Interviews, insight & analysis on Ecommerce

Why Amazon has become the driving force in the growth of ecommerce

By Andrew Banks, the former head of ecommerce for Matalan and the current CEO of Venture Forge, an Amazon marketplace specialist. He is also director of premium cycling skincare brand VeloSkin, which is an Amazon best seller. 

The global pandemic has caused some major changes to the face of retail and ecommerce in the UK. The growing shift towards online shopping has accelerated at a pace no-one was quite expecting and for online retailers, it can feel like a race to keep up.

During lockdown, online sales of clothing and non-food items reached record levels as the UK shopped from home. During the spring of 2020, social media images emerged of consumers displaying piles of Amazon packages as they confessed to buying online more than ever during the pandemic. Where online sales were rising by 11% a year pre-pandemic, that figure is now closer to 19%.

The role of the online marketplace has been pivotal in the growth of ecommerce. Unsurprisingly, Amazon is taking the largest piece of the pie. Its nearest rival in the UK market is eBay, although in recent years, Amazon’s international annual revenue growth has overtaken that of eBay’s by almost tenfold.

Amazon has fostered incredible brand loyalty from its customers. 45% of Prime members make a purchase at least once a week, and the annual Prime customer retention rate is over 90%. Along with the high-level user experience it provides, this has proven to be a winning formula that has helped Amazon to overtake Microsoft as the most valuable public company in the world as of 2020.

Some online retailers are resistant to bringing marketplace selling into their sales strategy, often believing that it contributes to a race to the bottom and can devalue their brand. This need not be the case, however, as Amazon can integrate seamlessly into a multi-channel strategy if you use it to your advantage.

Online retailers need to embrace marketplace selling to keep up with consumer trends

Amazon leads the UK online marketplace trade, with a staggering 86% of Brits shopping on Amazon.co.uk and a quarter of the UK adult population signed up to Prime. There is no doubt that Amazon has changed the face of shopping as we know it.

The obvious selling point of listing on Amazon is the sheer volume of traffic visiting the site. With 464 million people having visited amazon.co.uk in May 2020 alone, the numbers speak for themselves. Online retailers who do not embrace this ecommerce giant face the risk of competing against it.

According to research by Feedvisor, 66% of consumers now start their search for a new product on Amazon. Compare that with the 20% of consumers who start their product search on Google and you can see just how much Amazon is dominating the online retail space. If you are investing in search engine optimisation, as most companies do, it also makes sense to spend at least as much, if not more, on capitalising on the opportunities that Amazon can bring for your business.

The brand credibility and SEO weighting of the leading online marketplaces mean they do the hard work for you when it comes to getting your product in front of people. In most cases, the increased sales and revenue achieved from being seen by such a vast audience more than makes up for the business compromises you may have to make to join the marketplace.

It’s also worth noting that more than 3,000 new sellers sign up to Amazon every day – so even if you’re not on there, your competitors are. The good news is that consumers still value recognisable brands and will often go out of their way to find their favourite products on Amazon, so your external marketing and brand image still has a significant impact on sales via a marketplace. Positioning yourself as a desirable brand can give you the edge on your lesser-known competitors – even if they’re cheaper.

When it comes to Amazon selling, you get as much out as you put in

A company must understand the marketplace platforms thoroughly to see success, so unless you consider yourself an expert, we highly recommend outsourcing this aspect of your business.

There are various ways to become an Amazon seller with different costs, commitments and criteria attached to each option. Choosing the right one for your business will depend on your desired outcomes, your capacity to fulfil orders and the level of control you are willing to forego.

A poor-quality listing, or failure to deliver excellent products and customer service, will ultimately harm your brand. Approach the marketplace with the same care and expertise that you would your own company website. The easily accessible customer feedback systems on most marketplace sites can be a blessing or a curse, so give your customers a brand experience you can be proud of. In short, whatever you do for your own ecommerce site, do for your marketplace presence, too.

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