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  • Ridgeline Insights

Ridgeline’s 2023 Amazon Predictions

The last few years have been filled with extremes and if you have been fortunate to ride those waves and come out relatively unscathed, our hat goes off to you. We predict that 2023 will be another set of waves in which your business needs to find balance and stay afloat.

The biggest elephant in the room is the US recession. Higher costs of goods, increased lending rates, and layoffs are changing how consumers are buying. We have seen a decline in consumer preferences for Amazon and now, Ridgeline predicts, you will see a massive change in the product assortments that are getting the most sales volume. People will buy what they need at a decent price. If your products are optional purchases for many consumers, you’ll see a dip in demand, which means it is even more important to have an efficient Amazon ad strategy, clear content to improve conversion, and an off-Amazon presence to grow awareness and visibility.

The next prediction we will make is that supply chain constraints are still going to be a concern. We’ve seen shipping prices return to close to normal but China’s zero-COVID policy will continue to create ripples in product availability and pricing. We are also seeing the highest demand for warehouse space but a labor shortage which will make fulfillment costs unattainable for many low-volume or low-price brands. We suggest taking a look at your product assortment and assessing how much tolerance your margin has before products arrive at Amazon. This will allow you to be confident in the investments you can make on the Amazon marketplace.

With less demand for some product categories, our prediction is that advertising costs will continue to rise. High competition and larger, more experienced sellers, will heavily invest in advertising, influencing a higher price-per-click. In order to combat this, we recommend you have a solid keyword strategy and a conversion-friendly page to get the most out of your advertising campaigns.

Lastly, we will see successful Amazon-only brands transition to having a stronger off-Amazon presence. Consumers are looking for legitimacy, social proof, and authenticity. We predict that brands that have an omnichannel strategy across different markets will fare better in 2023 than single channel brands. In order to be successful in the coming years on Amazon, you need to drive traffic and grow outside of Amazon.

Many sellers are feeling the edges of a recession which is why mitigating risk in 2023 is more important than ever. Our 2023 predictions encourage you to analyze your cost of goods, processes, and strategy in order to remain profitable in the coming year.

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