Want to Compete on Amazon? Find a Niche

With brands competing for consumers’ attention, spending and loyalty on Amazon‘s increasingly crowded marketplace, it is becoming all the more important for them to carve out a niche if they want to set their offerings apart.

In an interview with PYMNTS, Daniel Peled, chief revenue officer at Noogata, an artificial intelligence (AI)-based growth platform for brands on Amazon, spoke to the growing need for players in this competitive space to get specific about their market fit.

“It’s getting harder and harder for smaller sellers to get into the market and find their way and find niches they can win in. … For brands to compete right now they need to be very, very specialized about what they do,” Peled said.

Plus, Jaron Seijffers, director of product management at the AI platform, noted in the same conversation that it is “getting more difficult to survive on Amazon” for sellers that have not clearly and compellingly established their brands.

“If you don’t know how to create some brand awareness even off Amazon, you’re really going to have a difficult time making positive ROI on the Amazon platform,” Seijffers said.

Winning over Amazon shoppers can be make or break for brands today, given the commanding lead the eCommerce giant holds in retail overall. The PYMNTS Intelligence “Whole Paycheck Report” series estimates Amazon and Walmart’s market shares in various categories based on their earnings reports from Q1 2019 through Q4 2023 in conjunction with national data from the U.S. Census Bureau and Bureau of Economic Analysis. The latest edition showed that, as of Q4 2023, Amazon’s share of total consumer spending of the entire U.S. hit 4.4%, and the company seized 10% of all gross retail sales in the U.S. in that period.

Plus, the PYMNTS Intelligence report “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces,” which drew from a census-balanced survey of more than 3,500 U.S. consumers, found that, on average, shoppers tend to be more satisfied with their experiences buying from eCommerce marketplaces than from brands’ or retailers’ own online platforms.

Key to brands’ success going forward, Peled said, is AI.

“I think it’s becoming a live or die function within how you work and operate daily,” he said, from content creation to analytics to listing management. He argued that brands limit themselves when they focus only on AI as enabled by a generative AI (GenAI) chatbot such as ChatGPT, where in fact the capabilities of the technology are much broader.

Indeed, GenAI has been a key area of focus for businesses. Per a study highlighted in PYMNTS Intelligence’s December report, “Generative AI Tracker®: What Generative AI Has in Store for the Retail Industry,” 70% of consumers and executives identify retail marketing and sales as areas for further AI disruption. Plus, 77% of business leaders rank GenAI as the most impactful emerging technology.

These capabilities will be key to success not only on Amazon but on eCommerce marketplaces overall. Peled predicted that Amazon’s “dominance” will be diluted as more competitors “take more of its market share,” leveraging data analytics to better meet the needs of the sellers on their platform, a shift that he argued is already in the works.

Looking ahead, Seijffers said he views “hyper-personalization” as a key area of innovation that will separate successful sellers from those that cannot quite hack it.

“When you look at where things are going, everything becomes more and more tailored to how you think, what you believe, your smaller group of people that have the same view of the world, values and so forth,” he said. “So, I think also when you look at the eCommerce landscape, that personalization will be key to drive future growth.”