Rising Inflation & GDP: Amazon Seller Opportunities

In recent months, inflation has reached 40-year highs, and recent GDP numbers indicate a recession. These changes have started ringing alarm bells for consumers as well as brands selling on Amazon. How will brands respond to these external economic pressures? 

There are many ways for brands to respond, but in this article we’ll focus specifically on how brands should make changes to their Amazon advertising efforts in this economic climate. 

Changes for e-Commerce Businesses during Periods of Inflation

First, let’s make a few predictions about how inflationary and GDP pressures will affect purchasing behavior:

• Buyers will reduce discretionary spending.
• Buyers will do more research before making a purchase.
  • This will require more advertising touches to convert visits to your product detail pages into sales.

“Consumers will spend less money on discretionary purchases as more of their paycheck goes to necessities, consumer goods, groceries, etc. We saw a larger-than-usual increase in CPG and grocery on Prime Day as customers were looking for deals on everyday items.”— Liz Adamson, Buy Box Experts’s Chief Client Services Officer

Let’s now predict how these inflationary pressures will affect other brands (in general) who sell on Amazon: 

• Sellers will increase their prices.
• Sellers will cut back their advertising efforts in the following ways:
  • Reduced budgets
  • Reduced bids

So, if I were to tell you that your competitors are going to increase their prices and reduce their advertising efforts, what would you say? Hopefully, you would say, “Wow, what an incredible opportunity to capture market share!” If so, that’s exactly what we were thinking!

DSP Retargets Visitors of Your Product Detail Page Both on and off Amazon

Now, how are you going to take advantage of this opportunity for capturing Amazon market share? The answer may be Amazon DSP advertising. 

“DSP provides advertisers an opportunity to re-engage shoppers that have viewed an Amazon product detail page. Retargeting ads will be shown to shoppers both on Amazon as well as off Amazon. This provides a solution that reaches shoppers at multiple points in their shopping journey. Lookback windows can be customized to allow advertising to reach shoppers when they are most likely to complete a purchase.”— Dave Vermeulen, Buy Box Experts’s Director of DSP 

DSP is still a relatively new method of advertising on Amazon that your competitors aren’t fully taking advantage of. The barrier to entry also keeps most small brands and sellers from joining the program. If your biggest competition is running DSP, they may be cutting back on their DSP spend due to current outside economic pressures.

DSP Retargeting Solves the Problem of Needing Additional Advertising Touches to Make an Amazon Sale

As we discussed above, inflation and recession affect purchasing behavior. That purchasing behavior affects everyone, including competitors in your niche and category. DSP retargeting is the most effective way to gain the additional touches needed to trigger sales. 

“Due to potential customers having less discretionary spending, the lead time for sales is bound to increase. Amazon’s DSP platform provides a seamless structure to retarget those that have already shown interest in your products and helps your brand continue to be top of mind. This provides an efficient way to convert and build loyal consumers.”—Tiffany Evans, Buy Box Experts’s Director of Advertising

The buyers of your product will still be shopping on Amazon but may not be as impulsive in their purchasing decision as they once were. They will now need some additional touches to keep your brand at the top of their mind. DSP advertising is the best way to gain those additional touches, both on and off Amazon. 

There is so much more to DSP advertising than just retargeting the visitors of your Amazon catalog. As you consider building loyal customers, DSP gives you an opportunity to double down on past purchasers of your products to promote and increase a loyalty loop. Metrics such as lifetime value and repeat purchase rate ensure that you’re maximizing the potential of your existing audience base. 

In reality, a full-funnel approach to DSP advertising is the best way to get the results you’re looking for, and Buy Box Experts (BBE) is the best agency to deliver the strategy needed to run a successful DSP campaign.

A Solid Strategic Plan that Combines PPC and DSP Can Lead to a Larger Market Share

Amazon DSP advertising is not a replacement for your Amazon PPC advertising efforts. A solid strategic plan will include both advertising placements. We give our brand partners weekly calls to discuss their advertising strategies and make adjustments according to their advertising and sales goals. 

“Brands should strategically be spending more on ads, both DSP and PPC, but that will depend on a case-by-case basis. As other brands reduce their advertising budget, there will be an opportunity to take a bigger piece of the pie.”—Liz Adamson, Buy Box Experts’s Chief Client Services Officer

Preparing for the Economy to Bounce Back: How a Solid Plan to Gain Market Share Affects Future Growth

Brands that invest while their competitors are consolidating will be in a far better position when the economy bounces back and their competitors return to their previous budgets. Since they can take advantage of reduced competitiveness within the market, they will be in a far stronger organic position, and their products will experience reduced CPC and increased organic placement.

“Investing wisely will get the Amazon flywheel turning whilst competitors are inadvertently having the opposite effect by reducing spend. These competitors will also require greater investment to recapture market share lost whilst they reduced budgets, so the importance of having a solid strategy during this time could not be more vital.”—Serv Chumber, Buy Box Experts’s Global Director of Account Management

Because Amazon’s marketplace is not one size fits all, BBE creates a personalized Amazon strategy for every brand partner. Let us help you decide if this strategy is right for your brand by completing our free Amazon Assessment Form today. After all, you know what your brand needs, and you want an agency that can adapt that vision to deliver results on Amazon’s marketplace.