How Amazon picks its seemingly random offers of the day. And why are sellers so chasing after them
Amazon has captured 50% of the Internet market in America. Last year, over the five-week period from Thanksgiving (November 22 in the United States), 89% of the expenses of customers of the largest trading floors in the United States fell on this one online store. In 2017, the company's shares rallied by 55%, in 2018 - by another 30%. The reason is simple: the company has the best infrastructure, plus she knows what to give to customers. Independent sellers, third parties, provide up to 70% of purchases on the site. And the company needs to know which of them to issue in the search results, and on which to arrange discounts.
Of the hundreds of millions of goods placed on the site, every day the company selects only a couple of thousand. What are the parameters guided by the company to ensure maximum sales? How does this 0.1% of suitable things choose? Or takes goods at random, at the risk of disappointing customers?
A few months ago, Tea Forté , which sells expensive tea bags and special tea cups, won the jackpot. Amazon has chosen Amazon infusers, tea probes, and tea mugs as one of its Cyber Monday offers. This simple whim of the algorithm allowed some products to rise from No. 588 to No. 4 in the grocery list on the site. And in a few days she brought the company a total of almost $ 450 thousand.
Jürgen Nebelung, vice president of Tea Forté, could not hide his joy:
For us, getting into the list of recommended ones, especially on the day of discounts, is always a gigantic business. We reduced the income per unit of goods by 35%, and were able to sell 6.5 times more goods than usual. It was as if we were under water, and surfaced to gain fresh air.
Tea Forté is one of more than two million independent sellers on Amazon. With such enormous competition, many of them agree on almost everything in order to catch the eye of buyers. One of the options is to buy ads from Amazon itself, so that you are put in the top of the issue with the Sponsored die. But in this case, getting an income is almost impossible. Companies do this in the hope of earning the first base of loyal customers and launch word of mouth, although there are few chances.
A much more profitable way is to get an extradition thanks to your discount. So you can even find yourself in a special section of the best offers of the day , so even those buyers who are not specifically looking for your product can see it and think about purchasing. This will increase the seller in the ranking and help him in sales of other goods - for several weeks or even several months. It’s possible to minus one’s own to sell one category of things on sale, but due to this, gain a reputation and raise the rest of the products in the issuance of the site, so that as a result a good profit comes out.
On other sites, arranged differently from Amazon, this scheme could only bring losses. But since Amazon takes into account the most diverse metrics, it’s quite possible to launch a cascading effect here. If you become noticeable - they buy you - they leave you feedback - you earn a rating - you get out in the top of your category - you are provided with customers and orders for the next few years. The dream of any small seller.
How (presumably) Amazon’s search engine distribution algorithm works
In order for your product to consider the algorithm that determines the main shares of the day, and you get on the treasured page , the discount should be at least 15%. If it’s more, the chance is higher, plus you can be allocated one of the first places. Moreover, only a real decline is suitable: Amazon keeps track of whether you have had sales at previous prices, and how much such prices have been held before. With fake discounts, like the sellers of Aliexpress, you can’t get through.
You need to specify a certain amount of goods that you are willing to sell. The number cannot be less than 1000. So that competitors do not spy on the strategies of other participants in the site, this number is not shown anywhere, only percentages. If the client sees that 90% of the goods have already been bought up, he understands that he has little time left. At this percentage, he can also assess how attractive the discount was to other buyers.
Thanks to this trick, the buyer always remains to the benefit. Sellers, of course, would like to show that they always have "99%, there is literally one product left, fly on!". But they can only sell the amount that Amazon indicated in advance. So in the stock section, just low percentages of goods sold are more often found. Sellers want to beat off discounts with the highest possible sales for their few hours at the Sun, and rarely set a minimum volume.
Trying to get to the offers page is always a risk. Only a week can pass between filing an application with Amazon and the start of sales. Therefore, many sellers stock up on inventory in advance, and send tons of their goods to Amazon's warehouse before they receive a response. If you still don’t get on the top page, and there will be no sales, payment for warehousing and delivery, not to mention the production / purchase of thousands of goods, can bankrupt the company.
Traditional supermarkets and online stores, such as Macy's, Target and Best Buy, like to arrange discounts on a certain category of goods. Amazon, by contrast, is always trying to make a hodgepodge. Discounts go at the same time to a variety of things, even those that are not so often searched by customers. The main thing is that the goods do not directly resonate, the price is well reduced, and the seller receives positive feedback and provides a sufficient amount of goods to the warehouse. All that remains is to set the most purchased and clickable options forward, and put the less popular ones on the tenth or twentieth page.
In the five days after Thanksgiving in 2018, independent companies sold 140 million products on Amazon. In total, over the past year they earned about $ 260 billion on the site. This is more than the GDP of many countries (for example, Greece, the Czech Republic or Portugal). But for each individual company an average of only $ 110 thousand of sales. And this is considered only "professional" sellers who pay a subscription for Amazon and sell more than 40 products per month.
Only 3% of Amazon sellers earn more than $ 10 million a year. These are mainly promoted brands. True, many of the smaller companies are also displaying their products on eBay and Jet, and in the last two years at Walmart. Extra profits come from there, while the opportunities of the popular offers of the day on Amazon are used to become popular and become noticeable to the market.
On Cyber Monday, Tea Forté offered eight products at a discount from $ 10.40 to $ 19.25. At peak times, she sold one product every three seconds.
Coffee Gator exhibited three of its devices for brewing coffee. She cut prices by about 20%, from $ 42 to $ 32, and in one day in December she sold 3,500 units, 5 times more than usual. Company founder Phil Williams says he has been preparing for this day for more than two months - having offered Amazon a discount, he immediately ordered the production of a large batch of his devices and began to deal with their delivery.
Jason Boyce, top manager of Dazadi.com, a site selling various training and gaming equipment, always drops 15% - since, as he says, most of his products are already unique, so he doesn't have much competition on Amazon. Now most of the company's annual sales, about $ 20 million, are from Amazon. Talking about why he needs to sit on such a platform, having his own relatively popular resource, Jason Boyce replies:
The Amazon sales section is now one of the most popular pages on the Internet. It is as if you were hanging on top of Google, it has no price. Every time we appear there, I feel a lot of new eyes look at us.
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