Mastering the Amazon Flywheel: A Future-Proof Strategy

No matter where you look for facts and figures, whether independent research organizations, online platforms themselves, or marketing agencies, there is consensus that while the world is navigating a challenging period, e-commerce will continue growing at breakneck speed. Emarketer’s Global Ecommerce Forecast for 2021 expected worldwide e-commerce sales to hit 4.921 trillion in 2021, estimating growth beyond 5.5 trillion for 2022.

It’s well-known that brands wanting to reach the largest audiences internationally in such a rapidly growing industry must at some point venture into Amazon’s world. Successful brands and vendors have enjoyed tremendous success on the platform for many years. However, let’s be honest: There is a huge misconception out there that just because it’s the largest marketplace in the world, all a brand needs to do is get on it and the rest is smooth sailing.  

To succeed, a brand must bring its A-game to Amazon to make an impact and then keep adapting that game plan to maintain momentum. To be blunt, if you want to succeed on Amazon you have to be meticulous and detail-oriented, and have the perseverance to stick with it for at least 12 months to build your presence, gather reviews, build sales velocity, and climb the organic and paid ranking ladder. In other words, you must build momentum on the famous, but not widely understood, Amazon flywheel.

The flywheel has gained notoriety over the years as Amazon’s method of utilizing its algorithm to leverage customer experience to drive sales velocity. The flywheel consists of various elements that are weighted differently by the algorithm, and one must master each slice of the pie to overcome inertia and start building perpetual momentum on the flywheel.

The core concept of how the flywheel works hasn’t changed and will always remain true to its fundamentals. However, as the platform matures, what has changed is that there is less flexibility and leeway on how to drive the flywheel. Over the years, people have developed tactics, tricks, and shortcuts to manipulate the algorithm in their favor, whereas now there is far less leeway as the algorithm has become refined. 

Optimizing on Amazon

Whenever Amazon makes updates or releases new versions of its algorithm, it doesn't explain how to optimize your listing, which is achieved through studying how the algorithm is weighted, the ecosystem as a whole and what is and isn’t working to create a pre-launch, launch, and post-launch strategy. When attempting to sell on Amazon you need to stimulate the algorithm to notice that you're there, and then proactively work on building your ranking to speed up the flywheel and keep it going.

180-day sales velocity and conversion rate

The biggest change in the algorithm from version nine is the 32% weighting on the 180-day sales velocity. This is directly targeted at the best-seller rank or BSR. Just below this, in terms of weighting, but almost equally important, is the conversion rate: of all the traffic actually visiting your page, how many convert and purchase products? 

Everything else still matters and makes up about a third of the weighting, each worth roughly 6%, and is crucial to stimulating the algorithm to get moving. 

You simply must optimize the rest too

• Your rating

• Your click-through rate 

• Pay-per-click and paid conversion rate

• Your prime offering

• Variations

In other words, the first is your seller rating and your Amazon rating, based on your reviews and order fulfillment, among other things. The click-through rate is also there, so your strategy must aim to get this as high as possible. Pay-per-click (PPC) advertising and the ever-more-expensive bidding on keywords, and their relevance, are crucial too, because beyond bringing this paid traffic to your page, you will also be measured on your paid conversion rate. Another consideration is your Prime offering – do you have one? How do you set up product line variations? As is evident, there is a lot of work to fight for that 30% of the algorithm, but it is non-negotiable if you’re to get the flywheel moving and start building momentum towards your BSR and conversion rate.

So why the new changes, and what can you do about it?

You’re incentivized to bring traffic to Amazon 

It is evident that Amazon is incentivizing brands to bring traffic into the Amazon ecosystem that would not ordinarily be there. So, creating Facebook and Google ads and building landing pages – that tell potential customers more about your awesome product – is crucial. The importance of this goes beyond merely “finding people”. There are certain topical terms that are banned on Amazon but allowed on Google and Facebook, and your agency will help you navigate around this instead of being blocked by Amazon bots. 

Get your variations right

The other reason for the changes is that Amazon is cracking down on various strategies and tactics that people have used that aren’t what Amazon wants to occur. An example of this is how brands use variations. We always recommend that clients have strong variation structures because the Amazon sales rank is calculated off a variation as a whole and not just of individual listings. This is a legitimate way to fast-track the flywheel and get yourself an accelerated starting point. This is what Amazon wants. 

What many companies did before was create illegitimate variations of products that didn’t fit well together. If a product used to be a bestseller but is less relevant now, companies would add them to the variation structures to try to hijack that ranking. However, despite the higher volume, it meant they ended up with a lower converting page. To counter this, Amazon has put a premium on conversion.

Stay on the right side of the bots from the outset

There are similar nuances and strategies to fast-track reviews legitimately within the framework of the new algorithm, meaning brands would do well to take the time and seek counsel because as with all things on Amazon, if you get it wrong and become blocked by a machine, the admin to try to effect positive change can be daunting, to say the least. 

Ultimately, brands make more margin on their direct-to-consumer sites such as Shopify or their WordPress e-commerce sites. On Amazon, fees are roughly in the region of 30% for a seller and a bit less for a vendor. The only time you will get human interaction is when, as a vendor, you are negotiating the structure of the terms and margins of your listing. It’s crucial here to work with the right expertise because an army of bots will shut down anything that looks like a price increase. Navigating this needs hard work and very careful phrasing to get to human interaction. It’s better to get the terms right at the outset.

Develop a hawk’s-eye for detail

Ultimately, the message is clear. Amazon is the right place to reach the largest audience for your product. However, what made Amazon the largest marketplace in the world is also what makes it a complicated playing field for brands and vendors. It’s crucial to approach every phase of an Amazon adventure, from pre-launch to launch to post-launch, with as much real-time and relevant expertise as possible, combined with a hawk’s-eye for detail. The detail matters greatly to drive the Amazon flywheel.