When your Amazon business is growing, you have two choices: buy or build.
Building means hiring an internal team to take on Amazon responsibilities. Buying means outsourcing to a third-party agency.
Many Amazon partners pride themselves on being a third-party agency that will tackle everything for your Amazon business, including inventory management, advertising, forecasting, customer service, reviews, and fulfillment.
Who wouldn’t want someone fully dedicated to help manage your Amazon account? These teams are jacks of all trades.
While there are certainly benefits to having one agency manage your Amazon account, there are also some drawbacks that should be taken into consideration. We’re here to walk you through the pros and cons of working with a full-service Amazon agency vs. a specialized Amazon Advertising agency.
Who is Right for a Full-Service Agency?
Full-service agencies are great for sellers who are just starting out on Amazon. If you truly don’t have the bandwidth to effectively manage all sides of your Amazon business, one agency who charges you a flat fee for all-encompassing services is a great option. You can learn a lot from these agencies, especially if you’re in the early days of running your Amazon business.
These end-to-end solution agencies are also good for companies where the majority of their e-commerce revenue stems from other channels, so they are just looking to manage and maintain their Amazon presence.
What are the Downfalls of a Full-Service Agency?
Lack of Dedicated, Specialized Resources
At a full-service Amazon agency, one person is managing your entire account — including fulfillment, inventory management and forecasting, customer service, and advertising.
For example, let’s say Amazon is having warehouse issues and inbound shipment delays like they have recently due to COVID-19. A full-service agency will shift efforts to make that their number one priority, and as a result, will miss opportunities as it relates to advertising.
Likely, advertising will be what suffers, because it’s seen as a nice addition that can run on auto-pilot. But the fact of the matter is that Amazon advertising requires many dedicated hours and resources in order top be effective and efficient.
Not Experts in Advertising
These agencies are jacks of all trades but masters of none.
A lot of brands noticed during the COVID-19 pandemic that these agencies don’t always know how to pivot their advertising strategies. You’ll likely notice that your inventory and reviews are being handled well, but your business won’t be growing as fast as you’d like it to.
Why is Advertising So Important?
Amazon is a pay-to-play platform. If you want to be a serious seller, you’ll need to invest in advertising. That’s why ACOS is viewed differently from ROAS — the cost of advertising should be built into your budget, not seen just as a return.
Amazon follows a performance-based algorithm, so advertising is really the bottom line of how you grow your business. At its simplest explanation, Amazon’s algorithm works to show the products that have the highest clickthrough rates, sales, and overall performance. “Traditional” SEO markers like your product description and bullet points are less important for organic placement. Advertising is the main driver of growth, and the best advertisers in the room are top sellers.
Organic Isn’t As Important
If you’re used to working in a traditional Dotcom space, you might be hyper-focused on SEO and organic placement. While these certainly play a role in your Amazon business, they’re not as much of a priority for growth as you might think.
On page 1 of Amazon SERP, there are very few organic placements above the fold, if any at all. The first four search results are all sponsored products, and above that is a large sponsored brand ad.
Just thinking spatially, you would want to have the top placement possible on the SERP. And even if your product is the number-one organic search results, it won’t be seen until after someone scrolls.
The bottom line: Your organic ranking isn’t everything. What you should primarily strive for is a solid ad placement.
Advertising Drives Growth
Amazon ares less about how technically good your SEO is and more about how customers respond to your product — aka if customers are actually buying it. Or course, copy that converts is a huge part of sales, but most Amazon sales occur on page 1, and most of those sales are in the top few products that appear.
Amazon SEO is performance based. Amazon doesn’t differentiate ads performance from a product’s organic performance. The products with the most clicks, best sales, and highest conversion rates are represented higher up in the SERPs organically.
Advertising drives 60% of total growth on Amazon, so knowing your advertising is key to growing your company’s revenue and expanding the reach of your products on Amazon. Since advertising is by far the most important area of revenue growth for your brand, you need the smartest and most experienced people handling it.
Every other area (inventory, customer service, etc.) of a full-service Amazon agency is based on efficiency, and you don’t necessarily need a dedicated expert to do it. But advertising is different in that it requires an up-front monetary investment, and it requires constant optimization.
The bottom line: If you want to grow your sales on Amazon, you need to advertise.
Questions to Ask before Signing a Full-Service Contract
How many Amazon customer service inquiries do you receive weekly?
- If you only get three calls a week, you can easily manage that internally.
- Do you have an internal team who manages your Dotcom customer service? Could they take on your Amazon calls?
- If you have an omnichannel strategy, you are doing yourself a disservice by outsourcing rather than keeping everything in house.
How many questions do you respond to per week?
- Maybe 10? That can be tackled in 30 minutes each week.
How often do you monitor inventory levels?
- Once a month? Full-service agencies promise to do inventory planning, but they really just use a simple spreadsheet formula to calculate how many products you sell in a month.
- Once a week? If you didn’t know, the Amazon dashboard has a feature that can help you prepare and plan your next shipment to Amazon’s warehouses. Glancing at this feature provides the support a brand needs to manage inventory levels.
How often are you optimizing your titles/descriptions/bullet points?
- Full-service agencies will say they continually optimize your content — but if your content is good, you won’t need to optimize it.
Can you break out services so you can grow accordingly?
- DON’T get stuck in long-term contracts!
How well do you know each area of Amazon? Do you understand the importance of each? Which of these could you do in house?
Just Getting Started on Amazon?
Amazon has provided powerful resources that give clarity for beginners and seasoned sellers. The content truly simplifies the education and removes the learning curve many feel they cannot overcome. If you’ve ever thought that you don’t have the time, experience, or willingness, Seller University will eliminate those thoughts!
You do not need to have a Vendor or Seller account to access the content in the Seller University. This curated content is available directly from Amazon on YouTube!
If you have a Vendor or Seller account, you can access the full Seller University, which is the recommended user experience.
Once you’re logged in, you can view more resources here. This includes an amazing toolbar to help navigate to the exact topic you’re inquiring about!
While the Seller Forums are helpful, you will need an Amazon Vendor or Seller login to access. The content is all Q&As from volunteers and other sellers participating in the discussion. Some of the content you can trust, but be aware that Amazon does not directly provide any guidance here. The main benefit of this tool is that as a Vendor or Seller, you can submit questions to the Amazon community to answer!
Lastly, there is the Amazon Advertising Learning Console. The Learning Console can provide the most basic elementary teachings or more advanced advertising techniques!
Ready to take your advertising to the next level to grow your Amazon business? Schedule a consultation with one of our Amazon Advertising experts by emailing [email protected].