AMAZON BEST PRACTICES FOR SELLERS

By Ankita Jethalia and Kumar Ujjwal

Selling on Amazon is a skill which takes time to master. There are many variables involved to ensure that your products sell. This book is built around to help the sellers hit the ground running. If these basics are catered for, Amazon will prove to be a profitable venture for the sellers therein.

The first thing that comes to mind is what makes Amazon so important and why are we focussing on Amazon only? With the launch of Amazon, anyone could sell anything from anywhere. This freedom enabled many people who were not traditionally into business, to launch their products on Amazon. Hence it became essential to understand how to sell on Amazon. Having said that, it is important to understand that if you have a product that is not yet accepted by the public, in general, or your target audience, listing it on Amazon will not ensure revenue. Amazon is just another distribution channel. The product that you are selling should make sense to at least some segment of customers for the business to grow. In business language, until you have established a Product market fit (PMF) growth cannot happen. So, until PMF is achieved, the below techniques will not help in growth or increasing the revenues.

From here on, assuming PMF is achieved, we will concentrate on how to scale Amazon as a channel.

Amazon is based on an algorithm – “Every hour for every keyword every product gets ranked. Entire fight is to train the algo to pick your primary keyword and show your product at the top. That's the whole game.”

 AIM - How to come on the top search results.

 The road map to come on top is laid out in the form of multiple steps. We will go through each one of them in depth.

 

A. How big is the pie - To be able to achieve growth and revenue, we first need to understand how big is the pie. We need to know that if we get a big enough chunk of that pie would it be sufficient to provide us a substantial revenue upside. Now to understand the size of the pie, we conduct Brand Analytics. Knowing that >80% of revenue for that category will come from top 20-30 players we can understand the size of the pie.

 B. What is the demand - To understand, we first need to understand how Amazon works. Amazon keeps a track of all the things that people are searching for and they are called keywords (it’s not necessarily a word but more often than not is a phrase that customers type in the search box). It ranks these words in the order of frequency in which they have been used with the highest frequency keyword on the top followed by the next highest searched keyword and so on. Therefore, each keyword in the Amazon ranking represents demand density. For the keywords corresponding to your product category, the corresponding demand density can be used as an indicator of demand.

Amazon’s engine operates on different algorithms. The algo that evaluates the keyword demand is called A9 algo. It internally charts the top products clicked against each keyword every hour and ranks them for each keyword correspondingly. These keywords, the corresponding top 3 products, their search frequency rank and % click share can be obtained from the Brand Analytics Reports page of the seller account.

This Amazon ranking algorithm adapts to the search patterns of its customers, displaying what they are looking for most. Since Amazon aims at customer satisfaction, it looks for products that attract the most no. of customers (most clicks) and gets the maximum conversion on these clicks. So, higher the % clicked for any product, higher will be the search term rank for that product. Some of the factors that lead to the search term rank are:

  1. Sale - To sell is the top priority for Amazon. So it checks whether your product is selling or not. Another interesting thing to note here is Amazon considers only the volume of sales (i.e. no. of units sold) happening and not the price. So if you are selling 1000 units of100/- INR per product vs 1 unit of 1 Lakh INR product, although the sale amount is the same still 1000 units are counted as higher sales as against 1 unit.
  2. Frequency - It determines if the sale is a one-off case or is it consistent against that keyword. Higher the frequency the better is the rank.
  3. Duration In Which You Have Sold - the ranking is based on past 180 days of sale, hence the products sold during that duration are considered for current rating.
  4. Impression - Higher the no. of views/impression your product gets higher are the chances of conversion and so higher the ranking.
  5. Click Through Rate (CTR) - It is an indicator that of all the views that we received how many customers showed interest in knowing our product in more details and therefore click on the product.
  6. Conversion Rate - Of all the customers searching for a keyword, how many customers ended up buying our product is the conversion rate. It is very important because it finally justifies whether the ranking to a product was as per what the customer was looking for.
  7. Reviews - Positive reviews affirm the customer’s likability towards a product and indicates if he is happy with the purchase.

Therefore, as sellers we need to keep in mind that we are not selling products on Amazon, rather we are training an algo. Approximate duration to train that algo is 2 months.

 C. Hygiene Factors - Before we start with training the algo, we need to keep in mind certain hygiene factors, without which all our efforts would fail. These are related to your product page, on how it looks, what is the title, how are the photographs, what is in the description, A+ content etc. The importance of each of these factors would differ based on the price of the product as customers' mind-set changes with the price. As per a study, for a product which sells at

  1.  <500 INR, on an average, an Indian customer does not spend more than 5 seconds in making the purchase decision. So all that he can see in 5 seconds is the title of the product and the images. That is why title carries 60-70% weightage in the purchase decision and photographs carry ~30% weightage. Other components of the product page do not carry as much value for this price range.
  2. 1000-2000 INR products customers spend some time comparing the products hence other key features bullet points also become important.
  3.  >2000 products take much more research and other features also become important like the description, specs, A+ content, which separates your product from the rest of the category.

Another important thing to note here is that all the hygiene factors have to be optimised for human eyes/brains as well as Amazon’s algo.

 D. Title: Although each category has specific formats for titles but the basic idea behind forming the title stays the same. Key thing to keep in mind is that titles can be used to train the algo as it is composed of words which the algo can read. Therefore, product titles must have the top rated keywords as searched by the customers for your category. Based on experiments we have understood that the keywords in the title plays the most important role whenever someone searches for a product and not the search terms that are entered while creating the product page. Brand analytics gives access to > 10 Lakh keywords, sorted in the order of search frequency. With this, top keywords for any product can be arrived at. Even if they have spelling or grammatical errors, it is advisable to use the keywords as is since the algo and the people searching for the products are looking for the exact same phrases.

For eg. for “Bluetooth headset” the most searched keyword was “blututh” and that was used in the title, since it fetched better results. Since the keywords keep on changing and the seasonality kicks in couple

The title has to be human readable and not necessarily understandable because we need to train the algo and that's where the order of words comes in important. If the algo finds the words in the same order as they are ranked in brand analytics, Boom it’s a direct match. This is the reason, dislocating a leader in keyword search rank is extremely difficult as the algo realises that this is a valuable seller and gives more leeway for nearby keywords to him over a period of time. Therefore, to dislocate the current leader and become a new leader, depth, focus and customer understanding is needed.

Example: https://www.amazon.in/gp/product/B07XN8RTTS Kepler Brooks Office Chair | 3 Years Warranty | Chair for Office Work at Home, Recliner Chair, Study Chair, Ergonomic Chair, High Back Office Chair, Gaming Chair with Padded Arms & Leg Rest - "Italia Premium - Black

  1. Best seller tag

  2. Three years warranty visible even without going to the product page
  3. On the product title the primary key word is used first “office chair” followed by the secondary keywords in the order of their ranks.

How to be part of multiple categories – e.g.: kepler brook office chair

Now after this indexing will happen only once the Value Proposition is correct. Conversion rate plays an important role here.

Count of people who have rated doesn't matter as much as what the rating is: (4, 4.5)

E. PHOTOS -

  1. First picture is a plain white background just displaying the product.
  2. Utility photo - where is it being used? What purpose is it solving?
  3. Dimension - for the customer to understand what the product actually looks like since they cannot touch, judge, & feel the exact size in picture.
  4. Benefits - need to be explicitly mentioned.
  5. Zoom ability is important.
  6. more graphic then text – visual is processed faster.

F. Competitor Analysis – keepa.com helps in understanding the past price, ranking and sales performance of competitors. To be tracked on a daily/hourly basis.

  •  The longer you are as the top ranker, it is hard to displace you.
  • Algo supports the best seller.
  •  Brand is established in people’s mind therefore the pull is there.

Process to replace the top player is divided in two stages – i. Strategy ii. Execution

Execution is the key here.

G. Inventory Tracking/Planning - as the sales would explode it is very important to plan for inventory.

H. ACOS Tracking

I. MTR (Merchant tax Report) - has records of all the transactions of all types. It helps keep a track of returns and acts as an indicator if something goes haywire.

J. Pin code wise order distribution - can be helpful in running ad campaigns to certain cities or geographies.

K. Marketing Report - Variation could be in the form of combos, or price points. Variation helps in combining the sales of the two and then trending higher in the overall scheme of things. You can also combine 2 different products (related or non-related) which are trending high either in the same category or different categories and then promote them separately which will help in improving the overall rank of both the products and lead the path to achieve best seller tag. Marketing cost to 5% in a competitive category it is phenomenal as per market standard, keeping your best seller tag intact

L. Marketing - It is a 3 month cycle. The strategy enables to achieve 5% ACOS at the end of 3 months and stays in that range post that.

  1. Sponsored products
  2. Sponsored display
  3. Sponsored video

To train the algo, keywords are the key and Sponsored products work on keywords. (Broad, Phrase, Exact are the 3 types of options available in running sponsored products ads.) We use only phrases that match.

How it’s done - we select 8-10 keywords and experiment in 2-3 cycles of 2-3 weeks to understand what keywords work for us. Starting with a limited budget and then gradually increasing.

Each algo is like a conduit leading to the biggest player as of now, of them there would be some which will be leading to us as well. Aim is to gradually increase the traffic in these conduits and increase the number of conduits that are leading to us so that we get the max traffic/eyeballs.

Once this process is set, the next step is to benchmark against the market leader. And design the path to reach that value in a stipulated time of 3 months. Tracking the performance on a daily basis is crucial to see if we are on the right track.

  1. How much will be the spend
  2. What is the projection
  3. Price during that period

– The game is how to index yourself on the top for the highest trending keyword.

– Search density ranking can be hourly, daily, weekly, monthly

Daily Tracking parameters example

1-12-22

Benchmarking yourself on all 25-26 variables against the leader. In general over a period of 3 months we take a chunk ( upto 50% of the market leader) therefore it is very essential to understand what the leader is doing, what is its marketing expense, what is the revenue per day, units, etc. so that we know the game we are playing.

In addition, this helps us to understand if it is a pond big enough to play in. Because if it isn’t , even being the market leader will not give us as much upside. [refer BSC - men vs women trimmer]. This also helps us to understand where the leader is going wrong or what is lacking.

Titles play a very crucial role in keyword search and therefore changing the title on a weekly basis, basis the latest brand analytics trend is imperative.

  1. Understanding the process Post sales
  2. Handling a customer
  3. Data crunching to identify new clients
  4. Finalising a pipeline and converting
  5. Book