73 Percent of Amazon Sellers Buy Ads

One new trend we’re tracking is the “great eCommerce rollup.” As we examined recently, this is all about companies that acquire and consolidate Amazon sellers in order to gain economies of scale. Since we first wrote about the trend, JungleScout raised $110 million to advance its competitive position.

This is also known as the FBA ecosystem (“Fulfilled By Amazon”). Analogous to private equity, companies like JungleScout and Thrasio buy up promising sellers and amplify their performance through common standards, software and best practices. There are also shipping and logistical economies, as noted.

Through researching this trend and its players, we came across a notable data point. The universe of Amazon third-party sellers — mostly SMBs — about five-million in number, one million of which have joined in the past year alone. Perhaps more notable, 73 percent buy Amazon ads according to Feedvizor.

What’s Behind the Great eCommerce Rollup?

Rallying Cry

Zeroing in on the 73 percent figure, this is a boon for Amazon’s ad business. One of the rallying cries in the advertising world has been in support of new challengers to the Google/Facebook duopoly. And Amazon tops that list. It’s well-positioned, given that its sellers are motivated towards paid exposure.

In fact, Amazon has seeded demand by making paid placement a good way to stand out in its crowded marketplaces and search results. This new revenue stream is typical growth mechanics for large companies as core revenue (eCommerce in this case), matures and decelerates with a larger base/ denominator.

But in fairness, the other thing fueling this ad spend is performance. Fedvisor reports that 59 percent of Amazon sellers say that the ad platform produces their highest return on ad spend. That’s followed by Google (22 percent) and paid social ads (17 percent). 98 percent identify Amazon advertising as valuable.

For those advertising on Amazon, the most popular and valued format is its Sponsored Products offering. 55 percent of respondents named this as the source of their greatest ROI among Amazon ad formats. Meanwhile, 47 percent of respondents see at least a 7x return on their Amazon advertising spend.

Amazon Extends Its Long-Tail Reach

Goal Setting

All of the figures above specifically come from Feedvizor’s recently released 2020 report on amazon sellers (n=1000). For the rest of the findings, we’ll leave you with a sampling:

— 65 percent of those advertising on Amazon spend at least $40,000 per month, up from 49 percent last year.

— 93 percent of respondents that sell on Amazon agree that advertising and branding options are the best part of the platform.

— Further quantifying advertiser goals, 62 percent use Amazon to drive sales, 60 percent to acquire new customers, and 58 percent to build brand awareness, and 42 percent to identify competitors.

— 52 percent of respondents selling on Amazon put their most popular products on the platform in tandem with their own channels.

— It’s not all about Amazon… 70 percent of respondents advertise on Walmart.com, including 74 percent of those selling on Amazon.

We’ll continue watching for more drivers and dynamics of the “FBA” marketplace.

Walmart Beefs Up Online Marketplace

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