Welcome to Basilio Inc. Guide to Selling Electronics on Amazon. If you’re thinking about starting up your own business as an Amazon seller, stick around, because you’ve come to the right place.
The Electronics category on Amazon presents an exhilarating yet challenging journey for aspiring brands. With a multitude of major players, including Amazon itself, and a flood of copycat products vying for attention, the competition is fierce.With practical strategies, expert advice, and a deep understanding of the category’s nuances, this book equips you to hit the ground running and turn your Amazon venture into a sprint to success.
Chapter 1 – Category Landscape
Amazon 1P Dominates
Amazon’s dominance in the Electronics category is undeniably strong, with a remarkable first-party (1P) presence accounting for a staggering 43% of the total sales in Consumer Electronics, as revealed in Amazon’s responses to the US House Committee on the Judiciary’s Questions for the Record.
The Electronics category’s significant growth is due in part to the collaboration between Amazon and Electronics brands, with many opting to partner with Amazon 1P as their preferred wholesale online retailer. This strategic partnership was vividly evident during Prime Day 2020, where Amazon showcased its prowess. According to a Rolling Stones poll, eight out of the top ten selling products were from the Electronics category during Prime Day 2020, with Amazon 1P claiming half of the bestsellers.
Prime Day 2020 was an astounding success for Amazon, generating over $10.4 billion in sales. What’s more, Amazon secured a whopping 65% share of those sales. The success of Prime Day demonstrated Amazon’s firm control in the Electronics market, reflecting the immense interest among consumers in purchasing Electronics on the platform.
Electronics shoppers have come to rely on Amazon as their go-to destination for almost all their electronic needs. With the assurance of finding a vast array of top-selling products, it’s no surprise that Amazon’s Electronics category has become a focal point for brands and sellers seeking to maximize their market presence and tap into the enormous potential this market offers.
The Electronics Category is Saturated
The allure of the Electronics category on Amazon is undeniable, with its abundant potential for sales and growth. However, such a valuable landscape naturally attracts numerous sellers vying for a piece of the pie. In fact, the Electronics category stands as one of the most saturated and fiercely competitive sectors on the platform. The sheer volume of products, ads, and pricing battles make it a challenging realm to conquer. Notably, sub-categories like headphones, speakers, and microphones are teeming with hundreds of purchasing options, almost forming sub-markets of their own.
New brands entering the Electronics category face an uphill battle as they strive to rise above the crowd of lookalike products. Established sub-categories, particularly headphones, speakers, and microphones, present considerable challenges for newcomers aiming to carve out a space for their offerings. However, amidst the saturation, there exist compelling opportunities in emerging technologies, such as “smart home” products. Embracing these cutting-edge innovations can provide a strategic advantage for brands seeking an edge in the competitive Electronics market.
The Electronics category’s saturation did not occur overnight; rather, it has been a gradual evolution. Electronics sellers have been on Amazon for many years, honing their strategies and refining their approach to adapt to the platform’s dynamic nature. As a result, they have matured into one of the most experienced and adept categories on Amazon. This wealth of experience and established presence in the market adds an extra layer of challenge for new entrants, but also opens doors for collaboration and learning from those who have navigated the Electronics terrain successfully.
One of the Most Mature Categories
The Electronics category on Amazon stands as one of the most mature and well-established categories on the platform. This maturity implies that sellers operating within this space possess a higher level of expertise in the nuances of selling on Amazon. They are well-versed in understanding the competitive landscape, the dynamics of Amazon’s role as both a friend and a rival, the significance of marketing efforts, and the integration of brick-and-mortar and e-commerce strategies. In this highly saturated category, sellers must adapt swiftly or risk being overshadowed by their competitors.
As the Electronics category progresses to the next phase of its lifecycle, major players are taking the forefront and reclaiming the landscape. Amazon, as the giant in the industry, holds significant sway by retailing products from leading brands and offering its own low-cost private label items. While Amazon’s private label accounts for only 3% of its retail sales in the Electronics category, it remains a growing threat. AmazonBasics, in particular, poses a challenge as it develops affordable versions of successful market items, impacting competitors’ sales.
Nevertheless, Amazon’s private label strategies have come under scrutiny, with claims that they use private third-party information to inform their private label decisions. Despite this controversy, major brands like Bose, TLC, and Sony are also taking a more assertive stance in managing their Amazon channels, recognizing the potential opportunities the marketplace presents. As a result, the Electronics category may eventually see dominance by several established brands in specific sub-categories, while both established and emerging brands continue to vie for market share in newer sub-categories.
The COVID-19 pandemic has further influenced the landscape, potentially shifting consumer preferences from copycat products to items centered on design. With more people working remotely and spending prolonged periods at their home workstations, aesthetics are gaining importance. Electronics products with pleasing designs and functional appeal may experience increased sales as consumers seek to enhance their home office environments.
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