Part 2: 2018 Round Up with Kevin King & Liran Hirshkorn

Richard Morgan
December 21, 2018

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Part 2 of our 2018 Round up with Kevin King and Liran looking at the rise of Black Hat tactics and how Amazon will respond in 2019, challenges to AMazon’s dominance and how smaller sellers will be squeezed by big brands

2018 Round up – Black Hat

Black hat tactics have grown a lot this year in our 2018 Round up
2019 will likely be the year more Amazon control comes in here
Some changes were made and people were fired in India recently
The Amazon ‘one vendor’ combined seller and vendor central accounts to reduce abuse is key
People having stranded stock, listing changes, locked out of your listing needs to be stopped
Bad Sellers are buying ‘burner’ accounts and abusing people
Vendor Central gives you ‘God-like’ powers over accounts which has been abused by some in our 2018 Round up view
People with Seller Central burner accounts, you can buy Vendor Central accounts from China or India
China is where the real serious problems are coming from – but Amazon are courting China and turning a blind eye in some ways

Avoid Abuse

In China’s culture they don’t worry too much about ToS, they will focus on getting ahead
Mostly it’s in the BSR less than 1,000 space – stay in the middle of the pack and products over $20 to avoid these people

Strategy

If you’re selling things built in a Chinese factory then you’re likely to hit competition
Looking outside of China for products is a potential strategy (i.e. Carpets from Turkey)
The more complex the product the better off you will be
2019 branding and differentiation is increasingly important

Branding is the Way Forward

Amazon is better than ever – is it saturated and game over?
No it’s better and getting better every day
You can take $x and turn it into something and all in your PJs if you want
The rewards from patents and unique designs will be the way forward
Licensing designs will be a big area too with Licensors accepting you are Amazon only not retail
If your strategy is to be a ‘me-too’ product and compete with people selling the same product then you are screwed
Differentiation, branding and manufacturing your own is the way forwards
If you’re branding then you’re not just competing on price and reviews

Sweet Spot on Pricing

Kevin does not sell anything under $20
Amazon is not all about lower price – there’s plenty of people on Amazon that will pay a premium for a product
People will also pay for convenience
How much ROI, Profit and can I compete are Kevin’s drivers not the price

Predictions for 2019 – Changes ahead?

Advertising costs – Amazon becoming pay to play platform
Amazon has about 130 Amazon Private Label Brands
For smaller sellers it’s going to become more and more expensive
Ranking on Page 1 for some of the more popular keywords will be more costly
More of a ‘pay to play’ platform
All of the change on Sponsored Ads
If the algorithm changes and the Algorithm has no relationship between PPC and Organic Ranking it would be a problem
Google had to change this and separate the advertising from the ranking due to anti-trust issues
Amazon will likely keep this link
Expect to see more of the big brands coming in and smaller guys getting pushed out
Bigger brands are coming in and embracing the 3P side rather than the 1P side and spending a lot more on advertising in Amazon which pushes costs up
They are learning more of the Amazon tricks and techniques that increases the competitiveness in the marketplace
Smaller sellers advantage is to be able to change a Listing without having to go through the Legal Depts Accounting Dept, etc….
Speed of change on the platform is the smaller seller’s advantage
Might be more Amazon ‘central approval’ coming for when you want to make a change it will have to be approved before it takes effect to battle this black hat activity

Amazon Market Share Loss?

Not likely to see a challenge to Amazon’s dominance in 2019
Maybe Instagram or Facebook come up with an ecommerce model but the FBA fulfilment model is trusted and hard to build and compete with
Amazon if anything will grow their market share in Europe and wider

Sales Tax

Going to be a bigger problem
There will likely be more enforcement
Amazon at some point will have to start collecting and paying this across 40+ states
Steve Simonson has said there’s an announcement coming soon……not sure what!
There will be a domino effect once the States start falling