12 Facts Every Amazon Seller Should Know To Stay Competitive Part 2 of 2

12 Facts Every Amazon Seller Should Know To Stay Competitive Part 2 of 2

In the 25 years since Amazon was born, it has become the top eCommerce platform in the world and shows no signs of slowing down. As we grow closer to 2020, many sellers are looking to generate more sales and gain a bigger piece of the Amazon pie.

Part 2 of our “12 Facts Every Amazon Seller Should Know to Stay Competitive” contains key takeaways at the cutting edge of the industry – plus 2 bonus facts that you as Amazon sellers should know to stay competitive within the marketplace. Note that these facts are based on Amazon’s answers from the Hearing of the Subcommittee on Antitrust, Commercial, and Administrative Law, Committee on the Judiciary, Entitled “Online Platforms and Market Power, Part 2: Innovation and Entrepreneurship”.

1. For each month since July 2018, what is the percentage of all space eligible for advertising on Amazon that has been devoted to Amazon’s private label products?

There is no advertising space reserved for Amazon’s private label products. The type and amount of ads shown to customers depend on many factors such as customer’s search terms, the product the customer is shopping for, and also depends on whether the customer is shopping on mobile, desktop, or Amazon’s app.

In each month since July 2018, only 2–3% of space eligible for Sponsored Products and Sponsored Brands impressions has highlighted Amazon’s private label products. Amazon’s display and video programs only show ads for private label products on Amazon when there is no third-party ad available.

2. In categories where Amazon has a private label product, what portion of ad inventory is not available for first-party or third-party sellers because of ads for Amazon’s private label products?

Amazon Advertising does not restrict vendors or third-party sellers from accessing ad inventory in categories where Amazon has a private label product.

3. What types of ads and ad space does Amazon reserve exclusively for Amazon’s private label products?

There is no advertising space reserved for Amazon’s private label products. Amazon decides how to use the space in its stores based on a variety of factors, centered on what customers will find most helpful. Whether to show ads or merchandising placements, and how many, depends on many variables, including the customer’s search terms, what type of product the customer is shopping for, and whether the customer is shopping on desktop, mobile, or in Amazon’s app.

4. What marketing and/or promotion services does Amazon offer suppliers or merchants (sellers and vendors)?

Marketing and promotion services offered by Amazon highlights brands, offers, products, and help brands increase product visibility towards customers. Most marketing and promotional opportunities are available to sellers and vendors as a function of products being for sale on Amazon.

Amazon pays to advertise products from both sellers and vendors on search engines such as Google, and Amazon merchandise products from both merchants through in-store product recommendations and widgets such as “Recommended for You” or “Customers Who Viewed This Also Viewed”.

There are a variety of promotional tools that third-party sellers and vendors can use to highlight their products such as publicizing deal types for price changes, coupons, and promotional codes. These include:

1. 24-hour deep discounts on high-demand products (Deal of the Day)
2. 6-hour discounts of limited quantities of products (Lightning Deals)
3. Extended time discounts (7-Day Deals)
4. Coupons
5. Buy X Get Y Promotions (i.e. “Buy 3, save 20%”)

Amazon also offers a range of advertising products and services (i.e. Display and video ads, sponsored products, and sponsored brands) to help third-party sellers and vendors find, attract, and engage with new and existing customers.

In general, display and video ads are priced either by a real-time bidding auction or a cost per one thousand impressions. Advertisers are charged for Sponsored Products and Sponsored Brands when a customer clicks on the advertiser’s ad, and the price per click is set in an auction-based on advertisers’ bids, how relevant the advertised product is in the context which it will appear, the likelihood of the ad being clicked on, and other similar factors.

5. Please describe all the ways that suppliers or merchants that do not purchase Amazon’s distribution services through FBA are treated differently by Amazon from suppliers or merchants that do purchase through FBA.

Sellers who chose FBA get to enjoy high-quality fulfillment services that customers want, including fulfillment and delivery speed, Prime eligibility, and seller performance. The featured offer is based on factors affecting customer experience, and FBA generally provides a better and more reliable experience for Amazon’s customers than fulfillment by merchants; accordingly, that difference may be reflected in the offer that is featured.

6. Has Amazon ever used information gathered as a result of a business partnership with another company to guide its product strategy? Has Amazon ever used this information to introduce Amazon products that directly compete with the business partner’s product?

Amazon requires its selling partners to provide information about their identity, location, payment methods, and products as part of its registration processes. Amazon may require additional information for certain products, such as safety-testing data or commercial invoices, to ensure that products are safe and authentic.

Amazon prohibits the use of such information and other non-public, seller-specific information to introduce Amazon products that directly compete with its selling partners. Amazon does not require disclosure of sensitive information, such as customer or manufacturer lists, as a condition of registration.

7. Has Amazon ever threatened to either remove a seller from Amazon Marketplace or prohibit the third-party sale of a product on Amazon due to a business dispute with that seller in one of Amazon’s other areas of business?

As described in the Standards for Brands Selling in the Amazon Store, one way that Amazon has ensured a great customer experience is by sourcing products directly from brand owners and selling them to customers on Amazon.

For a limited number of national brands that supply their products to other major retailers for sale by those retailers, Amazon has elected to source the brand’s products for sale by Amazon only. This ensures Amazon can provide competitive prices, availability, and fast delivery for the most popular products on Amazon, and avoids customer confusion. As part of business agreements, Amazon has in certain circumstances chosen not to list third-party products for sale on Amazon if those products do not allow customers to access Amazon services, such as Amazon Prime Video.

8. Has Amazon ever removed the “Buy Box” or “Buy Button” for products sold by a third-party on Amazon?

Since Amazon seeks to highlight offers that it believes will present a great experience for its customers, there may be circumstances in which a third-party offer would be ineligible to be displayed as the Featured Offer. For instance, an offer would be ineligible if the third-party has a history of providing a poor customer experience or presents a high risk of fraud or abuse.

Similarly, an offer at a price that is uncompetitive, for a product that is not available or cannot ship to a customer’s location, or for a product about which there may be product-quality or customer-experience concerns may be ineligible to be displayed as the Featured Offer.

9. Although Marketplace merchants generally set the price at which their products are sold on Amazon, in some instances Amazon has lowered prices on products sold by Marketplace merchants, stating “This item is sold by a third-party seller. The discount is provided by Amazon.” Please describe how Amazon determines when to alter the consumer-facing price on a Marketplace product.

Amazon may occasionally choose to fund a discount to its customers when the prices set by third-party sellers are higher than the prices offered by other stores for the same product. In these instances, third-party sellers receive payment for the order and pay referral fees based on the item price that they set and Amazon pays for the full discount, which appears as a credit to Amazon’s customers.

10. One email from Amazon to a brand stated: “[W]e have made the decision to source your products for sale by Amazon only and your existing Seller Central account will be closed within 30 days of this email.” Please identify the number of merchants to whom Amazon has sent this message or a substantially similar message. For each instance, please describe the relevant circumstances, including the recipient of the message and all the reasons for sending it.

Consistent with the Standards for Brands Selling in the Amazon Store, for a limited number of national brands that supply their products to other major retailers for sale by those retailers, Amazon has elected to source the brand’s products for sale by Amazon only.

This ensures that Amazon can provide competitive prices, availability, and fast delivery for the most popular products in Amazon’s store, and avoids customer confusion. As a result, a small number of brands have received similar emails under these circumstances.

11. What is the “Sold By Amazon” program? Which sellers are eligible to join and how does Amazon determine what price sellers will receive for their sales?

This invite-only program is testing an opt-in consignment program for brand owners. In SBA, brand owners choose which products to enroll in SBA, and once enrolled, these products are priced and sold by Amazon. SBA provides for a guaranteed minimum dollar amount that participants will receive for each item regardless of its selling price. When a customer purchases an item that is being sold through SBA, Amazon purchases the inventory from the selling partner and then sells it to the customer.

12. If Amazon suspends a seller without detailing the precise basis for the suspension, how does Amazon expect the seller to remedy the violation and bring itself in compliance with Amazon’s policies?

Amazon strives to help sellers avoid and correct mistakes that may lead to policy violations. Amazon makes its policies available to selling partners, provides an entire educational series called Seller University, and displays real-time account health dashboards and alerts to help sellers track their performance and get a warning of issues as they arise.

Amazon also offers a self-service resolution for many issues, enabling sellers to edit their listings or fix other common problems instantaneously. Similarly, Amazon proactively calls certain sellers when their accounts are at risk, and Amazon provides individualized support and a path to address any outstanding concerns before taking action.

In some cases, Amazon is required to take swift action to suspend selling accounts that have violated its selling policies to protect both its customers and its other selling partners from fraud, counterfeits, and other forms of abuse. To prevent bad actors from abusing Amazon’s systems, Amazon may limit details about what it specifically found to be in violation but will still provide the seller with an appeal option. This is generally limited to a set of terrible violations (i.e. stolen identity, credit card fraud, etc.).

Amazon regularly audits these account-level enforcement actions and adjusts its approaches where it identifies mistakes or opportunities to help honest sellers that may have inadvertently violated its policies.

Bonus Fact: Does Amazon Advertising allow first-party and/or third-party sellers to bid on branded keywords of competitor brands?

Amazon Advertising permits advertisers to bid on branded keywords of their brands and other brands.

Bonus Fact: What are the steps that Amazon takes when Amazon receives a complaint about an intellectual property violation by a third-party seller, including any steps it takes to verify the legitimacy of the claim.

When an intellectual property claim is submitted, Amazon verifies the submitter’s identification and compares the asserted intellectual property (IP) rights to the accused product or content. Some types of IP claims are given customized treatment. For instance, copyright claims are handled according to the procedures prescribed by the Digital Millennium Copyright Act (“DMCA”). Utility patent claims are enforced pursuant to court and agency orders, or, in the absence of such orders, resolved by the affected parties or resolved through Amazon’s Neutral Utility Patent Evaluation Process.

If a violation is found, Amazon removes the infringing content or, in some circumstances, such as in cases of repeated violations, suspends the offending seller’s account. Where Amazon takes action with respect to a violation, the goal is to provide clear communications to sellers, describe the policy violation that led to the suspension, and offer an appeals (handled by specialized teams) process where sellers can tell Amazon if they believe that a mistake was made.

Final Thoughts

After looking at all these data-driven facts, you now have a better understanding of how Amazon ranks products and creates their private label products using aggregated data, advertising functionalities, and many more. Be sure to leverage these to make necessary updates and changes to your Amazon business.

Again, if you haven’t checked out the data-driven method to discover and scale your next Amazon product in 2020, please do yourselves a favor and watch the videos HERE. It’s time for you to shine in the year 2020!

Eugene Cheng

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