Amazon Product Ads

as dangerous as selling on Amazon?

[Tonearm]

A little while back I started a thread about the "dangers" of selling on Amazon. It comes down to them using your sales data to become your competitor and destroy your profits.

[webmasterworld.com...]

I was planning on using Amazon Product Ads as an alternative to this, but when I think about it, Product Ads seems almost as dangerous. Amazon would know which of my products receives a large number of clicks and they could use that data in the same way they reportedly use sales data. Are Product Ads as dangerous as selling on Amazon?

[working hard]

If you don't a competitor might do it anyway - that way you loss both ways!

[Tonearm]

That's a good point. Any other perspectives on this?

[Tonearm]

I'm having a hard time deciding what to do here. Providing sales data to a huge competitor like Amazon seems like a bad idea but "working hard" makes a really good point.

Is anyone else using Amazon Product Ads?

[pbradish]

I tend to agree with Working Hard, if you don't use them a competitor might.

I've noticed several competitors using Amazon Product Ads, and we run some as well. One thing I've always liked about Amazon is that you can tap into a large group of people who are looking to buy.

[Robino]

You don't have to provide sales data to them for Ad listings, do you?


I've seen some companies have great success w/ their product ads. Give it a shot! ;)

[Tonearm]

From what I understand, you don't have to provide sales data but the click data they get should be analogous. Maybe I'm being paranoid but Amazon is a little scary.

[mattb]

Can you obfuscate the sku number? Can you private label from the manufacturer? If not, maybe you can feed Amazon just your worst sellers as a start.

Is Amazon actually focusing on growing their 1st party sales? If you read over at Amazon Strategies Blog it appears that the major push is on AWS and 3rd party sales.

[RhinoFish]

They mix in AdWords ads...

[Tonearm]

Can you obfuscate the sku number? Can you private label from the manufacturer?

I want them to stay out of my entire product category. :)

Is Amazon actually focusing on growing their 1st party sales? If you read over at Amazon Strategies Blog it appears that the major push is on AWS and 3rd party sales.

They do seem to be interested in growing 1st party sales:

[online.wsj.com...]

[jwurunner]

Amazon will get a ton of click thru data from you. They will know which products are more popular and what triggers a click. Then they will do what they have been for years and source the product for first party sales. Just about every product I exposed amazon too, they have started selling, usually at or below my cost. I realize we may be an exception because of our product lines.

Our original thought was use them to get the eyeballs and then if they did compete, we would have head start. Instead, we gave them more data to compete against us than we ever imagined. They do not need to profit on every item they sell. All they want is all the web traffic they can get so they can be the true one stop shop. They will offer a bunch of widgets as loss leaders to get customer info. Then they will market their video on demand and e-book which they make good money on thus offsetting the losses of selling your widget below their cost.

Of course if your product is something they can't source, then there is no real harm in selling or advertising there. Just because your niche seems to small for them doesn't mean it is.

[mattb]

I did a little more investigation into this. For most of our products, we are the "manufacturer". We import, give our own unique sku, image, etc. However, we do have a few product lines where we are reselling from other wholesalers in the US. We don't have the exclusive on these products, other retailers sell them too. A quick search of Amazon has revealed that now Amazon is selling and stocking these products and winning the buy box. I can't say that they received this data exclusively from product listing ad clicks, but it certainly would help them to make the decision on what products to stock.

If none of your type of product is listed on Amazon, then perhaps it is best to stay away. The customers won't be able to find it and will search Google, etc. However, if your competitors list your type of product on Amazon then maybe it doesn't matter. Amazon will eventually get the data from them and you might as well get the sales while you can.

[greenleaves]

Ditto mattb,

Only worth it if your 'product category' is already there. Don't be giving someone so big and powerful proven ideas.

[Tonearm]

One problem for me is one of my suppliers is also a retailer. They're selling on Amazon and I'm sure they'd be delighted if Amazon started selling the same stuff because Amazon would have to get it from them. The rest of my suppliers are wholesale-only.

[jwurunner]

If your suppliers are wholesale, then they would more than likely be happy to sell Amazon. Amazon will research what vendors you source product from and contact them. They will then offer the same product for less than you and usually grab the buy box.

We had one product line where the volume was small but had good margins. Amazon figured out the vendor and took most of the profit away.

If competitors are already either selling on Amazon or advertising on Amazon with product ads then it doesn't hurt to join in as long as you realize the sales volume may be short lived.

If it a a product that Amazon has not been exposed to, then realize they will probably jump on it thus cannibalizing your sales and profits for that product.

Remember, they have deep pockets and a lot of employees, in both purchasing and merchandising, whose primary goal is to offer everything.

[Tonearm]

The scary part is the prospect of getting priced out of Amazon by Amazon and then realizing that sales on my own site have gone way down because now everybody buys on Amazon.

Many of the same products I sell are already offered on Amazon by other retailers. Even so, I think it still makes sense to stay off of Amazon because increasing the selection there will move customers there and once Amazon takes over the Amazon sales it will be difficult or impossible to bring those customers back to my own site.

Selling on eBay makes a lot more sense because they aren't my competitor.

[J_RaD]

It comes down to them using your sales data to become your competitor and destroy your profits.

if he says this and its true...which im sure it is given amazon

If you don't a competitor might do it anyway - that way you loss both ways!

then wouldn't this just be a trap for a competitor to fall into and die?


don't fall into the trap... laugh as the others have big sales for a short time and die off?

[JackieBlue]

You are going to have competitors no matter what. Just because it is not on Amazon doesn't mean it might not be. I sell on multiple marketplaces. I keep prices consistent (sometimes shipping is different) and manage to sell some on each, even when I know that Amazon is cheaper. I think that each marketplace attracts a different customer. I get much fewer questions from Amazon than I do eBay. Amazon product descriptions are sh** so I surmise that in my niche it is mostly gift givers and those who do not care and are just looking for x rather than finding the best x there is.

[Tonearm]

Here is some more info. "How Amazon Exploits Small Online Retailers":

[mashable.com...]

[Bewenched]

Here's a funny regarding Amazon. A few years back we experimented with selling a single product line through them. After about 6 months we dropped selling through them because of their 10% fee they wanted to charge... it had been lower.

Anyhow about 6 months ago I was doing a search on google for our company name.. just doing some brand protection searching and guess what. Amazon was selling that product line, but I guess in their haste to re-use our product information they mistakenly listed our company name as the manufacturer even through we'd never listed it that way. Can you say busted!

[Tonearm]

Busted!