What is the Amazon Brand Referral Bonus?
On July 15th, Amazon notified sellers of its new Brand Referral Bonus Program as an incentive and reward for driving off-Amazon traffic to their Amazon listings. Brand Registered Sellers enrolled in the program will receive a credit to their seller account of 10% on every sale made from an off-platform referral source
Why Is Amazon Incentivizing Off-Amazon Advertising?
Early on, Amazon experts noticed that Amazon’s algorithm seemed to reward listings that drove higher volumes of off-Amazon traffic. Driving traffic from external sources like Google paid search and Facebook ads seemed to improve organic search rankings on Amazon. Then in 2018, Amazon launched Amazon Attribution, a tool for Brand Registered Sellers to monitor the performance of their off-Amazon advertising efforts.
Prior to Attribution, Sellers could see which sales resulted from their Amazon PPC campaigns, but the source of all other sales remained a mystery. By providing a tool for sellers to measure and optimize their off-Amazon campaigns, Amazon was sending a clear message to sellers that off-platform traffic was important and needed to be prioritized.
This message was confirmed with the A10 algorithm update. This iteration of the Amazon search algorithm placed much more value on off-Amazon traffic for search results. Amazon was clearly telling sellers that if they wanted to succeed on the platform, they needed to be directing customers from all over the web to Amazon.
So why is off-platform traffic so important to the current number one ecommerce platform that many have called an ecommerce search engine itself? While an estimated 50% or more of online shoppers begin their product search on Amazon, that leaves another 40% of shoppers that are starting their search on Google or another search engine, with the balance going directly to the merchant’s site or another marketplace. To continue growing its share of the ecommerce market, Amazon needs to own search and paid advertising across all channels. With Walmart Marketplace establishing itself as a new ecommerce leader and destination for third party sellers, Amazon knows that to retain their number one position, an Amazon listing has to be at the top of every search ranking and highlighted in every sponsored post on shoppers’ social media timelines. The best way to do that, is to incentivize their nearly 2 million third party sellers to canvas the internet on their behalf.
How Does the Brand Referral Bonus Work?
Amazon’s Brand Referral Bonus is available only to Brand Registered Sellers, and participating sellers must enroll in the program. Once enrolled, sellers will track their sales from off-platform advertising through Amazon Attribution.
Sellers will create an attribution tag, which like a pixel on Google or Facebook will follow the shopper on their purchase journey from their first click to their final purchase. Sellers will attach this attribution tag to their external marketing campaign, whether that’s paid advertising, a link in a newsletter, or a social media post. For each sale that’s made from external traffic, sellers will receive a credit on their referral fees equal to 10% of the purchase price.
How Will the Brand Referral Bonus Affect My Business?
With Amazon referral fees currently costing 15% per sale, this credit reduces the referral fee for sales made from off-Amazon traffic to only 5%. This makes the aspect of selling on Amazon much more attractive to multichannel sellers and may cause them to reprioritize their ecommerce ecosystem.
Additionally, with Amazon’s PPC advertising costs up 50% year over year, it makes sense to increase ad spend on external channels. Sellers get the bonus of higher organic search rankings and now a substantial kickback to offset their operating costs overall.
Amazon also leads the way in ecommerce strategies for other major players. Walmart’s search algorithms function very much like Amazon’s, and Walmart has already introduced an affiliate program much like Amazon’s to drive off-platform traffic. It’s likely that Amazon will soon follow suit with a similar strategy to incentivize more external marketing efforts from its third-party sellers.
Using Amazon in Your Multichannel Strategy
This incentive will certainly lead some sellers to place higher priority on marketing their Amazon channel, but multichannel merchants should continue to grow all of their channels simultaneously.
In fact, Amazon can be leveraged to create brand awareness and acquire new customers as part of a multichannel strategy, but to do this, sellers must create a unique brand experience on Amazon and maintain as much control over customer interactions as possible.
One of the most effective tools for creating a unique brand experience on Amazon is through fulfillment. Amazon sellers who fulfill orders through Fulfillment by Merchant (FBM) or Seller Fulfilled Prime (SFP) have access to valuable customer data that can be used for re-marketing, getting customers to leave reviews, and establishing trust with their brand. Below are a few ways that choosing to manage your Amazon fulfillment internally or with an outsourced fulfillment partner can help you leverage Amazon to grow across all sales channels:
- Custom Packaging: Custom packaging allows you to connect with your customers and establish your brand as soon as your package arrives on their doorstep. You can also ensure that your products are packaged efficiently to reduce shipping costs and damages, as well as offer eco-friendly packaging options, which 64% of consumers indicate is important to their decision whether or not to make a purchase online.
- Order Inserts: Fulfillment by Amazon (FBA) limits the additional materials that sellers can insert into their shipments. Working with an outsourced fulfillment provider will allow you to include marketing materials asking your customers to leave reviews, follow you on social media, or look at your additional product offerings on your ecommerce site.
- Streamlined Experience Across Channels: Finding a fulfillment partner that can satisfy the fulfillment requirements of all your sales channels will help you create a cohesive, repeatable experience for your customers no matter where they make their purchase. Managing fulfillment across all channels through a single partner will also simplify your internal process and free up bandwidth to focus on sales, marketing, and product development.
The Future of Multichannel Retail
Amazon accounts for 37% of online sales and can’t be ignored as a sales channel for most merchants, but social media platforms continue to build out new shopping capabilities, and shopping carts like Shopify and BigCommerce continue to evolve in order to compete with Amazon. This means that ecommerce will continue to become more and more ubiquitous, and merchants looking to compete will need to build out more than just their Amazon strategy in order to compete.
Looking for a multichannel fulfillment solution? Talk to one of our ecommerce fulfillment experts.