Brands and retailers will spend $9.85 billion on advertising on Amazon in the US to boost their position in search results. Amazon advertising is growing beyond performance marketing in the form of sponsored products, though. Amazon is going after ad budgets under CMOs, looking for a more holistic advertising strategy and not just bottom-of-the-funnel ads.
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More than 85% of the top Amazon sellers offer Prime shipping for more than half of their assortment, up from 56% three years ago. The number of sellers offering products through Prime is steadily increasing. Very few international sellers do not offer Prime - 93% of the top international sellers offer it, compared to 74% for US-based sellers.
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Etsy changed its search algorithm to prioritize free shipping above everything else, pushing some of the relevant results to functional invisibility. "Items [without free shipping] are not given first-page placement, even if our search algorithms might have previously ranked them higher," said Rachel Glaser, CFO at Etsy.
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Amazon’s search is increasingly featuring sponsored products, Amazon brands, as well as recommended products, instead of organic results. For many searches, there are only two organic results on the whole screen above the fold. Not until scrolling down past various recommended products do organic search results come up.
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Amazon has expanded product reviews by allowing shoppers to leave a star rating without a written review. The company has been testing the change since September, and committed to it last week by changing the wording on the website to "ratings." The overall star rating now includes feedback from customers who simply rated the product as well as the traditional reviews with text, images, or video.
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Amazon's sales rose 22% in the third quarter, the biggest gain in two years. Since also growing 22% in Q3 2017, Amazon's first-party sales - not the total GMV including the marketplace, but only sales where Amazon is the retailer - have only been growing 13.5% on average.
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eBay GMV was down by $1 billion, and the sold items growth has turned negative for the first time in the company’s history. The company reported $20.4 billion in GMV in Q3, down -5% year-over-year from $21.4 billion. Sold items growth was -3%; it hasn’t grown since 2018 Q1.
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Amazon has discontinued thirty of its clothing brands in recent months. Clothing brands account for more than half of Amazon’s hundreds of private label brands; however, they rarely succeed. Amazon Essentials, Goodthreads, Daily Ritual, and Lark & Ro brands have performed well, and yet most other brands haven’t. Thus, the company is starting to trim the portfolio of owned brands.
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Amazon sellers are centered around the cities of Los Angeles, San Diego, New York, Brooklyn, Miami, Fort Lauderdale, and Houston. Sellers are located in all fifty states and all of the more than 3,000 counties. 3% of sellers are in Brooklyn, the city with the most sellers. 8.6% of sellers are in Los Angeles County, the county with the most sellers. And 21.1% of sellers are in California, the state with the most sellers.
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Amazon has started to add local Whole Foods assortment with free two-hour delivery for Prime members to its main website and app. Previously, Prime members had to use a separate Prime Now app. Searches for groceries like bananas or yogurt now return Whole Foods items intermixed with the regular Amazon results.
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