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How Brands Are Winning on Amazon in 2021 [Webinar Recap]
Stay on top of the latest e-commerce and marketplace trends.
In the wake of Covid-19, Amazon and e-marketplaces have taken over as the biggest source of opportunity for brands looking to grow and increase their profits.
As revealed in Feedvisor’s latest report, “Brands, Amazon, and the Rise of E-Marketplaces,” 61% of brands on Amazon saw their overall revenue increase by up to 30% in 2020. Our exclusive look into more than 1,000 U.S. brands also showed how new advertising strategies are playing key roles, resulting in significant returns on investments.
Now that more brands than ever before are embracing Amazon and e-marketplace platforms, it is critical for businesses to stay on top of the latest trends and tactics in order to connect with more consumers and accelerate growth.
In this webinar, Feedvisor’s President and Chief Operating Officer Dani Nadel joins General Manger of Enterprise Brands Andrew Altersohn for a deep dive into this groundbreaking data, uncovering the essential strategies brands are using to win on Amazon in 2021.
Why the Rapid Influx of Brands on Amazon?
Brands’ increased adoption of an Amazon strategy was driven by the apparent benefit of selling on the platform. Feedvisor’s new report revealed that, for 47% of brands with an Amazon presence, the platform represented more than half of their company’s overall e-commerce sales. Additionally, Amazon generates 26%–75% of overall e-commerce sales for 79% of brands.
The “black swan” event of Covid-19 also served as a major catalyst for Amazon’s growth in popularity among brands this past year. As U.S. e-commerce sales reached $794.5 billion in 2020, Amazon was a clear winner, growing its e-commerce market share to nearly 40%, per eMarketer.
“Clearly Covid was transformative,” says Nadel, “but the main reason brands are selling on Amazon is because it works.”
Does Amazon Advertising Really Work?
Not only are more brands selling on Amazon, but they are also increasing their investment into the platform’s advertising capabilities.
According to Feedvisor’s report, 62% of brands on Amazon say the platform generates their greatest return on media spend, with brands on average allocating 28% of their overall digital media budgets to Amazon, compared with 22% to Google and 23% to paid social, such as Facebook.
Amazon Advertising is resulting in big returns for businesses, with 51% of brands seeing at least 7x return on their initiatives. Brands across categories are also benefiting from Amazon Advertising, with 31% of 1P brands, 51% of 3P brands, and 46% of hybrid brands experiencing 7x–10x returns on investment.
“The data is very clear,” says Altersohn. “Yes, advertising on Amazon is incredibly powerful and it works.”
Which Advertising Strategies and Tactics Deliver the Best ROI?
More than 1,000 brands revealed to Feedvisor the top ad types that have delivered their greatest results over the past year.
When asked which types produced the maximum return on advertising spend (RoAS), 56% of brands pointed to Sponsored Products, followed by 53% for Sponsored Brands, 51% for Amazon DSP, and 48% for Sponsored Display.
“Sponsored Products does, overall, deliver the greatest return as compared to the other ad types,” says Altersohn. “But you can see that they all deliver pretty strong value and they all are growing year over year.”
However, he also notes that there’s been a “jump” in Amazon DSP, as more brands become comfortable with this powerful ad type and understand its role in a full-funnel approach.
Is Amazon a Full-Funnel Experience?
The webinar also explored how these Amazon ad types are being deployed at every stage of the funnel, showcasing the platform’s ability to reach consumers no matter where they are.
Data from the report shows that 68% of brands use Amazon Advertising to drive brand awareness, while 65% advertise on Amazon to acquire new customers. In addition, 60% of brands said they use it to drive sales, while 54% see Amazon Advertising as a key vehicle to gain market share over their competitors.
“Amazon has been aggressively focused on expanding their suite of advertising options over the last few years,” says Nadel, noting the platform’s evolving ad types and targeting options, as well as new creative features and content capabilities.
Beyond Amazon, Where Should Brands Focus?
Although Amazon plays a central role in most brands’ strategies, particularly when it comes to showcasing popular products, businesses are also beginning to experiment with new platforms outside of Amazon for specific purposes like building brand awareness and driving sales.
In particular, Walmart surpassed eBay to become the No. 2 e-marketplace in 2020, while Kroger broke into the top 10 of e-commerce retailers. Along with platforms like Google Shopping and Home Depot, brands are more willing than ever to expand to these emerging e-marketplaces.
“E-marketplaces now account for 62% of global online retail sales, outpacing any other channel in e-commerce,” says Nadel. “Brands recognize this. They see the opportunity.”
For additional insights from our experts on how today’s leading brands leverage Amazon and e-marketplaces, view our webinar, 5 Things Brands Are Doing Differently to Win on Amazon in 2021.