It's 2022, and Amazon still is the biggest player in online commerce. It's also not very likely that this is going to change anytime soon. 🤷♂️
As of this year, there are 1.5 million active sellers on the platform offering 75 million different products. That's one big wow! But hold on, why are we telling you all this, and where does this data even come from? Let's zoom out:
The main reason to pay attention to what's going on with Amazon – if you're in ecommerce – is that Amazon is our window into the ecommerce industry as a whole. To an extent, the challenges that Amazon deals with are the challenges for all of ecommerce. Apart from that, Amazon is also very smart about how they address these challenges and the solutions they implement.
At the end of the day; if you're an ecommerce business owner and you're going to learn from anyone, you might as well learn from the best, hence Amazon.
That's all fine, and “learning from Amazon” sounds like a cliche thing someone would say, but how do you actually do it?
This is where the post you're reading right now comes into play. What we've prepared for you here is a look into the report written jointly by Kaspien and Sellzone (Semrush's set of tools for Amazon). The report's titled The State of Amazon 📈📉, and its main goal is to help sellers understand the current ecommerce landscape so that they can align their strategies for 2022 accordingly.
Here's what this report has taught us about what's coming to ecommerce in the near future and what you can do in your business to prepare.
The forecasts of the pre-COVID era suggested that ecommerce would experience a steady growth in 2020 compared to 2019, and that the trend will follow into 2021 as well. That's pretty much what we all expected. However, no one was quite ready for the massive surge that came about mid-2020.
Amazon experienced over 80% traffic surge throughout 2020. We've seen similar enthusiasm in the ecommerce industry as a whole. More and more businesses entered the online, as in many cases this was their only option to keep offering products during lockdowns.
However, as it turns out, it now looks like this surge was indeed “a surge” and not a permanent shift in the industry. Amazon experienced a 7% decrease in traffic in 2021, which is attributed to the slow but steady reopening of the offline world and commerce.
Here's Amazon traffic trend between 2019 and 2021:
💡 By the look of it, things are coming back to normal considering how people consume and buy goods. While the ecommerce industry is still on the rise overall, no ecommerce business owner should assume that their pre-2021 growth rates are going to stay that way. It's better not to set any overly ambitious sales goals in the long term.
Back in January 2019, Amazon introduced their Amazon Attribution program meant to encourage sellers to bring more external traffic to the marketplace.
Before Amazon Attribution, if you were a seller, it wasn't that easy to bring in traffic via places like third-party ads or social media and have that traffic effectively tracked and evaluated. Amazon Attribution is a measurement solution that makes it possible. And it looks to be paying off.
Roughly around the end of 2020, direct traffic to Amazon started falling. However, the number of visits through Amazon Attribution referrals started to increase. We can see this the most clearly when comparing Q3 2020 traffic stats with Q3 2021:
- direct traffic fell by 31%,
- referral traffic grew by 9% in the same period.
Referral traffic of all kinds is becoming increasingly important to Amazon's overall user growth and bottom line. No wonder the company invests so heavily in expanding this part of their platform. And they are shouldering 100% of the costs involved, as Amazon Attribution is available to sellers free of charge.
💡 The lesson for ecommerce business is simple: if you sell products through Amazon, you should look into Amazon Attribution and how it can help you grow.
One statistic that Amazon is probably not that happy about is that the number of pages-per-visit has dropped by 12.5% between 2020 and 2021.
This can be a result of a couple of things:
- the bounce back of offline shopping as many areas are reopening after the pandemic, 😷
- a high likelihood that shoppers found a viable off-Amazon alternative among the many new ecommerce stores that were launched in 2020. 🛒
But pages-per-visit dropping is just one side of the coin. On a more positive note, the average visit duration rose by more than 5% compared to last year.
💡 What both these stats mean combined is that shoppers are more focused once they decide to visit an online retailer. They know what they're coming for, and they will read about these products more in depth.
Yes, you're reading this right. You might have known that Amazon offers a lot of other stuff apart from what's sold through the main marketplace, but as it turns out, all that “other stuff” is now more than half of Amazon's overall net sales.
Here's the breakdown exactly:
In Q3 2021, revenue from these non-marketplace services collectively reached $55.9 billion, which adds up to 51% of all Amazon sales. This is the first time in Amazon's history when services surpassed retail sales. 😮
The most mind-boggling way to read this piece of data is that Amazon is now more of a service company with an ecommerce side gig, than the other way around.
AWS – Amazon's server infrastructure – is the key player in the services lineup, adding up to 15% of total net sales. Other notable services include various subscription services, like Prime, Amazon Ads platform, and third-party seller services.
💡 One thing that every ecommerce business can learn from this is to never stop developing new products. Even though you might have started as a business selling X, it doesn't mean that it's going to be the most profitable business model to follow long term. Innovation seems to pay off hugely in the long run.
We saw a massive influx of investments into companies that buy up Amazon-focused brands over the last couple of years. And we really do mean massive! The growth is truly incredible. What started as $1 billion raised in 2020, grew by another $12 billion (no typo) raised in 2021. The largest such aggregator, Thrasio, claims $3.4 billion of the cake overall.
So, what those aggregators actually do? In simple terms, they bring in a range of products and brands that are normally available in the Amazon marketplace and give them additional tools and exposure.
For example, some of the brands you can find in Thrasio's portfolio include: Veva, Katchy, Turbo Mops, ThisWorx, Kizen, Mixology, TrailBuddy, and Vybe. Thrasio brags that one in six US households has purchased a Thrasio product.
💡 Have an Amazon FBA product? Look into how getting under the roof of one of these aggregators can help you and evaluate if it's the right path for your business.
In 2020, we saw big drops in cost-per-click (CPC) as many sellers reduced their ad spends to minimize operating costs due to the pandemic worries.
This was happening across all advertising networks and not just within Amazon's own advertising network.
However, in 2021, we saw the same sellers phoenix themselves up from the ashes 🔥🐦 and start increasing their ad spends back again steadily. What followed was a sharp rise in CPC as well.
Overall, 2021 brought us a 26% increase in average CPC compared to 2020 – with 34% of sellers increasing their ad spends.
The pandemic created a handful of consumer buying patterns, with equipment like laptops, headsets, home office desks, office chairs, and other goods experiencing increased demand.
Many of these patterns have stuck even now, almost two years later. For instance, electronics are still dominating product searches on Amazon, as reported by the Sellzone Keyword Wizard tool.
Out of the top 30 searches on the platform, 16 are for electronics and accessories. Even more interestingly, Apple products alone captured seven of the top 30 searched keywords. 🍏
What else is on the list? Here's the complete 30:
Some other interesting entries on the list:
- face masks still strong in 2021, adding up to more than 2.1 million searches per month,
- a fidget toy “Pop It” took the third place with nearly 2.2 million monthly searches,
- and, of course, the ever-fleeting PS5 coming in at no.4 with more than 2.1 million hungry people begging to find it available on the shelf anywhere.
All things added up, Amazon saw a massive 23% drop in visitors between Q3 2020 and Q3 2021.
However, even with that, Amazon is still the sole giant of the ecommerce industry getting as much as 46% of all traffic.
Here are the other top players:
Amazon's traffic fall at -23% exceeded the market average at -15%. This has resulted in many speculations about other marketplaces allegedly catching up to Amazon. However, we can still clearly see that no one is even remotely close to matching Amazon's numbers.
Currently, Amazon has a larger market share than its top six rivals combined. These rivals being: eBay, Walmart, Target, Home Depot, Etsy, and Best Buy.
Despite the fact that the growth in the market has been slowing down, not all rivals of Amazon's saw a negative trend in 2021.
Albeit the raw sales numbers are not impressive when put against Amazon's, seven of the top competitors actually managed to grow their market shares compared to 2020. The three most notable companies being:
- Walgreens (+64%),
- Costco (+20%),
- Etsy (18%).
💡 What we can learn from this insight? If you're an independent ecommerce business selling a generic line of products, then having a presence on Amazon is still your best bet. However, the rise of other platforms, like Shopify or Etsy, cannot be ignored and should be monitored for possible expansions in the future.
Amazon should watch out for these brands as well, as they are showing higher than average traffic growth, which means that they're clearly doing something right.
Amazon has the US market pretty covered at this stage. However, it's actually non-English-speaking countries that contribute the most to growing Amazon.com's traffic.
South Korea is the clear leader and MVP in this race 🐎. At the growth rate of over 212% it is orders of magnitude above anyone else.
Here are the top markets that bring in the largest traffic shares to Amazon:
As you can see, India is still a big contributor to ecommerce traffic globally, and continues to be on the rise for yet another year.
💡 What does this mean? If you're an international business, make your offer seen through the main marketplace at Amazon.com. You're going to attract clients not only from the US that way.
That's it for our top 10 takeaways, but there's a lot more info in the original report.If you want to get more insights, you can read the article by Sellzone here here. 📓
If you want to learn more about operating your ecommerce business through Amazon, read any of these guides:
- How to sell on Amazon – The Ultimate guide
- What is Amazon FBA? What does Amazon FBA mean?
- Best Tools for Boosting Amazon Sales and Workflows
Lastly, tell us your story with Amazon, your experience with Amazon FBA, or anything else you want to share about how it is to work with Amazon. Use the comments below.