Amazon's new adjustments are coming, and sellers' costs will increase again

After the autumn promotion, some sellers were happy while others were sad. Some sellers’ orders doubled, but many sellers’ sales were not ideal. Their orders did not explode, but their ads did. Careful sellers found that Amazon’s ads had been adjusted again, and the competition for traffic would be more intense in the future. Some of their peers said: “The cost is going to increase again, and the bidding is simply unbearable!”

With the increase in advertising costs and other expenses, sellers' profits have been hit again and again. Statistics show that the average annual profit of Amazon sellers is about 210,000. Are you falling behind?

Amazon adjusts its ads again, sellers call it a "leek-cutting magic tool"

The autumn promotion is in progress, and many sellers have intuitively felt that orders are not booming, but advertisements are booming. One seller was helpless: "The sales on Member Day only doubled, but the advertising fee tripled. It's another day of being scammed and doing charity!" More sellers have similar situations:

“——Order volume has doubled, and advertising costs have quadrupled;

——There are indeed a lot of advertisements, but not many orders;

——On this day, the advertisement exploded but there was no sales. What a hell;

——The order volume is only 50% of last year, and Acos has increased from 10%+ to 20%+. Even after increasing the budget, no orders were brought in;

——There are no conversions but only clicks. One product has no orders in the past two days.

——CPC soared, and orders dropped sharply. ”

When advertising costs soared, some sellers discovered that Amazon had quietly made new adjustments to advertising positions before the big sale, and now they can adjust the bids for the rest of the search results.

Currently, the new adjustment only applies to some accounts. A colleague found that only one of his several accounts could be flexibly adjusted in terms of ads. However, the rest of the search results for his colleague's account could also be adjusted, regardless of whether it was a new ad or an old ad plan.

The new adjustment gives sellers more options, but it also seems to have increased advertising costs.

One seller said that the conversion rate of other positions is higher than that of the product page, and the bid is lower than that of the top position. It is a position with good cost performance, but if everyone bids, it is equivalent to not bidding. The update frequency of Amazon ads is getting faster and faster, which is indeed a tool for cutting leeks. Another seller lamented that " the bidding is simply unbearable, and the bidding is very high in the off-season ! "

Industry insiders believe that after the adjustment, the competition for primary traffic will intensify. New products generally have no weight accumulation in the early stage, so they are more likely to be exposed on the product page . Now, they can try to obtain primary traffic more easily by lowering the bid and doubling the other positions. In addition, combined with the current actions of Amazon search pages, it may be beneficial to new products.

However, some people think that this adjustment makes Amazon's advertising strategy more flexible . The remaining ad positions are open to bidding adjustments. At least low bids will not be concentrated on the product pages, so that traffic will be more controllable.

In general, most sellers believe that the advantage of the new adjustment is that advertising can be more accurate, but the disadvantage is that bidding will soar again, which will increase advertising costs, and sellers' advertising costs will become higher and higher in the future.

In recent years, many Amazon sellers have felt that advertising costs have been rising rapidly, the difficulty of obtaining traffic has increased dramatically, and the sharp increase in Amazon sellers and the intensified advertising competition are also reasons.

As advertising costs rise, more and more Amazon sellers are beginning to pay attention to traffic resources outside the Amazon platform and have diversified their advertising portfolios on channels such as social media and paid search.

The platform itself is also paying attention to traffic from other channels. Not long ago, Amazon announced that for sellers who advertise on Amazon, their ads will now appear on other websites and apps besides the platform, and clicking on these ads will jump back to the Amazon product page.

Some sellers have raised questions about this. If the seller has already placed ads on a certain channel, this may compete with the ads automatically placed by Amazon sellers. Even if shoppers only click on one ad, the seller's advertising costs may be higher due to more intense competition for ad space on the page. Amazon said that sellers can choose not to place ads on specific websites or apps, or they can directly turn off this feature.

The advertising function launched by Amazon may increase sellers' costs. In fact, this is not entirely the platform's fault. Various factors such as consumption downgrade, fierce competition, and diversion of traffic by new platforms will lead to an increase in the cost of acquiring traffic.

Amazon sellers’ average annual profit exceeds 210,000

As costs rise, sellers’ profits will inevitably be hit. According to statistics, small and medium-sized sellers on Amazon have an average annual sales of about $140,000, with an average annual profit of less than $30,000, and 23% of sellers have a profit of less than 10%.

Jungle Scout surveyed thousands of Amazon sellers and found that in 2023, 23% of Amazon sellers had a profit margin of less than 10%; 36% had a profit margin of 11-20%; 35% had a profit margin of 21-50%; and 3% had a profit margin of more than 50%. The specific situation is as follows:

Sellers with a profit of 1% - 5% account for 7%;

Sellers with a profit of 6% - 10% account for 16%;

Sellers with a profit of 11% - 15% account for 19%;

Sellers with a profit of 16% - 20% account for 17%;

Sellers with a profit of 21% - 25% account for 19%;

Sellers with a profit of 26% - 50% account for 16%;

Profit: 51% - 3% for 100% of sellers.

Some sellers have been in business for many years and have relatively considerable lifetime profits. 47% of small and medium-sized sellers have lifetime profits exceeding $100,000, and 12% of sellers have lifetime profits between $100,000 and $500,000. 28% of sellers have lifetime profits between $500,000 and $5 million, only 3% of sellers have lifetime profits exceeding $5 million, and 9% of sellers have not yet made a profit.

In terms of sales, most Amazon sellers make at least $1,000 per month, with some super sellers making over $100,000 per month.

45% of Amazon sellers earn $1,000 to $25,000 per month, which translates to $12,000 to $300,000 in annual sales. 25% of Amazon sellers earn $25,000 to $250,000 per month, which translates to $300,000 to $3 million in annual sales. 17% of sellers earn less than $500 per month in sales.

In terms of lifetime sales, nearly half of the sellers have lifetime sales of less than $25,000 ; 17% of small and medium-sized Amazon sellers have lifetime sales of more than $100,000, and 1% of sellers have lifetime sales of between $5 million and $10 million, becoming the top sellers that everyone envy.

Less than $25,000: 49%

$25,000-$50,000: 11%

$50,000-$100,000: 10%

$100,000 - $500,000: 8%

$500,000-$1 million: 4%

$1 million to $5 million: 5%

$5 million to $10 million: 1%

Combining the data, the average monthly sales of small and medium-sized sellers is $11,671, or $140,052 per year. Considering that the average profit margin of small and medium-sized sellers is 21%, the average monthly profit of new sellers is $2,451 (about RMB 18,000), or $29,412 (about RMB 215,000) per year. For sellers with a profit margin of 21% or higher, their monthly profits may reach five figures or more.

The average annual profit is 210,000, which should be achievable by many sellers. With the increase in operating costs, Amazon operations must be profit-oriented.

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