Coming off of the holiday season and keeping in mind the impact of COVID on the market, it’s not surprising to see a drop in sales on the Amazon platform in Q1 of 2022. Q1 2021 was pre-vaccine, whereas this year we’re seeing many businesses go back to brick and mortar at a much higher rate. Per Mastercard Economics Institute –  during covid peak, e-commerce retail as a percentage of total retail sales peaked at 22% of total, whereas ‘post covid’ (with the rise of vaccinations) that number has dropped to 17%. This number was around 11% pre-Covid, so e-commerce sales as a percentage of total retail is still riding at a higher baseline than prior to 2020. However it has dropped significantly from the Covid-pandemic peak in 2020 and early 2021 prior to vaccine rollouts.

Other well documented macro-economic factors continue to depress Amazon topline POS results, including ongoing supply chain constraints, rising inflation, increased labor and transportation costs.  All of these components have led to increased product pricing on the platform, where we have observed a rise in total ASP in the range of 10-20%, depending on category. These pressures are not expected to relieve for many months, if not longer. We will continue to observe and report insights as we move through 2022.

As far as Amazon news and trends go for January 2022, below is a list of key changes to be aware of and leverage while navigating selling on the Amazon platform.

Opening of First “Amazon Style” Store
Amazon announced a new retail venture; a physical clothing store under the Amazon Style brand is set to open in a swanky shopping complex in Los Angeles later this year. Amazon will be squaring off against traditional fashion retailers Nordstrom, JCPenney, Urban Outfitters and J. Crew in their new location. 

Online shopping for products that are worn – clothing, shoes, or other accessories, can often be a difficult experience for the consumer. By adding a brick and mortar location, Amazon can attract customers with the same expansive selection they enjoy online, but with the features and experience of a physical location to be able to try on the fit, look, and feel of these highly personalized products. With well over 600 brick and mortar stores nationwide across a variety of categories, we expect to see additional trials of Amazon Style pop up throughout the year.

Amazon to Unroll 24/7 ‘Call Me Now’ Phone Support for Pro Seller Accounts 

In an initiative that began rolling out at the end of 2021, a “Call-me-now” button will be added to pro sellers’ Account Health pages. This feature will allow sellers to remedy account health problems as soon as they arise, allowing on-demand access to Amazon support 24/7. Keep a lookout in your account, as 100% of pro sellers should expect to see this feature shortly. 

Amazon Prime Membership Pricing Increase

One of the most noteworthy announcements from Amazon this month was the increase in Prime membership pricing. This change will come on February 18th for new accounts and March 25th for current subscribers. The yearly cost will rise from $119 to $139, the first membership price increase since 2018. Despite reported growth in their fourth-quarter earnings, the company cited growing labor and transportation costs as the main reason for this change.

Amazon streamlines Business Discounts Manager Tool

Last month, Amazon launched a new tool called Business Discount Manager to provide direct-vendors with an improved interface for adding single-unit as well as multiple-quantity discounts. Amazon account managers can now add business discounts in bulk in minutes, and avoid the Excel file upload process. The Business Discount Manager enables you to create the same discounts across all products in your catalog directly from Vendor Central, and set discounts at a brand code or vendor code level. We recommend all our clients consider Amazon Business as another lever to pull on the platform, and this updated workflow will streamline the once cumbersome process that existed previously and perhaps allow for greater selection participation in the program.

Amazon adds more retail-centric data into Sponsored Display reporting

In late December, Amazon enabled advertisers to gain insight into detail-page-view (DPV) metrics associated with their Sponsored Display campaigns. This metric accounts for the number of ad attributed DPVs within 14 days of a shopper clicking or viewing a Sponsored Display ad. Brands are able to closely monitor and analyze the relation between the total organic DPVs on a particular product listing in relation to those attributed to ads. As Amazon continues to add more retail-centric data into their Sponsored Ads reporting, brands should look forward to the ability to make more holistic and better informed business decisions in 2022 and beyond.

Amazon makes it easier to target global markets
With the newly released ‘localized keyword’ targeting feature, advertisers can now easily translate keywords within the Amazon Ads Console. This feature has been enabled for Sponsored Products and Sponsored Brands ad products for most global marketplaces.  With this new release, it is now easier for advertisers to run campaigns in various geographies at scale. In 2022 we expect more brands to realize the upside of a globalized approach to their Amazon business. Amazon is continuing to focus efforts on making this viable and attractive to sellers and vendors alike.

With new Amazon trends rapidly unfolding, new opportunities for optimization and innovation are created. Let us help you navigate these changes, contact our team today.