2022 Amazon Holiday Landscape & Predictions

It seems like this year’s holiday shoppers are starting to create plans for celebrations and festive moments that are even more extensive than in previous years, largely as a cultural response to many global and economic problems. Historically, in times of financial hardship, war, or political unrest, consumers tend to focus on more frequent, small pleasures within seasonal celebrations versus large or extravagant gifts. This year is no different as inflation, and other factors are putting additional strain on the average buyer. 

80% of holiday shoppers plan to have more “mini moments” throughout the holiday season. While this may not be great news for brands with higher price points per item, such as luxury goods, electronics, and furniture…the consumer zeitgeist in 2022 could be great for brands selling multiple products at an average lower price point per item like food, decor, beauty, toys, apparel, and more. If you have many products in your inventory, bundling several items together, focusing on percentage off promotions, or adding gifts with purchases could be great tactics this holiday season versus focusing on average order value. 

In 2021, there were many more high-spending e-commerce days in November than in 2020. E-commerce sales see no sign of slowing for Holidays 2022; however, many consumers indicate a desire to shop in person again, so ensure your brick-and-mortar locations and e-commerce teams are ready to offer a great customer experience to create brand consistency online and offline. 

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Consumer behavior for holiday season 2022

Purchasing early

To avoid price hikes as much as possible, many shoppers are purchasing early to save some money. More shoppers are buying holiday items earlier out of concern that they may not be able to find what they need come December or may not get a reasonable price. This year, the primary motivating factor for spending earlier is inflation.

New research by Salesforce has found that a staggering 42% of shoppers worldwide and 37% in the US will start buying gifts earlier than ever this year. This is the top behavioral change to avoid higher prices as pandemic-related supply chain issues continue to plague the global market.

Opt for eco-friendly product options

Studies show that shoppers prioritize purchasing sustainable items and eco-friendly products. Over 80% of shoppers will seek out sustainable brands, and 42% of those polled said they would consider paying more for sustainable shipping options or would be satisfied with a longer delivery window if they knew it would have a positive environmental impact.

Customers and employees will be looking at where their money's going before investing in a product. Consumers are placing more importance on sustainability and an emphasis on investing in organizations focusing on racial or economic justice as part of their charitable giving initiatives.

Closely evaluating prices

It's no surprise that pricing and discounting will be crucial in the lead-up to Christmas in 2022. Research has revealed that 17% of people globally and 15% of US shoppers are unsure if they'll buy any gifts this year, opting instead for experiences or simply being unable to afford the luxury of gift giving in its entirety due to other economic issues. Pricing could also be prohibitive when it comes to your existing customers' decision-making. It's estimated that 2.5 billion shoppers worldwide could opt for a lower-priced competitor this Q4 over a brand they have shown loyalty to in the past.

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Now that we have a view of the retail landscape and predictions for consumer behavior this year, let’s take a look at what you need to be focusing on over the next few months to prepare for the holiday selling season. 

Inventory Planning

While we're on the heels of Amazon's best Prime day in history, it's no secret that Amazon needs to be a core component of your holistic omnichannel marketing strategy. Ensure you're tackling the following checklist.

  • Analyze existing inventory
  • Choose your product lineup
  • Solidify your shipping process
  • Consider temporary business loans to fill Q4 demand
  • Identify new-to-Amazon products that may qualify for waived fees`

Analyze existing inventory

Inventory is so dynamic for many businesses that one day (or even one hour) to the next can be the difference between making a sale or not. Be mindful of your inventory and stock, and use that to your advantage when it comes to being more or less aggressive with your advertising efforts.

Amazon offers a wide range of tools for businesses that go beyond just managing inventory and help you to analyze the performance of your products and business. Ecommerce businesses that use Fulfillment by Amazon (FBA), for example, have access to tools and reports that will inform you of your product's progress in the Amazon warehouses. You can quickly check this through Seller Central.

Amazon also offers a service to help e-commerce sellers manage their inventory. With the excess inventory alert feature, you can check the demand for the product, response to price changes, and the right amount of stock to keep in storage with Amazon at any one time.

Generally, you want to increase the number of items customers buy, reduce storage costs, and generate a positive return on investment by managing your sell-thru rate. To that end, it is worth noting that Amazon defines product excess as:

  • Having over 90 days of supply
  • At least 1 unit aged over 90 days
  • A better ROI opportunity (such as reducing the price to increase sales)
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Here are a few simple tips on how to make managing inventory а lot easier:

1. Get reasonable prices from suppliers by building and maintaining a positive relationship with them - treat them like another branch of your business because in many ways, they are.

2. Keep your inventory stocked with the right products that are in popular demand.

3. Promote products that are in demand as a way to reduce your inventory that is now not selling very well.

4. Monitor margins carefully and plan promotions around your products with the best profit margin.

5. Lastly, ensure you have at least four weeks' worth of inventory on hand.

Choose your product lineup

Analyze your product performance throughout this year and look back on the last few holiday sales cycles. The right products to put front and center will reveal themselves as you evaluate: your company's objectives for Q4 2022, what your target market bought the most in previous years, and what items have been performing the least this current year. Considering that buyers will most likely make conservative purchase decisions this holiday season, aim to feature your best sellers that fall at a medium price point. Read on to get a few other factors that may affect your decision when identifying the "most valuable players" this holiday season:

  • Weight and size should be a consideration…statistically, items on Amazon that fall on the lighter and smaller end of the spectrum sell the best. 
  • Products with limited sizes or colors may perform worse than if they had a complete assortment. Be sure to adjust your budgets and targets accordingly.
  • Don't advertise if you have low inventory and you’re confident you’ll sell through that product organically.
  • If you have an inventory surplus and need to clear the shelves, advertising with Amazon can be a great way to drive supplemental sales.
  • Hit the ground running as soon as a low-stock product replenishes.

Solidify your shipping process

The aim is to combine various fulfillment methods to suit your business needs. If you sell online in Amazon stores, you may want to use FBA for some or all of your products. FBA Small and Light can help you cost-effectively ship lightweight items, and FBA Export also provides international shipping solutions.

3rd party fulfillment outside of FBA could also be a good option if you are distributing at scale and need multiple options for cost and efficiency considerations. The right fulfillment partner can help you grow safely and more confidently, as many fulfillment companies have more flexibility than FBA. This flexibility for many Amazon sellers means improved customer service and lower storage and overhead costs while maintaining excellent visibility on inventory. Ultimately, the right mix of fulfillment options depends on the type of products and goals for your business.

The first thing you need to do before sending inventory to Amazon is to create a shipping plan. This plan specifies what products, quantity, locations, which carrier should be used, and whether you’d like to label your products in-house or have Amazon do that.

While One-Day Delivery is an option for many Amazon sellers, not every product can qualify for it. You have to meet a set of requirements before offering your products with One-Day Delivery.

  • You should have sold on Amazon for an accumulated total of at least 90 days before.
  • Have an on-time delivery rate of at least 95%
  • Have an on-time shipment rate of at least 99%
  • Fulfill a handful of other delivery score requirements, like providing valid tracking rates, having a cancellation rate of less than 1.5%, and maintaining a minimum order threshold of at least ten orders on all shipping options.
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Product & Feed Optimization

Take the last few weeks you have before launching a new campaign to ensure your entire Amazon infrastructure is healthy and well-oiled. Take this time to finalize listings and optimize the customer experience with your brand on Amazon.

FBA best practices

Inventory performance dashboard

For those businesses using FBA, Amazon’s Inventory Performance dashboard is another helpful tool that helps you identify opportunities to grow sales, create cost efficiencies, and track key performance indicators. Check up on it regularly to keep your IPI score healthy, multiple factors influence your IPI score. However, the most important ones are your actions:

  • Maintain a balanced inventory level between sold and available inventory and avoid excess and aged stock.
  • Avoid long-term storage fees.
  • Resolve any problems or issues with your listings.
  • Keep your most popular products in stock at the proper levels, when possible, to meet demand and maintain a high level of customer satisfaction.

Inventory performance index

Amazon takes a quarterly approach to your IPI score: at the end of each three month period and six weeks before the next quarter, your score will be re-evaluated. Amazon can notify you that you still have time to improve your score before imposing inventory limits, but remember, they also may not remind you. So it's imperative to keep track of IPI review dates and deadlines on your own to keep your score as high as possible. For this upcoming season, we recommend you spend the remainder of Q3 2022 prepping your inventory to get your score as high as possible before Q4.

Product listing management

Update your product descriptions, product names, title, and photos for all products in your Amazon inventory. Pay special attention to those items you’ve already identified as your holiday frontrunners. 

You may find it beneficial to automate your pricing, in order to always be among Amazon's bestsellers. Use Amazon's pricing algorithm to set your prices, even if just for a short test—this feature will give you an idea of what prices you should use, based on the competition, and whether you ought to change any prices significantly. Keep in mind that pricing is a significant factor in being eligible for the "Buy Box" on Amazon product pages. While not required, utilizing Amazon’s free automated pricing tool can improve your chances of becoming the Featured Offer on Amazon product detail pages. 

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Product reviews

Ratings and reviews are a big driver of how well your products will perform. If a product has strong reviews in terms of count and rating, that’s great! Push it more aggressively with advertising. These are the products for which you want to maximize sales velocity. 

If you have a product that seems to suffer in the customer reviews arena for whatever reason, it may be a good idea to pull that item from Amazon inventory temporarily and push it harder through other sales channels or take action to address the product feedback before restocking it. Be sure to improve customer satisfaction (ie make retail-ready) before accelerating with advertising.

Regardless of the current review status of your Amazon products, it should be an ongoing initiative to collect ratings and reviews. Do everything possible to keep customers happy and make those reviews as positive as possible through great service and responsive product design. The reviews for each item on Amazon are tethered to the ASIN, so keep that in mind if you are often changing your ASIN number or refreshing inventory.

Consider strategies to push high volume to emergent products which have not yet established their places in the market segment. You may expect a higher cost of sale for products which are new to product because people may be less prone to buying a product without ratings and reviews -- however, think of this investment in the long run. As those ratings and reviews accrue, the investment will pay off and the sales velocity will grow.

Promotional Planning & Marketing Preparations

Once your product and feed optimizations are in place, now is the time to start launching test campaigns, run various audience segments, and get the early data you need to be full steam ahead during the highest volume time period. For 2022, November is most likely to be the peak of holiday sales traffic, so plan your promotions and primary messaging accordingly. 

Perfect Launch

"Perfect Launch" is the term Amazon uses to describe a trade and promotion strategy that capitalizes on five selling programs: Brand Registry, A+ content, automated pricing and advertising, Fulfillment By Amazon, and Prime. Successful sellers take these 5 steps within a 90-day timeframe, generating sales more quickly. To fulfill Amazon’s requirements, complete the following:

  • Enroll your brand in Brand Registry
  • Enhance your product detail pages with the best content possible.
  • Get set up with FBA
  • Automate pricing on your core products
  • Incorporate Sponsored Product campaigns, Coupons, and Deals into your campaign strategy

Brand Registry

Brand Registry is for brands that are already registered trademarks. However, if a seller is "authorized," the seller can also apply for a Brand Registry under the brand owners’ name.

Amazon now offers incentives to become a Registered Brand, including 5% back on your first $1M in sales, credit to try CPC advertising or promote your product reviews, and discounts on Fulfillment By Amazon.

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Preparing for Peak Performance Dates

The calendar and seasonality can have major impacts on your business. Optimize products far in advance of your expected high volume periods so that when the traffic comes, you’re ready and in the right position.

Make sure you have sufficient inventory and are not limited by budget constraints during peak sales periods. The worst-case scenario is to run out of product or budget and miss out on sales during a make or break time of the year.

Best Practices for Amazon Creative

Imagery

What is the goal of your ad? Does your product speak for itself in terms of use case, or does it require some understanding from the user? If your goal is to increase consideration, you might want to include an image of the product, with bullets or copy on the image highlighting unique features. Showcasing a lifestyle image on the other hand is a great way to generate awareness for your brand and product by helping the user understand applications for your product.

Uncluttered and simple ads perform the best. Research performed by Amazon Ads found that ads had a 2.4x higher CTR on average when there were only 1-4 objects on the ad. So less is more!

Brand logo

Put a clear logo on your ad creative to help increase brand coverage, establish trust for customers, and make an easy connection between you and your product.

Use contrast and size variation

When you are designing your composition, use high contrast between the foreground and background so the product is easy to identify. Test multiple variances in the size of your objects. Another interesting insight from Amazon’s internal research was that on average the CTR was 1.6x higher when an ad's primary object was 4x bigger than the next biggest object featured. Amazon also observed that 70% of categories on Amazon experienced greater CTRs when important items had a bigger font size.

Headline

Use a headline that is impactful and communicates your message clearly. Use plain language for the widest possible potential audience. Consider posing a question, solving a problem, incorporating humor, or conveying empathy. Creatively worded headlines for your product should start with an action verb. Well-written headlines remind the customer that by purchasing your product, they will achieve or accomplish something specific. 

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Keep messages concise

Use a concise message to explain the value proposition of your product. Clear, specific wording will generate more click-throughs and increase your purchase rates. Line breaks of different widths also  make text easier to digest. In Amazon’s internal research, they found line variations enhanced CTRs on 74% of content.

Saving time - ad scheduling

Creating variants of the same ads for each sub-segment of the season is a great way to decrease time spent on each campaign, while still running relevant content for singular points in time

Paid Media Execution and Campaign Management

Now that we’ve covered a few techniques around setting up the right Amazon infrastructure, let’s discuss some of the things to be mindful of weeks and months after launching your holiday campaigns. 

As you know, advertising is not a “set it and forget it” activity. There are many factors to consider outside of the campaign purview that impact performance just as much as a bid change or negative keyword might. Let’s take a look at a few examples.

Automatic campaigns

One of the really cool features of Amazon ads is that it'll automatically target keywords for you. This makes your ad more relevant and saves time. Amazon saves time and energy by targeting advertisements to shoppers browsing with similar interests to the products in your store. Automatic targeting helps you create an ad campaign quickly and easily.

Bid strategy: depending on your goals with the exploratory campaign, you could use any of the dynamic bid models. If it’s a very fixed amount of budget you’re allocating towards exploratory expansion, consider a fixed or down-only approach. If you’re leaning in on a more growth-focused target, use the up or down option.

Automatic campaigns can be incredibly useful for exploratory and prospecting purposes. Keep at least one on at all times with sufficient budget to surface new opportunities!

  • Use Automatic campaigns to surface new search queries.
  • Set thresholds that determine when a query should be built as a keyword.
  • Similarly, be deliberate about when queries should be negatively matched.

Build multiple campaigns

To make it so that multiple products of yours may show for a single query, build multiple campaigns -- each with the same keyword -- and allocate different products to each campaign. Tier the bids intently so that the desired product (with the highest associated bid) might show at the top, and the second, next best product has the second highest bid, etc.

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Audit your product listings regularly

Regularly audit your campaigns’ ASIN selection to make sure you have the right products in place. Add variations of color, size, and count to maximize coverage for your best-selling products. Consider adding multiple instances of a single product across a few different campaigns. 

Make an analysis and monitor your products holistically - with a properly configured analysis dashboard you can see a product’s operational status (price point, availability, review counts, and rating) as well as its advertising performance (metrics like cost, sales, clicks, and impressions). This helps reduce complexity and presents a single, comprehensive view of product performance, as well as the factors which influence performance on a day-to-day basis.

Test Google keywords on Amazon (and vice versa)

You’re probably selling things on other channels as well as Amazon. You can get ideas for which keywords are working on Google and make sure those keywords are covered on Amazon. This also works the other way, you may find new keywords on Amazon that you can consider using on Google.

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Use multiple bidding techniques

Using the Amazon dynamic bidding tools is effective, but to get the most out of your efforts, layer a tool and algorithmic bidding on top of that in a complementary fashion. Marin’s approach to bidding utilizes folders and dynamic clustering to group keywords and product attribute targeting together based on their goals. For example, a brand collective of keywords likely has a different business goal than low-margin products or non-brand terms. Think of these as swim lanes for your Amazon keywords which allow you to operate outside the constraints of campaign structure to achieve desired returns.

Benefits of using a an algorithmic bidding strategy:

  • Plan budgets effectively (daily and monthly).
  • Redistribute resources by channel more seamlessly when needed.
  • Plan ahead for seasonal volume shifts.
  • Allocate budgets across campaign strategies and pivot quickly.

Make Amazon ads an integral part of your omnichannel marketing strategy and have the best holiday season yet in 2022. With over 300 million active global customers, Amazon has a deep understanding of how shoppers engage with products and brands. They have a detailed knowledge of how and when people are shopping online; and when Amazon advertising is combined with sophisticated campaign management and bidding tools like MarinOne, you’ll be able to see and utilize multi-channel insights that make all your publisher campaigns more effective across the board. Contact our advertising experts for a free consultation on how to get started and make your Amazon ads more successful today