Understanding the Amazon Flywheel Concept
The Amazon marketplace is often referred to as a Flywheel.
As you gain sales velocity you appear more organically (in search + BSR rankings), which leads to more total sales. However, generating momentum on this flywheel is often a challenge.
When you start selling on Amazon, you will most likely not get Organic sales because Amazon has no signals that people want to buy your product therefore it won't be placed in a highly visible spot on the results page (and Amazon wants people to purchase).
On account of this, you need to manufacture momentum on the proverbial Flywheel.
Leveraging Advertising for Momentum
The best way to manufacture this momentum is with advertising.
You need to inform Amazon that people want to buy your product, and advertising - specifically Sponsored Ads - is the fastest and most scalable way to drive people to your product page. When you launch Sponsored Products and Sponsored Brand campaigns, your products can get impressions, clicks and thus, conversions.
Once you get more conversions, you get more reviews, your Best Seller Rank will climb and more importantly:
1️⃣ Your product will appear higher in the organic search rankings
2️⃣ Your ACoS will become more sustainable over time
Advertising, therefore, creates a snowball effect, not only increasing your Attributed sales but also your Organic sales and your advertising spend will become less of a cost burden and more of a sustainable growth contribution to your Amazon strategy.
Measuring and Analyzing Flywheel Effects
It is often very difficult to understand the impact of the Flywheel, however, Perpetua provides some powerful analytics tools to help you measure the effects:
1️⃣ Total Sales Analytics: Visualize the interplay between Organic and Attributed sales and how they contribute to the increase in your Total Sales
2️⃣ Cost-Per-Click (CPC) Trends: As Amazon learns people want to buy your products based on specific keywords, you will be able to see that the CPC will decrease over time.
If you want your products to start spinning in the Flywheel, be aggressive with your advertising strategy in the short term and you will reap the benefits in the long run.
Article last updated March 2024. If you find this information to be out of date, please contact firstname.lastname@example.org.