5 things retailers need to know about selling on Amazon, from marketing tactics to AI and competitors

Retail marketplace ecommerce sales will reach $428.30 billion this year, with Amazon accounting for almost three-quarters (73.4%) of that, per our March 2023 forecast.

Here are insights, for brands both new to Amazon and already established, to maximize success on the platform.

1. Amazon supports both brand and performance goals

Over a third (34%) of enterprise sellers, defined as larger brands, retailers, or parent companies with $5 million or more in annual revenue, say that Amazon is supplemental to their direct-to-consumer website, mainly used for visibility, per Jungle Scout’s “The State of the Amazon Seller 2024” report. However, nearly as many (32%) say that Amazon is their main retail channel where most sales occur.

Amazon can be leveraged across the funnel, depending on what sellers want to achieve.

• Search and display ads put brands closer to the point of purchase, helping increase unit sales and revenues, the No. 1 way that enterprise brands and retailers measure success on Amazon, per Jungle Scout.
• But off-site placements (via Amazon’s Sponsored Product ads) can help to increase awareness and expand into new markets, increasing market share growth, also a top measure of success for brands on Amazon.

2. Amazon sellers are experimenting with AI

Nearly half (48%) of all Amazon sellers, brands, and businesses have leveraged AI or implemented AI-powered tools to help manage their ecommerce operations.

• The most common usage of AI by far is writing and optimizing product listings, cited by 34% of Amazon sellers, per Jungle Scout.
• The next most popular use is creating marketing and social media content, which is only being employed by 14% of Amazon sellers.

As AI evolves and Amazon implements it across more parts of its organization, we expect sellers to use it in more complex ways. However, at the moment tasks like data collection and analysis, market and competitor research, and business planning and reporting are not likely to be done with AI.

3. Platform challenges and opportunities vary by business size

Increasing ad costs, increasing shipping costs, and increasing cost of goods are the top three external challenges faced by Amazon sellers of all sizes, per Jungle Scout.

When asked about business-specific challenges, there are some differences.

• The top three challenges according to small-to-midsize businesses (solo entrepreneurs or businesses that make less than $2 million in annual revenue) are getting customer reviews, conducting product research, and trying new marketing tactics.
• Enterprise sellers also struggle to get customer reviews, but branding their business/products and increasing market share are bigger challenges.

The focus areas for Amazon sellers also vary by size. While small-to-midsize businesses are focused most on generating awareness (via new marketing tactics, expanding to other ecommerce platforms or online channels, and increasing market share), enterprise brands are focused on maturing and protecting their business (through product research, reporting on the health of the brand/business, and protecting the business from hijackers, counterfeiters, etc.).

4. There’s a sweet spot for product volume and price

Over three-quarters (77%) of Amazon sellers have 10 or fewer active products on Amazon, per Jungle Scout. While enterprises do tend to have larger portfolios (40% sell more than 100 products), a more curated approach could be successful for small brands trying to build their customer base.

Brands may also want to consider their pricing strategies.

• 61% of all Amazon businesses price their products between $16 and $50.
• Many sellers use the rule of thirds. This means spending a third of the product’s sale price on the product itself, paying a third in Amazon fees, and keeping the remaining third as revenue.

5. Amazon is just one tool in the toolbox

A majority (60%) Amazon sellers of all sizes sold their product via at least one other channel in 2023, per Jungle Scout.

• The most popular platform was eBay, which 23% of Amazon businesses of all sizes said they were already on, followed by Shopify (21%), Walmart (19%), Etsy (13%), and Facebook Marketplace (10%).
• When asked which platforms they plan to expand to in 2024, over a third (36%) of Amazon sellers cited Walmart. Nearly as many (35%) said they would expand to Shopify, 33% plan to expand to eBay, 22% to Etsy, and 20% to TikTok Shop.

When it comes to the dollars, Amazon can’t be beat.

• Amazon will rake in $326.35 billion in retail marketplace ecommerce sales this year, over nine times more than the next largest marketplace, eBay ($35.02 billion), per our November 2023 forecast.
• Walmart is in third at $10.60 billion, but it’s growing faster (17.5%) than Amazon (13.0%) and eBay (-1.1%).

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