The Profitero Blog

Driving Amazon profitability through digital shelf data

Written by Andrew Pearl | Oct 24, 2024 12:22:48 PM

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.

 

How digital shelf data feeds profitability

 

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:

 

1. Conversion rate optimisation

 

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.

 

2. Margin optimisation

 

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.

 

3. Sales velocity

 

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.

 

4. Customer lifetime value (CLTV)

 

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.

 

Amazon Profitability Action Plan

 

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:

  1. Manage margins through Buy Box control
  2. Maximise traffic and conversion by prioritising actions
  3. Drive assortment optimisation
  4. Optimise media execution

 

1. Manage margins through Buy Box control


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.

  • Poor availability - Define which products are prone to out-of-stocks, and consider changing Amazon stock requirements.
  • Third-party price drops - Identify 3P sellers winning the Buy Box, and highlight unauthorised sellers or pricing activity through Brand Registry or direct legal action. 
  • Retailer price matching - Whilst brands can’t control retail pricing for Amazon’s competitors, being aware of daily pricing activity will highlight risks to sales volumes when Amazon matches the lowest price in a market.

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.

 



2. Maximise traffic and conversion by prioritising actions


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.

 

Categorising Your Products for Targeted Action

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:

  • Are there content gaps compared to benchmarks (e.g., missing images, lack of video, short descriptions, or missing keywords)?
  • Are glance views being driven by relevant keywords for the product?
  • Are promotions underperforming? (This is where price elasticity analysis can help.)

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:

  • What are the priority keywords for this product? How well is it ranking on page 1 for those terms?
  • Is the product’s written content optimised with the right keywords to increase organic search visibility?
  • If the content is already optimised, which competitors are outperforming it in search? Could increasing keyword sponsorship improve visibility?

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.

 

3. Drive assortment optimisation


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:

  • Within a single market: When Amazon or third-party (3P) sellers source stock from other retail partners, leading to price inconsistencies and competition for the Buy Box.
  • Across regions: A lack of alignment on pricing or agreements, such as pan-European cost prices, can create discrepancies and confusion.

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:

  • You missed winning potential new buyers while your competitor was out of stock for a week.
  • Your conversion rates fell on a heavily advertised product because your main competitor dropped its prices. 
  • Your media drove traffic to third-party (3P) sellers because you lost the Buy Box.

To avoid these pitfalls, it’s essential for brands to integrate digital shelf data into their media strategy. Here’s how:

  • Competitor availability alerts: Know when competitors are out of stock and increase bids on related keywords (or conquest) to capture more traffic during those windows.
  • Conversion data and product content scores: Focus media efforts on products that are most likely to convert in order to maximise the efficiency of media spend.
  • Buy Box data: Keep track of products that lose the Buy Box to avoid wasting media budget driving traffic to 3P sellers.

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.

 

 

In summary

 

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!

 

Ready to boost profitability on Amazon? Speak with an expert on our team today. Request a meeting here.