Over 60% of SMBs Attribute Half or More of Ecommerce Sales to Amazon and other Online Marketplaces, NetElixir Study Reveals
Study sheds light on small-to-mid size retailers’ experience with Amazon, and its impact on revenues and sales
Princeton, NJ – Retail search marketing company NetElixir has released the results of a unique study titled “Amazon for SMB: Friend of Foe” that examines how small-to-mid size businesses (SMBs) are experiencing working with Amazon, including marketing products on Amazon and how Amazon impacts their revenue and sales. For the study, NetElixir surveyed over 500 SMB owners and managers of companies that sell products through Amazon.
“Having worked closely with retailers for over 10 years, we have always known that Amazon is a strong ecommerce contender that can both help and hurt retailers,” said Udayan Bose, CEO of NetElixir. “It seems that 2017 is the year that this understanding became mainstream, and as a search marketing agency specializing in retail, we felt it was important to have a way to quantify small and mid-size retailer’s experience with the ecommerce giant.”
The data collected provides valuable insights into how SMBs are viewing and interacting with marketplaces like Amazon. The majority (60.2%) of small to mid-sized businesses are seeing 50% or more of their ecommerce sales happening on marketplaces. 26.6% see a 50-50 split from their website vs. marketplaces such as Amazon, Jet.com and eBay. 22.7% are experiencing a 75% own website / 25% marketplace split and 21.3% have the opposite experience, with 25% of sales happening on their own sites and 75% happening on marketplaces. Of those who experience 100% of sales on one of these channels, 12.3% experience all sales through marketplaces and 8.3% experience sales only through their own sites.
When asked about the main reason why SMBs chose to sell on Amazon, 52% said that increased sales volume potential was the biggest benefit, 32.6% noted increased brand exposure and 11.3% noted solid infrastructure. When asked about the downside of selling on Amazon, 45% noted lower margins as the biggest downside, 29% noted not owning the end customer, 9.5% noted commoditization of their brand and 8.2% noted lack of access to data.
Additional findings include:
60% of SMBs said their biggest challenge was acquiring new customers, 17.9% said it was retaining customers and 15.3% said it was converting customers.
27% of SMBs plan to invest in paid search within the next five years, with Amazon and website user experience falling in close behind with 25% and 23% respectively.
68.4% of SMBs are not running ads on Amazon; 40% of SMBs running ads on Amazon say they’re ineffective.
Of those who say Amazon ads are ineffective, 23.7% cite the reason for why as lack of know-how, 23.5% cite lack of budget and 20.7% cite Amazon as not being the right channel for their business.
“Our results clearly demonstrate that Amazon has a huge influence on SMBs and is an integral part of their business strategy. However, our results also indicate that most businesses aren’t sure how to navigate marketing on Amazon, with a majority of SMBs not marketing on it at all,” continued Udayan Bose. “With the customer journey growing increasingly more complicated, applying the best digital marketing strategy to succeed on Amazon is not always simple. Consumers are shopping on mobile devices, laptops and in-stores. They’re checking social platforms, multiple marketplaces and social media sites for information to guide them in purchasing decisions. In order to be successful, SMBs need to consider this entire customer journey or risk being left behind.”
NetElixir will discuss the findings of its new study in a webinar, airing on Wednesday, July 26 at 3 p.m. ET. Registration details here.
The “Amazon for SMB: Friend of Foe” study was conducted by NetElixir using Google Consumer Surveys. The target was small-to-mid size business owners and managers in the United States on the Google Consumer Surveys publisher network whose companies sell products through Amazon as a vendor, seller or both. The sample size was 503.The data collection period was between May 10, 2017 and May 19, 2017.
NetElixir is a rapidly growing search marketing agency with over 12 years of experience working with retailers on their search marketing needs. By helping retailers to decode what makes customers click, NetElixir is helping these businesses succeed online. Its analytical team of industry experts, technology builders and business strategists drive exceptional results and uncover actionable customer insights through a combination of proprietary paid search optimization technology, strategic growth models and expert campaign management services. The company’s LXRMarketplace hub is a destination for small businesses and solo entrepreneurs in need of free or low cost search engine marketing tools. NetElixir is headquartered in Princeton, NJ with wholly owned subsidiary offices in London and Hyderabad, India. For more information, please visit www.NetElixir.com.