A Marketer's Strategic Guide to the Amazon Channel

There is a growing bank of compelling data to support why brands should be investing in e-commerce. Over the past four years, online retail sales share has increased by 8.1%. It's projected that in 2024, retail e-commerce sales will exceed $6.3 trillion globally. 

Marketers have three key channels they should consider when looking to grow their e-commerce presence: a direct-to-consumer (D2C) channel where a company produces a given product in its own facility and distributes it within its own channels; first-party vendors; and third-party marketplaces such as Amazon, Walmart, and Etsy. 

When it comes to third-party marketplaces, Amazon is significantly larger than any of its competitors. According to Jungle Scout’s The State of the Amazon Reseller 2024 Report, Amazon’s turnover in 2023 was $554 billion. Boasting more than 300 million customers worldwide, the platform enjoys over 2.7 billion site visits per month and sells 7,800 products per minute from US sellers. The report found that 59% of customers begin their online searches for products on Amazon while 75% of enterprise brands and retailers say Amazon helps them to build brand awareness. 

Trending products and categories on Amazon include home and kitchen; beauty and personal care; toys and games; garden and outdoors; and clothing, shoes, and jewelry. 

Regarding the global marketplace, the US is Amazon’s largest market. Significantly smaller is Canada, followed by the UK. Nearly half (46%) of Amazon sellers, brands, and businesses operating in the US marketplace also operate in at least one other international marketplace. 

The Jungle Scout report reveals that other platforms top Amazon sellers plan to expand to in 2024 include Walmart, Shopify, eBay, Etsy, TikTok Shop, and Instagram.

Average Amazon product prices range between $16 to $50, with 63% of enterprise brands and retailers reporting sales of over $100,000 per month and 62% claiming a gross profit margin higher than 15%. 

There are four key considerations marketers need to bear in mind when setting up an Amazon channel. The first focuses on market research and understanding. Before establishing an Amazon channel, conducting a comprehensive Amazon audit is advisable. This should include a competitor analysis, a content audit, a campaigns audit, and an account audit. A market opportunity audit needs to investigate the size of the market, brand dominance, and the cost of market penetration. 

As a specialized full-service growth agency for Amazon Vendors & Sellers, we can assist here by researching brand presence, search volumes per brand, subcategory identification, market size per subcategory, identify subcategory targeting, listing performance per subcategory, competitor analysis, and develop account strategies. 

The next consideration is around logistics and fulfillment. Organizations have two choices when it comes to fulfillment: they can either choose to fulfill sales themselves if they have the necessary logistics infrastructure already in place, or they can opt for Amazon to handle fulfillment. Fulfillment by Amazon (FBA) is the most popular option, supported by two-thirds of sellers, according to the Jungle Scout Report, which states this is a good option for products that are small and lightweight and when inventory turns over quickly. One of the advantages of FBA is access to the sought-after Prime badge. However, the service doesn’t come cheap, and companies need to be comfortable allowing Amazon to handle its customer service. 

The third consideration focuses on internal marketing and operational capabilities. Does the business have the necessary in-house expertise to handle marketing? If not, outsourcing to an external service provider is a good idea. 

Lastly, there are budget considerations. While Amazon is certainly a channel worth pursuing, it's not a quick sell. On average, it will take 18 months for a brand to establish itself on the platform, and access to sufficient marketing investment resources can be key to success. 

What has become very apparent is that the e-commerce environment—and Amazon in particular—offers significant potential. However, marketers need to improve their understanding of this exciting channel to reap the full benefits of it.