June 18, 2024

Amazon’s arrival: A double-edged sword for South African brands

4 min read

The long-awaited launch of Amazon.co.za is a watershed moment for South African businesses, brimming with potential for increased market reach, brand elevation and credibility through association. The robust and streamlined logistics and fulfilment network, coupled with data-driven insights, are set to foster a more competitive e-commerce landscape, offering a promising path to growth and success.

While there are many intricacies, with the right strategy and a deep understanding of the platform and the Amazon algorithm, brands can start seeing profitable returns after 18 months. The journey requires time, budget and persistence, but the rewards are worth it.

Amazon’s global dominance is reflected in impressive numbers from the “State of the Amazon Seller 2024” report by Jungle Scout. In 2023, 52% of Amazon sellers reported monthly sales above $1 000, with 19% surpassing $10 000. Enterprise brands and retailers, which make up 63% of Amazon sellers, reported average monthly sales of more than $100 000, and 40% in excess of $500 000. These figures highlight the vast potential for profitability on the platform.

“To successfully develop and expand a brand on Amazon, a clearly outlined strategy is essential – a blueprint for Amazon retail-readiness, if you will,” says Stephen Lloyd, Amazon senior strategist at RT7 Digital, a South African–based Amazon specialist marketing agency. “There are four key phases a brand will typically navigate through the complex Amazon environment.”

Phase 1: Establishment

Starting with a well-rounded foundation built upon detailed market research is crucial. Understand the competition, identify the niche and pinpoint customer preferences to lay the groundwork. Develop unique products tailored to meet the needs of the core market, coupled with optimising product listings (titles, descriptions and images) to ensure they stand out.

Build a robust brand presence by strategically using Amazon Stores and Enhanced Brand Content while appealing for reviews via Amazon Vine.

Choose an appropriate fulfilment and delivery mechanism, set competitive pricing to secure a profit, and orchestrate a strategic product launch complemented by promotions and targeted advertising.

“But remember, the journey doesn’t end here,” adds Lloyd. “Brands must continuously test and refine strategies based on real-time data to maintain and increase market presence, demonstrating the need for adaptability and agility in the ever-evolving Amazon landscape.”

Phase 2: Acceleration

Shift the focus during the ‘acceleration’ phase toward growing market share and solidifying profitable lines for long-term viability. This includes increased investment in targeted advertising to capture the attention of potential customers and drive sales. Identify key competitors and strategically position the brand to gain market share. Optimise the listing/s regularly through SEO while using promos and ads to climb the bestseller ranks, boosting the brand’s visibility and credibility. And encourage positive reviews to help to build trust and a loyal customer base.

Lloyd adds, “The integration of AI tools has transformed Amazon operations, with 48% of sellers leveraging AI for tasks like optimising listings, analysing reviews and generating sales analytics. This technological advancement promises to streamline operations for South African businesses venturing onto Amazon.”

Additionally, create ads specifically aimed at competitor products to pinpoint gaps and opportunities in the market. Engage with customers via social media to source insights into their needs and desires, guiding further product and marketing strategies. Partner with affiliates to extend the brand’s reach beyond conventional boundaries, and explore a hybrid model combining seller and vendor strategies for better profitability.

Phase 3: Defend and grow

Thereafter, the brand must optimise its operations and defend its market share while continuing to grow. Leverage advertising tools like Amazon’s Demand-Side Platform (DSP) to enhance reach and allow for highly targeted advertising strategies.

Refine the product catalogue continuously, introduce new products that meet the market demand, and phase out underperformers to maintain a streamlined and effective offering. Winning and retaining the Featured Offer/Buy Box on Amazon by tracking resellers and implementing strategic measures is key to boosting sales.

To further secure market position, consider splitting product variations to reduce competitor visibility and use defensive advertising tactics to safeguard market share. Gain exposure through Amazon editorials to enhance brand visibility and credibility. Participate in promotions and special events to drive sales during key shopping periods.

Finally, explore expansion opportunities into new markets or customer segments to sustain the brand’s leadership in a competitive landscape.

Phase 4: Yield 

Finally, sustain profitability and maintain a dominant position in the market by focusing on keeping your best-selling products at the forefront. This period demands continuous use of Amazon’s DSP to ensure maximum ad reach. To drive sales for the top products, implement day-to-day tactics like price adjustments, ensuring these offerings remain attractive and competitive. Stay vigilant about emerging brands and new products in your niche; swiftly adapt your strategy – including keywords, pricing and unique selling propositions – to respond to these challenges. Employ smart pricing strategies to strike a balance between maximising sales and maintaining profits.

Additionally, visual elements significantly capture customer attention and continuously enhance product pages with high-quality images and videos.

This proactive approach will empower you to cement your brand’s leadership and success in the marketplace.

While Jeff Bezos, founder and CEO of Amazon, was quoted saying, “It’s hard to find things that won’t sell online,” it is easy to get lost in the crowd. Thriving on Amazon – the world’s most competitive marketplace – lies in a strategic approach that maximises opportunities while navigating challenges.

Lloyd shares, “The harsh reality is that not all brands will win on Amazon. It takes an aggressive advertising strategy with larger budgets, mastering the platform’s complexities, focusing on compelling brand storytelling and leveraging the data to adapt and optimise.”

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