sales are expected to breach the $1 trillion mark in as early as 2025, Amazon is poised to overtake its competitors with a whopping 50% share. And since traffic and engagement is highly abundant on the platform, both small- and large-scale sellers are moving their businesses to it.

Sustainability

Apart from revenue boosts, the world is also keeping an eye on Amazon’s sustainability efforts. Since their launch, programs such as the FBA Grade and Resell and Amazon Renewed have been effective tools in strengthening the company’s commitment to sustainability — something that sellers can participate in as they sell second-hand and refurbished products.

On the business side, these programs could help Amazon keep up with competitors such as Facebook Marketplace and eBay, while also aiding sellers in dealing with inventory woes.

Amazon has always been ambitious with its goal of achieving sustainability. The company already expressed its commitment to using 100% renewable energy by 2025, and pledges to reach net-zero carbon emissions by 2040. Until then, we could watch out for more sustainability projects within the next few months or years.

Social Media

It seems tough to compete in a space where a brand’s message must be conveyed in a seconds-long video, but here we are.

Amazon has since applied the secret sauce to improving customer recall: short, engaging video clips. They’ve also added Amazon Live into the mix, where known personalities feature curated products to encourage audiences to purchase. TikTok who?

Aside from these, Amazon continues to provide customer support through its social media channels, by way of comment replies and real-time messaging. These customer engagement strategies are expected to carry on through the next few years, particularly as more social media platforms are being built solely for brand marketing.

Trends Come and Go; Relevance Stays.

Marketplace platforms are constantly gearing up to thrive in an industry that only gets more competitive with each day. With this comes the drive to stay relevant to audiences and adapt quickly to unexpected changes. 

Particularly as an FBA seller (or even as a shopper), it pays to know about the trends that could affect your business’ growth and scalability. Some operations service providers like SellerPlex can help your business quickly adapt to these changes while still keeping all of its aspects in check.

But while trends come and go, what serves as the platform’s lifeline is community engagement — something that you as a seller should also prioritize, whatever the season. By being constantly updated with e-commerce and buyer activity, you’ll more or less gain insight into what will work for your business not only at present, but also for the future.

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Author:

Janica Buenconsejo, Lead Copywriter, SellerPlex

Bio:

SellerPlex is here to help your business increase its online success. With a team of highly motivated analysts and e-commerce experts, we maximize the value of online businesses from across the globe. It is our vision to support entrepreneurs by providing outstanding services, such as operations, supply chain, and finance, which are crucial to run a business, so the owner can focus on growing the business. If you need expert advice, our trusted experts help you make the right moves.