Amazon Trends: 2018 Review and 2019 Predictions
by Liz Adamson, on January 16, 2019
With another busy and successful Q4 behind us, we’re jumping into what will be another exciting year as an Amazon seller. 2018 saw a lot of changes on the Amazon marketplace and I expect we will continue to see many more. Here are some (certainly not all) of the changes we saw last year and some predictions for this year.
Amazon Advertising Rebrand
Amazon consolidated its internal advertising teams and services and rebranded as Amazon Advertising. They retired the names Amazon Media Group, Amazon Advertising Platform and others in an effort to simplify their structure and offering. Headline Search ads became Sponsored Brand ads.
This update signals Amazon’s recent move into advertising and their commitment to growing their advertising offering (and revenue) over the next several years. They are already the third largest advertiser, with Google and Facebook in the top two spots.
Updates to Amazon PPC
There were many changes within Amazon’s advertising platforms as well. The campaign manager in both Seller Central and the Advertising Console (formerly AMS) was updated with new filters and graphs and features, making it easier to manually optimize campaigns. New targeting functionality allowing sellers to target specific categories and ASINs with their ads launched at the end of the year. And new reports such as the placement report allowing sellers to see where their ads are showing up.
Monthly Long-Term Storage Fees and IPI Score
In September Amazon began charging long-term storage fees on units older than 6 months on a monthly basis, instead of twice a year. Amazon also started using the Inventory Performance Index (IPI) to determine how much storage sellers had access to. Giving unlimited storage to sellers whose inventory meets different turnover metrics and reducing storage for sellers who fall below the mark. They are continuing to penalize sellers for storing slow moving inventory in their fulfillment centers to free up space for items with more demand.
State Sales Tax
While not entirely Amazon’s doing, the sales tax requirements shifted after the Supreme Court ruling on the Wayfair case. States can now collect sales tax based on economic nexus, not just physical presence. Many states have passed new laws taking advantage of this ruling, California forced Amazon to turn over seller names, and Amazon has started collecting and remitting sales taxes on behalf of sellers in many more states including Washington, Pennsylvania, Oklahoma, Minnesota and more.
2018 was a busy year and 2019 should be no different. Here are some things to watch for:
Changes to Amazon Fees
As they do every February, Amazon’s storage and FBA fees will update, as will referral fees for a few categories. This year there was a mix of increases and decreases to the fee structure. One big change was for long term storage fees. Amazon will no longer charge LTSF for units between 6-12 months old; instead, fees will only apply to inventory older than 12 months.
This does not mean Amazon is relaxing on how much you can store in their fulfillment centers. The IPI score will continue to monitor how quickly your inventory moves in and out and sellers below the 350 mark will have their storage reduced.
More Advertising Features
Advertising will continue to be one of Amazon’s primary focuses, and sellers will have to “pay to play” if they want to maintain their exposure on the marketplace. Ads are beginning to dominate search results and are the first thing a customers sees. Amazon will add more products and features, both in an effort to collect more revenue and to help sellers run more optimized ads.
Just recently Amazon rolled out new dynamic bidding options, one of which replaces bid+. There are a few products in beta that will roll out this year and I predict we will see more targeting options, video ads and more. As Amazon continues to change the paid advertising platform, sellers should be on the look out for how they can use the features while maintaining a solid return on ad spend. Some features will not be very useful, except to empty your bank account; others used wisely will greatly enhance a seller’s ability to increase sales and profits.
Amazon is aggressively working to get products to customers at faster speeds and with more convenience. Amazon recently announced plans to expand Whole Foods and their Prime Now program (2 hour grocery delivery) into more suburban areas across the country. They are continuing to grow their Prime membership levels and over the holiday season Amazon even offered free shipping with no minimum order amount for non-Prime customers. Sellers who don’t use the FBA program should either look into FBA or Seller Fulfilled Prime as a way to keep up with the demand for free, fast shipping.
This list just scratches the surface of everything Amazon is working on. As Amazon continues to grow the marketplace, it’s brick and mortar presences, expand into new niches, innovate and offer new services we never knew we needed, 2019 will be an exciting one!