2021 was another wild year for ecommerce and Amazon. More and more consumers took their shopping online, driving more sellers to try and take advantage of this modern-day gold rush. Nearly 571,000 new sellers will have created a new Amazon seller account by the end of the year!
A year ago, we predicted what would change in 2021 for Amazon sellers — particularly those who use Fulfillment by Amazon or FBA. We’re back for another round, this time for 2022.
Let’s look to the future and make new predictions for how running an FBA business will differ in 2022. Then we’ll see how Jungle Scout’s 2021 forecast held up to what happened this year.
Amazon FBA Predictions for 2022
As great as 2021 was for Amazon and ecommerce sellers, we think 2022 and beyond will be even better.
To help sellers prepare for what might happen with selling on Amazon next year, I spoke to the Amazon experts here at Jungle Scout. We predict these changes will impact FBA business in the new year!
1. Sellers will source more from domestic manufacturers
With the supply chain issues that negatively impact businesses worldwide, we predict that more sellers will start to source products from manufacturers or suppliers within their home countries.
Compared to China, where labor and materials are much cheaper, sourcing products from a country like the US will likely cost more per unit to produce. On the plus side, receiving your items will be much faster and more affordable than shipping them from China.
Sellers can also look into sourcing from within the continent. For example, if you live in the US, look for manufacturers in Canada or Mexico, where materials may be cheaper or even higher quality.
Specific customers may also increasingly become interested in purchasing products made in their home country. For example, the search term “made in USA” has had a 54% increase in search volume over the past 90 days, and “made in Canada” has had a 143% increase in search volume (on Amazon.ca.)
Sourcing from within the US can often be more complex than sourcing products from other countries such as China. You can easily visit a site like Alibaba and find a supplier for nearly any product to source from China. If you want to source from the US, however, it’s going to take a lot more research to find exactly what you’re looking for. Still, if sellers can find a reliable source at a fair price, they’ll have an advantage over their competitors who have issues ordering and receiving inventory.
2. Amazon will spotlight secondhand products
To rival eBay and even Facebook Marketplace, we believe Amazon will focus more on used and refurbished products. Not only is buying secondhand more sustainable for the environment, but it may also help buyers find the products they’re looking for in case of shortages.
What will Amazon change?
- Amazon will make more of an effort to highlight used products in the marketplace
- Buyers will be able to filter through products based on how they’re graded (e.g., used-like new; used-acceptable.)
- Amazon will add a section to the homepage to give buyers an option to shop secondhand.
3. Amazon will create more tools and programs catered towards brand owners
If you are enrolled in Amazon’s Brand Registry program, you know the many tools and features you have available to you. Some special tools include A+ Content, Amazon Stores, Video ads, Virtual Bundles, and other advertising solutions not available to non-brand registered, third-party sellers.
If you are a seller with a unique product offering and are not yet enrolled in Brand Registry, you may miss substantial growth opportunities. We believe Amazon will continue to create tools and programs that benefit brands enrolled in Brand Registry.
We made a similar prediction last year and think Amazon will continue to put a significant focus on their Brand Registry program.
What will Amazon change?
- Amazon will add a profit and loss dashboard to Seller Central
Sellers and brands can currently view their daily, weekly, monthly, and yearly sales and payment reports to view how much they receive after various Amazon fees. However, there is no way to view your actual profit and loss within Seller Central.
We imagine Amazon will create a type of accounting dashboard to input all costs such as cost per unit, shipping, packaging, supplies, etc.
- Amazon will add more Amazon Store features
Amazon Stores is an incredible way for brands to create their ecommerce website on Amazon. Our gut instinct tells us that Amazon will likely develop new tools and features to help drive more traffic and awareness to a brand’s Amazon storefront.
4. Amazon will create more social media-like features
With an increasing population of consumers browsing social media apps for products, social media marketing, and influencer marketing are essential for growing an ecommerce brand in today’s market.
Amazon has been moving into the influencer marketing space with its Amazon Live program over the past couple of years. Amazon Live allows brands enrolled in Brand Registry and Amazon Influencers to livestream on Amazon about their brand or products they love.
As a brand on Amazon, your livestream will appear directly on your product detail page so visitors can watch livestreams and learn more about your products. Amazon Influencer streams will appear on the Amazon Live page, where viewers can browse through different creators.
Amazon also has an Amazon Posts program — yet another Brand Registry-only feature. Amazon Posts mimics how Instagram works, where consumers can browse a brand’s unique “feed” and discover products that are similar to the ones they’re searching for.
Posts allow brands to share unique content and drive brand awareness.
What will Amazon change?
It would be a natural progression for Amazon to continue building out social media-like tools that brands and influencers can use to promote their products. Tools like “Posts” will be more prevalent on a product detail page so buyers can learn more about product features and connect with branding.
Now that video is a standard and often-preferred medium, we also believe that Amazon will create a TikTok-style feature through which customers can watch short clips about products.
5. Advertising costs will continue to increase
As new sellers enter the marketplace and brands launch new products, we predict the cost to promote these products via Amazon Advertising will continue to increase throughout 2022. The average cost per click on Amazon increased nearly 52% from 2020 to 2021.
Sellers may have to come to terms with this fear coming true — as it is, 62% of sellers are concerned about increasing ad costs on Amazon.
How can sellers combat increased CPCs?
- Make sure to optimize your listings for conversions
- Update your images to be the best they can be
- Enroll in Brand Registry and create an A+ content description
- Add a product video to your listing to increase chances of a conversion
Summary of our 2021 predictions and the outcomes
Now that we’ve made our forecast for 2022, let’s see which of our 2021 predictions became a reality.
Prediction 1: More Brand Registry features
Did this happen? Yes, but it’s not quite what we predicted.
Let me explain. Last year, we predicted that Amazon would give brands the ability to “gate” their listings. This prediction did not come true. We hope to see this feature sometime soon, so brands have more protection against counterfeiters.
Amazon did add a new feature available to sellers enrolled in Brand Registry called the “Manage Your Customer Engagement Tool.” This tool allows brands to send email marketing campaigns to customers who follow their brands on their Amazon Stores.
Prediction 2: Expanded video content
Did this happen? Yes
We predicted that Amazon would allow all third-party sellers to add a video to their product detail page, and that prediction came true. Once only available to brand registered sellers, this feature is now open to all.
Amazon adds your product video to the product images section so customers can easily view it without having to scroll through your listing.
To add a video to your listing, simply click on the Inventory tab in Seller Central and choose “Upload and manage videos.”
Prediction 3: Amazon’s continued growth
Did this happen? Yes
I think it is safe to say that Amazon has seen tremendous growth in 2021. Despite significant economic changes in 2020, Amazon revenue increased from $280 billion in 2019 to $386 billion in 2020 and is already seeing a 28% revenue growth year-to-date in 2021.
55% of U.S. consumers say that if they were only able to buy products from a single store, it would be Amazon. That statement alone is unbelievable.
Though Amazon’s revenue numbers are impressive, they wouldn’t have been able to get there without its third-party sellers. More than half of Amazon’s $386 billion revenue in 2020 was fueled by third-party sellers just like you.
This growth will continue even more this coming new year. If you haven’t started selling on Amazon yet, 2022 will be a great year to get into ecommerce — online sales are only going up and to the right from here.
Prediction 4: Improved ad features and targeting options
Did this happen? Yes
Amazon is constantly innovating new ways for sellers and brands to optimize their advertising efforts. If you’ve taken a look in your Amazon advertising console lately, you’ll likely notice some new products, features, and updates.
Here’s what Amazon added or changed in 2021:
- Brand Metrics: A new measurement solution to help better understand your brand’s performance and on-Amazon shopper engagement
- Brands who use Sponsored Display ads will now be able to target Amazon audiences with display ads on Twitch live streams
- Shoppers can “Follow” brands on their Amazon stores
- New top-of-search impression share metrics to measure how effective your campaigns are at receiving impressions at the top of the first page in the search results
- A new Diagnostics tool in Sponsored Products allows sellers to quickly and efficiently troubleshoot any issues regarding their campaigns without having to open a support case
There are many more updates and features that Amazon released throughout the year and continues to release. Check out their Amazon ads update page to stay informed on Amazon’s new advertising features.
Prediction 5: Added support for small and medium-sized businesses
Did this happen? Yes
There has never been a better time to sell products on Amazon. The customer-focused platform has helped many small businesses go from nothing to building a thriving, profitable business.
While many traditional brick-and-mortar small businesses take years to turn a profit, nearly 60% of new Amazon sellers took one year or less to see a profit from their company.
A lot of that success has to do with Amazon’s support. Without its massive audience and access to excellent advertising solutions, many businesses would not be as successful today. Currently, over half of the products sold on Amazon come from small and medium-sized businesses. To learn more about how Amazon’s investment in the growth of SMB sellers, go to their “Support Small” page.
Amazon also has a “Shop Local” page dedicated to small and medium-sized businesses from different regions, through which shoppers can find sellers based in their area.
Customers then know they’re supporting an actual small business rather than a giant corporation.
We believe that Amazon will continue to focus on small businesses in 2022 and beyond.
Here’s to a successful 2022!
I don’t know what exactly will happen in 2022, but I’m confident in the predictions my fellow Amazon experts and I have made. All of us are excited to see what the new year — and Amazon — bring us, and we hope you are too!
What are your predictions for selling FBA in 2022? Did any of your predictions for 2021 come true? Let us know in the comments below! Also, if you haven’t done so already, make sure to join our exclusive Amazon FBA Competitive Edge Facebook group, where Amazon sellers can get advice from fellow entrepreneurs, including Jungle Scout’s experts.