Amazon Marketplace Fears

The Amazon marketplace is a jungle. Savvy merchants can reach a massive audience and sell a lot of merchandise, but like a real jungle, there are reasons to be afraid.

Contributing to sellers’ fear are Amazon’s dominance in the U.S. market, advertising challenges, and Google’s generative search results. Let’s consider each.

King Amazon

In 2023 Amazon Logistics transported more packages than each UPS and FedEx, a first.

I set out to address the amazing Amazon Logistics and how it helps small and mid-sized ecommerce businesses.

The impetus was an annual Pitney Bowes report stating, “2023 is the first time in the Index history that Amazon Logistics surpasses UPS in parcel volume.”

The king of the ecommerce jungle, Amazon, transported 5.9 billion parcels in the United States in 2023, compared to 4.6 billion for UPS and 3.9 billion for FedEx.

Only the United States Postal Services (6.6 billion boxes and envelopes) had more parcel volume than Amazon Logistics. Of the big four — USPS, UPS, FedEx, and Amazon Logistics— only Amazon’s parcel volume increased in 2023, up some 800 million parcels from the prior year.

I asked a few Amazon marketplace pros about the impact on SMBs.

Two services — Amazon Logistics and Fulfillment by Amazon — streamline storage, packing, shipping, customer service, and returns, freeing sellers from the complexities of order fulfillment. Consumers love the service, with many packages — purchased on Amazon from small businesses and emerging DTC sellers — delivered the same day as ordered.

It is a strong opportunity, but not without risks. Those same experts noted that while Amazon’s dominance enables SMBs to sell and compete with massive retailers, it also makes them dependent.

“It shows how reliant sellers are on Amazon,” said Jon Elder, the founder of Black Label Advisor, a Texas-based Amazon consultancy.

“Amazon is nearing 50% of all ecommerce revenue in America, so it’s almost a monopoly now,” Elder said, adding that the dominance has allowed Amazon to raise its selling fee significantly.

“Margins are getting crushed,” Elder said.

Some in the industry have estimated that new logistics-related fees in February 2024 add about 15 cents to the cost of each item sold on the marketplace and managed via FBA. In Amazon’s defense, the increase was reportedly consistent with or even below the increases by other parcel carriers.

Nonetheless, a merchant that depends on Amazon for most of its revenue has no obvious choice but to pay.

Effective Advertising

Many marketplace sellers are reliant on more than shipping and fulfillment. Amazon Ads is vital, too.

Amazon’s advertising platform has several advantages over Meta Ads and Google Ads, such as:

• Large, high-intent audience. Depending on the study, between 50% and 57% of all shopping intent searches in America start on Amazon.

• Seamless shopping. Amazon Ads are integrated into the platform’s search results and product pages, enhancing visibility and conversions.

• First-party data. Most Amazon shoppers are logged in when they see an ad. The hubbub about tracking cookies has little impact on performance.

Amazon Ads drives the bulk of sales for many sellers. That’s the opportunity. The concern is increasing costs and a disruption of some sort.

AI Search

Some marketplace professionals believe that Google’s AI Overviews (previously called Search Generative Experience) could drive some ecommerce and D2C companies to Amazon.

AI Overviews may reduce organic search traffic to sellers’ own ecommerce sites.

Imagine a consumer seeking trail running shoes. She searches Google for “the best running shoes for Appalachian trails.” An online shoe store has a comprehensive, search-optimized article about that very topic, pairing the perfect shoe with each type of Appalachian terrain.

Before Overviews, this query could lead her to the article on the store’s website, with its branding and merchandising. The odds were good she would click a shoe in the article and add it to the cart.

Google’s AI Overview can now provide the answer from the article without a clear link to the store.

In February 2024, research firm Gartner predicted that AI would reduce overall organic search traffic by about 25% by 2026.

Meanwhile, in May 2024, Raptive, a company that places ads on creators’ and publishers’ websites, expressed concern “about the implications of AI Overviews. Our initial analysis suggests it will significantly reduce search traffic to content creators’ websites, directly impacting their ad revenue and, by extension, their livelihoods.”

Ecommerce stores with a meaningful reduction in organic search traffic could seek new sales channels such as Amazon’s marketplace, resulting in more competition.

How to Research Amazon Keywords

Knowing the words consumers type in Amazon’s search box has the dual benefit of optimizing product listings and identifying commercial-intent queries to target on Google.

Searchers on Google have varied intentions, such as informational, commercial, or brand-specific. But searches on Amazon are for products, offering keyword insights on categories, descriptions, feeds, and more.

Unlike Google, Amazon has no keyword research tool. But, like Google, it has an autocomplete feature.

Here are five third-party keyword tools that pull Amazon’s autocomplete suggestions.

Amazon’s autocomplete drop-down lists keyword variations, such as the example for “space heater.”

Helium 10

Helium 10 focuses on optimizing Amazon and Walmart listings. Input a seed term and the tool lists long-tail and related keywords with the following metrics:

• Search volume and trends.
• Number of competing products.
• “Magnet IQ Score,” the ratio of search volume divided by the number of competing products. The higher the score, the more opportunity.
• “Title Density,” the number of products on page one of search results containing the query term, indicating how many products were optimized for the keyword and, thus, the ranking opportunity.

The tool also provides a keyword cluster analysis identifying common long-tail modifiers for a given term. (View screenshot.)

Helium 10 offers no free plan or trial. Paid plans start at $39 per month.

AMZ Suggestion Expander

AMZ Suggestion Expander is a Chrome extension that expands Amazon’s autocomplete drop-down based on the initial query. It generates a list of long-tail keywords with before and after modifiers.

Clicking any keyword in the drop-down will trigger a new search. Users can download the complete list of these suggestions. (View screenshot.)

AMZ Suggestion Expander is free. For $9.97 it adds the search volume and advertising cost per click for each keyword.

SellerApp

SellerApp is a free Chrome extension that extends queries while searching on Amazon or the extension icon in the toolbar. To generate keyword suggestions, select the marketplace country and the query extension method — letters or numbers.

Then export the entire list as a CSV file and use spreadsheet filters to identify keyword groups for optimizing products or categories. (View screenshot.)

Ahrefs

Ahrefs provides a free Amazon keyword tool requiring no registration or payment. The tool extracts 100 keyword variations (from a seed term) based on Amazon autocomplete.

Ahrefs is the only tool I’m aware of that provides free search volume data for each keyword. (View screenshot.)

Keyword Tool Dominator

Keyword Tool Dominator pulls autocomplete results from multiple platforms, including Google, YouTube, and Amazon.

To use the tool, set a mode — “Broad,” “Precise,” or “Normal” — each generating different suggestions.

• “Broad” extracts suggestions with the seed term in the middle of a phrase.
• “Precise” limits the suggestions to those that start with the seed term.
• “Normal” includes both.

Users can filter the suggestions by the marketplace country and department (e.g., “Appliances,” “Automotive Parts”) as well as by modifier and word count, including exclusions. Download the entire suggestion list or the filtered version. (View screenshot.)

Pricing for Keyword Tool Dominator starts at $9 per month. There’s no free version or trial.

Charts: Ecommerce Trends in Europe

Statista defines ecommerce as the sale of physical goods via a digital channel to a private end consumer. Statista projects ecommerce revenue in Europe to grow from $631.9 billion in 2023 to $902.26 billion in 2027, a 42.79% increase.

–

Ireland, Czechia, and Belgium were the top European leaders in ecommerce in 2022 as a percentage of total revenue by companies. That’s according to Eurostat, the statistical office of the European Union. The data shows that Ireland leads with a 33% share, followed by Czechia at 30% and Belgium at 29%.

–

As of August 2023, Amazon was the most visited online marketplace in Europe, with roughly 1.3 billion monthly visits. eBay is second with over 474 million, while Allegro, the large Polish marketplace, secured third with nearly 199 million.

The chart below comprises online marketplaces (pure-play or retailers with a marketplace component) with more than 20 million monthly visits from within Europe, excluding the U.K.

–

In 2022, Wildberries, the largest marketplace in Russia, recorded revenues of about $17.8 billion. The revenue for German fashion marketplace Zalando stood at $10.899 billion.