As Amazon becomes the go-to shopping destination for more and more consumers, competition for shopper attention and sales has intensified. Standing out and maintaining profitability on Amazon presents significant challenges, with many industry leaders forecasting a tough road ahead as we approach 2025.
The difficulty lies in two key areas: securing favourable outcomes in vendor negotiations while simultaneously safeguarding overall profitability. Recent research from Stratably and Consulterce reveals a growing sense of pessimism about both.
In this blog, we’ll tackle these challenges head-on. First, we’ll explore the critical role of digital shelf data in mitigating profitability risks and optimising Amazon performance. In part two, we’ll examine how a data-driven approach can enhance your annual vendor negotiations.
Amazon's influence on a brand's online presence goes far beyond just being a sales platform. It has become a critical research tool, especially in many categories, where shoppers use it to validate purchase decisions both online and in-store.
Failing to perform on the digital shelf—whether it's due to poor content, dropping off page one in search results, or a low review count—can have serious consequences for a brand’s overall omnichannel sales strategy. Maintaining digital shelf excellence on Amazon is particularly challenging: the relentless pace of change in Amazon’s algorithms and marketplace dynamics creates constant headaches for brands and upends established strategies.
Digital Shelf data helps brands navigate this turbulence by providing visibility and guidance. It provides insight into how well products are performing across various touchpoints on Amazon. And it helps brands make smarter decisions to boost visibility, increase conversions, and ultimately drive profitability.
Let’s break down the key profit drivers that are influenced by digital shelf data:
At its core, the success of any product on Amazon depends on converting browsing customers into buyers. Digital shelf data can help identify why some products convert better than others. For example, by analysing conversion rates, brands can see whether their titles, images, or pricing are resonating with consumers. They can also monitor the impact of product reviews and ratings on conversion.
Amazon’s marketplace is highly price-sensitive, and many brands struggle to balance competitive pricing with profitability. Digital shelf data allows brands to track competitor pricing and promotions in real time, helping them adjust their own strategies to remain competitive while protecting margins. For example, if a competitor reduces their price, a brand can respond with targeted promotions that attracts attention without slashing prices across the board.
Digital shelf data also allows brands to track another key success factor: Buy Box performance. Winning the Buy Box is critical for driving profitability because it directly influences sales volume and brand visibility.
Sales velocity is a critical metric for both Amazon’s algorithm and your bottom line. The faster a brand’s products sell, the higher they will rank in search results, creating a virtuous cycle of visibility and sales. Digital shelf data helps brands understand which factors are driving sales velocity, such as pricing changes, seasonality, or promotional events, allowing teams to fine-tune their approach.
For long-term profitability, it’s crucial to focus not just on one-off sales but also on customer retention and repeat purchases. By analysing reviews, feedback, and ratings data, brands can identify patterns in customer satisfaction and product issues. These insights can inform product improvements, leading to higher satisfaction, increased repeat business, and better CLTV.
Below, we’ll go in-depth on four essential foundations to Amazon profitability and examine how digital shelf data helps brands identify and implement winning strategies:
Losing the Buy Box has serious consequences on a brand’s visibility as well as direct sales volumes. Amidst increasing 3P competition, brands must ensure their investment in best-in-class content isn’t ultimately driving sales for marketplace sellers. Profitero’s research highlights the impact of losing the Buy Box:
Source: Profitero
Daily alerts from a digital shelf provider can define the size of the issue and highlight which marketplace sellers are winning for a brand’s products:
Digging into the reasons behind these Buy Box losses will inform effective action plans.
For many brands, timely digital shelf data is the only way to manage the Buy Box effectively. With real-time insights into stock availability, third-party activity, and competitive pricing, brands like Goliath Games have seen significant improvements in Buy Box retention and, as a result, healthier sales growth. Staying proactive with Buy Box management is key to protecting visibility and profitability on Amazon.
Ultimately, high glance views and strong conversion rates will power long term sales growth and profitability. Reviewing traffic & conversion data can steer brands toward optimisation efforts that pay off and avoid time wasted on the wrong metrics.
Profitero’s traffic and conversion chart within the Amazon sales & share module provides a clear visualisation of product performance. Each bubble on the chart represents a product, with its size reflecting sales volume. Products are grouped into four key quadrants.
Categorising the product portfolio is important, as each quadrant requires a distinct action plan:
1) Hero SKUs (High conversion & high glance views)
These are your star performers—products that not only attract a lot of traffic but also convert shoppers effectively. As your key profit drivers, hero SKUs should serve as models for the rest of your range in terms of content quality and search strategy. This will enhance your Net Pure Profit Margin (Net PPM) and improve the overall profitability of your portfolio.
2) Low conversion & high glance views
Products in this category attract traffic but struggle to convert. Here’s where digital shelf data can help a brand identify and fix the issues:
By understanding and addressing these gaps, brands can improve conversion rates and capitalise on the traffic these products are already receiving.
3) High conversion & low glance views
These products convert well but aren’t attracting enough traffic, limiting sales volume. Digital shelf data can help a brand identify the next steps:
The goal here is to drive more traffic to these products and capitalise on their strong conversion rates.
4) Laggards (low conversion & low glance views)
These underperformers are at risk of being phased out (often referred to as being "crapped out"). If they aren’t priority SKUs, they may not justify further investment. Removing these laggards can help direct focus toward more promising products and improve overall Net PPM.
Product availability is a crucial factor in maximising sales on Amazon. Poor availability leads to lost sales and lower rankings, while overstocking can tie up capital unnecessarily. Digital shelf data can provide insights into stock levels, demand trends, and fulfilment performance.
However, a lack of distribution control can often result in increased Buy Box losses and reduced Net Pure Profit Margin (Net PPM). This issue can arise in two ways:
While distribution control is ultimately a strategic decision, digital shelf data can provide clarity on the risks and opportunities available. It can clearly break down exclusive versus overlapping SKUs, highlighting areas where a brand’s range might be vulnerable to competition.
Analysing competitor product ranges using this approach can provide a brand with guidance on how to differentiate its Amazon offerings from competitors – which will in turn minimise price matching and protect profitability.
By using these insights, you can maintain better control over your distribution, optimise stock levels, and ultimately improve your performance on Amazon.
Taking it a step farther, brands can combine these insights with Amazon sales & share data as well as pricing, promotion and share of search data to identify exclusive ranging opportunities and optimise promotional effectiveness.
Here are 5 questions every brand leader should ask to unlock the full potential of their pricing strategy:
"How can we refine our price pack architecture (PPA) to better meet consumer needs and drive sales performance?"
Analysing PPA helps identify the most effective combinations of pack sizes, price points and product offerings to meet consumer needs and maximise sales.
Below is an example of a PPA analysis of the Beverage category on Amazon. By overlaying sales & share data with category price data, we learned that 12 oz 24-packs are ideal for Amazon.
"How sensitive is demand to price changes?"
Understanding price elasticity is key to finding the optimal price points that maximise both revenue and profit. By analysing historical sales data and identifying patterns in consumer behaviour, brands can determine how sensitive their customers are to price changes. This empowers them to set competitive prices that drive sales without sacrificing profitability.
"How do our products' prices compare to those of our competitors?"
By continuously monitoring competitor pricing and benchmarking their prices against the competition, brands can spot opportunities to make strategic pricing adjustments that keep their offerings competitive.
Pro tip: Schedule automated alerts for price drops on competitor products in the Profitero app. These alerts are sent directly to your inbox, allowing you to proactively match prices or launch promotions to counter the competition. This ensures you’re always ready to respond quickly and maintain your edge in the market.
"How do our pricing decisions impact glance views and conversion rates for our products?"
Understanding the relationship between pricing and consumer engagement is also essential. By analysing how various price points impact glance views and conversion rates, brands can make data-driven decisions to optimise their pricing strategy for maximum sales.
"How can we leverage pricing to improve search rank?"
Appearing at the top of search results on retailer websites is vital for maximising visibility and driving sales – and pricing is a major factor in the search algorithm. Analysing the impact of pricing on search rank informs pricing optimisations that improve product visibility and discoverability.
Pro tip: Profitero’s Commerce Advisory team can help your team optimise your pricing strategy and ensure your brand's long-term success. We offer flexible solutions that include a competitive pricing evaluation, price pack analysis, price elasticity reports and more.
4. Optimise media execution
Amazon is the dominant player in the retail media landscape: they’re expected to capture around 41% of global retail media spend in 2024, amounting to approximately $44 billion.
While brands have clearly recognised the attractive opportunity to reach buyers on a global scale, they’re often executing media campaigns with minimal visibility or optimisation – leading to missed opportunities and wasted spend.
Consider these common scenarios:
To avoid these pitfalls, it’s essential for brands to integrate digital shelf data into their media strategy. Here’s how:
Brands that have linked their media execution with digital shelf insights have seen significant improvements to campaign effectiveness, maximised their investments, and gained ground over competitors:
Given the complexity of media campaigns and the sheer scale of digital shelf data, Profitero offers an integration with Skai and Pacvue to automatically adjust bids in response to these critical signals. The result for brands is significantly better profitability achieved at a lower cost.
For brands looking to thrive on Amazon, the path to profitability therefore begins with mastering the digital shelf. It’s not just about visibility — it’s about leveraging data to make smarter decisions, improve efficiency, and create a sustainable, profitable presence in the world’s largest online marketplace.
Stay tuned for the second instalment, where we’ll explore the benefits of adopting a data-driven approach to vendor negotiations and business planning. This strategy can pay significant dividends, empowering brands to make more informed decisions and achieve greater success on the platform. Don’t miss it!