The Marketplace ‘Flywheel Effect’
On Google, organic search rankings are based on content, user engagement, inbound linking, technical SEO, etc., not paid search. On Amazon and other marketplaces there is a direct correlation between paid search advertising and organic search results—known as the Flywheel Effect.
How Important Are Marketplaces?
- Marketplaces continue to increase share of U.S. sales at double-digit rates, and are where most consumers start their product research
- Though Amazon owns 50% of U.S. e-Commerce sales, Walmart.com sales are growing more rapidly than Amazon’s, and reaches 100 million consumers
The first mistake brands often make is not conducting financial planning before launching on a marketplace. You need to determine a realistic annual sales budget, need financial planning to make sure you can be profitable, and don’t need to be selling on a marketplace to do financial planning.
Marketplace Launches and the Flywheel Effect
Due to the importance of the Flywheel Effect, it’s often best to start with one marketplace and get optimized. Another school of thought is to use a feed provider, test marketplaces at the same time, identify the opportunities and then prioritize. For example, Wal-Mart is large, growing faster than Amazon in many categories, and is less competitive.
A “Catch 22,” to get good organic rank on Amazon you need to have sales, however, to have sales you need good organic rank. Enter the Flywheel Effect. You need to budget enough money to generate almost all of your sales with paid advertising for the first few months.
Multi-channel Marketplace Sales
There are similarities across marketplaces. There are also differences. Following are only a few examples. Working with a feed provider can make it more efficient to manage.
- On eBay, sellers have been able to take advantage of cost per sale advertising, where the seller doesn’t pay unless a sale is made
- Walmart.com has had more limited CPC advertising targeting and bidding but is rapidly evolving their platform
- Amazon’s FBA fulfillment is unique, though both Amazon and Walmart.com have expedited shipping options, which influence organic rank and sales conversion
We hope you’re better informed about the marketplace Flywheel Effect, and what it could mean to your brand.
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Author | Paul Becker, Senior Consultant
- Published in Other