Unless you’ve been asleep for the past few years, it should be no surprise that Amazon has become the predominant Ecommerce website, raking in more than $350 billion in net product sales in the U.S. in 2023 and more than $574 billion worldwide. And while a significant portion of that revenue is B2C sales, one of Amazon’s fastest growing is Amazon Business, which achieved $35 billion in annualized B2B sales last year.
What many may not realize, however, is that Amazon has now become the de facto search engine for product searches, surpassing Google back in 2018. There are billions of products on the website from millions of sellers around the world, making it not only the world’s largest marketplace, but certainly one of its most competitive. This could be disheartening for branded manufacturers looking to sell their products on Amazon. With so much competition, how does a firm stand out?
That’s putting the cart before the horse, in our opinion. A better question should be: What is my opportunity on Amazon? It turns out that the same data that might scare some potential sellers away can actually be a treasure trove of information that can help determine the size of a brand manufacturer’s opportunity.
At Enceiba, we use three specific approaches to help clients decide whether Amazon is right for them. Before we discuss these, though, it’s important to understand that our methodologies are geared mostly towards manufacturers that sell branded, differentiated products. While these approaches can certainly be used by distributors or manufacturers that sell non-branded products, it can be significantly harder to build a customer base on Amazon if the company does not directly produce the products being sold.
The good news is that there are multiple ways to define your Amazon opportunity. Regardless of the approach, it’s important to remember to be disciplined and thorough in conducting research.
Brand-focused Research
If you are a branded manufacturer, the first step should be to understand where you fit into the Amazon landscape. Your first step should therefore be to get an idea of what level of activity there is on your brand name (e.g. search volumes and product sales).
Start by doing a simple search on Amazon using your brand and product names. Often you will find that resellers are offering your products for sale on the marketplace. What items show up and what portion of your entire catalog appears to be listed? Does it seem that particular product categories have more listings? Do your branded products have a large number of product reviews?
While this is far from a scientific approach, finding a wide range of your products with numerous reviews is a good first-pass indication that there is a significant revenue opportunity on the platform.
Why? Because resellers tend to focus on listing products that will sell well. Additionally, we’ve found there is a positive correlation between number of reviews and revenues, as product reviews impact visibility on the site, which in turn impacts conversions.
Of course, this type of analysis will only provide you with a general idea of whether or not there’s an opportunity. There are still two other approaches we recommend to get a clearer, more concrete understanding of what your Amazon opportunity is.
Keyword-focused Research
As we mentioned, Amazon has become the world’s largest product search engine. Millions of people conduct millions of product searches on Amazon daily, and these are both consumers and B2B buyers.
Conducting keyword research is therefore a key indicator of the interest Amazon buyers have in your products, both in terms of your brand name(s) and your general categories. As a result, researching search volumes is an integral step to determining your Amazon opportunity.
Here at Enceiba, we rely on a set of tools that provide us with a variety of key insights and give details on the amount of brand search conducted directly on Amazon. Tools like merchantwords.com to identify the volume of branded keyword searches occurring on a monthly basis. This will often reveal thousands—or even millions—of searches conducted using a client’s brand name. We then use this data with industry standard metrics to correlate searches to estimated revenue. The result is that projected brand revenue based on keyword search volume can be in the millions or even tens of millions of dollars if brands receive significantly large search volume.
Revenue Projection Research
While the previous two methodologies give us a general sense of search volume and extrapolate potential revenues, it’s often a good idea to hone in on revenue projections as accurately as possible.
For that, we turn to tools like JungleScout or Helium10, two sophisticated tools for Amazon sellers that provide detailed product research data. For brands already on Amazon, these solutions can generate revenue estimates on individually listed products, including your own products being sold by resellers. You can see projections for short-term revenues and create estimates for annual sales based on a trailing 30-day sales volume. By leveraging these tools to obtain estimated sales volumes on both your branded products and other products similar to those in your catalog (e.g. those offered by competing brands), you can gain additional data points on the potential for your products on the channel.
What If Your Products Aren’t Being Sold on Amazon Currently?
So how can you determine your Amazon opportunity if no one (including your own company) is selling your products on the platform?
You can actually use the same keyword research approach we described above for branded keywords, but with non-branded search terms. For example, if your company makes pneumatic tools, we might research the search volume for “pneumatic sander,” “pneumatic drill,” etc. This will often tell us what the larger market opportunity is in terms of gaining product visibility in a specific category, and we can make a rough estimate of addressable market size by applying industry averages and metrics.
Competitor Research
Last but not least is conducting competitor research. This is a particularly important step for manufacturers who don’t have any products being sold on Amazon. We recommend that every company conduct competitor research for branded keywords and product volumes to get a sense of the category landscape. Using this approach, you can develop similar revenue projections for competitors to understand what the market dynamic is like for their products.
When estimating your Amazon opportunity, it’s important to remember that there’s no single methodology that will provide all the insights you need to make a decision. In fact, it’s a good idea to gather multiple data points and understand that any estimates are ranges. This type of research is primarily to tell you if there is enough volume and activity on Amazon to pursue the channel. Achieving those projections, of course, relies on a well-thought out strategy and expert execution.
It’s best to get your revenue projections dialed in as tightly as possible—and that’s when you need Enceiba! If you’re looking to dip your toe into Amazon, schedule a call with our expert consultants. We’re happy to help you determine the size of your Amazon opportunity and develop a strategy for capturing it!
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