How Amazon Works and How Products Are Ranked
Grab a piece of paper and get ready to take notes. We’re going to go over this whole Amazon thing.
Before we determine what products to actually sell, let’s take a look at what Amazon is and how they rank products. To sell on Amazon, you have to rank.
So what is Amazon? It began as an online e-commerce website where early internet adopters could buy books. It has grown into the largest online marketplace in the U.S. and the founder, Jeff Bezos is now one of the richest people in the world. Why? Because Amazon is delivering what people want. The public demand products and Amazon delivers – fast.
It may seem common now but it up until Amazon started delivering products in 2 days or even on the same day (for Prime members), it was almost unheard of to order something online and get it in under 3 business days. Now, you can place an order before noon and get your items the same day. From a consumer perspective, it’s incredible.
Today, Amazon is a gargantuan marketplace that offers an estimated 600 million products for sale, extremely fast delivery via nationwide distribution centers and allows merchants of all size to offer their goods for sale via their online platform.
So how does Amazon determine rankings? They use an algorithm similar in many ways to Google. Essentially, they look at the text on the product page, reviews, volume of sales and other information within a seller’s account to determine how to best serve their customers the product(s) that best matches their search query.
Search for “multivitamin” on Amazon and you’ll see a list of products that bet match your query – currently a list of multivitamins including Amazon’s latest “Solimo” line.
Amazon has just served up a list of products it thinks best match your request. They hold the key to the success on the platform. Ranking is the way to sell on Amazon and the formula, although secret, can be understood if you understand the basics of a search engine.
Why Ranking is Important
Make no mistake about it. The products that rank at the top of any category are selling and those on pages 2-100 are not. In fact, if a product is not on the top of the category, it may not sell at all – ever.
Understanding how Amazon ranks is the most important part of this learning experience. But to actually be successful on Amazon, you have to know to actually rank and that formula is not nearly as easy. Ask anyone that has a product at the top of a category how they on Amazon how they did it and you will usually get one of two answers: 1. I started at the beginning and it took a ling time or 2. I spent a lot of money advertising.
Amazon has been around for over 20 years now so getting in early is not an option. The other option is to advertise your tail off and to be very honest, it is by far the most effective way to rank.
The competition can be fierce at the top and if you want to get on top and stay there, you have to find ways to rank consistently and to do that you must advertise effectively on a regular basis. Marketing and advertising leads to ranking and ranking leads to sales.
Ranking = Sales.
Tools That Can Be Used to Rank
As with most other large corporations, there are now experts who have been working with this platform for many years to find the best ways to rank a product. Many of the tools out there such as Jungle Scout for example, allow you to see who is ranking, estimated income, how difficult it would be to supplant them in the rankings, and many other metrics.
The big boys that dominate the rankings on Amazon have several other tricks up their sleeve, from ways to dominate the Buy Box to cultivating large quantities of reviews from buyers that participate in “buying clubs” to offering up their products for free or at steep discounts. Many years ago, these practices were known as “loss leaders” because you would be willing to take a loss in order to get more sales until the point at which your company was stable and viable. And so it continues today along with all kinds of other tricks to outsmart and outperform the competition.
Whatever tools you decide to use, I always advise any person new to Amazon to seek an expert’s help and guidance. For entrepreneurs with decent budgets, I advise the services of an Amazon launch expert firm. These corporations know the ins and outs of starting a new product or line and can help advise you on every aspect of the business from the look and presentation of the product to the price, keywords and category selection.
For all others, I advise taking the time to learn as much as possible about the way Amazon works and when in doubt, refer to the leaders of the category for information. Struggling with sales and ranking? What are the top-selling products in the category doing differently. There’s nothing wrong with learning from the success of other products and brands. See what they do, and apply what looks to be successful for them to your product and business.
You don’t necessarily have to reinvent the wheel. You can see what other, successful businesses are doing and apply those techniques to your company and products.
Selecting the Right Product to Sell
So how do you actually select the right product to sell?
The answer is, you choose an approach and then do everything you can to become familiar with your competitors, what they do, how they change and how they perform. Knowing your competition, you are far more likely to succeed is this competition.
What approach will you take? The three most common approaches are:
1. Sell your existing product(s) – You already have products and want to now sell them.
2. Exploit a niche – You know how to find a niche and will exploit that by entering a category with a product or products and using you skills, will attempt to outsell the competition using keywords, marketing and promotional techniques.
3. Passion project – You have a passion for a specific product or a product that you made and wish to offer it for sale.
Regardless of the way that you approach the subject, selecting the right product to sell should come down to the selection of the product that is expected to rank and thus sell the best. This doesn’t mean the product that you think is going to sell the best, but the product that lies in an active category, has good demand, sells well, has relatively weak competition and can yield a profit.
Do your research. Get help if you need it. Look for the numbers. Get active.
The best way to choose the right product is to find the one that people are searching for but is not offered by a strong seller or in adequate quantities. There are many weaknesses when it comes to a seller. They may have poor pictures, poor copy, poor reviews. You may be able to offer a better price, a better value or a better quality. Emphasize those points, target a specific audience and focus on offering a useful product at a competitive price.