The year 2020 probably did not go as planned for, I don’t know, the entire world. To say this has been a crazy year is an understatement. Coronavirus has completely changed the way we run our businesses, celebrate holidays, and complete normal, everyday tasks.
The COVID-19 pandemic has greatly impacted ecommerce, including how consumers shop on Amazon. Though overall consumer spending dropped throughout 2020, 1 in 3 consumers actually increased their online spending between July and September 2020, according to the Jungle Scout Consumer Trends Report. On top of that, fourth-quarter holiday shopping events were a boon for online retailers. And I foresee a continued shift to ecommerce in 2021.
Any major events in the new year are likely to impact consumer behavior, and by extension, Amazon’s over two million active third-party sellers. It’s important for Amazon entrepreneurs to keep an eye on changes in the marketplace so they can continue to successfully grow their businesses.
A year ago, we predicted what would change in 2020 for Amazon sellers—particularly those who use Fulfillment by Amazon, or FBA. We’re back for another round, this time for 2021.
Let’s look to the future and make new predictions for how running an FBA business will be different in 2021. Then we’ll see how our 2020 forecast held up to what actually happened this year.
Amazon FBA Predictions for 2021
Hopefully, 2021 won’t bring the surprises and uncertainty we saw this year. Though with a new United States President and a potential lockdown approaching, who knows what could happen.
To help sellers prepare for whatever 2021 throws at us, I spoke to the Amazon experts here at Jungle Scout. These are the changes that we predict will impact FBA business in the new year!
1. More Brand Registry features
Becoming brand-registered on Amazon offers enormous benefits. Registering your trademark with Amazon’s Brand Registry protects it from hijackers and counterfeiters and provides additional selling features, branded storefronts, advanced advertising features, and more.
One of the coolest Brand Registry perks is the ability to create A+ Content Descriptions. Also known as Enhanced Brand Content, A+ Content allows sellers to add images, unique templates, and text placements in their listings’ descriptions.
A+ content is designed to catch a potential customer’s attention and increase conversions, brand awareness, and overall sales.
What changes will Amazon make?
- Sellers will be able to “gate” their own listings
Black-hat sellers, listing “hijackers”, and counterfeiters will always try to steal customers from honest sellers. Amazon works hard to combat phony products, but there is still more work to be done.
Large, well-known brands like Nike and Adidas are shielded from black-hat sellers and counterfeiters on Amazon, so why can’t smaller brands get similar protection? Currently, Brand Registry can protect smaller brands—but only to a certain extent. In 2021, I predict that Amazon will enable brand owners to “gate” their listings, allowing only approved sellers to list their products.
This would make controlling listings and pricing much much easier for third-party sellers.
- More video and advanced advertising features
While brand-registered sellers can already add videos to their product listing, the experts here at Jungle Scout believe Amazon will expand the video features to include clips within A+ content and other robust video advertising options.
2. Expanded video content
We touched on this above, but we believe video will become a much bigger aspect of selling on Amazon—and not just for brand-registered sellers.
Plain and simple, videos help sell more products. They give sellers an opportunity to build brand awareness and enhance customer understanding of a given product. In a video, a seller can present product features in detail, giving customers a digital experience not unlike viewing the product in person.
Amazon announced on September 22, 2020 that sellers could upload a video to their listing—but only if they’d sold on Amazon for at least a year. That said, many sellers who meet that criteria are still not able to upload videos.
We believe Amazon will soon allow all sellers to upload videos to their listings, regardless of their tenure on the platform. It’d be in Amazon’s best interest to do this, given that videos boost sales.
Amazon has already taken a step toward more video features by introducing Amazon Live. I imagine they’ll also feature video content on customers’ Amazon homepages related to products they viewed or purchased in the past.
3. Amazon’s continued growth
With coronavirus cases still on the rise, we can expect people to continue shopping online versus going into stores.
In fact, even as consumers are spending less money overall, ecommerce sales—on Amazon specifically— have surged.
I expect this trend to continue well into 2021, for most if not all product categories. A majority of consumers still prefer to purchase essential products like groceries, cleaning supplies, and over-the-counter medicines in-store. However, more than a third only buy these kinds of products online, and that figure could rise in the new year.
If you haven’t started selling on Amazon yet, 2021 will be a great year to get into ecommerce—online sales are only going up from here.
4. Improved ad features and targeting options
Amazon is constantly improving and expanding the advertising features that benefit sellers. Some relatively new additions include Amazon Attribution, Amazon Live, and Sponsored Display Ads. As with listing videos, you need to be brand-registered on Amazon in order to use these features.
I suspect that Amazon will focus more on improving the ad platform and add new targeting options for brand-registered sellers. So if you have not applied for Brand Registry yet, you should really look into it for 2021.
What improvements will Amazon make?
- Beef up advertising reporting to help sellers better understand their ad performance
- Boost ad campaign optimization for sellers
- Build more advertising features that focus on specific objectives such as brand awareness, growing a follower base on your Amazon store, and increasing conversions
- Enhance targeting precision to include customer demographics, location, interests, etc.
- Provide more off-Amazon advertising options
While we believe Amazon will make significant improvements to the ad platform, a Jungle Scout expert has also predicted that Pay-per-Click advertising (PPC) costs will continue to increase in 2021. Amazon PPC is an auction, meaning that your cost per click (CPC) is a penny more than what the next seller is willing to pay per customer click for a specific keyword.
Your CPC depends on how competitive your product is and in particular, the keywords you’re targeting. The greater the competition, the more you’re likely to pay, as there are many more sellers bidding for those same keywords.
A tip for anticipating PPC costs early in your product and keyword research is to use our Keyword Scout tool. It’ll give you insights on what you can expect in PPC costs for your desired keywords. That way, there won’t be any surprises when you launch your advertising campaigns.
5. Added support for small and medium-sized businesses
COVID-19 has negatively affected thousands of small and medium sized businesses (SMBs) across the globe. There has never been a better time to support small and local businesses than right now.
While Amazon is among the largest companies in the world, it empowers thousands of SMBs to reach millions of potential customers. A small business—even a single-person operation—has incredible potential for success on Amazon.
Currently, Amazon has a Shop Local Small Business section, though it’s not easy to find unless you’re specifically looking for it. I predict Amazon will make a greater effort to bolster SMBs’ success in 2021.
How will Amazon support small businesses in 2021?
- Spotlight small businesses on the Amazon homepage
- Make it easier to find the small business page
- Feature small businesses in the categories customers are likely to shop
- Highlight nearby small businesses so customers can support their local economy
Summary of our 2020 predictions and the outcomes
Now that we’ve made our forecast for 2021, let’s see which of our 2020 predictions came to fruition. (Spoiler alert: 2020’s unprecedented global pandemic had at least a slight impact on plenty of the year’s predictions.)
Prediction 1: Amazon will end its Buyer-Seller Messaging Service
Did this happen? No, but buyer-seller communications have become more limited.
Sellers need to be aware of the frequent changes Amazon makes to its Terms of Service. On September 8, 2020, Amazon announced changes to buyer-seller messages. Some of the communication that is no longer permitted includes:
- Order or shipping confirmations (see indirect communication below)
- Messages that only say “Thank you” or that you are here to help if buyers have any problems
- Marketing or promotional messaging, including coupons
- Language that incentivizes or persuades the buyer to submit positive product reviews or seller feedback, including offering money, gift cards, free or discounted products, refunds, rebates, reimbursements, or other compensation or future benefits in return for a review
- Language that requests the removal of or update to an existing product review
- Language that requests a product review only if the customer had a positive experience with the product
- A repeat request (per order) for a product review or seller feedback
I know—this is a lot to remember. But it’s crucial to fully review Amazon’s new communication guidelines to ensure you’re not violating any new terms. Failure to do so could result in account suspension—even if you didn’t know you broke the rules.
Prediction 2: Amazon will bring Singles’ Day to the U.S.
Did this happen? No. But there were extenuating circumstances.
Due to the coronavirus pandemic, adding another huge sales event like Singles’ Day to Amazon’s already-swamped fulfillment operations simply was not possible. Even Prime Day, which is usually held in mid-July, took place in October after weeks of delays.
Singles’ Day can be thought of as China’s equivalent to Prime Day, though it’s much bigger—it’s an unofficial Chinese holiday and, thanks to ecommerce platform Alibaba, holds the title of largest online shopping event on the planet.
I don’t see Amazon adopting a Singles’ Day event in the foreseeable future, especially as it continues to expand Black Friday and other holiday deals in November.
Prediction 3: Amazon will enter African markets
Did this happen? No (not yet).
Amazon is currently expanding its AWS (Amazon Web Services) business in Africa, but there is still no dedicated African marketplace.
Currently, Jumia is the leading African ecommerce marketplace and is often dubbed “the Amazon of Africa.”
We predicted that instead of creating its own marketplace and competing with Jumia, Amazon would acquire Jumia the same way it did with Middle East online retailer Souq in 2017 (Souq is now Amazon.ae).
While a Jumia acquisition did not occur in 2020, Amazon could still make a move in the near future.
Prediction 4: Amazon will make sweeping changes in response to fake reviews
Did this happen? Kind of—Amazon is constantly combating fake reviews.
Many of the changes to buyer-seller messaging discussed above prevent sellers from using language that promotes fake reviews.
As all sellers should know by now, you cannot incentivize customers to leave feedback. You can still request reviews from buyers (you can even automate the review request process), as well as leverage Amazon’s own incentivized review programs. But in no way can sellers try to influence customers to leave a kind word about their product.
We believe Amazon will continue to make changes to their review policy throughout 2021 to further stymie fake reviews.
Prediction 5: Amazon will end FBM for certain categories
Did this happen? No.
I don’t believe this will ever happen on Amazon, even after COVID-19. This year, Amazon created ASIN-Level inventory restrictions for new listings and increased their IPI (inventory performance index score) to limit warehouse storage for certain sellers.
This forced Amazon sellers to pivot to other fulfillment methods for their products.
There was even talk in various seller forums and the Amazon FBA Competitive Edge Facebook group that Fulfillment By Merchant (FBM) offers were taking priority over FBA offers in the Buy Box. There is speculation that Amazon prioritized FBM offers on purpose. This would have eased the pressure on Amazon fulfillment centers strained by both holiday shopping and the coronavirus pandemic.
Over a third of Amazon sellers built and now run their businesses solely using FBM or Seller-Fulfilled Prime. I believe many sellers would leave Amazon if they could no longer fulfill their own products.
I don’t know what exactly will happen in 2021. 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 2021? 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.