According to a recent Wall Street Journal article, written by Dana Mattioli, Amazon recently updated its search algorithm to bring more of its own private label goods to the top of the results page.
“Late last year, these people said, Amazon optimized the secret algorithm that ranks listings so that instead of showing customers mainly the most-relevant and best-selling listings when they search—as it had for more than a decade—the site also gives a boost to items that are more profitable for the company,” says Mattioli.
On the other hand, Amazon executives dispute the claims, saying the e-commerce giant has not changed the algorithm to account for profitability of products. According to the unnamed whistleblower(s), an ongoing battle was in the midst between Amazon’s retail team and the “A9” (algorithm) engineers, who did not want to favor the company’s private label.
“Customers often believe that search algorithms are neutral and objective, and that results from their queries are the most relevant listings,” says Mattioli. Which brings us to ask, will e-commerce shoppers look elsewhere if they’re not finding relevant merchandise quickly enough?
“Legally, search algorithms are constitutionally protected speech under the First Amendment, according to previous judicial opinions,” says Greg Sterling, a Contributor with Search Engine Land. “Therefore, at least in the abstract, Amazon can rank results in whatever manner, using whatever factors or criteria it pleases.”
An extra murky layer is added in when we consider that the Amazon retail team, who develops the company’s private label items, also oversees independent wholesalers and third-party sellers on the site. So, when seller post their products to Amazon, they’re also handing over valuable consumer data to the e-tailer, such as which products are trending or up-and-coming.
“I used to sell on Amazon and I sold over $2,000,000 per year,” Paul Wenke commented on the WSJ article. “A few years ago I realized Amazon had the same product I had and was selling for less than me. I lowered the price and they lowered their price within an hour.”
In September, Roni Molla, a Contributor for Vox, published an article stating: “One out of 10 products pages you visit on Amazon comes from sponsored content, a 3 percentage point jump up from last year.” In other words, more sellers are paying to sponsor their products to have higher search results or features.
“Case in point: the luggage brand Samsonite, which has to pay for sponsored ads in order to be the top result when you search “Samsonite” on Amazon,” says Molla.
What can sellers do to combat these alleged algorithm changes? OFFPRICE recommends purchasing below-wholesale products at a competitive price point, to improve your own profit margins and continue meeting the needs of deal-seeking consumers. Price point will continue to be a key factor, especially for online retailers, but also brainstorming new ideas to keep your customers shopping with you.
We expect private label apparel, footwear, and accessories will continue being a huge competitive edge for many boutiques and small business owners. After all, why would consumers shop elsewhere if they believe they can only find a product at your store?
Find unbeatable deals and custom label merchandise at OFFPRICE Show in Las Vegas, February 3-6, 2020, at the Sands Convention Center. Or, start shopping today at www.offprice365.com. For questions, contact Mikaela Kornowski, Marketing Manager, at 262-754-6906 or firstname.lastname@example.org.