Most brands have some idea of how well they’re doing on Amazon.
They know, in most cases, what the POs they’re getting from their sellers amount to. And they know if the numbers are going up or down.
But how do you know how much you’re leaving on the table?
At Zoplenti, that’s a fundamental question we need to answer when onboarding a new partner.
We’ve written before how we can evaluate a brand’s performance on Amazon, overall. But that’s only part of the equation: it tells how well a brand is executing on Amazon.
As a growth-focused partner, we also need to understand what we can realistically aim for, and how fast we can get there.
This article will walk you through a high level overview of how we quantify the opportunity for a brand on Amazon.
First, we understand the current situation.
Our first step is to understand where the market for your brand stands right now on Amazon.
Basically, we look to understand two crucial things:
- How big the market is for your products;
- Who owns market share, and how much of it.
We start by looking deeply at your brand’s catalog, as well as your competitors.
The size of your market on Amazon is largely determined by Amazon’s customer base, and it closely matches overall market trends. For most categories, what brands do does little to change the total size: Amazon shoppers want to shop on Amazon.
By estimating sales for these catalogs, we can come up with a pretty accurate estimate of your total addressable market on Amazon, across your product lines. Not just that, but we also know how much of that pie you and your competitors own.
Now that we know the market, it’s time to go deeper and understand how well the players are executing.
Then we estimate brand potential.
The next step in our process is to figure out what you’re doing wrong (the gaps in your strategy), and crucially, how much potential there is if we fixed those gaps.
To do this, we run our discoverability and gap analysis on all the players, as well as account for a bunch of other factors, like the strength and reputation of brands off platform and their current promotional efforts on other channels.
We do this using our proprietary Z-Vantage technology to churn the relevant data and generate quantitative insights, as well as human experience for qualitative evaluations.
With this analysis we get three important pieces of information: it tells us how well they are performing on the platform (from a discoverability perspective), how well they are executing their strategy, and how sticky their market share is.
This lets us estimate how much potential there is. While our model for forecasting growth potential is proprietary, here are some general ideas to provide some insight on how it works:
- The worse your current execution, the more growth potential there is in executing a winning Amazon strategy; conversely, worse execution from competitors increases attack surface to leverage against them.
- The brand’s power in the overall market is a large factor in determining their baseline results; a stronger brand is harder to compete with, regardless of execution on the platform. This, however, depends on the market.
- How much market share a brand holds, compared to its discoverability performance and execution, gives important information about how strong it is and how hard it will be to steal market share.
The process is complex, but it gives us a very clear picture of the realistic potential for a brand to grow in market share on Amazon.
The bottom line is, this step helps us define “the multiplier”: how much can we realistically grow your brand if we execute on a winning Amazon strategy, and how hard will it be?
Lastly, we quantify the opportunity.
In the last step, we take the potential we have uncovered, and translate it into a real sales lift forecast.
In practical terms, this means: considering the potential we uncovered and the strength of the competition, how much can we improve the brand’s discoverability with our winning Amazon strategy?
By predicting how things will look from the customer perspective once we improve your Amazon discoverability performance, we can estimate the sales we’d steal from the brands we’re dislodging market share from.
In other words: if we know your flagship product is currently the 10th best selling product in its category, and we know to a reasonable confidence level that we can execute and bring it to the 5th spot… then we can estimate how many more sales it will get in that spot.
By executing this data-driven process across your catalog, we can estimate the value of the opportunity in terms of revenue and market share.
Now, there is only one thing left: to execute on a winning Amazon strategy.
At Zoplenti, we turn market opportunities into sales. With our obsession for growth and effective, tested strategy, we deliver real results for our partners. All the way to the top.
