Four ways to use Amazon for business growth
For many Australian businesses – Amazon is an overwhelming unknown. In April, the e-commerce giant officially announced it would be launching down under, leaving Australian retailers fearful for how this will impact their sales and brand performance.
And why wouldn’t they be? With annual revenues over US$136 billion in 2017, 30 per cent year-on-year growth, and an aggressive global expansion plan – Amazon is one terrifying competitor.
However, when you understand Amazon’s business model, it’s clear that its arrival doesn’t need to be scary. Rather, if retailers use the platform properly, they can deliver huge growth for their company. Here are four ways retailers can use Amazon for business growth:
- Amazon can serve as an additional revenue stream
One of the easiest ways to include Amazon into your sales’ plan is to see the platform as an ancillary revenue stream for your company. I like to tell retailers to think of using Amazon in addition to, not in replacement of.
It’s important to understand that Amazon is a search engine – 38% of all product searches happen on Amazon, proving it’s even more popular than Google (35%). When understanding this, it becomes obvious that Amazon can be another way to put your product in front of more customers with the potential to drive them back to your website. There’s the opportunity to expand your virtual footprint and your revenue by using Amazon as a supplementary piece to the sales puzzle.
- Amazon provides marketing services
Amazon has a few different marketing platforms – all which can be very effective if used appropriately. On average, a customer on Amazon coverts 4x higher than a traditional eCommerce website. Combine this with typically cheaper ad costs than Google due to a lack of saturation, and you have a recipe for campaigns with good ROI. These advantages explain why Amazon has successfully grown its ad revenue at a faster rate than major competitors like Facebook and Google.
- Amazon’s platform has smarts
Amazon ranks all sellers based on hundreds of metrics – it’s not limited to major brands or global retailers. This means that if you’re pulling all the right optimisation levers, you can easily beat out much more established brands and quickly grow your market share.
In addition to this, the platform provides useful data and analytics about your selling performance. Such insights, when used correctly, can power your broader marketing strategy.
- Amazon offers a centralised inventory management system
The majority of retailers know that a downside to growth can be the expensive infrastructure necessary to support it. It’s nearly impossible for companies to quickly scale correctly and, as such, exponential growth can ruin them.
Enter – ‘Fulfillment by Amazon’ (FBA). FBA is a service that allows companies to store their products at Amazon fulfillment centres, with Amazon handling all packaging and shipping required; they even manage returns and customer related inquiries. With FBA, companies can focus on sales instead of in-house infrastructures and often greatly cut their logistics expenses from in-house or local 3PL support.
Nick Lavidge is the CEO of Goliath by Alley, a company that helps brands and retailers sell on Amazon.