It is learned that recently an EU privacy regulator proposed to impose fines on Amazon A $425 million fine was levied against Amazon over data privacy issues.
It is reported that the $425 million fine is one of the highest fines issued by the European Union, accounting for about 2% of Amazon's net income in 2020 (US$21.3 billion). However, many peers currently oppose the draft decision and say the fine should be higher. Not long ago, Amazon was sued by the US government for monopolizing the market. In recent times, Amazon has been involved in various lawsuits. How can Amazon solve the problem of recent "suppression" from various forces? The only way is to sharpen the sickle towards the "leeks" and continue to squeeze the sellers. Advertising costs on US sites surged by more than 50% According to Marketplace Pulse research, advertising fees on all Amazon sites continue to rise. The average cost per click (CPC) for ads on the U.S. site is $1.2, up 30% from $0.93 at the beginning of this year, and up more than 50% year-on-year.
Data shows that the average cost per click (CPC) of Amazon ads in 2020 was $0.85, and reached a low of $0.70 in early May of the same year, reaching its peak during Prime Day in October, Black Friday Cyber Monday in November, and the holiday season in December. Since then, CPC has stabilized at around $0.9 for most of the first quarter of 2021 . It is reported that the average advertising cost of sales (ACoS) was 22% in 2020, 25% at the beginning of 2021, and has now risen to more than 30%. However, the average conversion rate has remained at 12%-13%. In addition, the current average sales cost has risen to US$9-10, and it takes 8 clicks at an average price of US$1.20 to generate one sale. Marketplace Pulse said that Amazon's advertising rates have changed almost the same in all its markets. Not only in the United States, but also in other markets such as Japan and Europe, the same trend of CPC falling in May 2020, the end-of-year holiday peak, and rising in the past few months can be seen. Amazon has turned most of the widgets on its website and app into paid display ads, without increasing the number of ads in its search results. Since most of Amazon’s ad spend is for sponsored product results in search, this means that more and more brands are advertising on Amazon, causing CPC to rise. Driven by the epidemic, online consumer demand has surged, which has also driven increasingly fierce competition for advertising on Amazon, thereby pushing up advertising prices. For mature brands, they are still able to compete for advertising display. However, for small and medium-sized sellers, the rising advertising costs may make them unable to afford it. Traffic keeps decreasing, but ACOS keeps rising Since the end of May, many sellers have reported that traffic has been declining, but advertising ACoS has been soaring. One seller said that advertising only burns money but does not convert, ACOS has risen to more than 100%, and sales rankings have continued to decline, and the performance in May was bleak.
In this regard, some sellers analyzed that as the epidemic situation stabilized, many categories of products had more purchasing channels, so the overall sales volume showed a downward trend. However, many sellers prepared goods based on last year's sales volume, resulting in a large amount of inventory piling up in warehouses, and they could only respond by raising advertising bids and lowering product prices. ▲ The picture comes from Zhiwubuyan This also explains why ACOS has been rising steadily, while conversion rates have continued to decline. All the data last year were extraordinary results stimulated by the epidemic. Now that the overall inventory has expanded, demand has decreased, and traffic can only be competed through various means such as advertising display. It can be said that the current situation is actually the return of last year’s excess profits. Only sellers are losing money, and Amazon is still the beneficiary. In connection with the news that the founder of Amazon announced that he would fly into space on the rocket "New Shepard", many sellers joked that everyone here has a responsibility for his brother-in-law to go to space, and the road to becoming the richest man cannot be separated from the "bricks and tiles" of all sellers. ▲ The picture comes from Weibo For small and medium-sized sellers, faced with the increasingly fierce "advertising war" and the "gratifying" increase in advertising costs, they can only appropriately increase product prices and invest budgets prudently.
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