Many sellers are feeling slighted by Amazon lately. Recent policy changes to the product review guidelines have changed strategies. Using discounted products to drive reviews and increase customer conversions are no longer possible. We’ve been saying since the change that the only way to be successful now is to increase your sales. Amazon is attempting to help with the reviews, but how can you as a seller increase your sales? One simple change that you need to test out can impact the Amazon product ranking algorithm in your favor. We are going to go through a case study of a few changes we made for a client and show you how to rank on Amazon.
The Most Important Factors
Amazon’s A9 algorithm is governed by a few main rules and have a single goal in mind; to provide the most relevant results and best deals for their customers. The A9 algorithm only uses data on the Amazon database to determine product relevancy, and does not consider relevancy factors that search engines like Google look for (i.e., backlinks, off-page SEO). Amazon wants to maximize revenue per customer. It therefore tracks all customer data from what they search for to what products they click on after searching to what product they end up buying.
In our experience, there are 4 main factors that can increase product relevancy in the Amazon A9 algorithm. The most important factor is sales history. Amazon will index your product based on the search terms present in the listing and how many sales you get on each search term. Getting sales on search terms is a huge indication to Amazon that your product is relevant to the customers’ search. It is important to optimize Amazon listings with search terms that are relevant to your product. Too often we see clients going after random keywords that are barely related to their product. Amazon will index for those random keywords and it ends up hurting the seller because the second factor is negatively impacted.
Conversion rates play a very important role in your product’s ranking. Converting on a specific search term is another massive relevancy signal for the Amazon A9 algorithm. We’ve seen through our experience how conversion rates can help boost your product’s visibility and we will share that with you. Therefore, focusing on keywords directly related to your product is incredibly important. You will end up killing your conversion rates by going after random keywords that are only slightly related to your product. Similarly, click thru rate is relevancy signal that Amazon values. Customer’s clicking on your product listing shows product relevancy for the search term. While still important, we believe it is much more important to convert that click into a conversion as much as possible.
The final factor is pricing, and it’s the only factor that you can control. As we said, Amazon wants to show the most relevant results and best deals for the clients. We’ve noticed that pricing below market averages can give you a huge initial boost to your product. By testing out new pricing strategies you can impact the Amazon product ranking algorithm in your favor.
Case Study: Pricing’s Impacts on a Product Listing
We recently worked with a client that launched a product in early January 2016. The product was launched at an above market average price. Initially, the product did not start moving until they dropped the price down a few weeks later. In the chart below you will notice that as they decreased price, page views, orders and conversions increased:
These increases are directly related to the product becoming more visible on Amazon. Maintaining a consistent price continued to increase these factors. As the client began to run out of inventory, they started increasing price. The result was a drop in all 3 of those factors. The client killed their conversion rates by increasing the price and thus product visibility decreased drastically. The interesting thing is that even as they decreased price in the following months product sales did not return. Correlation analysis shows a strong negative relationship between price and sessions, page views and conversion rates. Their relevancy suffered directly from the increase in price.
We began working with this client in late August. They had ordered a thousand units of inventory after their initial success and were now stuck with a product that wasn’t moving. We overhauled the product to create an optimized Amazon listing. Low relevancy keywords were removed. Then we began testing new pricing points to see how the product performed. As the product crossed the $10 per unit threshold there was a massive up-tick in conversion rates, orders and page views:
The inventory began flying off the shelf and thus the product relevancy was confirmed in Amazon’s eyes again. Conversion rates reached as high 50% and page views increased by ~700%. The client was achieving success like what they had initially received. We attempted to increase the price slightly over time and these metrics began decreasing again. The correlation analysis again showed a strong negative relationship between price and conversion rates, orders and page views. The client had achieved page one visibility, but was doing it a reduced profit in exchange for higher volume. Dropping pricing can be a powerful, yet tricky tool to impact the Amazon product ranking algorithm.
What Does All That Mean?
Pricing will directly impact your visibility within the Amazon product ranking algorithm. More importantly, it shows that you need to differentiate your product. This client was in a highly competitive market with a product that was just like everything else on the market. The private labeled item had no unique value proposition to customers and could only compete on price. We’re now working with the client to improve their offering and achieve higher profits in the future.
Anyone could implement these same strategies to begin dominating a market. Downward pricing pressure from competitors will kill your product on Amazon. When choosing a product to sell, look for opportunities to differentiate yourself through bundling with a complimentary product or possibly working with your manufacturers to design unique features. Amazon is a great sales channel, but it’s also extremely important to grow your product outside of the Amazon platform.
Utilize effective pricing on Amazon to get your product moving initially. Be willing to break even on your sales for as long as possible to develop the sales history that you need. Having a high-quality product and high volume of sales will lead to increased product reviews (or social proof) that will highlight your quality in shoppers’ eyes. Do not drastically increase price to prevent selling out your inventory. This will kill your listing’s relevancy within the Amazon product ranking algorithm. Slowly test increased pricing over time and check the sales data to see the impact it has on your listing. A differentiated product that has a unique value proposition to a client will be able to be priced higher without product relevancy being impacted as drastically.
Contact AMZ Advisers to learn more about maximizing your Amazon sales