Overcoming the Top 4 Misconceptions about Selling on Amazon
Article by: Orca Pacific
To become a successful Amazon seller, you must have extensive knowledge, time, and energy. Due to the platform’s complex nature, there are various misconceptions that can derail your sales strategy. Our Amazon experts outlined the top 4 misconceptions and how you can strategize for success on the platform –
- Misconception 1 – There is no need to actively analyze your sales strategy.
- Misconception 2 – ROAS is the ultimate measure of success on Amazon.
- Misconception 3 – Advertising alone is driving the overall success.
- Misconception 4 – Sellers should advertise their entire product catalog.
- Final thoughts on how to be successful selling on Amazon –
Misconception 1 – There is no need to actively analyze your sales strategy.
False. The reality is that the Amazon platform is constantly changing and evolving into something bigger and better so with such a high level of competition, sellers must stay on track with their dynamic sales strategy to stand out. Put simply, this means you need to actively monitor your performance, category trends, marketplace trends, and your competitors’ performance to ensure success on the Amazon platform. To do this, consider making optimizations to your advertising campaigns weekly or biweekly to ensure relevancy and more frequently depending on a variety of factors including but not limited to:
- New product launches
- Peak events
Due to Amazon’s 14-day attribution window, some sales data can be delayed so to prevent making premature decisions based on sales performance, we recommend making ad adjustments weekly or bi-weekly while allowing the campaign a few weeks to run its course to gather enough data for future optimizations. Doing so will allow you to compare the engagement and conversion metrics to determine success within the campaign. To ensure all ad copy is of top quality, our team will run A/B Test Experiments on content within Amazon’s ad types where applicable and compare the results after 2-4 weeks.
But wait… if I make too many changes, wouldn’t that affect the overall algorithm?
Yes and no. Depending on the level of adjustments, if the campaign has a lot of history then there will be less impact on the delivery and, thus, the campaign will bounce right back. On the other hand, you should expect to give it a few months to adjust if you are wanting to completely revamp your whole strategy and launch brand new campaigns.
To summarize, the ad adjustment would eventually impact the total business in either direction (i.e., positive or negative) but would take 2-3 weeks at minimum to see impacts of smaller ad adjustments on current campaigns and up to a few months for newly launched campaigns.
Misconception 2 – ROAS is the ultimate measure of success on Amazon.
False. Oftentimes, sellers are too focused on instant returns (i.e., ROAS) which can lead to the risk of losing long-term growth for a variety of reasons. ROAS is a rear-facing KPI and is simply a result of the inputs we put into the platform. Most importantly, it is more challenging to achieve both a high return and long-term growth on the Amazon platform and we have seen this in clients with a Google background where they are really focused on ROAS – which is fine for Google but doing so can limit your growth potential on the Amazon platform. For that reason, we prefer to lean into metrics that indicate future success, show momentum being built, and prove that the Amazon flywheel is spinning for the promoted products.
An important question to remember and continuously ask yourself is, “what is your total spend vs. your total revenue on Amazon?” This is also known as Total Advertising Cost of Sale (TACoS) and it allows you to look at the bigger picture by analyzing your actual revenue. What this means is if your advertising return is $2 and you are making millions of dollars more than you have in the past, is ROI still your highest priority?
One way to achieve long-term success is to look at the bigger picture and plan for continued growth. Perfecting your Amazon strategy takes time as it requires researching, planning, executing, and optimizing to fine-tune your advertising strategy. Things like building product reviews, ranking high for keywords, and showing up on the first page of search results cannot happen overnight. Earning your customer’s trust and increasing brand awareness takes time and patience as all of these factors play into your overall long-term growth.
Get more insights on best practices for measuring your overall performance on the Amazon platform HERE.
Misconception 3 – Advertising alone is driving the overall success.
False. Amazon is a pay-to-play platform and this simply means that to be successful, you have to invest in advertising to increase momentum and velocity. But this entails much more than just running paid ads – the goal is to drive the most qualified traffic that is most likely to convert and make a purchase. Conversion happens as a result of the ad content, SEO, and so much more. All of which require extensive knowledge, testing, analysis, and optimization. So to succeed on Amazon, you have to look at the broader image beyond advertising alone – you must prepare, test, analyze, and optimize things such as ad content and SEO.
To sustain long-term growth on the Amazon platform, you must understand and optimize your organic strengths – if there is no organic lift over the weeks of paid advertising then your advertising investment isn’t worth it. The goal is to drive velocity and conversions but that does not mean doubling your advertising budget and expecting business to take off.
Velocity is the key to winning on Amazon and this includes:
- Winning the Buy Box
- Having the inventory levels to support sales velocity
- Keeping all Product Detail Pages and ad copy updated and optimized
- Ensuring products have positive customer reviews and 4+ stars
By focusing on the importance of organic page placement and ensuring all ad campaigns contribute to organic strengths, brands can eventually forgo the pay-to-play strategy to switch to a maintenance-focused strategy.
Misconception 4 – Sellers should advertise their entire product catalog.
False. More often than not, we see brands spread their budget too thin across their entire product assortment but what we found in our experience is that less is more. We strongly recommend all of our clients spread their advertising dollars across a small group of featured products, focusing on top-selling items.
By investing more dollars in fewer products, you can be confident that your ads are targeting the right audience at the right time. This will inevitably lead to a decrease in return rates and negative reviews as well as an increase in brand awareness and reputation. In advertising your entire product catalog, you end up running out of budget before making a real impact on your Amazon strategy.
Final thoughts on how to be successful selling on Amazon –
Though it takes a lot of effort to become a successful Amazon seller, it takes even more effort to maintain that success so be sure to implement a well-planned strategy using Amazon Advertising and optimize your product pages to increase SEO ranking, monitor your competition to stay one step ahead, and actively review your campaign performance to avoid reactive decision-making.
If you are interested in learning more about this topic, check out this virtual webinar we hosted in June 2022 where our experts, and a special guest from Fellowes Brands, unpacked how to measure success on Amazon beyond ROAS.
At the end of the day, Amazon is our go-to platform for online shopping so it goes without saying – there is immense potential for brands to maximize their potential with the Amazon platform so why not make your lives easier by connecting with an Amazon Ads Partner to strategize your Amazon game plan for long-term growth and success.
Contact one of our Amazon Ads Specialists below or reach out to us at: