Amazon stopped 10 billion bad listings and removed 2 million phony products in 2020, the company said
Amazon released its second annual report Wednesday, detailing that the online retailer in 2021 blocked 4 billion counterfeit listings from being posted and scrubbed more than 3 million phony products from its site.
In 2020, Amazon stopped 10 billion bad listings and removed 2 million phony products.
The company also reported a decline in complaints of intellectual property infringement in 2021, and the number of active brands on the site increased.
The report stated that Amazon blocked more than 2.5 million attempts to create fake accounts on its e-commerce site, a 58% decline from 2020. The company attributes the drop-off to its vetting process and other efforts to discourage bad actors.
Amazon released its second annual report Wednesday, detailing that the online retailer in 2021 blocked 4 billion counterfeit listings from being posted and scrubbed more than 3 million phony products from its site. (AP Photo/Bebeto Matthews, File / AP Newsroom)
Counterfeit sellers have hurt online retailers like Amazon for years, and the company has ramped up efforts to combat the problem in recent years as it endures scrutiny from brands and lawmakers advocating for anti-counterfeit laws.
Amazon supports the INFORM Act, a House online retail bill that would require online stores to gather contact and financial information from high-volume sellers and reveal some of the information to buyers.
Amazon had previously opposed a Senate version of the bill, which would mandate that online retailers collect information from a larger group of third-party merchants.
Close-up of logo for Amazon Warehouse on Amazon Prime package, San Ramon, California, May 20, 2020. (Smith Collection/Gado/Getty Images / Getty Images)
Another bill on Capitol Hill would hold the online retailers responsible for counterfeit goods sold on their platforms.
Amazon recognizes “the intent of the legislation is to stop counterfeits” and is looking forward to working with Congress to reach that goal, a company spokesperson said.
The e-commerce giant said in its report that it implemented a program last year making it more difficult for bad actors to create accounts for selling products by requiring one-on-one conversations with an Amazon team member to verify their authenticity.
Logos of Amazon and Amazon Prime are pictured on vehicles outside the Amazon Fulfilment Centre in Altrincham, near Manchester, Britain, November 26, 2021. REUTERS/Carl Recine/File Photo (Reuters / Reuters Photos)
The report also said the company is verifying the seller’s physical location and payment instruments.
Amazon said last year it had spent more than $900 million to fund efforts fighting fraud. The company sued or referred more than 600 sellers for investigation in the U.S., China and elsewhere.
How can brands leverage Amazon to grow DTC sales? Let’s dive right into it.
In the past two years, brands like Supply, Beardbrand, and Ranch Road Boots joined the likes of Nike and Ikea to exit Amazon. While this shift in strategy does pique the interest of DTC brands, it is one that removes its presence from the biggest shopping site in the world. This begs the question: How can brands leverage Amazon to grow DTC sales? Let’s dive right into it.
As the largest product search engine in the world, Amazon offers key benefits that work to the seller’s advantage and also appeal to consumers. Specifically, consumers trust the platform. Further, added incentives, such as Amazon’s single-day delivery, an accessible catalogue of diverse products and the brand’s buying power, add to the platform’s assets.
The downside? High fees, huge competition over price and keywords, non-unique product pages, prioritization of sponsored listings and, of course, the uncertainty of having your listings pulled at any time.
While this does make the benefits of switching to a single DTC sales channel shimmer a little brighter, it comes with its own fair share of drawbacks. The complete control over the content, absence of market fees and building long-term customers are offset by the heavy lifting to attract customers, investment in site maintenance and building trust with customers.
Sellers who also sell on DTC channels are afraid that having both sales channels will make Amazon cannibalize their DTC sales and undermine their high-cost DTC marketing efforts. All this, while also paying Amazon with high selling fees.
Here’s how brands can leverage Amazon to grow direct customer relationships:
Strategically perceive Amazon as a doorway for relationships
When a customer discovers and buys your product on Amazon, they are still an Amazon customer. They made the choice to search for a solution to their problem on Amazon. Despite choosing your product, they trusted Amazon first to display the products and brands.
Think of an exhibition or a multi-artist gallery. Brands who wish to grow direct relationships with customers through Amazon perceive it as the “gallery” that provides them with the opportunity to make a great first impression on the consumer. Although, this might not make the desired profits right off the first interaction.
This is just like how an artist would use a gallery to showcase their talent and provide visitors with an experience that would leave them wanting more. This could be deployed in several practical ways we will discuss further. But this mindset is crucial to succeeding in using Amazon to grow direct customer relationships.
Use (and A/B test) product inserts to start direct relationships with Amazon customers
Think of Amazon as a sales driver, not a customer acquisition channel. With no data or opportunity to re-engage with the customer, you mostly make sales on Amazon but do not acquire customers.
Despite strict restrictions on the content of your product inserts, there are several ways you can engage with your customers outside of Amazon without breaking the rules.
The most effective ways to interact with customers are through email and text messaging. Think of an added value you can provide the customer that would prove incentive enough to give you consent to interact with them after their Amazon purchase. For example, register their lifetime warranty, sign up to an exclusive content club or even free products. Direct them to sign up via a special link (QR code or a very short URL works best) to your list.
A/B test the offer to see which one resonates best with your audience and gets you the most engaged customers. From this point on, it’s up to you to deliver great value for their consent and engagement with your brand through this channel.
Pro Tip: This is not just a lead list — these are customers who have received your product, paid money and attention to your brand and now expect to get more value from your brand. The more value you provide, the higher your chances are to convert them into paying customers directly with your brand. It’s all about the “trust meter” that will make them buy directly from you the next time around.
Use Amazon as a review showcase
Being the largest product search engine in the world, consumers may search for your product or brand on Amazon even if they’ve seen your ads outside of Amazon. Consumers trust the Amazon review system. While many sellers are angry about them removing reviews, some are taking advantage of that consumer-trusted system to increase credibility and sales outside of Amazon.
One of the strategies we use for brands we work with is to push their product on Amazon to make as many sales as possible. We push to get as many positive reviews and showcase these reviews outside of Amazon — in ads, email marketing and social media.
We then provide a coupon for consumers to incentivize them to purchase the product directly from the brand’s website. This way, the brand enjoys the credibility of the Amazon platform and acquires customers directly on their site.
Be ready to break even or even lose money on Amazon sales to win long-term on DTC
To drive sales and beat the high competition on the Amazon marketplace, brands must think of Amazon as a marketing channel rather than a profit centre.
When done right, brands can acquire high-quality customers from Amazon who will buy and engage directly with the brand. This spares the high marketplace fees and constant need to adapt to new Amazon regulations and rising competition.
Further, this allows the brand the freedom to showcase its products and brand the way they desire. It also provides brands the chance to learn more about their customers’ preferences and innovate new ways in which they can serve them better.
Given the tremendous value brands get from acquiring direct customers and the high cost of acquiring them outside of Amazon, it’s sometimes worth looking into spending more advertising on Amazon. Alternatively, brands can lower prices on specific products inside Amazon and gain traction on initial sales for the chance to convert more of these sales into long-term customers.
This is similar to the strategy employed by accessory manufacturers when selling in Apple stores. Though sometimes they break even or lose money on the front-end products sold within Apple stores, they gain long-term customers. When done right, this also helps increase brand recognition and word-of-mouth marketing.
If the strategies I presented to you today were beneficial to you, or if you plan to employ them in your sales activities, I’d be excited to hear from you! Or, if you would like to talk more about how brands can use the changing landscape as an opportunity to grow, please feel free to drop me a note!
Brands have only begun to explore the potential of this new feature for an old sales platform.
Investors keeping close tabs on e-commerce giant Amazon( AMZN -2.11% ) will likely know it’s getting into the web advertising business. Indeed, it’s already deep in the market, driving $31.2 billion worth of ad revenue last year. For perspective, Alphabet‘s ( GOOGL -1.91% )( GOOG -1.80% ) Google brand — when including YouTube — collected $209.5 billion worth of advertising dollars in 2021. Alphabet’s been doing it a lot longer and had more time to tweak its offering than Amazon has, of course, but Amazon’s lesser tally is still an impressive figure.
Furthermore, Amazon has only scratched the surface of its opportunity in this segment of its business. Early users of Amazon’s promotional platform are finding a shockingly high return on their investment in the advertising program. Other companies that regularly run ads should achieve similarly strong results once they try it out.
Yes, Amazon is in the ad game
If you’re not familiar with Amazon’s newest project, it’s not complicated. Amazon.com is one of the world’s busiest websites (the 11th most-visited site, according to Alexa). The company is simply looking to monetize all that traffic by selling a bit of space on its web pages to advertisers looking to draw attention to their products.
It’s not exactly a new business; the company’s allowed advertisers to “sponsor” a particular product for some time now. Back in 2020 though, Amazon really started to turn the idea into a major profit center. Jungle Scout suggests the company did $21.5 billion in advertising business that year, up more than 40% from 2019’s tally, en route to 2021’s 45% growth. And the stage is set for more of the same.
In its recently published report “Brands, Amazon, and the Changing Landscape of E-Marketplaces,” e-commerce consulting outfit Feedvisor lays out some compelling information regarding Amazon’s advertising product. One of these data nuggets is the fact that, according to its findings, Amazon.com is the most commonly used sales venue for all brands surveyed, including e-commerce sites owned and operated by that brand itself.
All told, 45% of companies that sell physical goods count on Amazon’s reach. That’s near twice the 25% of brands that utilize Walmart‘s or Google’s online-selling tools.
And well they should. An incredible 64% of the consumer goods companies using Amazon.com to sell their products say they’ve seen increased sales because of it.
Perhaps the most impressive piece of information from Feedvisor’s study, however, is this: More than half the companies selling goods through Amazon.com that also advertise their goods at the site say the return on investment is seven times their cost, if not more. In other words, for every $1 spent on promoting their product on Amazon, that company gets at least $7 back in increased revenue.
That’s impressive. It puts Amazon right up there with the venerable Google when measuring their fiscal upsides to advertising. Indeed, the two companies are tied for top honors in terms of making the most of money spent on digital ads.
Room and reason to keep growing
Don’t look for this rate of return on advertising dollars deployed through Amazon.com to persist indefinitely. A little less than half of all the brands Feedvisor reviewed use any sort of digital marketplace to sell their goods right now.
More are sure to step into the fray, though. In fact, Feedvisor’s report indicates that 74% of the brands finding success with advertising at Amazon.com say growing competition for consumers’ attention at the e-commerce site — through ads — is their biggest concern going forward. It’s not an unmerited worry. That competition for Amazon’s ad inventory, however, is ultimately good news for Amazon itself.
All of a sudden, eMarketer’s expectation that Amazon’s advertising revenue could grow on the order of another 30% this year and 24% more next year doesn’t seem far-fetched at all. That’s especially true given eMarketer’s figures suggesting Amazon’s ad revenue growth so far has largely come at the expense of Google’s share without even requiring any actual net market growth. Google, meanwhile, has a lot more business it could end up giving up to Amazon.
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The tech giant has many ways of gathering information about its users’ activity – from Prime to Alexa. But how much can it collect and what can you do to keep your life private?
rom selling books out of Jeff Bezos’s garage to a global conglomerate with a yearly revenue topping $400bn (£290bn), much of the monstrous growth of Amazon has been fuelled by its customers’ data. Continuous analysis of customer data determines, among other things, prices, suggested purchases and what profitable own-label products Amazon chooses to produce. The 200 million users who are Amazon Prime members are not only the corporation’s most valuable customers but also their richest source of user data. The more Amazon and services you use – whether it’s the shopping app, the Kindle e-reader, the Ring doorbell, Echo smart speaker or the Prime streaming service – the more their algorithms can infer what kind of person you are and what you are most likely to buy next. The firm’s software is so accomplished at prediction that third parties can hire its algorithms as a service called Amazon Forecast.
Not everyone is happy about this level of surveillance. Those who have requested their data from Amazon are astonished by the vast amounts of information they are sent, including audio files from each time they speak to the company’s voice assistant, Alexa.
So, what data does Amazon collect and share and what can you do to stop it?
The data Amazon collects, according to its privacy policy
Strict EU regulation in the General Data Protection Regulation (GDPR) and UK equivalent the Data Protection Act limit the ways personal data can be used in Europe compared with the US. But, according to Amazon’s privacy policy, the tech giant still collects a large amount of information. This covers three areas: information you give Amazon, data it collects automatically and information from other sources such as delivery data from carriers.
Amazon can collect your name, address, searches and recordings when you speak to the Alexa voice assistant. It knows your orders, content you watch on Prime, your contacts if you upload them and communications with it via email. Meanwhile, when you use its website, cookie trackers are used to “enhance your shopping experience” and improve its services, Amazon says.
Some of the data is used for “personalisation” – big tech speak for using your data to improve your online experience – but it can reveal a lot about you. For example, if you just use its online retail site via the app or website, Amazon will collect data such as purchase dates and payment and delivery information.
“From this information, Amazon can work out where you work, where you live, how you spend your leisure time and who your family and friends are,” says Rowenna Fielding, director of data protection consultancy Miss IG Geek.
At the same time, Prime Video and Fire TV information about what you watch and listen to can reveal your politics, religion, culture and economic status, says Fielding. If you use Amazon to store your photos, a facial recognition feature is enabled by default, she says. “Amazon promises not to share facial recognition data with third parties. But it makes no such commitment about other types of photo data, such as geolocation tags, device information or attributes of people and objects featured in images.”
Amazon Photos does not sell customer information and data to third parties or use content for ad targeting, an Amazon spokesperson says, insisting the feature is for ease of use. You also have the option to turn the feature off in the Amazon Photos app or on the website.
Meanwhile, Amazon’s Kindle e-reader will collect data such as what you read, when, how fast you read, what you’ve highlighted and book genres. “This could reveal a lot about your thoughts, feelings, preferences and beliefs,” says Fielding, pointing out that how often you look up words might indicate how literate you are in a certain language.
Smart speakers have been criticised by privacy advocates and devices such as Amazon’s Echo have been known to be activated accidentally. But Amazon says its Echo devices are designed to record “as little audio as possible”.
No audio is stored or sent to the cloud unless the device detects the wake word and the audio stream is closed immediately after a request has ended, an Amazon spokesperson says.
More broadly, Amazon says much of the information it collects is needed to keep its products working properly. An Amazon spokesperson says the company is “thoughtful about the information we collect”.
But it can add up to a lot of data. In 2020, a BBC investigation showed how every motion detected by its Ring doorbells and each interaction with the app is stored, including the model of phone or tablet and mobile network used. Ring can share your stored data with law enforcement, if you give your consent or if a warrant is issued.
How Amazon shares data across its own services
The more services you use, the bigger Amazon’s opportunity to collect your data. “If you have bought fully into the Amazon experience, you will share details, habits and information that the company will collect and potentially use to ‘enhance your experience’,” says Richard Hale, a senior lecturer in digital forensics at Birmingham City University.
But what exactly is shared within its own companies isn’t clear. The privacy policy section on data sharing within the Amazon group of companies is “pretty limited”, says Will Richmond-Coggan, an information and privacy law specialist at Freeths LLP. Taking this into account, he says, people should “assume that any information shared with one Amazon entity will be known to any other”.
How Amazon shares your data with third parties
Like Google and Facebook, Amazon operates an advertising network allowing advertisers to use its customer data for targeting.
“Although Amazon doesn’t share information that can directly identify someone, such as a name or email address, it does allow advertisers to target by demographic, location, interests and previous purchases,” says Paul Bischoff, privacy advocate at Comparitech.
Amazon lets other companies track users visiting its website, says Wolfie Christl, a researcher who investigates the data industry. “It lets companies such as Google and Facebook ‘tag’ people and synchronise identifiers that refer to them. These companies can then potentially better track people on the web and exchange data on them.”
Amazon says it doesn’t sell your data to third parties or use personally identifiable information such as your name or email for advertising purposes. Advertising audiences are only available within its ads systems and cannot be exported and you can opt out of ad targeting via its advertising preferences page.
What you can do to stop Amazon collecting data
Amazon’s data collection is so vast that the only way to stop it completely is not to use the service at all. That requires a lot of dedication but there are some ways to reduce the amount of data collected and shared.
If you are concerned about what Amazon knows about you, you can ask the company for a copy of your data by applying under a “data subject access request”. The Alexa assistant and Ring doorbell have their own privacy hubs that allow you to delete recordings and adjust privacy settings. Ring’s Control Centre allows you to tweak settings including who’s able to see and access your videos and personal information from a central dashboard. Speaking to Alexa, you can say: “Alexa, delete what I just said” or: “Alexa, delete everything I said today.”
Amazon says it allows customers to view their browsing and purchase history from “Your Account” and manage which items can be used for product recommendations. More broadly, you can also use privacy-focused browsers such as DuckDuckGo or Brave to stop Amazon from tracking you.
But it’s not always easy to change the settings on Amazon itself, says Chris Boyd, lead analyst at security company Malwarebytes. He recommends turning off browsing history on Amazon and opting out of interest-based ads to reduce the level of tracking by the company. Yet he warns: “You’ll likely still see ads from Amazon or encounter third-party advertisers in one form or another – they just won’t be as targeted.”
Feature Image Credit: Under scrutiny: Jeff Bezos and his empire of platforms and devices. Illustration: Philip Lay/The Observer
Those five-star reviews are reassuring. But what if a seller asks you to write one – for cash?
Not everything is as it seems on Amazon’s marketplace, where products are rated in a five-star system and a heavy number of positive reviews can help one brand stand out from a pack of competitors. Amazon has acknowledged it has a fake reviews problem, as it struggles to rein in coordinated efforts on other websites to flood product listings with good reviews in quid pro quo schemes that violate the company’s terms of service.
But for shoppers comparing 15 versions of that wireless phone charger or dashcam, the overload of stars and comments — real and fake — can be overwhelming.
This isn’t a new phenomenon. Some Amazon shoppers accept refunds and gift cards in exchange for positive reviews, despite the company’s ban on the activity. The e-commerce giant calls these “incentivized reviews,” because they come from real shoppers who are paid for their positive opinion. Before Amazon banned the practice in 2016, reviewers would often admit they got a product for free in exchange for a review, but the practice is now fully in the shadows.
Amazon has cracked down on the practice, kicking companies off its marketplace when it finds out the seller has broken the rules. In May, it removed listings for electronics sold by Aukey and Mpow amid reports the companies had engaged in incentivized review schemes. Amazon also says it puts resources into removing fake reviews and the accounts that post them, adding that it blocked 200 million suspected fake reviews before they were posted in 2020. A company spokesperson said 99% of Amazon’s actions on incentivized reviews take place proactively, before problems are reported to the company.
“We want Amazon customers to shop with confidence knowing that the reviews they read are authentic and relevant,” the Amazon spokesperson said.
But the problem remains pervasive enough — with many retailers eager to edge out their competitors — that shoppers can’t really tell if the number of five-star reviews on a product is legit or artificially inflated. That leaves consumers unsure of what to believe when they’re up against the prospects of dozens of copycat items in an Amazon marketplace that hosts nearly 2 million sellers globally. Amazon also struggles to identify fake reviews that come from real customers who’ve bought and used a product. Their behaviour looks legitimate, and the same customer might write some reviews that are paid and others that aren’t.
Another major challenge to Amazon is that the fake reviews are often coordinated on social media sites the company doesn’t control. In May, a UK regulator said it would continue scrutinizing these groups on Facebook and Instagram, and noted that 16,000 social media groups that coordinated refunds for fake Amazon reviews had been removed.
Meta, the company that runs those social media platforms, bans the trade of reviews and has automated processes to detect the schemes. The company said that people can report this type of group and that it removes groups and content if they’re found to be in violation of the rules. Amazon also monitors social networks for groups coordinating the reviews and last year reported 6,000 of the groups to social media companies.
The problem has a circular nature. The faster a product can build up good reviews, the more visibility it can get as a “best seller” on Amazon and the faster it can earn the trust of shoppers who’ve never bought from that company before. As that company gets more customers, it also has more people it can solicit paid reviews from, speeding up its ratings success even further.
Here’s how these schemes work, and how they keep themselves going:
Step 1
When a shopper logs into their Amazon account and starts searching for something to buy, a product’s star rating is one of the first things they see. With so many third-party sellers listing products on the company’s marketplace globally, the ratings can help shoppers decide whether to trust products from brands they’ve never heard of before.
Robert Rodriguez
The shopper might see a promising hair straightener, cabinet, coffee maker, toothbrush — or really anything — from a brand that has some hit products on Amazon’s top sellers lists. The brand’s positive reviews might help the shopper trust a product that they could otherwise buy from a name brand.
Since positive reviews are so central to sellers’ successes, Amazon’s ban on reviews in exchange for refunds aims to keep these reviews trustworthy.
Step 2
After buying a product based on positive reviews, an honest shopper might get recruited for a fake review scheme in a couple of different ways. In the first scenario, the product arrives in the Amazon smile box, and the customer notices a card with a QR code or a website printed on it. This is so common no shopper would blink, and the link might lead to a regular customer support website that’s above board.
However, it might also lead the shopper to a group on Facebook or another social media site where the brand offers up more products for review — in exchange for a refund.
Robert Rodriguez
The second scenario is more direct. The card in the package might directly offer a gift card or PayPal credit in exchange for a positive review. If the shopper follows through on the offer, it will add an “incentivized” review to the listing for the product they just purchased.
Step 3
On a Facebook group that’s coordinating positive reviews, shoppers will see posts from page administrators announcing new products that need reviews on Amazon or another online marketplace. This situation can lead the shopper to leave positive reviews for the brand’s other products, including newer products that don’t have as many reviews yet.
The shopper might also invite their friends to the group, recruiting more people to write reviews in exchange for products.
Robert Rodriguez
Sometimes multiple brands use the same group to trawl for reviewers. Once shoppers are in this world, they might receive private messages or friend requests from unrelated companies looking for more people to review their products.
Step 4
In either scenario, the shopper writes a positive review and then sends proof to a representative of the company. That could be in an email or private message on Facebook. They may share their PayPal details or accept a gift card in return for their efforts.
Facebook group administrators try to make themselves available to shoppers as much as they can, sometimes adding group members as friends on the platform and keeping them apprised of when they’ll be available to answer questions or process refunds.
Robert Rodriguez
Step 5
When a new Amazon shopper goes online and looks for products in categories sold by the third-party seller, they’ll see even more positive reviews. Even if the product is genuinely good, it will rack up positive reviews much faster than it would if it relied on traditional marketing and refrained from offering refunds in exchange for reviews.
The ever increasing number of positive reviews on the brand’s listings might convince the shopper to trust the product. They buy it and then find a card inside with a QR code or website on it.
And the cycle continues.
Correction: This article has been updated to reflect that 99% of Amazon’s actions on incentivized reviews take place before problems are reported to the company.
Like it or not, it’s the king of ecommerce. Here’s how to win selling on Amazon.
Selling and advertising successfully on Amazon takes time, energy and specific knowledge of Amazon’s SEO and keyword system. Because of the complicated nature of selling on Amazon, there are plenty of misconceptions out there that can derail your sales strategy and leave you far behind your competitors. We’ll dispel four of the most common misconceptions about selling on Amazon to help you get and stay on the right track.
1. Amazon is a passive “set it and forget it” sales channel
The biggest misconception about selling on Amazon is that you don’t need an active and dynamic sales strategy. The reality is that the Amazon marketplace is constantly changing. With a sea of other sellers all competing to sell similar products to the same customer base, you’ll need to remain competitive in order to stand out. This requires a thoughtful strategy that is precisely executed over a long period of time.
It’s critical to continuously monitor the different category and marketplace trends as well as the trends of your competitors and respond accordingly. Make sure you’re monitoring the effectiveness of your advertising strategy, as you’ll just be burning cash otherwise. Keep an eye on your operational KPIs to keep your account performance from declining. If you sit back and take your eye off the ball, don’t be surprised if you’re left in the dust.
2. Success on Amazon happens fast
Employing any sales and advertising strategy takes time and continuous effort. If you expect the orders to start pouring in as soon as you set up Brand Registry or begin your first PPC campaign, then you’ll be sorely disappointed. Success on Amazon takes time. The most successful brands on Amazon are the ones that execute a precise sales and advertising strategy over a long period of time.
Building reviews, ranking for keywords and fine-tuning your advertising strategy are all vital to boosting sales and growing your brand. But these things all take a long time. None of them happen right off the bat. However, if you’re willing to be patient and to play an active role in managing these factors over a sustained period, you will see meaningful results. Your brand awareness will skyrocket, you’ll earn customer trust, and you’ll soar through the search results.
3. My brand doesn’t need to advertise on Amazon
For better or for worse, Amazon is the king of ecommerce. It’s the most competitive marketplace in the world, so succeeding without advertising on Amazon isn’t really feasible. Advertising on Amazon was a luxury only a few years ago, but it has now become a necessity. The good news is that if you can navigate advertising on Amazon, then you’ll be able to make this ecommerce giant work for you.
The most successful brands on Amazon give their brand a paid competitive advantage by using sophisticated PPC strategies that are constantly evolving with the marketplace. This means gathering information on the marketplace by running ads for sustained periods of time with specific bids, budgets and targeting options. Once you’ve let the ads run for long enough, you’ll be able to determine the best bid for each keyword and create an optimal advertising strategy.
4. Amazon’s search algorithm is the same as Google’s
It’s common to think of Google when optimizing SEO for your brand, as the company has established itself as a giant among search engines. But Google’s search algorithm is not the same as Amazon’s. That means your SEO strategy is going to be entirely different. To master SEO for Amazon, you need to understand what shoppers are searching for. This means doing research on category and competitor keywords, which are specific to searches on Amazon. This will help you reach more customers as they type in their searches to Amazon’s search bar.
You’ll also need to optimize your Amazon copywriting to be indexed for Amazon’s algorithm. Your Amazon copywriting is the foundation of your listings, and when you invest in good copywriting, you can help your listing organically rank and index in Amazon’s algorithm.
At the same time, you want copywriting that is going to be more than just a jumble of keywords. The best Amazon copywriting contains the right keywords while simultaneously appealing to shoppers and compelling them to purchase your product.
Successfully growing and scaling your brand on Amazon is achievable if you have the proper knowledge of how to operate in the marketplace. If you maintain an active sales strategy and don’t fall prey to these misconceptions, you should be on track to sustainably grow your brand into a marketplace powerhouse.
Nick Heethuis is an Amazon consultant, thought leader in marketplace ecommerce and the founder of TripleShot Marketing. He has helped established brands scale to new levels of sales and profitability on Amazon.
The report says Amazon made $121 billion this year alone from the fees it charges sellers
The massive reach of Amazon’s e-commerce platform is appealing for any small business that wants to sell its products online. But a new report suggests that the cost of doing business can become a Faustian bargain for a third-party seller, as the fees that Amazon charges them can quickly eat into profits.
Amazon Toll Road, a report from the non-profit Institute for Local Self-Reliance (ILSR), found that Amazon charged third-party sellers a total of $121 billion in fees this year alone. According to the report, written by ILSR co-director Stacy Mitchell, those fees — for things like advertising, referrals, and shipping — usually mean that small businesses lose money to Amazon; Mitchell said that in 2014, sellers paid Amazon $19 of every $100 in sales, and today, it’s more like $34 per $100 in sales.
And, Amazon obscures the profit it makes from these small businesses in its financial reports, lumping it in with other less lucrative divisions “because showing that they generate these profits from small businesses is not a good look,” Mitchell said in an interview with The Verge.
But its Amazon Prime subscription service — believed to be a money loser for the e-commerce giant — provides Amazon a loyal base of shoppers who want to get their money’s worth of free shipping. The profits Amazon makes from seller fees subsidize the losses from its Prime division, according to the report.
“If you’re a company that makes or retails consumer products, you’re damned if you don’t sell on Amazon and damned if you do,” Mitchell said. A small retailer could try to use its own website to reach customers, but Mitchell says that’s often akin to “basically hanging your shingle out on a dirt road because of the role that Prime has in making Amazon often the first and only place customers go when shopping on the internet.” Former Amazon CEO Jeff Bezos said in his final annual letter to investors in April that by that point, Amazon Prime had grown to 200 million subscribers.
There are other e-commerce platforms where a small business could sell its products online, theoretically charging customers on those sites different prices than its Amazon customers. But if the seller also wants to continue selling on Amazon, it has to keep the same prices across the board. Under Amazon’s Fair Pricing Policy, a seller could be penalized if Amazon discovers the seller charging customers a different price for its products on other e-commerce platforms. Penalties can range from removing the seller’s product from the prominent “buy box” on a product listing page, all the way up to termination of selling privileges.
Amazon says the Fair Pricing Policy is aimed at pricing practices that “harm customer trust,” but the ILSR report concluded that it usually means customers may end up paying more overall because third-party sellers have to inflate the prices they charge customers to be able to pay Amazon’s fees and turn a profit, Mitchell explained.
Brooke Oberwetter, an Amazon spokesperson, said in a statement emailed to The Verge that the ILSR report was “intentionally misleading” and that it conflated Amazon’s selling fees with the cost of “optional services” that some sellers purchase, like logistics and advertising. Those fees range from 8 to 17 percent of the selling price, Oberwetter said. “These selling fees are highly competitive when compared to other selling options such as marketplaces like Walmart, Target, eBay, Etsy, and others, or direct-to-consumer via companies like Shopify and BigCommerce.”
In addition, Oberwetter said, some Amazon third-party sellers buy its Fulfilment by Amazon logistics service, which she said offered fulfilment services 30 percent cheaper than other logistics providers, as well as faster shipping.
“Some sellers also choose to purchase advertising from Amazon or use other advertising providers like Google, Facebook, and Twitter,” Oberwetter added. “Sellers are not required to use our logistics or advertising services, and only use them if they provide incremental value to their businesses.”
This assertion that the seller fees are not mandatory echoes testimony Bezos gave before Congress last year. Asked by Rep. Mary Gay Scanlon (D-PA) about what appeared to be sharp increases in the fees sellers pay to Amazon, Bezos said, “When you see these fees going up, what’s really happening is that sellers are choosing to use more of our services that we make available.”
The ILSR report, however, posits that the fees are all but necessary if sellers want their products to be visible in places like Amazon’s “customers who also viewed this item” carousels on search results pages. And unlike other forms of advertising, where a business places ads, reaches customers, then sells to those customers directly, Amazon’s policies limit most sellers from building these kinds of direct customer relationships. But, Amazon did test a feature earlier this year that would let sellers contact customers directly.
Mitchell writes in the report that an effective policy solution would separate Amazon’s divisions — marketplace, retail, AWS, and logistics — into standalone companies. She said a breakup of Amazon seems more likely than it has in recent years; the new chair of the Federal Trade Commission, Lina Khan, “sees the dangers of big tech.” Earlier this year, Amazon actually petitioned to have Khan recuse herself from being involved in proceedings that dealt with the company. And while there’s been an overall increase in antitrust scrutiny by President Biden’s administration and from Congress, Mitchell notes, whether there’s enough momentum behind the renewed focus on antitrust issues remains to be seen.
“A year ago, if you had asked me would we have bipartisan antitrust bills in Congress with the kinds of co-sponsorship we’re seeing, I would have been surprised by how much progress has been made,” she said. “We’ve gotten a lot further a lot faster than expected.”
Feature Image Credit: Illustration by Alex Castro / The Verge
The e-commerce giant has been gaining ground in the advertising market.
It may be a curious phenomenon that Amazon( AMZN -1.05% ) is happy about increasing ad spending, but it’s true. Over the past few years, Amazon has built itself into an advertising giant. The company is generating an increasing share of its revenue from advertising, and since that revenue tends to be more profitable than the overall business, it’s become an essential element.
For that reason, Amazon and its stockholders must be thrilled with a recent Wall Street Journal article that highlights advertisers are spending much more online this year.
Advertisers are finding online spending more lucrative
According to GroupM, global ad spending will grow 22.5% to $763 billion this year. That’s the second revision upward from GroupM since it first gave estimates in December 2020. After many businesses had to shut their doors to customers in the early stages of the pandemic, this year has consisted of vast reopening’s worldwide. That’s given cause for advertisers to increase spending: to get the word out that they are open for business again.
Interestingly, digital advertising will encompass 64.4% of the total in 2021, up from 60.5% in 2020 and 52.1% in 2019. The rapid shift to online advertising is not entirely surprising. Typically, marketers can more effectively measure the returns from online advertising. For instance, it’s difficult to calculate how many people heard a radio advertisement or viewed an ad placed in a newspaper.
Indeed, you can get approximations by looking at estimated listener audiences or subscribers to the newspaper, but they will be far from precise. Compare that with digital ad spending, where marketers can see how many folks viewed the ad and how many clicked on a link.
Moreover, with the proliferation of online shopping, it only makes sense to increase advertising online. People browsing the internet on their computers or phones typically have a payment method on file. If they see a compelling advertisement, they are only a few clicks away from purchasing.
Amazon is already benefiting from the shift
Amazon does not break out how much it makes from advertising specifically. However, it states that one of its segments consists primarily of ad revenue. In its most recent quarter ended Sept. 30, the segment that contains advertising reported revenue of $8.1 billion. That was up by 49% from the same quarter the year before. Amazon is home to hundreds of millions of shoppers who are one click away from purchasing, making it a desired online destination for ad spending.
“We’ve also seen strong growth in our advertising products as vendors and sellers have embraced their ability to build their brands and reach customers just as they consider their purchases,” CFO Brian Olsavsky said during the company’s Q3 conference call.
Indeed, ad revenue has almost doubled at Amazon since Q2 2020, growing from $4.2 billion to the $8.1 billion mentioned earlier. As folks keep looking to Amazon for their shopping needs, advertisers will increasingly be interested in gaining their attention in the meantime.
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The online giant gives a leg up to hundreds of house brand and exclusive products that most people don’t know are connected to Amazon
It took Robert Gomez about five months to get his Kaffe coffee grinder to the big leagues in e-commerce: among the first three search results for “coffee grinder” on Amazon.com.
Gomez, founder of Atlanta-based consumer goods startup 4Q Brands, said he obsessively refined his photos and description, amassed reviews from happy customers, and paid Amazon $40,000 a month on advertising to boost sales, one of the elements Amazon tells sellers will increase search ranking.
Robert Gomez, owner of startup 4Q Brands, in his warehouse in Buford, GA on October 6th, 2021. For more than two years, his coffee grinder had been one of his best sellers on Amazon. Rita Harper
Then Amazon introduced a competitor from house brand Amazon Basics and another from a brand that sells exclusively on Amazon, DR Mills.
“They ranked well right away,” Gomez said, each of them appearing among the top-three results for “coffee grinder” searches immediately. The reason, he said, was clear: “Their search ranking is high because they’re an Amazon brand.”
An investigation by The Markup found that Amazon places products from its house brands and products exclusive to the site ahead of those from competitors—even competitors with higher customer ratings and more sales, judging from the volume of reviews.
We found that knowing only whether a product was an Amazon brand or exclusive could predict in seven out of every 10 cases whether Amazon would place it first in search results. These listings are not visibly marked as “sponsored” and they are part of a grid that Amazon identifies as “search results” in the site’s source code. (We only analysed products in that grid, ignoring modules that are strictly for advertising.)
We used machine learning to try to predict which product Amazon put first in search results based on various factors. Source: The Markup/Amazon.com
When we analysed star ratings and number of reviews, neither could predict much better than a coin toss which product Amazon placed first in search results.
Amazon told Congress in 2019 that its search results do not take into account whether a product is an Amazon-owned brand.
Sellers say it doesn’t seem that way to them. Gomez said Amazon’s brands have “unfair advantages” that make it harder for small merchants like him to compete” on its open marketplace. “Who bears the cost are those entrepreneurs and small businesses that don’t have the means to fight.”
The Markup found Amazon placed its Happy Belly Cinnamon Crunch cereal, with four stars and 1,010 reviews, in the number one spot ahead of cereals with better and more reviews including Cap’n Crunch (five stars, 14,069 reviews), Honey Bunches of Oats (five stars, 5,205 reviews), and Honey Nut Cheerios (five stars, 11,702 reviews). A vacuum cleaner from Amazon’s exclusive Noisz brand was placed on top, ahead of models from Bissell, Eureka, and Hoover with higher ratings and more reviews. And the Amazon-exclusive Concept 3sneaker from Skechers placed number one, four spots ahead of a similar but not exclusive to Amazon Skechers sneaker with the same star rating but 77 times more reviews.
A former Amazon employee told The Markup that the company used to give its new house brand products an unearned place at the top of search rankings when they first launched. He said the practice has since stopped.
However, we found that Amazon brands and exclusive products overall received an outsized portion of the top spot on search results, one that was far out of line with their proportion of the sample.
That’s not what shoppers expect.
We commissioned a national panel of 1,000 adults. We included (non-Amazon) competing brands Champion and Brooklinen as a control. Source: The Markup/YouGov
In a national survey we commissioned from YouGov, only 17 percent of respondents said they assumed Amazon put its own products first. Half said they expected the first non-sponsored product on Amazon’s search results page to be the cheapest, highest rated, or bestselling.
By giving its brands top billing, Amazon is giving itself a significant leg up in sales. The first three items on the search results page get 64 percent of clicks, according to one ex-Amazon-employee-turned-consultant.
In a short, written statement, Amazon spokesperson Nell Rona said that the company does not favour its brands in search results and declined to answer any of the dozens of specific questions posed by The Markup.
She said the company identified its brands to shoppers by adding “Amazon brand” to the list of product features on the product page and sometimes to the listing title as well. We only found this to be the case in 23 percent of products in our sample that were Amazon-owned brands. She said brands that are exclusive to Amazon would not carry the disclosure because they are not owned by the company.
Invisible tags
A signal, invisible to the public but coded into the listings, suggests that most of the Amazon brand and exclusive products that were listed first were ads. In 87 percent of cases, the listing’s source code identified them as “sponsored”—though that label isn’t shown to the public. Instead, Amazon labels the products “featured from our brands.”
Rona, the Amazon spokesperson, said the company considers “featured from our brands” listings “merchandising placements” and not “search results,” despite their presence in the search results grid. She also said they are not ads, despite the “sponsored” label in the source code. Rona said they are “clearly labelled to distinguish them from search results” but did not respond to questions about whether the company believes such disclosures were clear enough under Federal Trade Commission requirements.
Mary Engle, who retired as the FTC advertising practices associate director last year, said that what Amazon calls “merchandising” is actually advertising.
“Amazon’s placement of its own products on its own site is advertising, whether or not money changes hands,” she said. She said it would require an investigation to determine whether “featured from our brands” is sufficient disclosure under the FTC’s rules.
Bill Baer, a former assistant attorney general in charge of the antitrust division of the U.S. Department of Justice and former director of the Bureau of Competition at the FTC, said if consumers expect Amazon’s product search results to be neutral, but they are not, and the site is essentially a monopoly, that could be a violation of the FTC Act of 1914, which prohibits unfair competition and unfair or deceptive practices in commerce, or the U.S. Sherman Antitrust Act, which prohibits monopolies from using their market power to harm competition.
“If basically you’ve got somebody with market power that is restraining competition both in terms of site access or where things appear on the site,” he said, “that is potentially problematic.”
Amazon’s online marketplace garners more than five times more sales than its closest online competitor, Walmart, which also allows third-party sales.
Congress is considering a package of anti-monopoly bills aimed at big tech, including the Ending Platform Monopolies Act, which would make the practice of platforms giving their brands a leg up explicitly illegal.
Amazon refers to its own brands and brands developed by others that sell exclusively on Amazon as “our brands.” They peddle everything from snack chips and vitamins to fashion and furniture.
Using public records from the U.S. Patent and Trademark Office and Amazon’s own statements, we identified more than 150 brands registered by or owned by Amazon. These include both brands with an obvious connection, such as Amazon Basics and Amazon Commercial, and those that are generally known to be owned by the company, including Kindle and Zappos. But they also include dozens more, such as Happy Belly, Daily Ritual, and Society New York, where the connection to the company is not obvious. Those are in addition to the estimated hundreds of third-party brands that are exclusive to the site.
We analysed search results on Amazon for 3,492 popular internet product queries in January 2021 and looked closely at what Amazon placed in the first spot. In 60 percent of cases, Amazon sold this spot to an advertiser and added a public label indicating the listing was “sponsored.” Of the rest, Amazon gave half to its own brands and brands exclusive to the site, and the other half to competing brands. But Amazon brands and exclusives made up only 6 percent of all products in the sample, and competitors made up 77 percent. In short, Amazon was hogging the top spot.
In more than a quarter of searches in which Amazon gave its brands the top spot, it placed its products above competitors that had both better ratings and more reviews than the Amazon brand or exclusive product.
‘They would shut us down’
Sellers said there’s no mistaking the effect on sales of Amazon’s choices in search results.
“If the customers are not seeing [our products] in the top five offers, then it makes it really hard for us to reach customers,” said Gabriela Mekler, a Miami mom who co-founded the organizational products company Mumi in 2014.
Mumi’s top product—a set of color-coded packing cubes—struggles for visibility on Amazon, even after more than two years on the site. She said the coronavirus pandemic decimated her sales—they dropped by more than 68 percent—costing the company a hard-won “Amazon’s Choice” badge on its packing cubes.
Mumi has not been placed on the first page of our search results for “packing cubes” for months. At the time of this writing, Amazon Basics took up eight spots on the first page; one was labelled “featured from our brands.” None were visibly marked “sponsored.”
“Their product will always show before yours,” Mekler said.
One Mumi product has still been selling well despite the pandemic, she said: reusable pill pouches. For now, there is no Amazon Basics pill pouch, and Mekler hopes there won’t be anytime soon.
“We’re a small company,” she said. “They would shut us down.”
Some annotated examples of popular searches we collected in January 2021. Source: The Markup / Amazon
The National Association of Wholesaler-Distributors, which represents more than 30,000 distributors, submitted a letter to members of Congress in July 2020, complaining that Amazon “abuses its position” to give preferential treatment to its house brands.
But when The Markup asked to speak to some of the sellers the group had quoted anonymously, NAW’s vice president of government relations, Blake Adami, demurred.
“Our members are still very hesitant to speak out against Amazon for fear of retaliation,” he said in an email, “even anonymously.”
Many sellers whose products we found were placed below Amazon products with fewer sales or ratings also declined a reporter’s request to be interviewed for this article, saying they were concerned it would negatively affect their livelihoods.
“Everybody’s so scared of Amazon,” said Paul Rafelson, executive director of the Online Merchants Guild, which represents Amazon sellers. “Their whole livelihood relies on them.”
‘This was a knockoff’
Some of Amazon’s competitors have accused the company of knocking off their products to sell under its house brands.
Williams Sonoma settled a lawsuit that included the claim that Amazon was copying West Elm furniture and selling it under the Amazon house brand Rivet. Allbirds co-CEO Joey Zwillinger wrote an open letter to Jeff Bezos when Amazon’s 206 Collective brand copied his company’s wool sneaker, urging Amazon to adopt Allbirds’ sustainability practices in addition to its design.
In March, Amazon Basics started selling the Everyday Sling, a camera bag with a similar design, the same name but a much lower price than a product from Peak Design.
“It wasn’t like they took some styling cues from it. This was a knockoff,” CEO Peter Dering said in an interview. The smaller company produced a parody video that now has 4.6 million views on YouTube. Within hours, Amazon changed the product’s name.
Dering said he wasn’t worried about losing sales because Peak Design mainly targets wholesalers and customers who want a high-end brand. Still, he said he found the move “highly distasteful.”
Rona, the Amazon spokesperson, said the company “did not infringe” on Allbirds’ or Peak Design’s “design rights” and “strictly prohibit[s] our employees from using non-public, seller-specific data to determine which store brand products to launch.”
Hard to spot
Identifying all of Amazon’s brands and brand exclusives to the site for this investigation was cumbersome. The company does not provide a complete list. The Markup’s reporting team used various filters on the site, reviewed the U.S. Patent and Trademark Office records, and reviewed Amazon bestseller lists—but even then we likely missed some.
Consumers would have an even harder time. We found Amazon does not consistently label its brands and exclusives.
Of the products in our sample that Amazon considered “our brands,” about two in five were not labeled as such in search results nor did they carry a name that many people would understand was connected to the company, such as Amazon Basics, Kindle, or Whole Foods.
Inconsistent labelling, combined with an almost endless stream of its own private brands, leaves customers in the dark to decide whether Amazon highly ranked a particular product because it was a good buy or because it benefited the company’s bottom line.
Nine in 10 respondents to the national survey The Markup commissioned in July didn’t know that Amazon’s highest-selling house brands, apart from Amazon Basics, were owned by the company.
Even there, 24 percent of respondents could not identify Amazon Basics as an Amazon brand, and half didn’t know Amazon owned Whole Foods.
To test your knowledge, Select all products from Amazon brands and exclusives: link
Alex Harman, competition policy advocate at Public Citizen who has studied Amazon’s marketplace, said that to him, the strategy of creating a stream of brands without a clear affiliation to Amazon feels “deceptive.”
Large brick-and-mortar retailers also have house brands. Costco has Kirkland Signature. Target has Up&Up, among others. Historically, he said, when large stores create brands they have been clearly affiliated with the store.
And Amazon’s search results are different from a store shelf.
“Unlike a retail store where you see everything on the shelf, the platform may be in a position to elevate its goods in a way that is harder to do in a retail outlet,” said Baer, the former FTC official, and assistant attorney general at the Justice Department.
By creating more than a hundred trademarked brands, most without an obvious connection to the company, Amazon can preserve its reputation if one of its homegrown products flops. This happened in 2015 when customer reviews for its newly launched Amazon Elements diapers included complaints about leaks and “sagginess.” Amazon pulled the products after just seven weeks to make “design improvements.”
Stacy Mitchell, co-director of the small business advocacy group Institute for Local Self-Reliance, and a frequent Amazon critic, said that as Amazon’s brands squeeze competitors, those competitors have less money to spend on innovation—and consumers lose.
“Consumers don’t even know what’s missing,” she said.
Case in point: Brandon Fuhrmann, who runs the New York Amazon Seller Meetup. He was considering expanding his kitchenware brand into a new type of dishware. While checking trademark registrations and U.S. import logs for sellers with similar products, he realized that the majority of his competition would come from Amazon brands.
“When that happened, we realized we couldn’t even compete,” he said. He decided not to launch the product.
Rise of Amazon brands
Amazon has continually set its sights on dizzying growth.
It launched in 1995, with the goal of becoming “Earth’s Biggest Bookstore.” Four years later, it declared its intention to become “Earth’s Biggest Selection.”
To reach this point, it took a page from rival eBay’s playbook, inviting individuals and business owners to list rare, used, and collectible items—which quickly transitioned to third parties selling mainstream, new wares on Amazon.
In 2003, Jason Boyce got a call from Amazon asking him to list his company’s basketball products on the nascent marketplace.
Jason Boyce, photographed at his home, on October 4th, 2021. (James Bernal for The Markup)
“We’re like, what are you talking about? You guys sell books,” he said. “What do you mean you’re selling sporting goods?”
Boyce took the plunge and his company’s basketball sales took off on Amazon.
By 2018, third-party sellers like Boyce were responsible for 58 percent of physical goods sales on Amazon. They helped boost Amazon’s North American sales by more than an order of magnitude, from $24.5 billion in 2009 to $386.1 billion in 2018.
The volume created fortunes for small businesses across the world. It also created a deep reliance on Amazon. A 2021 report by JungleScout, which provides software for Amazon sellers, found that Amazon was the only source of income for 22 percent of Amazon’s third-party sellers.
“Within two years of getting on Amazon, most of my clients, whether they want to or not, it becomes their single biggest sales channel,” said James Thomson, who was a manager at Amazon from 2007 to 2012 and now works at the e-commerce consulting firm Buy Box Experts.
And these new third-party sellers had lots of competition, eventually from Amazon itself.
Boyce said Amazon started undercutting his business, selling the same sporting goods—Spalding basketballs, for example—for less.
Unable to compete with Amazon on price for brand-name products, Boyce and his brothers launched their own brand, Harvil, in 2007, to sell sporting goods and home recreation equipment on Amazon. They figured Amazon couldn’t undercut their prices if he and his brothers owned the brand.
They had no idea Amazon was also beginning to launch its own brands and to enter into deals with companies to develop brands exclusive to the platform.
Among the first Amazon brands was Pinzon (a likely nod to the first conquistador to stumble across the Amazon River), which Amazon registered as a trademark in 2007 to sell bedding. Then came Denali for tools, and Amazon Basics for a slew of products, including household appliances and office supplies.
Sometime in 2017, Boyce was searching keywords related to his products on Amazon—”bocce ball,” “air hockey table”—when he noticed a new brand, Rally and Roar, peddling very similar products to his own. They showed up at the top of search results.
Rally and Roar are exclusive to Amazon, labelled as “our brands.” The company was moving in on his territory, again.
The speed of Amazon’s expansion of its own brands has been accelerating, according to several e-commerce and retail research firms. TJI Research counted 598 Amazon-exclusive brands in 2019. Coresight Research said Amazon brand products on the site tripled in the two years between 2018 and 2020 alone.
Amazon invites companies and individuals to join its “our brands” family through programs like Amazon Accelerator, which promises increased exposure for products sold exclusively on Amazon in exchange for extra fees, and sets a sales price if Amazon chooses to later buy the brand.
Boyce and his brothers had already been talking about getting off Amazon’s platform when they noticed Rally and Roar pop up. That settled it.
“We’re like, we’re not going to sit around and wait for Amazon to knock off the rest of our private-label products as well,” he said.
They sold the business.
A leg up
For years, Amazon gave items from its own brands multiple advantages when they first launched, said JT Meng, a former house brand manager at Amazon—though he said the practice has since stopped.
Employees manually applied the Amazon’s Choice label to a new Amazon brand product, even if it didn’t meet the usual criteria, he said.
And instead of starting from scratch in search results with zero reviews, sales, and stars, Meng said employees used a tactic called “search seeding” for new products, “cloning” a competing product’s search ranking and allowing the new Amazon product to appear immediately below that competitor in search results.
“We would use that for all of our products from the get-go for the first six months or longer,” he said.
Meng worked on the launch for Amazon Elements baby wipes, which he said were seeded against similar products from Huggies, Pampers, and others.
Sales spiked so quickly that his team had to stop promoting the Amazon Elements wipes so they didn’t take too much market share, he said.
Once a new house brand product was established, Meng said employees would turn off search seeding. “Without fail, your product would drop in ranking,” he said, “but the hope was that it would drop a small amount.”
By the time Meng left Amazon in 2016, he said search seeding and adding the Amazon’s Choice label to new Amazon brand products were no longer allowed.
Sellers who do try to compete with Amazon brands today said they feel compelled to pay for sponsored listings in order to get a higher result for non-sponsored listings on Amazon. On its Seller Central site, Amazon underlines to sellers how important sales are, stating that “better-selling products tend to list towards the beginning of search” and that as sales increase “so does your placement.”
“You can’t not advertise anymore,” said Boyce, who after selling his sporting goods line founded a consulting firm, Avenue7Media, which advises companies and individuals who want to sell on Amazon.
“You turn off the ads and you lose organic rank within days,” Boyce said. “It’s pay to play.”
Lots of companies are paying.
We found that inside the search results alone, 17 percent of products were paid listings. That doesn’t include entire rows of sponsored products that appear as special modules on about a third of search result pages. (Including those would roughly double the ad percentage on the first results page.)
Amazon is the third-largest seller of online advertising in the U.S., after Google and Facebook, and is growing fast. “Other” revenue, which the company says “primarily includes sales of advertising services,” jumped 52 percent from 2019 to 2020, to $21.4 billion a year.
Struggling for visibility
“If you’re willing to spend a ton of money, you can sell a ton of product,” said Evan Patterson, vice president of business development at California-based Linco, which is one of Boyce’s clients.
The 47-year-old family-owned institution makes casters, the small wheels that attach to office chairs and industrial gear—and has a solid reputation in the offline world for premium products. It competes against a product from Amazon Commercial, among others.
It’s so well known in industrial circles that Linco’s competitors advertise against its name within Amazon’s search results, Patterson said.
Still, Linco hasn’t consistently listed on the first page of search results for “caster wheels,” despite selling on Amazon for years. It will appear on the first page for Patterson, but did not in repeated searches by The Markup.
The only thing that seems to help Linco’s search ranking, Patterson said, is to spend more money for paid listings on Amazon. The company now pays about $10,000 a month for advertising.
“Our search ranking has improved dramatically,” Patterson said.
But it still has a ways to go. When The Markup searched for “caster wheels” at the time of writing, Linco appeared in the middle of the fifth page.
A trove of internal Amazon documents reveals how the e-commerce giant ran a systematic campaign of creating knockoff goods and manipulating search results to boost its own product lines in India – practices it has denied engaging in. And at least two top Amazon executives reviewed the strategy.
Amazon.com Inc has been repeatedly accused of knocking off products it sells on its website and of exploiting its vast trove of internal data to promote its own merchandise at the expense of other sellers. The company has denied the accusations.
But thousands of pages of internal Amazon documents examined by Reuters – including emails, strategy papers and business plans – show the company ran a systematic campaign of creating knockoffs and manipulating search results to boost its own product lines in India, one of the company’s largest growth markets.
The documents reveal how Amazon’s private-brands team in India secretly exploited internal data from Amazon.in to copy products sold by other companies, and then offered them on its platform. The employees also stoked sales of Amazon private-brand products by rigging Amazon’s search results so that the company’s products would appear, as one 2016 strategy report for India put it, “in the first 2 or three … search results” when customers were shopping on Amazon.in.
Among the victims of the strategy: a popular shirt brand in India, John Miller, which is owned by a company whose chief executive is Kishore Biyani, known as the country’s “retail king.” Amazon decided to “follow the measurements of” John Miller shirts down to the neck circumference and sleeve length, the document states.
Amazon founder Jeff Bezos speaks via video conference during a hearing of a U.S. Congressional subcommittee in July last year. Amazon is under investigation in the United States, Europe and India for alleged anti-competitive business practices. Graeme Jennings/Pool via REUTERS
The internal documents also show that Amazon employees studied proprietary data about other brands on Amazon.in, including detailed information about customer returns. The aim: to identify and target goods – described as “reference” or “benchmark” products – and “replicate” them. As part of that effort, the 2016 internal report laid out Amazon’s strategy for a brand the company originally created for the Indian market called “Solimo.” The Solimo strategy, it said, was simple: “use information from Amazon.in to develop products and then leverage the Amazon.in platform to market these products to our customers.”
The Solimo project in India has had international impact: Scores of Solimo-branded health and household products are now offered for sale on Amazon’s U.S. website, Amazon.com.
The 2016 document further shows that Amazon employees working on the company’s own products, known as private brands or private labels, planned to partner with the manufacturers of the products targeted for copying. That’s because they learned that these manufacturers employ “unique processes which impact the end quality of the product.”
The document, entitled “India Private Brands Program,” states: “It is difficult to develop this expertise across products and hence, to ensure that we are able to fully match quality with our reference product, we decided to only partner with the manufacturers of our reference product.” It termed such manufacturer expertise “Tribal Knowledge.”
This is the second in a series of stories based on internal Amazon documents that provide a rare, unvarnished look, in the company’s own words, into business practices that it has denied for years.
Amazon has been accused before by employees who worked on private-brand products of exploiting proprietary data from individual sellers to launch competing products and manipulating search results to increase sales of the company’s own goods.
In sworn testimony before the U.S. Congress in 2020, Amazon founder Jeff Bezos explained that the e-commerce giant prohibits its employees from using the data on individual sellers to help its private-label business. And, in 2019, another Amazon executive testified that the company does not use such data to create its own private-label products or alter its search results to favour them.
