- Ridgeline Insights
What should your 2023 Amazon Strategy Look Like?
Ridgeline Insights has worked with hundreds of companies, of all sizes, and have had tremendous success deploying unique Amazon strategies for our clients. As we’ve sat through client strategy conversations in the last year, we heard common concerns from our clients and witnessed many first-hand. We’d like to share these insights with you so that your brand can make a more informed 2023 Amazon-specific strategy.
First, let’s talk about off-Amazon challenges. The elephant in the room is a global recession alongside inflation. There are a number of concerns across industries but the one that impacts Amazon sellers is that consumers are being fiscally conservative. If you have a product that’s optional for most, you may feel the struggle more than others. We would recommend creating a use case, and value proposition, and really understanding your target audience to make marketing and positioning changes to increase your conversion. Other tactics include monitoring your inventory and forecasting and deciding on how much on-hand inventory you really need. Talk to your manufacturer to identify ways to reduce costs or produce in smaller runs, etc. We are seeing trends of overseas suppliers dramatically dropping production rates and you may be fortunate to benefit from these changes. Larger, existential threats are much harder to control and predict but having a plan and routinely assessing performance will be critical to allowing your brand to pivot on the Amazon marketplace.
Second, inventory is still wonky across all categories. We have too much inventory by some brands who forced select retailers to purchase, we have the wrong inventory at the wrong locations because of the supply chain mess, we are still struggling with production largely from China’s COVID Zero policy, and many businesses are dealing with rippling price changes from the cost of goods increases. Your business may be trying to liquidate old inventory while simultaneously trying to acquire what your customers want in Q2/Q3. Amazon is a great place to liquidate but mismanagement of the supply chain and advertising can absolutely erode any margin potential. In order to be successful in 2023, we recommend having a rolling 12-18 month demand plan and working with your supplier and lender, if applicable, to ensure you have proper inventory across all of your channels.
Lastly, a large, off-Amazon concern we are seeing quite a bit is still staffing and employee retention. We have been lucky enough to retain and acquire a talented headcount at our agency but many companies haven’t been so lucky and are trying to do more with less assistance. If this is the case for your organization, you may need to think outside of the box when it comes to talent – don’t overlook different work experiences and skills as there are a lot of crossovers. Sometimes the person with an unlikely background with a passion for learning could be a better fit than the individual who has years of industry experience. However, if you are struggling to obtain the right people for your business, outsourcing is a great way to fill the gap quickly and easily. We’ve had a tremendous amount of outreach from brands who cannot afford or find the right talent to bring their Amazon to the next level. For the price of a full-time employee, oftentimes, you can get an entire team to help you. In order to be successful in 2023, we recommend that you think creatively with staffing to continue to grow your brand products in the future on Amazon.
Switching gears to Amazon concerns, we’ve heard the same concerns over the last two years.
The largest concern is the threat of competition. Both as industry experts and regular shoppers, we notice Chinese competitors taking over every category. Oftentimes, these sellers are financed by the Chinese Government, allowing for low prices and unlimited ad spending. They also develop multiple brands and utilize multiple selling accounts making it easy to try gray hat tactics with little consequence. In the short term, this tells me consumers will put an emphasis on price, so long as there is a healthy amount of positive reviews. In some categories, shoppers are becoming increasingly brand agnostic, making this a great time to grow your product and brand presence on Amazon. Over time, consumers will swing back towards brand loyalty for consistency and safety. In order to be successful this year, we recommend having a long-term strategy and vision for your brand. It’ll be hard to navigate but a robust, conservative approach with a lot of patience will get you further than reacting to a 14-day sales window.
The second on-Amazon concern is that Amazon consumers are returning to brick-and-mortar and have reduced their shopping preferences away from online. This is great news for multi-channel brands who want to expand off of Amazon while still maintaining and growing their Amazon presence. This is a dancing act our agency has performed for many well-known brands who have individual goals we have helped achieve. If you do not have a presence off of Amazon, you may experience a dip in sales through 2023 due to a lower number of Amazon shoppers than in previous years. This means you need to do all you can to continually optimize your Amazon listings for conversion and have the right inventory in stock at the right time. A robust ad strategy will also help you get the shoppers who are there to your products. The best way to navigate lower consumer demand is with conservative forecasting, Amazon performance assessment, and regular competition checks to ensure you are staying relevant in your categories.
In addition, Amazon has launched “Buy with Prime” which will allow non-Amazon retailers to offer faster shipping. This off-Amazon branding may help push consumers back to Amazon. It’s also a great way for off-Amazon brands to increase conversion outside of Amazon. It’s too new to speculate on the impact to multi-channel brands but we think this will be a good thing, so long as Amazon can be reliable and consistent with warehousing and fulfillment.
Our third concern in 2023 with Amazon is warehousing and inventory management as it is still chaos. There’s no shortage of horror stories. Amazon warehouses closing, nothing being processed on time, poor seller support help, etc. Not to mention, sweeping and instantaneous policy changes that can completely thwart your plan. The one lesson we have learned is to plan early and plan often. Having a 12-18 month rolling inventory plan, allowing for ample resupply timing (but not too heavy to have long-term storage fees), and warehousing redundancy will be critical to your brand’s success in 2023.
The bottom line is to be successful in 2023, it starts with having a long-term plan for your brand and products. Understanding your company’s weaknesses or challenges when it comes to Amazon is immensely helpful to allow you to overcome those challenges. We recommend starting with a company-wide SWOT analysis to gain a global perspective of your business. From there, build your Amazon strategy to meet your company’s unique goals.