Client Letters: 2024 Wrap + 2025 Playbook
Been doing this for too long to say this was a wild year. Yet recency bias has me leaning towards “what a wild year!” Each year brings a new competitive set, increased cost per click in advertising and slight changes in the consumer mindset as Amazon and Walmart dominance remains. In 2024, we saw a few trends accelerate:
Cost per click continues to rise faster than sales - In prior years, Amazon has added additional slots for advertising in search results and on product pages. This year Amazon hasn’t added additional advertising “inventory.” When the number of slots stays flat, the competition for those slots grows as the marketplace grows. The more competition, the higher the cost of buying that slot.
FBA costs a lot more than just the fulfillment fee - We saw incremental costs on the FBA programs with increased pick fees and the introduction of inbound placement fees. Whilst the all-in cost of the program remains lower than most 3PLs, more aggressive management of inventory is the differentiator.
Everything is on “deal” - Tentpole events have led the main Amazon pages to “bleed” and look Temu-esque. Being on a deal brings no further awareness as everyone is on deal. However, if you land that customer on your page, being on deal does drive conversion. Whether you engineer the deals with lowest price in 30 days or play a high low game, deals must be part of the toolkit.
AI continues to be overhyped - Both marketplaces have released AI generated copy and title pushes, generated images and videos. Arguably these changes have caused more harm than good. These product releases need time unlike other betas such as Brand Tailored Promotions, off-Amazon Retailer advertising, Born To Run and Vine/Reviews Accelerator.
In 2025, there are a few plays we must focus on:
Supply chain revamp required - With the increased FBA fees, solutions like the Amazon Warehouse & Distribution (AWD) program must be evaluated on all 3P businesses. For those using 1P, direct import must be considered along with domestic inventory in CA and MX.
Brand control = sales or no sales - Whether it be policing 3rd party sellers or negating Amazon AI updates, control of brand is back to basics. Walmart, eBay (yes they still exist) and Amazon with its’ nearly 10 million global sellers are all linked in price, content and advertising. All must be at parity and as clean as possible.
AI tools off-platform help - My comment about AI above says otherwise, but we have seen some improvements in AI tools not run by the marketplaces. Use of Claude, Perplexity and ChatGPT became yesterday’s news in late 2023/early 2024. However, use of Sora for video, Claude for agent scraping and other tools for realistic image generation aren’t common YET.
Extend your advertising reach - With the higher costs on platform, we continue to see use of Amazon DSP for retargeting, use of lower cost platforms like Taboola (Yahoo, Apple), Reddit and streaming worthwhile to acquire traffic to listings. Additionally, we are now seeing Amazon launch other retailer advertising whereby you can buy placement for Amazon product on other retailer platforms.
Truly not that wild of a year. More of the same with a comp shift on Cyber 12 that will be back for 2025. However, one thing is for sure. The evolution of marketplaces still requires a relentless focus on change to maintain relevancy. Happy Holidays and looking forward to connecting with each of you in the New Year!
Thank you for allowing us to be part of your ride,
Ryan