Amazon Advertising Flywheel: How to Accelerate Your E-commerce Growth

Amazon Flywheel

Using a data-driven approach to fuel a successful Amazon Flywheel strategy

The Amazon Advertising Flywheel is a business model that describes how Amazon’s advertising services can drive growth for businesses that sell on Amazon. As a concept, it can be a powerful tool for e-commerce businesses looking to drive growth.

By understanding and utilizing the principles of the Flywheel, businesses can create a positive customer experience, drive customer loyalty, and increase sales.

The Amazon Flywheel Model

Let’s let Mr. Bezos flywheel describe the flywheel strategy;

“We’re not just trying to be the biggest company in the world. We’re trying to be the company that is the most customer-centric and the most customer-obsessed in the world.” — Jeff Bezos

This quote from Jeff Bezos highlights Amazon’s focus on using its Flywheel strategy to be customer-centric and customer-obsessed. It defines a business model that creates a virtuous growth cycle by constantly improving the customer experience.

So what are the critical elements of an Amazon Flywheel strategy? The Amazon Flywheel model consists of three main components:

  1. low prices
  2. fast delivery
  3. a wide selection of products

A business can attract customers by improving these three elements, allowing them to negotiate better deals with suppliers and invest in more efficient logistics.

This creates a positive feedback loop, where each improvement leads to even more customers, and so on. This is the virtuous cycle that Amazon aims to achieve and maintain, hence the name Amazon Flywheel model.

How does the Amazon Flywheel apply to retailers?

You might say, “Yea, it works for Amazon because it’s Amazon! How does this fit for a retailer my size?”

Putting the Flywheel into a non-Amazon context is essential since the goal is to embrace the concept of the Flywheel within your own operations.

  1. Customer experience: Small retailers can focus on providing an excellent customer experience by offering personalized service, fast shipping, and easy returns. Often small retailers can use this as a critical point of differentiation because they can be nimble and personal.
  2. Selection: Small retailers may not be able to offer a wide array of products, but they are not a market. A Smaller retailer can focus on a core set of exceptional products which delight customers, scaling demand and allowing a retailer to expand product lines/offerings. The key is you have a product line that delivers value to customers and “keep coming back.”
  3. Value prices: Small retailers can offer more value by offering fair prices for high-quality products. Coupled with first-class support, value-driven prices attract and retain customers.
  4. Advertising: Small retailers can use various online advertising platforms, like Amazon or Google, to efficiently reach the right customers, communicate their brand value, drive product awareness, and increase sales.

Amazon has the reach that drives scale

Amazon Advertising has a large audience size and reach, as it is one of the largest e-commerce platforms in the world. It has a wide range of targeting options for businesses to reach their desired audience and a variety of ad formats to choose from.

  • Audience size: Amazon has over 310+ million active customer accounts worldwide and more than 175+ million monthly unique visitors to its websites. This provides a vast audience for businesses to reach, which can help to increase their visibility and drive sales.
  • Reach: Amazon Advertising allows businesses to target customers across various devices, including desktop computers, mobile devices, and smart TVs. Advertisers can also reach audiences across multiple Amazon websites and apps, including, Amazon Fresh, and Amazon Prime Video, providing various platforms to reach different audiences.

Through the Amazon Advertising platform, businesses can reach an audience outside of Amazon through audience targeting options, such as external website browsing data and off-amazon conversion tracking. This allows businesses to reach customers beyond Amazon’s ecosystem and expand their audience reach.

Amazon Advertising Product Mix

The Ads platform comprises six main elements: Sponsored Products, Sponsored Brands, Sponsored Display, Amazon Attribution, Amazon DSP, and Amazon Stores.

  • Sponsored Products are text-based ads that appear in search results, product pages, and other relevant pages on Amazon. They are designed to help businesses drive more sales by making their products visible to potential customers.
  • Sponsored Brands are a type of display ad that feature a company’s logo and multiple products. These ads are designed to create brand awareness and help drive more sales by providing customers with a visual representation of the company’s product offerings.
  • Sponsored Display is a highly targeted advertising solution allowing businesses to reach customers across Amazon’s websites, apps, and third-party websites through the Amazon Advertising Platform.
  • Amazon Attribution is a measurement tool that helps businesses understand the customer journey and how their ad campaigns impact sales. This allows businesses to get a complete view of how their ads are performing and how to improve their performance by providing cross-channel attribution, customer journey analytics, and actionable insights.
  • Amazon DSP (Demand-Side Platform) is a programmatic advertising solution that allows businesses to programmatically buy and manage display, video, and audio ad inventory on the Amazon Advertising Platform and other third-party websites; it allows for even more targeting and reaches for a business’s advertising campaigns.

Multiple Ad Platforms For Sellers & Vendors

An advertiser can use Amazon Advertising and Google Ads to reach customers across multiple channels and platforms. Here are a few ways an advertiser can use both platforms to increase their visibility and drive sales:

  1. Synchronize audiences: An advertiser can use customer data from their Google Ads account to create lookalike audiences in Amazon Advertising. This allows them to reach new customers similar to their existing customer base.
  2. Utilize remarketing: An advertiser can use remarketing lists from Google Ads to create similar audiences in Amazon Advertising. This allows them to reach customers who have previously interacted with their brand across both platforms.
  3. Cross-promote: An advertiser can use Google Ads to promote their Amazon store or specific products and use Amazon Advertising to drive traffic to their website or other online platforms. This allows them to reach customers across multiple channels and increase visibility.
  4. Use different ad formats: Google Ads offers various ad formats such as search ads, display ads, and video ads, while Amazon Advertising mainly offers product ads, sponsored products, and sponsored brands; utilizing different ad formats in different platforms can appeal to different customers.
  5. Measure and optimize: An advertiser should track and measure the performance of their campaigns on both platforms and optimize accordingly. This allows them to identify which campaigns drive the most sales and adjust their strategy accordingly.

Amazon Advertising has different features and targeting options than Google Ads, so it’s essential to understand each platform’s strengths and limitations and how they can be used together to achieve the advertiser’s goals. Combining both platforms can be beneficial for an advertiser to increase brand visibility, reach new customers and drive sales. Still, it also requires a proper plan and strategy for the best results.

Amazon Flywheel Case Study

The first Amazon Advertising Flywheel case study is about a company that sells outdoor gear and apparel. The company used Sponsored Products to drive more sales and increase product visibility. As a result, the company saw a significant increase in sales and was able to invest in building brand awareness through Sponsored Brands.

They also added Sponsored Display to reach a wider audience, drive more sales, and increase brand awareness. They utilized Amazon Attribution to gain insights into the customer journey and measure the campaign performance. This virtuous growth cycle helped the company become one of the top sellers in the outdoor gear and apparel category on Amazon.

Another example of the Amazon Advertising Flywheel is a home goods e-commerce store. They used Sponsored Products to drive more sales and increase visibility for their products, and in doing so, they were able to increase their sales by over 50%.

They then used those increased sales to invest in Sponsored Brands to build brand awareness and increase customer loyalty. They also implemented Sponsored Display, reaching more customers and increasing their sales by 25%. They also used Amazon Attribution to gain insights, measure their campaign performance, and improve it, allowing them to continue growing their business on Amazon.

A third example of the Amazon Advertising Flywheel in action is a fashion e-commerce store. They used Sponsored Products to drive more sales and increase product visibility. As a result, the company saw a significant increase in sales and was able to invest in building brand awareness through Sponsored Brands and reach a wider audience with Sponsored Displays.

They also used Amazon Attribution to measure their campaign performance and gain insights, which allowed them to make data-driven decisions and improve their campaigns, leading to further business growth. They also leveraged Amazon DSP and Amazon Stores to reach their audience further, improve customer experience, and build brand awareness.

Using Data to Unlock the Amazon Flywheel

Amazon offers data to help any e-commerce business with the information needed to fuel the strategies outlined in the Amazon Advertising Flywheel. Rather than manual data wrangling data files, Amazon APIs can provide businesses with the tools they need to automate and optimize their advertising campaigns on Amazon.

When sellers and vendors can automate repetitive and time-consuming tasks, they can focus on using data for optimizing business performance. Using code-free, pre-built connectors for various advertising platforms like Google, Facebook, and Amazon DSP allows businesses to have a unified view of their data.

Unified data allows teams large and small to employ advanced analytics and visualization tools like Tableau, Power BI, Looker, and many others better to understand their customers and their campaigns’ performance. This includes tracking and analyzing website traffic, conversion rates, customer engagement, and retention.

Consistently investing in the elements of the Flywheel, e-commerce businesses can create a virtuous cycle of growth, where they can attract and retain customers and generate more revenue, which they can reinvest in their offerings and advertising to continue growing their business on Amazon.

Getting Started with Amazon Automation

Openbridge can help sellers and vendors execute Flywheel’s strategies by providing code-free, fully-automated Amazon API data integration and management capabilities.

Amazon automation for data allows businesses to unify and consolidate from multiple sources, including Amazon, and use that data to gain insights and make data-driven decisions about their advertising campaigns. This includes tracking and measuring the performance of their campaigns using Amazon Attribution and generating actionable insights to optimize them.

Try today, and get an Amazon Automated Data Feeds 30-day Free Trial.

Amazon Advertising Flywheel: How to Accelerate Your E-commerce Growth was originally published in Openbridge on Medium, where people are continuing the conversation by highlighting and responding to this story.

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