The Amazon marketplace contains nearly 500 million products, from about 2 million sellers. That’s a lot of competition for businesses that sell items there.
In fact, being competitive on Amazon is exactly what I’m going to discuss in this interview. It’s with Casey Gauss, co-founder and C.E.O. of Viral Launch, a software and services platform helping brands to source, launch, and succeed on the Amazon marketplace.
Practical Ecommerce: How did you come to create Viral Launch?
Casey Gauss: It was counter intuitive. I had never sold anything on Amazon. I knew nothing about Amazon until a friend of mine showed me what he was selling. It was roughly three years ago. We were both in college. I’m 24 now. He was making thousands of dollars a month in college at this little side-job.
I was very interested, but I had my own business. And then my friend, Jordan, who is now my co-founder, came to me to start a business together. He said something like, “There’s plenty of opportunity in this Amazon space. We should really do something. I have this idea where we could make around $10,000 a month. All we have to do is throw up a couple of websites.”
PEC: Fast forward to 2017. How many customers does Viral Launch have?
Gauss: We work with a little over 4,500 brands now. Our overall client base is around 8,000. The brands are one portion of what we do. We also have software-only customers, which brings the total to around 8,000.
PEC: Is Amazon a competitor to online retailers, or a partner?
Gauss: It depends on how you look at it. A lot of sellers have a love-hate relationship with Amazon. But at the end of the day, if you are selling a physical product, you need to be selling on Amazon.
Over 50 percent of product searches or shopping-related searches begin on Amazon. If your product isn’t listed on Amazon, you’re no longer in the consumer’s mind. When consumers look for a duffel bag, for example, and your duffel bag isn’t on Amazon, consumers are no longer thinking of your brand.
In the past, retailers just didn’t take it seriously. While they had their products on Amazon, their listings were terrible. Their photos are terrible. The content on the page was terrible.
Amazon is ecommerce. You know what I mean? And if you’re not optimized for that, you don’t look relevant to today’s consumers, and they move on.
PEC: Is the path to success on Amazon different for private label sellers versus traditional retailers?
Gauss: I don’t think the path is different. I think actually the path is the exact same. Third-party sellers are often very savvy of the Amazon platform. They know how to pull all of the success levers.
PEC: What are some of those success levers?
Gauss: Your listings have to be absolutely top-notch. That includes photography. We have split-testing software with thousands of campaigns where we know exactly what photos are driving the best conversions and what people really want in the ecommerce setting. Sellers have to have great studio shots with graphic call outs that are showing all the details, because nowadays people don’t really want to read.
You also have to have lifestyle photos that show the product in context and in use to build that emotional story and that emotional connection with a potential customer.
On the content side, so many people in traditional retail are like, “Oh, you’ve got to tell your brand’s story.” But fewer people are reading content. So the content is a lot more about SEO. It’s a lot more scientific than driving a brand’s story. We’ve done tons of split testing where the content doesn’t drive conversion nearly as much as you think it would. It’s all in the photos.
PEC: Is there a good way to know which products are likely to sell well on Amazon?
Gauss: For major retailers, you should put every product you have on Amazon. Then create a hit list of products to optimize, to focus on first.
PEC: How important is price?
Gauss: There is a price sensitivity to each market. Nutritional supplements, as an example, are fairly price-sensitive insomuch as low price actually is not the way to go. If you tried to cut your competitors on price, a lot of the time it doesn’t work, because people will assume that your supplement is inferior.
Take commodity items, like spatulas. Low prices definitely do well, so long as you have the social proof in terms of reviews. In that case, try to shoot for the average market price.
PEC: What’s your advice to a small or mid-sized company just getting into Amazon?
Gauss: Generally, we think that the barrier to entry is the average review quantity. I would go across products and look at the average BSR — best sellers rank — versus the average review quantity.
How many units are the top listings selling? What is their gross revenue divided by the barrier to entry [number of reviews]?
If everybody on page one has 10,000 reviews, that’s going to be a very difficult market to break into. If everybody has 500 or less reviews on average, that’s a much easier market.
Next, you have to look at price. How can you compete on price?
PEC: Are reviews really the currency for products on Amazon?
Gauss: Basically, it’s relative. At the end of the day, reviews are, for many consumers, the only indicator of popularity. So, yes, reviews are absolutely critical to maximizing your sales potential.
PEC: So how can sellers can get more reviews?
Gauss: The best tactic is always making sure that you’re providing a great customer experience. Then reach out to customers. Give them a tip on how to use the product.
Definitely make sure you are staying within Amazon’s terms of service. Amazon changed it in October 2016. You used to be able to give products away in exchange for a review. But Amazon took that away. There’s still a lot of people doing black hat tactics — make sure that you’re not doing that.