Amazon Ads are hot right now, with Walmart taking aim at a slice of the pie, and most big box retailers now boasting media networks, the competition is heating up. 🔥

Who Should Launch Amazon Ads

There are varying stats about the high percentage of shoppers that use Amazon to search for products over Google, Bing etc. But it is clear that consumers use Amazon as a search engine for products. So the popular opinion in ecommerce is Amazon Ads are (AMS) is a no brainer.

But with 9.7 million Amazon Sellers worldwide the marketplace is more competitive than ever. Ecommerce brands should definitely consider Amazon Ads, but there are important factors to take into consideration.

Attributes That Make a Successful Amazon Merchant

Merchants trading
  • Exclusive product line: Owning your own brand of products enables you to have a distinct advantage over the competition.
  • Clearly defined USP: Another fundamental, but given the nature of the competition on Amazon, and peoples reliance on customer reviews, simply owning your own brand isn’t going to be enough. Communicate why you are better than the rest.
  • Available Operations/Customer Service Bandwidth: Amazon is basically like managing another ecommerce website which comes with it’s quirks. Whether it’s responding to customer complaints, negative online reviews, or inventory issues.
  • Fast Shipping: Ideally your products are warehoused in the country of sale which enables you to ship quickly to meet customer expectations
  • Strong Gross Margins: of course this is a fundamental, but given the significant increases to Amazon fulfillment fees (Up to 30% in the past two years) this has never been more relevant

Whether or not your business currently has some or all of these attributes use them as a guide to help you decide whether taking the plunge on Amazon Ads will be worth your while.

Why Launch On Amazon Ads

With 300 million daily active users and roughly 157 million Prime Members in the US, Amazon is the largest global online marketplace.

Given the scale of this traffic, more than 50% of online shoppers start their product search directly on Amazon, and unlike on social media where customers may have other search intentions, people browsing Amazon are usually looking to make a purchase.

The Leading Online Marketplace

To outline Amazon’s dominance here is a comparison with their closest US marketplace competitor Walmart. Measured in terms of the share of e-commerce sales in the United States from 2018-2022.

It is clear that although Walmart’s ecommerce channel is growing at a greater rate than Amazon, there is a great deal of ground to make up.

Brand Perception

Another facet of the business to consider is the brand perception, and for the vast majority in the US Amazon ranks very highly, often listed as a highly trusted brand by consumers:

  • #5 on the 2020 American Customer Satisfaction Index
  • #2 Most Trusted Brand in America by Morning Consult, 2020
  • Second-highest customer loyalty after Walmart among the major brands surveyed, with over 90% of its 2020 shoppers returning in 2021.

The Typical Amazon Customer

Amazon Prime Boxes Pile

According to data from the Analytics firm Numerator Amazon’s typical shopper demographics breakdown as follows:

  • Education: College
  • Relationship status/family: Married, no children
  • Gender: Woman
  • Age: 35 to 44 and 55 to 64
  • Geo: Typically lives in the Southeast
  • Income: $80,000 per year.
  • Purchase behavior: The typical customer orders just one or two items per transaction, but she makes a comparatively high number of transactions per year, with 74 orders at an annual cost of $2,591
  • 9% of her spending takes place at Amazon — slightly less than what she spends at Walmart, the world’s largest retailer.

General Amazon Consumer Stats

  • Amazon customers are also highly likely to compare prices on Amazon, even when shopping elsewhere.
  • Favorite product categories on Amazon:
    • Cell phone accessories, cases, and chargers
    • Medical supplies
    • Small kitchen appliances.
  • They tend to buy Amazon’s in-house labels, and their favorite name-brands are Disney, Hanes, Kraft, and Apple.
  • Prime users spend an average of $1,400 annually
  • Over 40% of US Prime members place between two and four orders monthly. 

Alternative Marketplaces

Walmart

Since Walmart started it’s marketplace it’s been playing catch up with Amazon. An interesting position to be in for a retailer with $573 billion in annual revenue. However in Q2 2022 Walmart was able to vastly improve their ROAS suggesting that all their hard work was beginning to pay off.

US Amazon, Walmart, and Instacart Return on Ad Spending (ROAS) for Sponsored Product Ads, Q2 2021-Q2 2022 (dollars)

With significantly more annual revenue Amazon still continues to be the dominant player. But this is further evidence that there are emerging alternatives.

Who else is out there?

Amazon and Walmart aren’t the only players in the Retail Media landscape. It seems that just about anyone with an ecommerce site is pitching up. Target, Kroger, and Home Depot all boast media networks. For a more in depth look at the landscape take a look at Tinuiti’s Top 12 Retail Media Networks (Besides Amazon) Compared.

Final Thoughts

The answer is yes for the right business. If you fit most if not all of the attributes discussed in this article, great. But before you take the plunge, cover all your bases with the following steps:

  • Research your competition: Take a look at similar brands in your vertical already on the platform. Maybe there is too much competition for a particular product line so perhaps you choose to cut back which products you initially launch. Also good to think about the following:
    • How established are they?
    • Price ranges and are they discounting products on Amazon?
    • Analyze what:
      • Customer review feedback are they getting?
      • Ads are they displaying when you browse?
      • Ad copy/landing page copy/creative are they using,
        • How could you use or improve upon this.
  • Give it time: Once the products are live and your ads campaigns are launched be patient. Sometimes it can take around 6-8 months before you start seeing results
  • Attributes: Make sure you have a strong mix of most if not all of the right attributes. There are 6.3m Amazon Sellers worldwide, so the competition is fierce.

Good luck!

Looking for help scaling your Amazon Ads account? Contact us to find out whether we might be able to assist.