Amazon’s Flywheel: How to Dominate eCommerce
If there’s one thing Amazon has mastered, it’s how to dominate the eCommerce market. But what’s their secret? This blog post will discuss Amazon’s “flywheel” effect and how you can use it to benefit your own business. So read on to learn more!
Table of Contents
- What is Amazon Flywheel?
- How Does Amazon Flywheel Work?
- What Can Sellers Learn From Amazon’s Flywheel?
- The Advantage of Flywheel Effect on Your Amazon Business
- How to Create a Flywheel Effect for Your Own Amazon Store
What is Amazon Flywheel?
Amazon’s flywheel is a marketing strategy designed to take advantage of customer experience to drive more traffic to the platform and third-party sellers. The concept behind this strategy is that a flywheel requires considerable effort at the beginning, and once the wheel starts spinning, it continues to gain momentum and rotate faster over time effortlessly.
For instance, the flywheel effect is equivalent to the snowball effect. When you push a snowball down a hill, it progressively gets faster and faster until it reaches the bottom of the hill. Amazon’s flywheel is similar in that it requires initial effort to get started. Still, once it’s in motion, it can generate significant momentum.
Amazon’s flywheel has been incredibly successful in driving growth for the company. By providing a world-class customer experience, Amazon has been able to attract more and more customers, which in turn has helped Amazon become the go-to platform for online shopping. Thanks to the flywheel effect, Amazon continues to grow at a fantastic rate, and there are no signs of this slowing down anytime soon.
How Does Amazon Flywheel Work?
Amazon’s flywheel is a customer feedback loop that is integral to the company’s success. The flywheel consists of Amazon Prime, Amazon Web Services, and Amazon marketplace.
The Prime is an exclusive membership that offers Prime customers free shipping and access to online streaming services
Web Services by Amazon is a cloud computing platform that provides businesses with storage and other services.
Amazon marketplace: the world’s biggest online store where businesses can sell their products.
The flywheel works because each of these three parts reinforces the other. For example, Amazon Prime customers are more likely to shop on Amazon, increasing the number of businesses that use Amazon Web Services. This, in turn, increases the number of products available on the Amazon marketplace, making it more attractive to shoppers. The result is a virtuous circle that keeps customers coming back to Amazon again and again.
Related: What is Amazon Prime Day?
What Can Sellers Learn From Amazon’s Flywheel?
Amazon has built a flywheel business model that is the envy of many eCommerce businesses. Amazon’s flywheel is a customer-feeding machine that keeps Amazon customers coming back for more. Amazon sellers can learn a lot from Amazon’s flywheel business model, including creating a customer-centric business and using Amazon’s immense scale to their advantage.
Amazon’s flywheel starts with Amazon’s focus on the customer experience. Amazon obsesses over delivering the best possible customer experience, and this obsession drives every Amazon decision. From Amazon Prime to Amazon Fire TV, everything Amazon does is designed to keep customers coming back for more.
This customer-centric focus is something that all Amazon sellers should imitate. You should put customer relations and feedback as the top priority of your business strategy to keep enhancing your service. The other way to follow Amazon’s Flywheel effect is to design interdependent products and services to keep customers coming back to you for different needs.
Amazon also uses its massive scale to its advantage. Amazon can make decisions that other businesses can’t, like investing in long-term projects or offering free shipping. Of course, this scale gives Amazon an unfair advantage, but it’s something that all Amazon sellers should try to emulate. By understanding and copying Amazon’s flywheel business model, Amazon sellers can level the playing field and build their own customer-feeding machines.
The Advantage of Flywheel Effect on Your Amazon Business
Amazon’s flywheel is a customer feedback loop that is the core of Amazon’s success. Amazon’s flywheel starts with customer satisfaction. When customers buy something on Amazon, they are satisfied with their purchase if it arrives on time and as described.
This satisfaction leads to customer loyalty, which in turn leads to more sales and more positive reviews. The more customers Amazon has, the lower its prices can be, which leads to even more customers and even lower prices. The Flywheel effect is the key to Amazon’s success, which means ever-increasing traffic to Amazon.com, also great news for third-party sellers. Amazon’s flywheel is so powerful that it has allowed Amazon to dominate e-commerce, despite being late to the game.
How to Create a Flywheel Effect for Your Own Amazon Store
The steps below help Amazon sellers implement their own Flywheel effect to catalyze their business growth.
1. Laser-Focus on customer information
Customer satisfaction is the essence of everything and everything Amazon does. For example, suppose customers enjoy their time on the website. If so, they are more likely to buy more and return to the same place. The same can be said of your Amazon store. Suppose you provide a 5-star customer experience and service. In that case, the odds are very high that the customer will come back to buy from you and introduce you to their family and friends.
2. Your efforts should be continuous
Amazon SEO is proof of this. The more your store sells, the higher your organic ranking will be. So you can be sure that if you sell more on Amazon, you will reach out to more new customers. As a result, you’ll need to invest more money in Amazon advertising and develop more conversions. The strategy is to keep your momentum ongoing. Once the flywheel starts to spin, it is impossible to stop as long as there is stock available.
3. Make all your business ideas interconnected and interdependent
The flywheel effect promotes various aspects of your Amazon business together. For example, suppose you are SEO-optimizing your product listings to gain more organic traffic and boost sales. If so, you will have more revenue for Amazon advertising through the Amazon DSP & Ad Console. That leads to improving your impression, and vice versa. Sellers who understand how different Amazon business processes work will have the best experience in creating an effective Amazon Flywheel strategy that maximizes revenue while also improving customer retention processes.
Amazon’s flywheel strategy is designed to create a snowball effect, where the more traffic that comes to the platform and third-party sellers, the more sales they make. This virtuous circle can be turbocharged through effective advertising. If you’re looking for help getting your Amazon flywheel spinning, Eva has a free PPC audit waiting for you to maximize the conversion rates while minimizing TACoS!