Was this the most successful Prime Day ever?

According to estimations, Amazon will generate more e-commerce sales than the rest of the top 10 retailers in the US combined by the end of the year.
Amazon’s advertising business is also doing well: the demand for advertising space on the platform is growing quickly so that CPCs are currently steadily increasing. However, the larger the marketplace gets, the greater the competition on Amazon – some of the merchants active on the platform are fighting with unfair means. While Amazon continues trying to eliminate fake reviews we talked to OMR about the latest trick to get the highly sought-after ‘best-seller’ badge.

With the latest update to Amazon’s algorithm (from A9 to A10), more emphasis is being placed on organic sales than paid ads in the rankings. Whether this will render some of the current tricks used obsolete remains to be seen. In any case, we will report in detail about the new Amazon algorithm on our blog in the coming weeks.

If you’re looking for more input on Amazon and e-commerce in general, the digital “K5 Future Retail Conference” is taking place this and next week. It is focused on the future of e-commerce, starting next Monday with a more global perspective – you can sign up and join the virtual summit for free.

General Updates

Will Prime Day 2021 be more successful than ever in hindsight?

According to expert estimations, this year’s Prime Day will surpass last year’s $10.4 billion in sales: eMarketer expects global sales to reach nearly $12 billion. Adobe Digital cites the increased number of Prime subscribers, the +59% growth in online spending in the US over two years, and Americans’ eagerness to spend (as confirmed in their survey) as signs of this year’s Prime Day success.

Ads on Amazon are getting more expensive

Prices for ads on Amazon are on the rise: While the average CPC was still $0.93 in the US at the beginning of the year, a click already cost an average of 30% more ($1.20) in early June. Compared to the previous year, Amazon Advertising has even become 50% more expensive. The development can be observed almost identically on all marketplaces: Demand for ads is increasing very fast, driving up prices.

Prepaid returns labels become mandatory on Amazon UK

Amazon is requiring merchants on its UK marketplace to automatically include a returns label with every order starting July 5, 2021. The cost, averaging £2.75, will have to be carried by the buyer. The alternatives for sellers who want to avoid the extra charge for their customers are returnless refunds for small products or switching to the FBA seller model: in that case one pays the FBA fees for returns (50% of the fulfillment fee) instead of the Amazon prepaid return labels.

Amazon is trying hard to fight fake reviews

Amazon reports that it deleted more than 200 million fake reviews on its platform in 2020. Amazon sees a large part of the responsibility for fake product reviews with social media companies: on social platforms, fake reviews often are organized while nothing is being done to prevent it from happening. The fact that unfair means are used on the platform can also be seen in a new trick for obtaining the Amazon best-seller badge, about which we were asked by OMR.

Amazon’s 2021 US sales out of contention

eMarketer forecasts sales of $386 billion for Amazon.com in 2021 and a 41.4% share of US e-commerce sales. That would put Amazon in first place among the top-selling online stores in the US – and well ahead of competitor Walmart with expected sales of $67 billion. Even if you take all other top 10 retailers (like Ebay, Target and Apple) and add their expected revenues together, they will most likely make less in combined e-commerce sales than Amazon.

Investigations against Amazon: Data usage, Buy Box and FBA sellers

The UK’s Competition and Markets Authority (CMA) plans to open investigations against Amazon: It is looking into the use of data collected from buyers and sellers and the decision on which sellers win the coveted Buy Box. The European Commission is also looking into these issues. In addition, the CMA is investigating whether FBA sellers receive preferential treatment on the platform, because they use services provided by Amazon.

Amazon Fresh deliveries to become faster

Amazon Fresh wants to deliver faster in Germany: In Berlin, Munich, and Potsdam, groceries shall reach customers within 3 hours. Prime members shall receive their orders on the same day if they are placed by 7 pm. Compared to ultra-fast delivery services, the three-hour time window is still a long time. On that note, Amazon is said to already be in negotiations to acquire German quick delivery startup Flink.

Amazon Go supermarket-sized for the first time

On June 17, 2021, a supermarket-sized Amazon Go store opened in Seattle for the first time. For the first time, the store space is over 2,300 square feet. Until now, the stores of the cashierless supermarkets had a maximum of 200 square meters and were too small to do a complete week’s shopping. Accordingly, Amazon is now entering into competition with traditional supermarkets. The “Just Walk Out” technology uses sensors and artificial intelligence to enable shopping at Amazon Go without having to stand in line at the checkout.

Walmart launches drone delivery

Walmart has invested in drone delivery service DroneUp and will soon begin making its first deliveries by drone in Arkansas, United States. The retail company stated that the necessary infrastructure is already in place: Walmart’s 4,700 stores are within 10 miles of 90% of the US population. The company has already successfully completed a test-run of delivering Corona test kits via drone in 2020.

Online stores are adopting Amazon’s platform model

More and more online stores are recognizing the benefits of an Amazon-style marketplace: if all products people want are available on one platform, they are more likely to buy there and thus website traffic increases. For this reason, among others, Express, Urban Outfitters, and J.Crew in the US now allow third-party sellers to sell goods on their websites that are not from their own brand. Remazing gave a presentation on optimization on other online marketplaces at the Amazon Sales Congress that took place last week – feel free to contact us if you are interested in the presentation.

More fashion marketplaces go public

After Mytheresa and Fashionette, About You is now the third German online fashion company to list on the stock exchange within a short period of time. The fashion platform was valued at around €3.9 billion at the beginning of its public market debut, with the issue price for one share being listed at €23. About You has been working on expanding its marketplace business for quite some time – we are looking forward to further updates in this regard.

What caught our attention

Amazon adjusts the prices for products on Amazon Fresh depending on a customer’s zip code. In our example, we discovered a difference of 0.33€ between Hamburg and Munich for a shower gel.

Amazon is testing a new advertising report: the Sponsored Products Budget Report. This update makes it possible to better overview and distribute a fixed ad budget. For example, the report shows how often an own campaign was out of budget and how many “missed clicks” and “missed sales” resulted from this. Unfortunately, we couldn’t discover the report ourselves yet, but for some accounts on the American marketplace it is unlocked already.

It is now possible to distribute campaigns on different Amazon marketplaces once they were created in the Amazon Advertising Console. Changes can still be made to the products to be advertised, the budget, the bids and the campaign title.

Comment: First impressions from Prime Day 2021

Expectations for Prime Day 2021 were high – an overall sales increase of 19% compared to the previous year was estimated. We briefly summarize our initial learnings from the two deal event days in the following:

• there were significantly fewer Prime Day deals compared to previous years
• overall, Prime Day worked well for brands with deals – sales were sometimes more than 7x higher than the normal daily turnover
• sales on the first Prime Day day were significantly higher than on the second day for many brands
• the traffic on the German marketplace was overall less than Amazon expected beforehand
• already running Sponsored Brand campaigns often worked better than newly created ads
• some normal campaigns were more successful than the extremely competitive Prime Day deals – optimal: a combination of both
• in France, the Summer Sales will start only a few days later, promising customers even better deals

We will publish a detailed evaluation of the sales and a subsequent analysis of this year’s Prime Day on LinkedIn next week.

Top 5 Amazon Keywords

The recent trend of Amazon search terms continues: Corona-related keywords are not being searched for anymore. Customers in all analyzed countries are still preparing for summer and rising temperatures. Additionally, Father’s Day gifts were searched for on Amazon and Prime Day deals were already in demand in the US.