2016 Amazon Predictions from Leading Industry Experts
How can Amazon sellers grow their business in 2016?
In 2015, Amazon surpassed Walmart as the most valuable retailer in the United States by market capitalization.
Crowned the top destination for online shopping, Amazon has separate retail websites for the United States, Canada, Australia, Brazil, Japan, China, India, Europe, and Mexico.
The platform is so powerful they were able to create their own shopping holiday this year – Amazon Prime Day.
We asked a panel of 10 leading Amazon experts to answer the top questions on every seller’s mind:
- What trends are going to shape the Amazon Marketplace in 2016?
- How can Amazon sellers best look to grow their business in 2016?
- For mature Amazon sellers, what tips would you offer?
The 2016 Amazon Prediction Roundtable:
- James Thomson, President, PROSPER Show
- Nick Sandberg, Lead Marketplace Channel Analyst, CPC Strategy
- Keith O’Brien, CEO at iLoveToReview
- Pat Petriello, Senior Marketplace Strategist at CPC Strategy
- Andy Geldman, Founder of Web Retailer
- Ethan Pilkenton-Getty, Retail Search Manager at CPC Strategy
- Paul Johnson, Co-Founder of Seller Labs
- Joe Selzer, Marketplace Channel Analyst at CPC Strategy
- Brandon Checketts, Co-Founder of Seller Labs
- Chad Rubin, Co-Founder & CEO of Skubana; Founder of Crucial Vacuum
James Thomson, President, PROSPER Show
James Thomson is president of PROSPER Show, a continuing education conference focused on developing training and best-practice materials for early-stage online sellers.
In previous roles, James was the former head of Amazon Services (that part of Amazon that recruits 100,000 new sellers to the Amazon marketplace each year), the first FBA account manager, a banker and management consultant.
1. What trends are going to shape the Amazon Marketplace in 2016?
Amazon’s next retail game-changer is the maturing of the PRIME NOW program, making more products available to urban customers within a 1 to 4 hour delivery window.
Unfortunately, an Amazon seller that doesn’t use FBA will find that its products get excluded from this program. While the benefits of FBA have been delcared many ways over the past five years, it really is getting harder to avoid using FBA, at least for hero products in one’s catalog.
2. How can Amazon sellers best look to grow their business in 2016?
For a seller that ships a decent amount of merchant-fulfilled units through its own warehouse while hitting very high operational metrics, the launch of the Seller Fulfilled Prime program offers a seller the opportunity to get the buybox benefits of PRIME and FBA without having to send its inventory into FBA.
Most MFN sellers don’t realize that they can apply for this program directly through Seller Central – I certainly encourage every eligible seller to explore this option, as the awarding of this will have a bigger positive impact on the seller’s sales than any other Amazon program in 2016.
3. For mature Amazon sellers, what tips would you offer them?
Sellers need to have an in-depth understanding of their all-in costs and sku-level profitability of each item in their catalog. Only then can the seller make intelligent decisions about what to stock, what not to stock, which brands/vendors to pursue, how to modify return policies, where to improve costs, and where to modify pricing.
With such knowledge, 2016 could be the year that a mature seller brings home more bottom line, while reducing its workload and number of brands by selling more of the right items (but fewer total items).
Nick Sandberg, Lead Marketplace Channel Analyst, CPC Strategy
Nick Sandberg is a Lead Marketplace Channel Analyst for CPC Strategy with a focus on management, marketing, consulting, and research in the rapidly evolving digital marketplace.
1. What trends are going to shape the Amazon Marketplace in 2016?
Currently, Prime memberships are growing at a rate of 12% a year. This increase in customers searching for on-demand products and quick deliveries will be served by the sellers who are equipped to build out robust FBA strategies. We should expect more than a 12% increase in the number of sellers and products available through FBA as sellers jockey to meet this demand.
Every year we see Amazon encroach on more product verticals. In the past, Amazon launched their own line of low cost electronic accessories such as chargers called Amazon Basics.
They’ve also launched Amazon Collection which offers low cost basics in jewelry. This encroachment makes it very difficult tor sellers in these categories to compete on price and fulfillment time, so the big mystery for 2016 is what categories will Amazon enter next?
2. How can Amazon sellers best look to grow their business in 2016?
In my opinion, the best way for sellers to grow their business is to offer more products on the marketplace.
Whether they are resellers expanding their catalog, private labelers adding new products to their lines, or OEMs developing new products, the sellers who can gain more customers by casting a wider net of products, cross sell between existing products, and develop new products to meet niche demands will grow the fastest.
3. For mature Amazon sellers, what tips would you offer them?
Never be complacent and content with how far you’ve grown your business. Remember the effort and work it took to achieve the success that you have on Amazon and know that for every one of your businesses there are ten chasing behind you putting forth that same effort.
As a mature seller, you have to innovate on your processes, test new technologies, search for or develop better products, and explore new programs and platforms that Amazon makes available to it’s sellers.
Keith O’Brien, CEO at iLoveToReview
iLoveToReview.com is a unique, consumer-driven marketing company that works with merchants, primarily through Amazon, to increase their sales and profits by getting real customer reviews from our members.
1. What trends are going to shape the Amazon Marketplace in 2016?
Trend forecasting is a tough business. I can’t say I’ve ever been good at predicting the future, however, data can paint some interesting pictures. I think we’re going to see a lot of these 3 things in 2016:
a. Flushing out of inexperienced sellers
b. Movement towards quality and innovation
c. Crackdown on fraud
With the massive influx of private label sellers over the last few years, there are many people who are after quick riches and overnight success. When they realize there is real work involved, many people will flee the marketplace looking for the next pitch promising ‘beach money.’
Educated sellers of any size will look to innovate to compete with bigger companies who can outspend them. Their success will be driven by their ingenuity and creativity.
Lastly, Amazon will clean up their house. Right now they have savvy yet unethical marketers walking right into their kitchen and taking cookies out of the jar. We all know Amazon’s main focus in the customer and they will continue to look for ways to protect their most valued asset.
2. How can Amazon sellers best look to grow their business in 2016?
I think the factors for success on Amazon are no different than they are anywhere else. Focus on consistently doing the right things. Make decisions quickly. Learn fast. Put out great products and stand behind them. Lead with world class customer service.
Constantly test every variable in order to improve your results and outsource any aspect of your business that you think someone else can do better than you so you. That leaves you to focus on what you do best and enjoy the most.
3. For mature Amazon sellers, what tips would you offer them?
As a service provider, we have worked with a lot of larger sellers who are starting to understand the changes in the marketplace. Most are realizing they need to do more than they used to do to maintain and grow. Sometimes it’s easy to forget the mindset of the new seller – which often can have you see things in valuable ways. It’s easy to forget about what customers really want as a larger seller, it’s easy to get lazy.
Bring your years of experience with you, but always remember the customer’s perspective. Their choices are endless and we have to do more to win their business.
Pat Petriello, Senior Marketplace Strategist at CPC Strategy
Pat Petriello is a former professional seller on Amazon.com, Amazon.co.uk, eBay, Buy.com and former member of Amazon Seller Service Team. He now leads the Amazon Department at CPC Strategy.
1. What trends are going to shape the Amazon Marketplace in 2016?
In 2016, Amazon is going to continue to aggressively add to their suite of paid advertising modules for Sellers and Vendors on the Marketplace. In the last few years, we’ve seen substantial feature enhancements and increased visibility for Sponsored Products ads, AMS ads, and AMG display ads. As Amazon continues to wield their unparalleled customer data to deliver the best buying experience for their shoppers, this trend will continue.
I expect we’ll see more segmented targeting options, new ad placements, and more granular reports to support these tools and empower Sellers to get their products in front of the right shoppers on Amazon.com
Additionally, Amazon is going to continue to leverage their industry disrupting fulfillment network to re-define the table stakes for e-commerce retailers and other marketplaces alike. While shoppers have become accustomed to free two day shipping through Amazon’s Prime program, I don’t expect that Amazon will stop there.We’re already starting to see even faster delivery options become standard, so don’t be surprised to see next day and same day shipping become the norm.
While it might take Amazon a few years to fully figure out how to make their Amazon Custom program user friendly for both merchants and buyers alike, I also expect this program to continue to evolve and make significant strides in 2016. Personalization and customization present a massive market opportunity which Amazon has been unable to unlock up to this point.
These are precisely the type of situations where Amazon has a track record of continuously evolving until they get it right, and I expect this to be no different.
While we’re most likely still a few years away, I view the ability of customers to upload custom content and images to Amazon as an associated part of their order as an early precursor to Amazon being able to accept prescriptions for eyeglasses and contact lenses, which is a multi-billion dollar market.
I also expect to see significant growth in Amazon’s own private label product assortment. While we are familiar with Amazon’s electronic products (Kindle, Fire, FireTV, Echo, etc.), Amazon also makes available private label products in electronics accessories through Amazon Basics and jewelry through their Amazon Collection brand.
Just as Amazon made digital content from other providers available as a precursor to creating their own original content through Amazon Studios, the Amazon Marketplace is a massive existing distribution channel for Amazon to sell their own products through. For 3P Sellers and Vendors alike, Amazon will compete not just as a retailer of other manufacturers’ goods, but as a private label brand themselves with no buy box competition.
2. How can Amazon sellers best look to grow their business in 2016?
The most successful Amazon Sellers are those which base both their product level decision making and long term strategy on analytics and are comfortable adapting to the ever-changing landscape that is Amazon.com. It’s not groundbreaking to say that leveraging FBA, investing in Sponsored Products and AMS, and keeping inventory in stock are evergreen keys to success on the Marketplace.
However, those are just the foundation for a thriving Amazon business.
Selling on Amazon is not always easy and straightforward; product rankings change, customers leave negative reviews, Amazon makes changes to their detail pages and updates their Terms of Service. It’s easy for Sellers to lose focus and begin to stagnate amidst the slew of distractions in an extremely competitive and dynamic environment.
Those Sellers which are most comfortable using data to make decisions and stick to a long term strategic goal despite “the noise” are those which are best positioned for growth in 2016.
3. For mature Amazon sellers, what tips would you offer them?
For mature Sellers who are optimized to capture and convert demand on Amazon.com, investment in building their brand and expanding their product assortment will pay dividends by way of sales through the Marketplace.
Sellers with products and brands that shoppers are specifically looking for enjoy the fruits of branded searches and repeat customers, which is a lot more difficult for sellers with little or no brand equity. In lockstep with this approach is expansion of a Sellers’ product line.
If a Sellers feels they have just about maximized their profitability with their existing assortment, it might be time to make more products available to shoppers on Amazon.com.
Andy Geldman, Founder of Web Retailer
Web retailer offers help for eBay and Amazon users looking for third-party software and services. Categories include sniping, ad creation, seller tools, auction management, and more. Web Retailer also features interviews with successful sellers, profiles of the top suppliers, data and statistics.
1. What trends are going to shape the Amazon Marketplace in 2016?
I think we’ll start to see some changes in the private labeling world. Shoppers expect brand names – even ones they’ve never heard of before – to stand for a certain level of quality beyond that of generic products.
Private labeling hype has now hit fever pitch in internet marketing circles, and the marketplace is being flooded by low quality products with little more than branded packaging. Customers are starting to get disillusioned with these “brands”, and that’s sure to make Amazon take more action.
2. How can Amazon sellers best look to grow their business in 2016?
Go international. Cross-border ecommerce is still in its infancy, but service providers are now catching up with the needs of marketplace sellers. Software, logistics and customer support services are growing, and getting more innovative and accessible.
There are still enough barriers to keep your more reserved competitors away, which makes it a great opportunity for those with the will to break through.
3. For mature Amazon sellers, what tips would you offer them?
Get onto Jet.com. With a half-billion dollars in the bank and already significant sales for some businesses, Amazon hasn’t had a competitor like Jet since eBay was at its peak. Software vendor support is weak, but improving. If you are lucky enough to use a system which supports Jet, or have the technical capability in-house to build it into your business, now is the time to get on board and ride it as it grows.
Ethan Pilkenton-Getty, Retail Search Manager at CPC Strategy
Ethan Pilkenton-Getty, a Lead Marketplace Channel Analyst for CPC Strategy is an experienced marketing professional with a proven track record for success in both the digital and direct to consumer channels.
1. What trends are going to shape the Amazon Marketplace in 2016
I see Amazon pushing the needle even further in 2016 around increasing delivery timelines and methods. In 2015 we saw Amazon continue to disrupt the common delivery methods by introducing same day delivery in select test markets and also by taking a page out of Uber’s playbook and sourcing the local public to deliver packages through its Flex program.
While some of these efforts will succeed and some will fail, there is one certainty we have for 2016 – Amazon will continue to increase their testing around finding new and innovative ways to disrupt the current commercial delivery landscapes and continue to reshape consumers expectations and demands around acceptable shipping timelines.
2. How can Amazon sellers best look to grow their business in 2016?
Expanding into newly tapped international markets always poses a form of opportunity for sellers, and Amazon has done a lot of recent work on making this easier than ever by streamlining international marketplaces into continental unified accounts.
However, with opportunity comes risks and costs that need to be calculated before rushing into foreign marketplaces. As always, with any big business decision sellers should do their due diligence to make sure their products are a fit in those markets and that their current operations allow them to successfully sell within Amazon’s strict requirements.
3. For mature Amazon sellers, what tips would you offer them?
Stray from any sense of complacency! Amazon is a constantly evolving ecosystem where becoming an early adopter of its new advertising beta programs and operational tools will help you stay ahead of the ever increasing competitive landscape.
Also, sellers should continue to look for opportunities to improve their catalog offerings or expansion into new categories and international marketplaces. Re-sellers face increasing competition on a daily basis, being innovative within your product offerings and with Amazon’s beta tools will allow mature sellers to continue to hold that competitive edge.
Paul Johnson, Co-Founder of Seller Labs
Paul Johnson has leveraged his strengths to help create three successful internet companies. The first two being inventory based e-commerce businesses and the most recent, Seller Labs, a software company focused on e-commerce. These companies have generated millions in revenue and helped thousands of customers.
Seller Labs develops applications for modern e-commerce business. They currently specialize in helping brands build their reputation on Marketplaces like Amazon.
1. What trends are going to shape the Amazon Marketplace in 2016?
Amazon search will get more sophisticated. During the past couple of years Amazon merchants have learned how to surface their products to the top of Amazon search results.
Until now, it has be fairly simple to drive a product to the top of Amazon search results. I suspect that Amazon is working hard to improve their search Algorithm to surface the products they believe deliver the most value to their customers. I still believe sales and reviews will be the top signals for Amazon search but I also expect Amazon to start looking at many other signals which will be more difficult for merchants to directly influence.
2. How can Amazon sellers best look to grow their business in 2016?
Focus. Take a good hard look at what your business is good at and focus your energies there. Understanding where you can bring value to the supply chain is key for long term success.
Spend time to determine your core competencies. Are you good are marketing, operations, sourcing? Do you have specialized knowledge in a niche? Figure out whatever it is that makes your business unique and amplify that. Focus on what you are good at and outsource or hire for the rest.
3. For mature Amazon sellers, what tips would you offer them?
Become a data driven business. As a mature seller you should have years of sales data and experience. Make sure someone on your team knows how to leverage this data to provide insights into your business that can drive revenue and increase profits. If you don’t have the skills to do this in-house considering hiring or working with a consultant.
Joe Selzer, Marketplace Channel Analyst at CPC Strategy
Joe Selzer is an expert Marketplace Channel Analyst at CPC Strategy. He analyzes key metrics and implements data-driven strategy across marketing campaigns, inventory management, pricing, fulfillment strategy, product management, content management, feedback solicitation/maintenance, and CRM.
1. What trends are going to shape the Amazon Marketplace in 2016?
One trend from 2015 that will continue to develop in 2016 is Amazon’s concern with controlling the quality of the product reviews on the Marketplace. This is a huge priority for Amazon, as they depend on honest, trustworthy reviews to inform their customers’ buying decisions and keep those customers coming back.
If the reviews on Amazon start to be perceived as misleading or otherwise doctored to be more positive than reality, it poses a huge threat to one of the core value propositions of the Amazon Marketplace.
We have already seen Amazon address this through updates to their TOS and most recently through removing the “Verified Purchase” tag from products that were sold at too steep a discount (likely as part of a program to generate reviews for the product).
Amazon sellers must stay aware of the changes Amazon is making to adjust their review generation strategy accordingly and stay on Amazon’s good side.
2. How can Amazon sellers best look to grow their business in 2016?
Be looking to leverage new or improved features/functionality that Amazon rolls out. For example, Amazon has just recently been experimenting with displaying two Product Display ads, one banner and one box, on detail pages instead of just one box ad.
Amazon is constantly working to provide new ways for sellers to maximize their investment in Amazon and use Amazon’s vast trove of customer data to devise more effective strategies. That being said, not every feature Amazon introduces is gold; it is up to each individual seller to vet these features and decide if they make sense within the overall business model and are beneficial.
It’s always important to keep in mind that at the end of the day, Amazon cares most about customer satisfaction and buying experience (as well as their own revenues), not necessarily what is best for each seller.
3. For mature Amazon sellers, what tips would you offer them?
Stay vigilant, and don’t get too comfortable. Strategies that are effective today may be obsolete or ineffectual 3 weeks from now. Stagnation = death on the ever-evolving Amazon Marketplace, and just when you think you’ve got all the pieces in place the rules of the game will change. It is important to keep a keen eye on the Amazon environment and remain flexible with regard to the strategy you are implementing.
Brandon Checketts, Co-Founder of Seller Labs
Brandon Checketts has been a life-long entrepreneur. While still involved in the technical details of several projects, an increasing amount of his time is spent on managing the business aspects, attracting and organizing the incredible talent, and ensuring that these companies make a positive difference in the community. He work as the Chief Software Architect and lead developer for Feedback Genius and SearchRank.
1. What trends are going to shape the Amazon Marketplace in 2016?
As sellers and bigger brands look to grow, we’ll see competition from bigger companies. Launching your own brand will continue to get more sophisticated. I’d guess that we’ll start to hear of a couple of the legal issues related to selling online. Maybe something specifically around Intellectual Property rights, or perhaps some kind of liability issue with a private-labeled product. We may see some consolidation of successful mid-sized sellers as they may find complimentary value in each others businesses.
2. How can Amazon sellers best look to grow their business in 2016?
Emerging marketplaces (Rakuten, Walmart, Jet, etc) will likely pick up a little steam and may be worth considering. Continue to build upon good business practices to put in place systems to create a repeatable and predictable business model.
3. For mature Amazon sellers, what tips would you offer them?
Stay on top of the technology. Merchant Fulfilled Prime should start to be more compelling. Sponsored Products continue to evolve and will allow you to advertise more effectively. Effective cash management may become more important as sellers have some experience to rely upon and may be taking wider and deeper risks with inventory.
Chad Rubin Co-Founder & CEO of Skubana; Founder of Crucial Vacuum
Having worked in corporate finance covering internet stocks, Chad Rubin decided in 2008 to set up an e-commerce storefront, CrucialVacuum.com. Over the ensuing years, one vacuum filter grew into over 1,000 different SKUs as we added replacement filters and accessories for all major home appliances. Skubana solves the most serious problems of order processing and inventory management that cause millions of dollars in losses for e-commerce sellers every year.
The result is an e-commerce acceleration platform that has invented a categorically new breed of product: an enterprise-grade, all-in-one cloud portal scalable enough to accommodate small, medium AND enterprise e-commerce companies, all for a fraction of the cost.
1. What trends are going to shape the Amazon Marketplace in 2016?
The new seller fulfilled prime program, currently in BETA will be officially rolled out in 2016. No longer will you need to get your product into Amazon distribution centers to get 2-day PRIME offers to your customers – you will be able to access your own rates, right from your own facility. Game changer.
2. How can Amazon sellers best look to grow their business in 2016?
If you’re already selling on Amazon US, make sure you have FBA offerings on your SKUs pronto. If you’re a Amazon reseller, make sure you define niches to exploit and explore private labeling. If you’ve saturated Amazon, remember there are plenty of other channels to sell on (Rakuten, Newegg, eBay and your own storefront) and also a ton of international growth to capture.
3. For mature Amazon sellers, what tips would you offer them?
In 2016, it’s time to become more productive, more profitable…and ultimately a better company. How is your software holding you back from Amazon growth? Invest and get a proper system in place that will enable you to scale on Amazon and off. Analyze your top- and bottom-line numbers.
Understand your FBA SKU profitability including your hidden losses. Redeploy capital more efficiently into higher performing SKUs. Then finally, focus on automation. Evaluate where you spend your time and where do your employees spend time performing low value, repetitive tasks? Invest your time and resources in high margin profile products and scalable technology, so you can leverage your strength and create more sales online, leaving your competitors in the dust.
Additional Resources
2016 Search Predictions from Leading Industry Experts
How Retailers Can Grow Their Business in 2016 with Social Platforms
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