Sometimes I think that Amazon secretly wants to get out of the physical retailing business. It gets much higher margins from selling digital goods, or from collecting an affiliate fee from any sales it directs to an third-party Amazon Merchant. Any time it can avoid shipping something, it makes more money (proportionately) than if it sold you the item itself.
Now Amazon is making a move in the direction of becoming a shopping search engine. This week, it launched a program called Product Ads, which lets any Web merchant buy cost-per-click ads on Amazon linked to specific product searches. No announcement was made other than a blast e-mail to product marketers and the addition of a paragraph at the bottom of this page describing how you can advertise with Amazon. Although it is a limited test for now (in the Electronics & Computers, Home & Garden, Tools, and Toys, Kids & Baby categories), Product Ads is a direct response to the encroachment of Google and product search engines like eBay’s Shopping.com.
More people probably start their online shopping at Google than at Amazon.com these days. With Product Ads, Amazon is fighting back. Anyone who searches for a product on Amazon today will find either products that Amazon sells or ones that its merchant affiliates sell. Now Amazon is saying that any Websites that is selling something related to its product categories can buy an ad that will show up as a highly targeted product search result, along with all the items on Amazon and its merchant sites. What’s more, Websites won’t need to pay Amazon an affiliate fee or register as a merchant. They won’t even need to pay for the ad unless someone clicks on it.
Each click might bring only pennies, but search is a volume game. For Amazon, it is all gravy that could help boost the company’s overall margins if it takes off. It is also a smart defensive move against Google, which still does not do product search particularly well. If shoppers could find anything they want to buy across the Web on Amazon, it might once again become the first place to look when they shop online.
(via Josh Kopelman).
Shopping search sites are a dime a dozen. Amazon’s brand value is in the trust customers have in it: you will get a good price, your goods will arrive on time and in the right number of pieces, and your personal information will be used well but not abused.
In my experience as a consumer, the affiliates program detracts from the Amazon brand . Buying with affiliates means that the goods might not get to me on time and the price may not be competitive. If there’s a problem, customer service and returns might be a pain in the ###. I’d rather be able to filter my search to only Amazon products than see more products from affiliates.
The Amazon brand is unique: it’s not another search shopping site, and it’s not a manufacturer’s site or specialty store. It’s a trusted online general store. When you tell someone you bought with Amazon, that person should know what that experience means.
Agree 100% with @1. I often buy from Amazon even if the price is higher than somewhere else. I know I’ll get what I ordered with no hassles. Amazon risk tarnishing its brand by handing over customer service to other parties. Most people don’t know anything about affiliates, they only know the website says Amazon.
Wow. Okay so if Amazon can’t make it selling stuff online… who can? I saw ads on Amazon a while back and I thought - okay this is a fluke, they are just testing stuff… but, wow, its not a fluke, they want to get out of selling?
I understand that inventory is expensive, but they are already mostly a pipe, with lots of merchants running around. Why would they need ads?
Alex
… and to follow up with Ellie and George (except for the price issue) I refuse to purchase from a non-Amazon retailer (i.e. the music’s used and new choice).
Not everything listed on Amazon is currently in stock. Why waste valuable visibility when you can take interested customers and direct them to a site that has the same or similar product for sale? This is a generalization, but businesses that have an advertising budget will also have the infrastructure in place to ship orders quickly and accurately.
I heard the product manager in charge of this feature has a sister who is smokin’ hot!
For my American friends, Amazon is the #1 shopping site, so Amazon does the right thing by becoming a portal for everything about shopping: if it does not carry something - it will point you to merchants who do, and with its trustful brand, it can become really big.
I admire Amazon!
I got in earlier today. I posted some information about how it works at http://www.thejunglemap.com/post/186 if you want to check it out.
Amazon has the power to do what it wants….it has been along for so many years… It is what GOOG will be after 10 years.
http://www.jhatak.com/Buckler/BucklerHomePage.htm
I’m disappointed - I can’t help feeling that Amazon is slowly killing its golden goose. I used to love buying things on Amazon because it was quick, simple to use and came at a good price.
Now I find that almost everything has to be shipped separately because they’re coming from different stores, the site is a mess to look at because it’s covered in adverts and upselling and the total cost of shipping is almost 50% of the purchase.
It’s clear that becoming a search engine and a credit card company has better margins than being a physical retailer but if that’s what Amazon want to do then they need to be careful to factor in the loss of value as their proposition goes away.
I already have Google for search, I wanted Amazon for speed, ease of use and value, all of which are slowly eroding away.
They are monetizing their traffic as best they can.
Honestly, the big advertisers want access to Amazon’s customers, if Amazon keeps finding ways to increase their overal margins they can continue to price aggressivly on their own product. The breadth (No one wants to stock the long tail) comes form all of these other sources (3P Sellers, WebStores, ClickRiver, Product Ads).
Look at this scenario, An online reatiler can’t get into Amazon becasue they haven’t opened their category yet. So they use Product Ads to get their product in front of Amazon’s customers. Amazon sees where the deman is and decideds to open a new category based on it, all the while getting paid for their data gathering.
Or a smaller seller opens up an Amazon WebStore, using Amazon FBA to fulfill their orders and then uses Product Ads to get Amazon traffic to their WebStore. Amazon makes moeny from the click, from the sale (FVF 7%) and from the fulfillment. The Webstore has Amazon’s A2Z guarantee and everybody is happy.
I submitted an ad quote request for our large printer ink, toner cartridges, and ink cartridges business. They contacted me within 20 minutes. Appear to be very aggressive in selling this offering.
Great idea to help web site get more exposure from hi profile web site.
We sell Statues and Sculptures that are hand made in USA, small but growing. Would be a great help for a low fee to grow our business.
http://www.neo-mfg.com
Is this an extension of the ClickRiver program it launched in November of 2006?
You people are stupid suckers…you pay more at AMZN? What are you, dumb losers? AMZN is a pathetic company started for books. You think its some sort of onlien “general store.” pooh. Get a life and go to the mall. dumbazz.
Amazon’s a long-tail retailer / affiliate so it sorta makes sense with their whole raison d’etre to be able to make $ on virtually any search term.
I do hope they only deliver Product Ads when there are no matching results in the Amazon Marketplace. So it would round out their keyword inventory without stepping on their participating merchants’ toes or adding extra hassle for customers by giving them too many options. This would have a huge impact on conversion rates on Amazon.com - any time you introduce extra options you’re going to lower conversion. Now the customer has to go and check other sites to see if the offers are more attractive. One of the benefits of the Amazon marketplace is that you can quickly compare new and used items side by side, and place your order through Amazon.
This will be interesting to watch.
I thought Amazon was already a shopping search engine??
Barry