The emergence of Amazon: a double-edged sword for South African brands

The long-awaited launch of Amazon.co.za is a landmark moment for South African businesses, packed with the potential to increase market reach, brand positioning and credibility through association.

A robust and streamlined logistics and fulfillment network combined with data-driven insights are expected to support a more competitive e-commerce landscape, offering a promising path for growth and success.

While there are many complexities, with the right strategy and a deep understanding of the Amazon platform and algorithm, brands can start seeing profitable returns in as little as 18 months. The journey takes time, budget and perseverance, but the rewards are worth it.

Amazon’s global dominance is reflected in the impressive numbers from Jungle Scout’s “State of the Amazon Seller 2024” report. In 2023, 52% of Amazon sellers had monthly sales of more than $1,000, and 19% had more than $10,000.

Corporate brands and retailers, which make up 63% of Amazon sellers, reported average monthly sales of more than $100,000, and 40% reported average monthly sales of more than $500,000. These numbers highlight the platform’s enormous profitability potential.

“To successfully grow and expand your brand on Amazon, you need a clearly outlined strategy – an Amazon retail readiness plan, if you will,” says Stephen Lloyd, senior Amazon strategist at RT7 Digital, a specialist Amazon marketing agency based in SA.

“There are four key phases in which a brand typically navigates the complex Amazon environment.”

Phase 1: Establishment

Starting with a comprehensive foundation built on detailed market research is crucial. Understand your competition, identify your niche and determine customer preferences to lay the groundwork. Create unique products tailored to the needs of your mainstream market, combined with optimizing your product listings (titles, descriptions and images) to ensure they stand out.

Build a strong brand presence by strategically using Amazon stores and enhanced brand content while soliciting reviews via Amazon Vine. Choose the right fulfillment and delivery mechanism, set competitive prices to ensure profitability, and organize a strategic product launch, complemented by promotions and targeted advertising.

Lloyd adds: “But remember, the journey doesn’t end there. Brands must continually test and refine real-time data-driven strategies to maintain and grow their market presence, demonstrating the need for adaptation and agility in Amazon’s ever-changing landscape.

Phase 2: Acceleration

Shift the focus in the “Acceleration” phase to growing market share and strengthening profitable lines to ensure long-term profitability. This includes increased investment in targeted advertising to capture the attention of potential customers and increase sales.

Identify key competitors and strategically position your brand to increase market share. Regularly optimize your listings through SEO, taking advantage of promotions and advertising to climb the bestseller rankings, increasing your brand visibility and credibility. Also encourage positive reviews to help build trust and a loyal customer base.

Lloyd adds: “The integration of AI tools has transformed Amazon’s business, with 48% of sellers using AI for tasks such as optimizing offers, analyzing reviews and generating sales intelligence. “These technological advances promise to streamline the operations of South African start-up businesses on Amazon.”

Additionally, create ads specifically targeting competitor products to highlight gaps and opportunities in the market. Engage with customers through social media to gain insight into their needs and desires, guiding future product and marketing strategies.

Partner with affiliates to expand your brand’s reach beyond conventional boundaries and explore a hybrid model that combines reseller and supplier strategies for improved profitability.

Phase 3: Defend and evolve

The brand then needs to optimize its operations and defend its market share while constantly growing. Leverage advertising tools like Amazon’s Demand-Side Platform (DSP) to expand your reach and enable highly targeted advertising strategies.

Continuously improve your product catalog, introduce new products that meet market demand and phase out underperforming products to maintain a streamlined and effective offering. Gaining and maintaining the Buy Box on Amazon by tracking sellers and implementing strategic measures is the key to increasing sales.

To further secure market position, consider splitting product varieties to reduce the visibility of competitors and employ defensive advertising tactics to secure market share. Gain exposure with Amazon Editorials to increase your brand visibility and credibility. Take part in promotions and special events to increase sales during key shopping periods.

Finally, explore opportunities to expand into new markets or customer segments to maintain your brand’s leading position in the competitive landscape.

Phase 4: Performance

Finally, remain profitable and maintain a dominant position in the market by focusing on keeping your best-selling products at the forefront. This period requires continuous use of Amazon’s DSP to ensure maximum advertising reach.

To increase sales of your best products, implement daily tactics such as price adjustments to ensure these offers remain attractive and competitive. Stay alert to emerging brands and new products in your niche; Quickly adapt your strategy, including keywords, pricing and unique selling propositions, to address these challenges.

Use smart pricing strategies to strike the balance between maximizing sales and maintaining profits. Additionally, visual elements significantly attract customers’ attention and constantly enrich product pages with high-quality images and videos.

This proactive approach will enable you to establish your brand’s leadership position and its success in the market.

Although Jeff Bezos, founder and CEO of Amazon, was quoted as saying, “It’s hard to find things you can’t sell online,” it’s easy to get lost in the crowd. Thriving on Amazon – the most competitive marketplace in the world – is based on a strategic approach that maximizes opportunities while managing challenges. Lloyd says: “The harsh reality is that not all brands will succeed on Amazon. It requires an aggressive advertising strategy with larger budgets, mastering the complexities of platforms, focusing on compelling brand storytelling, and using data to adapt and optimize.”