4 Reasons Why Amazon's Product-Search Dominance Matters Customers research your products before they buy but smart strategy can reclaim sales lost to 'showrooming' and 'webrooming' alike.
By Jay Lagarde Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Data continues to affirm Amazon.com's dominance in the product-search industry. In fact, recent studies reveal the Amazon marketplace as the place most American consumers begin their product research. For entrepreneurs in the business of selling products, these trends are causing major shifts in product distribution and marketing.
Here are four reasons why Amazon's growth in product search matters to you.
1. Amazon shoppers are "Primed' to buy.
The more than 50 million Amazon Prime members seek to extract maximum value from their $99 annual subscription fees. With each new item added to their carts, shoppers can further justify the benefits of participating in the program.
Even among non-Prime shoppers, Amazon's minimum threshold for free shipping can be as low as $25. Users can log in on any web-enabled device and then research and add items to their carts in a few taps or clicks. Over the course of a few seconds, minutes, hours or even days, customers can mix and match on their own terms. As new needs are identified, Amazon shoppers perform additional product searches and determine when an order is ready to be finalized. After an order is placed, this process repeats itself over and over, further cementing the affinity for Amazon.com.
Related: 9 Unbelievable-But-True Amazon Services
Compare the Amazon experience to the traditional search model, in which a shopper starts with an idea and could spend hours bouncing among various websites. One site might offer the product the consumer wants but at too high a price. Other sites might feature better pricing but could be temporarily out of stock. Still others might offer the right mix of product and pricing but ultimately fail to deliver a trustworthy checkout process.
For these and many other reasons, consumers are bypassing traditional search engines and turning to the Amazon marketplace for all their product research and acquisition needs.
2. SEO no longer is limited to traditional search engines.
For years, consultants have preached the importance of an optimized web presence across Google, Yahoo and Bing. While these search engines still are important to retail entrepreneurs, it's also noteworthy to acknowledge the growth of Amazon SEO.
Granted, most merchants have less control on the visibility of individual Amazon product listings. Amazon maintains tight control over most product details, particularly when multiple merchants share the Buy Box.
To make an impact, merchants are getting creative. Some common strategies include:
- Building kits (or bundles), such as gift baskets
- Developing private-label products
- Asking for product reviews through proactive solicitation
Amazon seeks to match searchers with the most relevant, trustworthy and sought-after products. Kitted products achieve this by filling a niche with convenience-minded shoppers. Private-label products offer additional choices for the consumer, often providing higher quality at lower prices. Product reviews reduce uncertainty and are the source of truly organic, original content.
Merchants who own the Buy Box on kits and private-label items can achieve a significant uptick in brand awareness among Amazon searchers. They'll boost their stock even higher by requesting timely reviews from users who completed a purchase. As search traffic expands, savvy merchants position themselves to support the demand.
Related: 10 Steps to Selling Your Product on Amazon
3. Advertising allocations are shifting.
Search engine pay-per-click (PPC) advertising is very effective at driving traffic to a merchant's website. The challenge involves convincing visitors to convert into paying customers.
Branding, user experience, web security and mobile friendliness all can influence a visitor's willingness to buy. Taking this approach, merchants could spend thousands of dollars chasing only a few hundred dollars in initial sales.
As a result, an increasing number of merchants are shifting their advertising budgets toward an Amazon-centric orientation. With the success of the Amazon Sponsored Products program, merchants can expose their listings to purchase-ready searchers. With each click, shoppers remain within the cozy confines of the Amazon marketplace, rather than being redirected to third-party websites. This approach delivers a more cohesive, convenient shopping experience -- and generates traffic with higher conversion rates.
Related: Amazon Rolls Out New Marketplace for Startups
4. Amazon search is leading to increased "webrooming.'
Several years ago, the term "showrooming" became a common issue facing brick-and-mortar retail stores. A showrooming shopper enters a store, identifies the items he or she likes, compares prices online and then makes the transaction online (often via a smartphone). Locally owned businesses in particular have struggled with declining sales because of this phenomenon.
Given Amazon's ever-increasing dominance, online stores are seeing the rise of the reverse problem: "webrooming." In this scenario, shoppers spend hours reading online reviews for items they intend to purchase in person. Unlike showrooming, which certainly has challenged local retailers, webrooming's impact on Amazon is uncertain at present.
For entrepreneurs in the retail industry, webrooming could have a number of interesting side effects. As an example, consider a regional chain of home-appliance stores. Sales of smaller items such as toasters, microwaves and replacement parts long ago evaporated to the web. But purchases of high-dollar or bulky items (think washers, dryers, water softeners and refrigerators) may now at least be shaped by online reviews. The same is true of any other product customers want to see before they buy.
Related: Is Amazon's First Brick-and-Mortar Bookstore the Future of Retail?
Business owners -- brick and click alike -- must remain vigilant. They need to proactively monitor how their products are perceived on the Amazon marketplace, in particular.
The takeaway: Merchants can leverage this growth opportunity.
As consumers shift more of their product research to the Amazon marketplace, product-focused entrepreneurs face several decisions. While it's unwise to abandon all off-Amazon strategies, most merchants certainly could benefit from developing a strategy tailored for Amazon search. Diversification of SEO and PPC budgets also could prove to be a competitive advantage, especially when competitors stick to more obvious channels.
