7 Key Trends of Amazon FBA in 2022Trend #1 Amazon Advertising is getting more expensive in 2022 Trend #2 External Traffic for Amazon (Rank, Sales, Conversion Rate) Trend #3 Amazon is becoming a social shopping platform Trend #4 Amazon will provide more native tools for sellers Trend #5 Supply chain issues will continue in 2022 Trend #6 Selling on Amazon in 2022 is going to be different (FBA Aggregators and less sellers) Trend #7 The growth of Amazon (how long will it keep growing?) #8 Revision of previous year’s trends and predictions (2021) #9 How to Make Money on Amazon in 2022! Before we begin, this is going to be a really interesting blog post so stick to the end to find out how you can make money on Amazon in 2022 or jump to the trend that catches your eye. If you follow us then you know we give a lot of information for free. We never ask for anything in return and love doing this. Since we started this blog in 2017 we have been giving free advice to the Amazon sellers out there. Yes, it has been that long. The trends and predictions for the next year are always the most viewed topics on our blog. You can find other years here (Amazon FBA Trends & Predictions 2021, Amazon Sellers Trend & Predictions 2020). Now let’s see what Amazon has for us in 2022.
Trend #1: Amazon Advertising is getting more expensive in 2022We definitely expected this and to industry insiders this was nothing new. We have been forecasting the Amazon advertising’s cost growing trend since 2018 when we started doing this research into Amazon trends for the coming year. There is nothing particularly surprising here, as we know that Amazon has been a pay-to-play platform for a very long time now. Back in 2014 when we first started you could literally just source some products from China, slap your label – or not even put your brand name on them -, and just let them organically get sales through the algorithm, trusting that people will do the rest. You could get some nice sales back then but fewer sales too because Amazon wasn’t as big as it is now. Contrast that with where we are today and we can see that it is getting more expensive and it is getting more competitive, so it does make sense for the advertising to also be more expensive. You might be wondering how it is going to be more expensive and why? What are people saying regarding Amazon advertising getting more and more expensive?
Amazon Advertising Trends & CPC in 2022 (Report)To have a better understanding you need to see the Amazon Advertising Q4 2021 CPC Report by Pacvue. We can see that generally the CPC spend is going up. The CPC has been increasing by 14.3% year-over-year for sponsored products and 7.5% for sponsored brands. That’s really big. We definitely suggest you guys go and take a look at this report as it shows all the trends when it comes to the conversion rate, click-through rate, CPC, ROAS, the return on investment, and all this stuff that you, as an Amazon seller, must know to succeed. Keep in mind that this is aggregated data by Pacvue so this is not absolute data from Amazon. This means that you should still read this report but take it with a little grain of salt because this data is coming from sellers that are using their software. It doesn’t actually provide a whole vision of the entire Amazon ecosystem. We can assume that the sellers that are part of this report are already doing well or are big sellers, especially if they can afford a PPC software. Nevertheless if you’re already performing well on Amazon you better take a look and use the report as a benchmark to compare yourself. The average click-through rate for Amazon SP (Sponsored Product ads) is between 0.30 to 0.35%. We can also see that the CPC keeps growing. Of course it makes sense that from Q1 to Q4 it’s going to be more expensive because you have the holiday season with more competition and you also have more products. So the trend is Amazon advertising getting more and more expensive year after year. Also with bigger players getting into the marketplace (eg: Amazon FBA Aggregators) we have to consider that there will be a lot of large sellers that can afford to spend a lot of money to dominate their category. More competitors result in higher bidding, which will drive up the cost per click. Aggregators and large sellers also have a large amount of money that they can spend so if you are a small seller, you’re probably going to have some difficulties competing with those aggregators. This is something we will cover a bit later. Something that stood out from this report by Pacvue is that the actual cost per acquisition is going up and the ROAS – the return on ad spend – is going down. This is the actual proof that Amazon is getting more expensive and competitive. You really have to focus on your niche and you have to focus on understanding what your customer wants because you really don’t want to waste a lot of money here. It’s very important that you use the right advertising because it’s going to be more expensive. Depending on how much budget you want to invest you should be able to make the right choices when it comes to targeting the right audiences, the right keywords, and also using the right kind of advertising.
How about Amazon Video Ads in 2022?!One thing to note is that the return on investment for sponsored brands is actually not better than the return on investment for sponsored product ads. This is quite interesting just because video ads are considered the best performing ads on Amazon, as per several reports by different agencies. So the question here is what is going on? Most likely sellers still don’t use as much video advertising when it comes to sponsored brand ads. This is actually a good thing because this means that if you focus more and more on doing video ads, you’re going to probably have better results than your competitors. So video ads are something you should leverage. One more thing that we would like to show is the new product features for 2022 for Amazon brands report. This report comes directly from Amazon. What kind of new features are we going to have in 2022 for Amazon Sellers? Well we are going to have more in-line store shopping experiences. In other words, virtual stores will be more and more present. This isn’t just our prediction. We can see that Amazon is trying to drive the attention more into the Amazon store, which is acting like your brand’s website. If you don’t have a store yet make it happen and really work on your store as it’s going to be very important. This storefront has auto-generated spots like a ‘store spot’ which function like ads for your product. As we will see later, this emphasis on the store is why Amazon is becoming more and more of a social platform. We think the entire online shopping experience in general is becoming more and more social. Also there will be more and more brand metrics available. We already see how Amazon Attribution is becoming very important. We predict that Amazon is going to provide more brand metrics. Two key advertising elements that must be used is first getting your store ready because it’s going to be a lot more important and use video ads.
Amazon Advertising 2022 Experts PredictionsNow let’s see what some of the other experts are saying when it comes to advertising on Amazon. In this trends and predictions for 2022 article by Tinuiti it states that Amazon is getting more and more expensive, advertising getting more costly, CPC is going up and sellers are experiencing big inventory struggles. Doing the right inventory management is going to be key this year as we will see later on. When there is less stock and because costs are higher, it means that not only do you have a higher competition but you also have problems bringing your products to FBA. That is really a situation where you don’t want to be as a seller, so what do they recommend you do if you experience this? Dylan Verburgt of Tinuiti says that brands can minimize their market share loss from out of stock products and combat rising costs if they:
“Double down on advertising that is designed to build brand awareness and preferences. When everyone else is pulling out of the market you can gain a higher share of voice by making bold moves. Additionally brands that can level up the products they do have in stock through advertising can mitigate any loss in revenue.”We agree here but to a certain extent. This doubling down on advertising is just going to make the game harder and harder. Also, who are we giving this advice to? Are we talking to someone who’s already a seven or eight or nine figure seller or are we talking to a seller who just started? Are we talking to a family business that doesn’t really have the money to double down on advertising because their business model is completely different? Once again, smaller sellers are going to have serious issues in competing with the big ones. Key will be differentiation and doing the right marketing. So how can you actually compete with the very large sellers? We know that advertising is going to be more and more expensive so I would personally say do not just put all of your money into advertising on Amazon. To make a profit on Amazon in 2022 you should first choose the right niche where you know you can make the difference without spending too much on advertising. Eg: use micro-influencers. These days you’re competing with the big guys, especially when we’re talking about large sellers and aggregators. Aggregators are changing this game and we will see later what is going on with that. We also see in the article that “Amazon is likely to invest in store capabilities.” Yes, we definitely agree with this. 2022 is going to be a year where it is very important to have your storefront ready to attract customers, drive their journey and experience to your products, retain them, and give them a good feeling about your brand. So the store is going to be very important this year. We wouldn’t be surprised to see Amazon not only providing more metrics but also more features for your storefront, including more opportunities to interact with customers to make the shopping experience more social. This might mean adding different tabs, different shopping opportunities, or anything that helps further monetize your store because this is where Amazon is going this year.