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Top Trends Affecting Amazon Businesses in 2022
By Ian Drogin
Every FBA seller knows that the Amazon marketplace evolves at a rapid pace. Some strategies that worked last year are no longer relevant, while others have emerged as new and exciting opportunities for sellers who take advantage of them. As an owner, it’s important to pay close attention to key trends affecting Amazon businesses in 2022.
In addition to affecting your growth strategies, industry trends also impact your prospects for selling your Amazon business. Just like any other market, there are numerous external forces that shape the acquisition marketplace.
In this article, we discuss the most important trends that you should be aware of when scaling (or selling) your Amazon FBA business. We also talk about common challenges that many sellers face, as well as how to overcome them.
7 Top Trends Affecting Amazon Businesses in 2022
Some trends have more significant implications than others. Therefore, how do you know which changes have the greatest impact on you and your business?
Below, we’ve listed seven of the most important trends affecting Amazon businesses in 2022. As you’ll notice, a few of these trends are most relevant for owners who are considering selling their FBA business.
- PPC costs are continuing to rise
- High-quality images and videos are essential
- Supply chains require additional thought and oversight
- Online grocery is growing rapidly
- Ecommerce sales volume is continuing to increase
- Current economic conditions are impacting the acquisition marketplace
- Institutional investment firms are continuing to fuel demand for FBA brands
Rising PPC Costs
It’s no surprise that PPC costs are continuing to rise across most platforms, including Amazon. Several years ago, many sellers didn’t even utilize Amazon advertising, and few who did were savvy in their approach.
In ‘those days,’ novice marketers could utilize PPC to achieve great results. However, as more and more sellers have joined the platform and become educated, the competition has increased. It’s no longer possible to implement a haphazard strategy to capture market share.
In 2022, you can’t necessarily expect to simply turn on ads and experience a winning ACoS right out of the gate. More than likely, you’ll need to utilize more ‘advanced’ strategies to refine and optimize.
Even then, most sellers still accept that their ad budgets are going to be higher than they used to be. This is especially true when launching new products. While the increase in Amazon PPC is what Amazon sellers are most concerned with, this Amazon trend affects just all social media marketing efforts across a variety of platforms.
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The Importance of Images and Videos
Just as sellers need to increase their efforts with Amazon ads, images and videos need to reach new standards of quality in 2022. With more products than ever to compete with, you need to make sure that yours truly stand out.
According to many Amazon experts, sellers should seek to combine high-quality photographs with 3D rendering. This can go a long way to maximizing products’ visual appeal. After all, many buyers make purchasing decisions solely based on images.
“With more products than ever to compete with, you need to make sure that yours truly stand out.”
Also, videos are an excellent way to further differentiate products. In addition to their visual appeal, videos are great for highlighting key product features that images can’t fully capture. They also serve as invaluable Amazon marketing assets for your marketing strategy.
Supply Chain Instability
In the last two years, global supply chains have encountered significant challenges. These have threatened both Ecommerce as well as brick and mortar businesses. As a result, numerous Amazon sellers have found it difficult to stay in stock, losing valuable online sales and rankings. Additionally, increased shipping costs have reduced profit margins in many cases.
“FBA business owners must critically analyze their supply chains and take proactive steps to optimize efficiency and minimize stock-outs.”
To overcome these challenges, business owners must take a proactive role in analyzing supply chain issues and developing effective solutions.
- Establishing backup suppliers in different parts of the world
- Finding new freight and logistics providers
- Adjusting sales and inventory forecasting practices to account for the new realities.
Some Amazon sellers are choosing to go a step further by moving production to the U.S. or Mexico. While such a shift can lead to higher production costs, it can also reduce transportation costs and lead times, as well as uncertainty.
Each Amazon business has its own supply chain challenges to face. However, on a broad level, the solutions are similar. FBA business owners must critically analyze their supply chains and take proactive steps to optimize efficiency and minimize stock-outs.
The Growth of Online Grocery
Consumers are increasingly purchasing groceries online, and Amazon is aggressively seeking to capitalize on this opportunity. Currently, Walmart is in the lead, but Amazon fresh is quickly growing on Amazon as well. By 2024, it’s predicted that online grocery will top $240 billion.
This rapid growth presents enormous opportunities for Amazon businesses that cater to the increasing demand. And because Amazon’s ‘Subscribe and Save’ program is aligned perfectly with online grocery, sellers have the opportunity to earn repeat customers, dramatically increasing their Customer Lifetime Value (CLV).
Amazon Sales Continue to Grow
Amazon sales have grown quickly over the last few years, and that Ecommerce trend shows no signs of ending anytime soon. In fact, all indications suggest that volume on Amazon will continue to increase for the foreseeable future.
The growth of total Amazon sales means that there are more opportunities than ever for sellers. Of course, the growth in sales is accompanied by increased competition, but there’s still plenty of room for new small businesses to succeed on the platform.
“The growth of total Amazon sales means that there are more opportunities than ever for sellers.”
Economic Uncertainty Impacting the Acquisition Marketplace
If you’re one of the many Amazon sellers considering selling your FBA business, there’s more than just “Amazon trends” to pay attention to. When it comes to understanding the acquisition marketplace, the overall economy plays a significant role.
2021 was a record year in the world of mergers and acquisitions. Thanks in part to strong economic growth, many investors were eager to put their money into FBA brands that showed promise.
“Although the current economic conditions aren’t helping the acquisition marketplace, there are many businesses still being bought and sold.”
While there are still plenty of opportunities to sell Amazon businesses, the market has cooled off a bit. Compared to some other investments, small businesses are riskier. When the economy regresses, investors tend to favor relatively stable investments. This causes a reduction in the availability of capital for purchasing Amazon businesses.
Although the current economic conditions aren’t helping the acquisition marketplace, there are many businesses still being bought and sold. As a third party seller, this just means that it might take slightly longer to close, or your deal terms might not be quite as favorable. However, if you’ve built a desirable business, there’s a strong possibility that you’ll find the right buyer.
Institutional Money Fuels Demand for FBA Brands
Over the last couple of years, we’ve seen an influx of institutional investing in the acquisition marketplace. To a large extent, FBA aggregators have fueled the demand for profitable FBA businesses.
Aggregators seek to buy established FBA brands and then grow them using their own teams and infrastructure. They rely on the ‘economies of scale’ principles to increase revenue and maximize profitability across the portfolio of brands they operate.
“If you list your business for sale with a reputable Advisor, you gain exposure to the broader marketplace of prospective buyers.”
While selling to the right aggregator can be a great move, it’s important to not only sell to an aggregator. In other words, if a single party approaches you to buy your business, it’s best to see what other parties might also be interested in making an offer. If you only deal with one party, they’re not incentivized to offer you a great deal.
On the other hand, if you list your business for sale with a reputable Advisor, you gain exposure to the broader marketplace of prospective buyers. When more potential buyers have the opportunity to make offers, you have more options. In turn, this route typically leads to a better purchase price and more favorable deal terms compared to selling directly to an aggregator.
Factors Influencing Amazon Business Trends in 2022
To understand key Amazon trends on a deeper level, you need to consider each of them in the context of the global economy, as well as world events as a whole. There are many factors that influence Amazon trends, but four that stand out include:
- Increasing competition
- Supply chain instability
- Economic uncertainty
- Continued growth within Ecommerce
In 2022, there’s no question about whether or not selling on Amazon is a viable way to scale an Ecommerce business. Time and time again, entrepreneurs have launched, built, and sold profitable Amazon businesses. Not surprisingly, the proven success of the FBA business model has attracted a dramatic influx of sellers. In turn, this has led to increased competition on the platform.
Increased competition has been a driving force when it comes to rising PPC costs, as well as the need to provide high-quality product images and videos.
The Causes of Supply Chain Instability
In regard to supply chain instability, there have been several key factors that are responsible. First and foremost, everyone knows that pandemic lockdowns have had a significant impact on supply chains around the world. Although many businesses have adapted, lockdowns continue to impose challenges for Amazon businesses in North America, and globally. Additionally, the recent hikes in oil prices have brought corresponding increases in transportation costs—a further challenge for Ecommerce businesses.
“The rapid growth of online shopping has created enormous opportunities for many Amazon sellers.”
When it comes to buying and selling Amazon businesses, the global economy plays an important role in investors’ decisions. As mentioned, when the economy declines as it has recently, investors tend to put their money into less risky asset classes. This doesn’t mean that it’s not a good time to sell, only that the market is quieter than it was in 2021.
Lastly, the rapid growth of online shopping has created enormous opportunities for many sellers who implement effective Amazon SEO strategies. In today’s Amazon marketplace, top-ranking products now enjoy enormous organic traffic from Amazon Prime customers who can complete purchases with a single mouse click. Not only has this led to an increase in revenue, but also an increase in business value. Amazon has essentially even created its own holiday—Amazon Prime Day, which many compare to Black Friday.
Challenges Amazon Businesses Should Be Prepared for in 2022
In 2022, it’s not good enough to merely meet the status quo in the activities you engage in. When it comes to PPC, you can’t just throw up an ad targeting the most obvious keyword and expect your campaign to take off. For images, you can’t just snap a few photos on your iPhone at home and sit back and watch the sales come in.
As an Amazon seller or retailer, the challenge is that you must excel at almost everything. In the previous sections, we outlined many of the key trends that can represent challenges for an Amazon FBA business. Whether it’s supply chain instability or issues with PPC management, FBA businesses should be prepared to implement effective strategies in 2022.
How to Overcome Challenges that May Affect Your Amazon Business in 2022
There are many specific challenges that sellers must overcome, but the overall strategy is the same in each area. When you work with great people who are experts in their respective areas, it becomes much easier to overcome common challenges and build a successful small business.
In order to overcome the challenges discussed above, it’s important to have the right people on your team. Unless you’re one of the (extremely) rare people who are good at everything, it’s best to allocate key activities to those who specialize in the respective area—be it product development, PPC, or creating an excellent customer experience.
“When you work with great people who are experts in their respective areas, it becomes much easier to overcome common challenges and build a successful business.”
Some owners decide to build their own teams, while others choose to outsource most of the work to an Amazon agency. Regardless of what path you choose, working with the right people is a powerful step to overcoming common challenges and building a sustainable FBA business.
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