HOW TO RUN GREAT PROMOTIONS

By Vipon last updated on 0 comments

When you’re thinking of discounting a product there are a number of questions you need to ask yourself. If you’re not certain of what you’re doing, you’re making less profit for no reason.

First of all you need to ask what is the purpose of the discount. It should have a definite reason, such as:

•      liquidating old inventory,

•      getting a newly launched product off to a good start,

•      increasing market share,

•      putting the pressure on weak rivals or discouraging new entrants.

You also need to work out the numbers. A discount will not necessarily make more profit. If you have a $20 product and your gross profit is $8, you might want to lower the price by 10%. With $12 in production cost, if you lowered the price to $18, your gross profit is cut from $8 to $6, or 25%. So you’ll need to sell 25% more volume to break even.

That’s a lot more volume. If you are a new entrant to a product area, you may find that the discount is enough for customers to decide it’s worth trying out your product even though they usually buy a different brand. That could make it worth while discounting.

In the same way, if you have seen a number of new entrants coming into your sector, a short sharp discounting campaign might make them think better of launching new products. However, if they reduce their prices to compete, you’ll have lower profitability in future. That’s the risk you take.

How are you going to present and publicize your discount? Just reducing the price isn’t enough. You need to attract people’s attention, and you need be able to get people excited about it.

This is where it can help to think about who in particular you’re targeting as new customers. Here are a few ideas:

•      customers who usually use another product, but might use the discount to try yours;

•      customers who usually buy cheaper products, but might buy yours if the price is reduced;

•      new customers (banks and credit cards often offer better terms to new customers);

•      customers who bulk buy.

You might also want to think about who you don’t want to see the discount. For instance, if you’re offering a special deal to new customers, you might want to try to advertise it in such a way that as few existing customers as possible see it. Or if you’re offering a deal only to customers in certain states, again, you want to try to stop customers who don’t qualify from seeing it.

Couponing and the use of discount sites is a great way to help keep your discounts focused. Existing customers probably won’t see your discounted stock unless they’re members of the site or actively clip coupons.

Finally you need to be able to monitor whether the discount worked. Did it bring in the expected increase in sales? Did it shift your inventory? Even when you’ve ended the discount campaign, you should be checking whether sales fall back to the pre-discount level, or whether you’ve managed to retain the new customers you brought on board. If you’ve expanded your customer base long term, then you can see the lower profit on discounted stock as an investment – but only if it actually works!

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Discounting: comparing your costs

By Vipon last updated on 0 comments

As a seller, you need to consider discounting against other ways of spending your Amazon marketing budget, such as advertising, or paid social media content. You also need to consider the impact of Amazon fees, for instance, if you’re trying to shift slow-moving stock.

The difficulty is that you think of a discount as money off the sales price. To do your calculations you really ought to think of it as a marketing cost.

For instance, a new product could be introduced with just advertising, or a mixture of advertising with a couple of discount deals, perhaps a Lightning Deal on Amazon. To look at the figures, you’ll want to do this sort of calculation:

•      cost of advertising = cost A

•      cost of advertising plus the discount = cost B.

If you show discount as a cost, rather than changing the sales price, it’s much easier to model different scenarios on your spreadsheet. You can play with different proportions of costs, too; run your figures to see what happens if you spend half your money on advertising, against three-quarters. You may find that there is a certain number of sales at which you want to cap the discount.

Of course, the difficulty is that you won’t know in advance how well the advertising and discounting will work. But you can still choose a mix that suits you.

The other advantage of doing your sums like this is that if you treat the discount as a  cost, in a couple of months’ time you will be able to look back at the return on your investment in terms of the sales that were stimulated (assuming you still make a profit). So you know how much money you made on that level of discount. That can help you work out how useful your discounting and advertising has been, and may help you budget better next time round.

You might also want to discount slow moving stock. In this case, you need to consider the discount against Amazon’s storage and discontinuation fees. Check the rate card at Seller Central (https://sellercentral.amazon.com/gp/help/external/G3EDYEF6KUCFQTNM): they depend on the size and type of product. You might also be charged overage fees (https://sellercentral.amazon.com/gp/help/external/V8JEETWV9Q33CMX) if you go over your allotted storage space, and an aged inventory surcharge (https://sellercentral.amazon.com/gp/help/external/GJQNPA23YWVA4SBD) for units stored over 271 days. (This got more expensive in May – Amazon only used to charge for units that had been in store for a full year.)

We’ve put the links up for you as Amazon has been changing fees fairly regularly for a while. If we put them on this blog they’ll probably be out of date by the time you look at them.

Add together all the fees that apply to your slow moving stock over the period that you think you’ll have to keep it in store. To this you may want to add Amazon’s removal order fees, which are charged if you decide to take product out of its warehouses (https://sellercentral.amazon.com/gp/help/external/help.html?itemID=9W7FVTLY343ZBKN&language=en_US&ref=efph_9W7FVTLY343ZBKN_cont_6F7CN3EQS7MEGCN). This is the total amount of discount that you can offer on the stock in hand and still do better than leaving it in the warehouse. (Obviously, don’t forget the Amazon selling fees you’ll have to pay on selling the discounted stock. That would give you a falsely optimistic answer.)

Note that this doesn’t necessarily mean you’ll make a profit, but it will minimize your cost of closing down an unproductive line. It might also be more cost effective to get your inventory back to regular levels with a discount than to pay overage fees or aged inventory surcharges.

Again, the key to making the right decisions is to look at discounts as a cost of doing business, just like your product cost, marketing costs, or other Amazon fees.

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Why discounts make people spend more

By Vipon last updated on 0 comments

Auctions are great places to get a bargain, you would think. For instance, at one auction a foreclosed house that had started at $25,000 came down to the crazy price of $2,000 before a bidder put her hand up.

She thought she’d got a bargain. Unfortunately so did the guy in row three. Up went his hand, and up went the price to $3,000. Her hand went up; $4,000. His hand went up; $5,000. Eventually, the house sold for nearly $40,000.

If either of those bidders had put their hand up at $25,000, they’d probably have got the house at that price.

What made them behave like that? Two things. First of all, the love of a bargain; and then secondly, fear of missing out (FOMO). At some point, they each decided that not letting the other person get a bargain was more important than actually getting a bargain themselves.

If you’re selling on Amazon you won’t be selling at auction, but recognizing these emotional responses from customers puts you in a good place to maximize the effectiveness of your discounts.

Remember that in a way, a customer has an emotional connection to the price they pay, not just a rational one. Imagine you just managed to score a fantastic car for ten percent below the usual price – then your friend says “Hey, I managed to get the same price and they added leather seats, too!” Suddenly you don’t feel so happy!

This is what’s called the ego-expressive aspect of price. You feel the price you pay is an expression of who you are; a smart shopper, a good negotiator, a bargain hunter.

So how do you make use of this? One thing you definitely must not do is to destroy smart-shopper feeling by increasing your discount once customers have already bought your product, unless there’s a good reason such as a closing-out sale. That makes them feel mad. “Hey! I thought I’d got a good deal, but it was lousy! If I’d waited I would have got an even better price!”

One thing that can help make your customers feel great about taking a discount is to get them to feel they did something to achieve that great price. That could be collecting coupons, answering a simple question, or joining Vipon. Then they don’t feel they were just lucky; instead, they feel they are responsible for having got the deal. Again, the smart shopper feeling is in play.

Car dealers know all about this. A car is a big ticket purchase that customers don’t make often, and they’re likely to be apprehensive about making it. Although cars sell on the basis of a list price, a car dealer will always find some way of offering a discount or giving some type of feature away. That leaves the customer feeling smart, and stops them from getting buyer’s remorse.

You also play with FOMO, of course. For instance, you could offer the discount only on a certain number of sales, or only up to a particular date. If someone’s thinking about buying, but they have been deferring the purchase for a while, or isn’t certain just yet, the availability of a time-limited discount might be just what’s needed to push them into a purchase.

“Only the first 1000 customers” style offers are also great because they make your customer part of a tiny elite – even if it’s just the tiny elite of customers who bought a pack of ballpoints for $9 instead of $10. That’s really affirming the ego-expressive aspect of price as far as they’re concerned!

And of course, if you want to find the greatest number of smart shoppers around, all looking for discounts, look no further than the Vipon community.

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Amazon Trends: Advantages and Disadvantages

By Vipon last updated on 1 comment

Some people follow trends, some people make trends, and some people just carry on what they’re doing already.

In business, Apple makes trends, McDonald’s follows trends, and Harley-Davidson (mainly) just carries on being Harley-Davidson.

While it’s easy to disparage the trend followers, there’s nothing wrong with following trends. As an FBA seller, you’re going to perform better if you have an idea of where the market is headed.

One advantage of following trends is that you don’t need to take the big risks that the first player in the market takes. You know a product is beginning to gain traction. And popular items will make you money fast, while giving you great growth potential.

Some trends will continue over a number of years. For instance, the move to healthier eating habits, and the shift to e-commerce and away from the mall, have continued for a decade or more and look set to continue for a while. Build your business in alignment with these trends and you’re securing your future growth.

There are also smaller trends, for instance for particular toys or games, books, TV series, and so on. Think Game of Thrones – parents were actually calling their children Daenerys, Arya, and Bran at one point!

Jump on a trending product, for instance by providing accessories for a growing craft market, or add-ons for a trending toy, and you are riding someone else’s coat tails. You’re selling product that’s linked to an existing winner in the market. That can help a small business scale up fast.

Trending products also give you the chance to make money quickly, rather than with a slow burn.

However, there are also a number of disadvantages.

•      Some trends are real. Others just turn out to be fads. Jump on a fad and you could end up with a load of unsold stock when the market turns.

•      If everybody jumps on the bandwagon, a product can suddenly become very competitive, to the extent that no one manages to make money out of it.

•      You need to be careful about copyright and trademark issues if you’re selling accessories designed to work with another product.

•      Whichever strategy you choose, you’ll need to track trends. Your suppliers can actually be a good source of news; remember to ask them whenever you talk about new products and trends they’re seeing. For instance, if you have a stationery brand, news from your suppliers that neon is going to be ‘in’ could motivate you to launch a ‘glo’ notebook series.

Industry magazines and journals are another good source of ideas, though they tend to be reactive rather than proactive. Following LinkedIn or Instagram accounts in your sector is always a good idea – for instance if you’re in decor, Instagram is a great way to see what’s happening right now.

You might want to visit Oddity Mall, a site which features the latest crazy ideas. Right now its front page has a hippo ottoman, lobster sandals, elephant bookends and unicorn paddle boards. Seeing that, I’m thinking animals are going to be hot; perhaps French cookware like chicken-shaped crock pots and cabbage-shaped soup tureens will be a good seller? Check out the number of views on a product if you like it. It’s easy to see if it’s getting a receptive audience.

Once you’ve got your trend and you’re ready to ride, don’t forget to promote your product. But you’ll find if you’re with-the-trend you’ll be selling to people who want to buy – and they’ll be using all those on-trend keywords.

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Boost Your Amazon Sales: FAST

By Vipon last updated on 0 comments

Are your products selling enough? Have sales stalled?

In this article, we are going to share our top 5 tips for boosting your sales on Amazon FBA.

#1 AMAZON PPC

Most likely, you are doing Amazon advertising already. However, most sellers do not optimize the PPC campaigns or use all the strategies available to them. Every sale through PPC boosts your organic ranking for your products leading to more sales. So it is important to make sure your PPC is fully optimized.

For a super quick boost in sales, you can just increase your budget and your bids per keyword. But this is not the most profitable strategy.

The best way is to optimize your Amazon PPC every 1 to 2 weeks. Keep adding extra keywords to your listing & ad campaigns, and remove bad-performing keywords. You can also boost your budget for keywords that are doing well.

It’s impossible to have the perfect advertising setup as ads change every day – but regular improvements can boost your sales and profits over the long run.

#2 Product Promotions

Imagine trying to get a list of 10,000 or 100,000 customers. Building a list of potential customers is hard – but there are existing platforms that help you get in front of millions of shoppers instantly. AMZ Tracker offers the best way to boost your sales with promotions via the VIPON platform – which has millions of people looking for deals on Amazon.

Selling at a promotional price can still be profitable. Also, it is worth listing products on VIPON because these are extra sales that you would not have got otherwise.

#3 Add Some New Products

What if you simply chose a bad niche to begin with? Even if you spend $100,000 on marketing – it might not lead to more sales.

You might try every strategy possible and it is still hard to boost the sales and performance of your Amazon product. If that’s you, then why not try adding new items to your range. Head over to Unicorn Smasher and research products with higher sales volume and low to medium competition.

Adding new products could add $20,000 to $100,000 or more to your monthly sales – by targeting new niches. You could also expand your business by widening your product range. You don’t have to sell the same types of items you are selling. Look for new niches that have higher potential than your existing product.

#4 Partner with Influencers

Does your Instagram have 100,000 followers? Probably not. And it would cost a lot of time and money to build up to that.

Although it is hard to reach influencers with hundreds of thousands of followers, there are thousands of influencers with 10,000 to 50,000 followers in your niche. They tend to be easier to reach, they expect less payment for posting about your product, and usually, they are keener to share new items with their audience.

If 5 influencers with 50,000 followers each promote your product – then you get to reach an extra 250,000 potential customers. And it doesn’t have to cost you much. You could offer a free product and a $50 to $100 amazon gift card to influencers who would be willing to post about your product. Some people will also do it for free. 

#5 Expand Overseas

Amazon has warehouses and online stores in dozens of markets around the world.

If you are selling in Amazon Europe – you could expand to Amazon USA. If you are selling in the USA – you can add your products to Canada and also Europe too.

Amazon is growing at 20% to 30% in different markets around the world. With no extra product development – you could launch in these extra markets and increase your sales almost overnight.

A huge benefit for international sellers is that Amazon is sharing the reviews across marketplaces for the same SKU. If you have some reviews already in the USA – when you launch your product in Europe, Amazon will show those reviews too. This makes expansion faster and easier than it used to be.

Conclusion

There are dozens of ways to increase your sales. Try 1 strategy at a time and focus on that until you get the result you are looking for. If you try each of these tips above you are almost guaranteed to add 10% to 100% to your sales and profits in the coming months.

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Amazon: Avoiding The Dangers Of Discounts

By Vipon last updated on 0 comments

Discounts can help you sell your products in volume. They can really help you get started with a new product, shifting enough volume that Amazon’s search algorithm will sit up and take notice.

But discounts can also be dangerous. It’s quite easy for buyers to get used to the idea that your product is only “worth” the discounted rate.

Discounts only really work when the perceived value of your product is higher than the discounted price. If, for instance, you doubled your price and then offered a 50% discount, most buyers would work out that it’s not a great deal.

This is one reason a lot of luxury goods brands, like Hermes or Montblanc, don’t discount. They want to be seen as exclusive, and one element of that is having prices that deter the less wealthy from buying the product. If they are discounted, they might lose some of that exclusivity.

A way of holding special offers that suits this kind of product is a ‘valued customer perk’, whether that’s giving a discount on subsequent orders (for ‘valued regular customers’), a special bag or gift that accompanies the order, or the chance to attend a private sales evening. It can deliver the same value, but it’s differently presented.

You may not want that kind of exclusivity but you will still want to ‘anchor’ the perception of value at your original price. You can do that in a number of ways, by limiting the availability of discounts. For instance:

•      you can limit the discount to a single channel, for instance, Vipon;

•      you can limit the discount to a certain number of units of stock (“When it’s gone, it’s gone”);

•      you can limit the discount to a particular time (Black Friday, lightning deals);

•      you can create conditions that must be met (bulk buy, coupon, first-time buyer, repeat buyer); and

•      on Amazon, you can also limit the purchases in units that each customer can make.

This last option is ultra useful. Sometimes, people will try to buy up your stock at bargain prices so that they can resell on Amazon and undercut your normal prices. By limiting the number of unit per customer, you not only help keep your discount offer discrete, you also stop these nimble sellers from scalping you.

Building up a loyal customer base helps you discount strategically. If, for instance, you sell own-brand leather boots, loyal customers will know your regular price is (say) $110. If you present your discounted sales as a special end-of-line offer, or discount only small sizes, customers will quickly see that you’re not discounting the product line as a whole. And customers who want to get that particular offer will know that the discount is worth having, so they’ll get their orders in fast.

“Free” is a huge motivator that you can use to move stock without discounting, or in addition to a discount. Here again, customer perceptions won’t necessarily match the cost of what you’re giving away. One luxury baggage brand gives a free padlock and key fob with every bag sold. The cost is very small, but customer perception of the “free” gift is very favorable. (A similar giveaway is luxury hotels that don’t discount on price but offer a ‘free’ shuttle to the airport.)

Finally, use your discounts tactically to address particular customer segments or needs. For instance, customers switching to your product from a different brand will be more likely to try your product out if they get a first time discount. You might want to sell off last season’s inventory or encourage existing customers to purchase new products in your range.

There’s no doubt that discounts are a formidably good way of boosting your sales. You just have to use them very carefully, so that once your discount offer is over you can go back to your regular pricing.

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Amazon FBA: Make the psychology of discounts work for you

By Vipon last updated on 0 comments

Academic research is often dismissed as … well, ‘academic’. But sometimes it’s really interesting to look at what it has to say. For instance, psychologists have done quite a lot of research into how buyers respond to discounts. They’ve designed experiments that test different discount strategies. That’s just the same as an e-commerce seller doing A/B testing, except that they publish their results.

So let’s look at some of the things they’ve found out. One interesting area is the split between “the same, but cheaper” and “more for the same money”. Existing customers are more likely to be encouraged to buy more if you offer a bundled deal or a multi buy, such as buy two, get one free. On the other hand new customers will be motivated more by a discount; 80 percent of shoppers will try a new brand if there’s a discount.

So discounts are by far your best way of attracting new customers, but you might use other strategies for existing customers. The effect on your margins will be the same, but you’re presenting the deal in a different way.

Different generations also have different attitudes. Boomers are less motivated by discounts, but 70 percent of millennials will look for a deal before buying.

When you’re offering a discount, the exact way you present it matters. The ‘Rule of 100’ says that if you’re selling an item below $100, presenting the discount as a percentage is generally more efficient; “20% off!” rather than “save $2” on a $10 sale, for instance. But above $100, the dollar saving looks a lot chunkier and will generally net you more sales.

Customers don’t always do the math. For instance, if you sell one pair of sunglasses for $50 and let the customer order a second pair at half price, the “half price” message will stick in the mind, even though the actual math is that the customer’s only getting a 25% discount on the order as a whole. Take care to present your discounts the most favorable way for your sales!

Two particular factors can really hook buyers. First, everyone’s a sucker for a discount on top of a discount. For instance, when you’re at the sales and you see the special red marker of an extra 20% off on an item that’s already been discounted 50%, it’s a clincher.

The other thing that really hooks people is urgency. Limited inventories, limited time, flash sales, make people feel they really need to buy now. You’re using FOMO, fear of missing out. That’s very powerful; it works for limited edition luxury goods and Kickstarter, and it also works for discounts.

It’s particularly useful for discounts because the element of urgency can stop buyers feeling that your goods are always going to sell at a discount. All of us know shops that have a special sale every single week of the year; would we ever pay full price there? Whereas a top brand retailer dropping prices for just a single weekend is a huge incentive to go out and bag a bargain.

The other thing that a discount coupled with a sense of urgency does is to stop customers looking elsewhere. They don’t want to miss the saving because they were too busy comparing prices! That’s why if you use Vipon to promote your discounts, customers aren’t going to click around Amazon trying to find a better deal!

And getting a discount makes customers feel happy. Psychologists have found that their oxytocin levels increase, which gives them a great feeling!

282


Time to think about Back to School, already

By Vipon last updated on 0 comments

If you’re an FBA seller you always have to think a couple of months ahead of the calendar. Most kids are just looking forward to the summer vacation, but you need to be thinking about ‘back to school’ right now!

If you sell any stationery products, or backpacks, or school sports kit, you need to think right now about restocking. August will be peak sales season, and you don’t want to be short of stock. Look at last year’s sales when you’re planning stock levels, and even boost your stocks a bit more if you’re planning more marketing this year.  You’ll want to get your stock into the warehouse by the end of July, to be safe; searches for back to school goods skyrocket every August.

This year a lot of families will be looking for bargains, as the cost of a tank of gas has gone up and so have food prices. Help them out by thinking about how you can put together bundles of products, pens together with paper, for instance, or make multi packs which give them a discount. Multi packs can really help larger families where several kids need stuff for the new school year.

If you have older stock, this is a great time to make a killer discount in order to offload it. Put it on Vipon and you’ll be able to push stock out and make way for new product, and of course, you’ll be reaching the most discount-hungry buyers this way.

Have a good think about your marketing now, and tee up your campaigns. If you have a social media following, it’s time to start planning relevant posts and pics, you’ll want to ease the subject in gently and then ramp up as you get towards the end of July. TikTok is a particularly important place to market right now, so if last time round you didn’t use video, this ought to be the year you start.

Think about what useful advice you can give. For instance, “How to prepare for your child’s first day at school” is a great post; parents always find this a tough time and read as many posts as they can just to get a bit more confidence. You might also look at the different challenges facing different age groups, or checklists of what’s needed (and links to your products, where relevant).

Get your content made, whether that’s blog posts, videos, and get the posts scheduled. The more you can do right now, the less hassled you’re going to be over the next couple of months.

Plan your ad spend and couponing. You don’t necessarily want to put it all upfront. For instance, you might want to think about a special “last minute” offer for parents who have left things till the last moment, there’s always something that gets forgotten, and other sellers may have taken their foot off the accelerator by then. As always, the big brands will be pushing up the price of basic keywords, so look for long tail search terms you can bid for instead. Instead of “school backpack”, “stripy school backpack” or “school backpack for teens” or “cute school backpack for girls”.

And once you’ve done all this… well, you can sit back and wait for the sales to come in. Of course, before you know it, there will be Thanksgiving, and Black Friday, and the holiday season to prepare for.  But you might be able to take a little break before then. You know, you could even do like other people do, and have a summer vacation!

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Pricing For Amazon: A Tale of Two Purchases

By Vipon last updated on 0 comments

Do you like yard sales and flea markets? They can be a very enjoyable way of looking for vintage furnishings and antiques. They can also be truly instructive if you use them to examine buyers’ behavior.

You can bet everyone at a yard sale is there because they want a bargain. These are not splurge buyers, they’re looking for a good deal – or at least they think they are. But being human, they’re not always completely rational about what constitutes a “good deal”.

We were out at the weekend with a few friends. Two of them, both quite smart and frugal individuals, were looking for the same thing – a rug for the family room. Both had looked at what was available in the shops and decided the prices were too high.

Simon was the first to find something – a Bani Ourain rug with smart black lozenges on a white ground. There was a small stain at one end, which probably would shift with some soap and elbow grease. It was $40.

“Wow,” he said; “These are $200, $300, in the shops.” He snapped it up.

Tara found a gorgeous Turkish kilim for $12. She found another for $10. Then she found a big Turkish rug for … $200.

“It’s lovely,” she said. “The colors are all-natural earth colors, and the pattern has a real nomad feel to it, all those abstract zig-zags. But… $200.”

She haggled it down to $150.

We had a little discussion later about who had got the best bargain.

•      I thought it was Tara’s two kilims. They were exceptionally cheap compared to what you’d normally buy for this quality. She probably would have to pay $150 or so each if she bought them in the shops.

•      But she didn’t feel they were a great deal. Instead, she thought getting $50 “off” the price of the big carpet was a fantastic deal.

•      Simon pointed out he’d got at least $160 off the price of the Bani Ourain rug. But Tara said the stain accounted for that.

Simon got a good deal with his rug, that’s for sure – if it cleans up all right. But let’s look at Tara’s reasoning.

She scored two cheap kilims. Then she fell in love with a carpet. Because she was in love with it, and because the stallholder had mentioned the first price of $200, she thought $150 was a great deal – despite the fact that the two kilims had cost a fraction of the price. It was still a good deal – but not as good as she thought it was.

She had also forgotten that she only needed one rug!

Now both Tara and Simon will tell you they’re frugal. And they do both find good deals, on flights and on insurance and groceries as well as on rugs. But you can see that given a discount on an expensive luxury, Tara fell for it. Simon, on the other hand, found a bargain and was willing to put up with its less than perfect condition to get a low price.

The moral is that sometimes, a ‘frugal’ purchaser will be so motivated by the saving they’re making that they forget what they’re actually spending. Tara was motivated by the $50 saving, not the $150 price tag.

And the moral for you, as an FBA seller, is that if you put that saving front and center, as a deep discount coupon offer, you’ll get the Taras of this world beating a path to your door. And you may get quite a few Simons looking for a deal, as well.

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2022 Quarter 1 Was Disastrous For Amazon

By Vipon last updated on 0 comments

Amazon’s latest results amazed Wall Street, and not in a good way. Instead of the expected $5.3bn operating income, the company only made $3.7bn, and revenue decelerated markedly.

A year ago, revenues were growing at 44%. This time round, they saw growth of just 7%. That’s hardly enough to keep pace with inflation. It’s also the slowest growth Amazon has seen since 2001.

Worse still, Amazon’s commitment to double its fulfillment network over 2 years, in order to support same-day delivery, ended up being too aggressive. That meant costs were significantly higher, demolishing operating margins in the retail business. Despite a better than expected performance from the web services business, that meant results were disappointing.

Further bad news came with a big write-down on Amazon’s investment in electric truck maker Rivian. After this, Amazon made a net loss for the quarter.

The share price headed down 14% the next day as Wall Street turned negative on the stock. So, how bad are these results?

It’s clear that Amazon mistimed its big investment. It has way too much space in logistics right now, as well as too many employees, and it’s going to have to fill up that capacity somehow. But the huge boost to sales during the pandemic hasn’t continued.

That’s been confirmed by other e-commerce vendors. Shopify, which supplies a large slice of the e-commerce market with trading capability, also had poor results. Meanwhile, Etsy and eBay had good results, but warned that their markets are cooling off and revenue growth won’t continue at the same rate in future. So that’s bad news for e-commerce in general.

On the other hand there are two factors which suggest this isn’t a disaster for Amazon. The first quarter is never a great quarter for retailers – it’s the fourth quarter which really matters, with Thanksgiving and the holiday season. And as with companies like Zoom and Docusign, Amazon had fantastic strength during the pandemic, as bricks and mortar competitors suffered, so the comparisons were always going to be bad.

How will this affect FBA sellers? The results show that sales are hard to get right now. Consumers are suffering from the increase in inflation, and they’re trying to cut costs. That makes discounts more valuable than ever as a way of attracting business, whether on Amazon directly or using Vipon to attract cost-conscious consumers.

Amazon is also left with low profitability in its distribution chain thanks to the big expansion. It’s probably looking to cut costs – but it might not be surprising if it raises storage prices for FBA sellers, or even referral fees.

But no, this isn’t the end of Amazon. It’s just a slowdown – you don’t need to worry about the viability of the business.

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