It’s Whiteboard Wednesday!
We’re launching a new feature here at Market Rocket – Whiteboard Wednesday – where either myself or one of the team will talk you through various concepts and ideas that could help you and your business.
Here’s this week’s Amazon Whiteboard Wednesday Workout!
Today, we’re going to talk about subcategories and how you can use them to improve your sales, your impressions, and your reach on Amazon.
Get ready to have your mind blown – there are 25,000 subcategories on Amazon. Yes, that’s right – 25,000!
What is a subcategory?
Subcategories are essentially each of the individual markets that make up Amazon as a whole. If you look at all the various categories and subcategories within Amazon, you’ll notice that each one can be separated from every other category, effectively making it a market in and of itself.
One important thing to remember when dealing with Amazon subcategories is that not all subcategories are created equal. Each market, or subcategory, has a different worth or value attributed to it.
For example, one category may be worth £1m/pcm and another may be worth £100k/pcm.
How to choose the right category for your product
The category in which you choose to place your product is vitally important.
70% of sales on Amazon come from the search bar, but the whopping 30% of remaining sales on Amazon are attributed to subcategory browsing. This subcategory browsing can be (kind of) compared to high street browsing. Instead of going directly to purchase a specific item that you need, you’re walking into a shop that sells a number of similar items, or you go to a specific section within a shop, and just browse what’s available
Subcategory browsing on Amazon
Since 30% of sales on Amazon come from subcategory browsing, let’s talk a little about what that entails.
With subcategory browsing, instead of searching for an item they’re looking for in the search bar, buyers will select a subcategory from the list of available categories and browse the products available there. This would typically be the top 50 products; those on the first page, mainly.
Those 50 products on that subcategory first page will be the top performing products for that category, without advertising or SEO bias.
This makes it important to not only rank in a category appropriate to your product but also within a market that is of a decent size, allowing you to achieve a ranking within that top 50.
How to choose a subcategory as a new Amazon seller
Minimal sales are to be expected when launching on Amazon. Unless customers are searching for your specific product, brand or by ASIN, it’s unlikely that your product will be picked up by Amazon’s search algorithm without listing heritage.
Choosing a subcategory that is appropriate for your product but also with a lower rate of sale could be more beneficial, enabling you to rank higher within that market when compared with a subcategory with a higher rate of sale. Higher ranking will give your product better visibility in the category, reducing ad spend.
For example, if your rate of sale is 1 product per day and that is enough to put you into the top 50 ranking products within a subcategory, then that will help catapult your product and give you more impressions early on in your Amazon adventure.
What to do as your Amazon store grows
Once your product starts to mature, staying in that smaller subcategory and focussing on a niche may not be what’s best for your product.
Being number one in a smaller category, whilst a great achievement, might not have the same impact as being in the top ten for a larger category.
What are we trying to achieve on Amazon?
On Amazon it is important to understand what it is you are trying to achieve at any stage of your selling journey.
Let’s take a look at the two categories in our example on the whiteboard.
With our larger subcategory worth around £1million per month, the top selling product has a market share of 10%, equating to about £100,000.
If we think about what we’re trying to achieve from day one of listing in this category, we’re trying to build our own market share and our own market size, eventually taking that 10% market share and growing it from there.
Now, as a new product, we can only take market share from what already exists.
We are not Apple. Apple, by engaging with Amazon and taking a proactive approach to selling their MacBooks (as an example) in the relevant subcategory, they have increased the market size for laptops on Amazon. Because the Apple product is so well known, so well transacted, and in such great demand, they will have increased the overall worth of that subcategory. What is worth remembering however, is that we’re not trying to compete with Apple; we’re trying to take market share from other competitors and absorb that into our market share growth.
Four methods to grow your market share of an Amazon subcategory
There are roughly four methods that, if you focus your efforts on them, could help grow your market share within a subcategory on Amazon.
1. Advertising on Amazon
Look at the different subcategories that your product might be similar to, but also supporting categories. Consumers purchasing goods in supporting categories might also be interested in purchasing your products. For example, if someone is looking at purchasing frying pans, they may have moved home recently. If they’ve moved home, they may need other kitchen utensils or appliances.
2. Spread your catalogue over multiple categories
Some brands are quite heavily placed within a single subcategory and have all their products focussed on that. The problem with this approach is that there is only so much market share, and only 50 top places available within that subcategory. If you have multiple products within the same subcategory then you are missing out on the rest of that overall 30% of consumers shopping within all subcategories. So, it may be worth considering your product catalogue and subcategory structure, and seeing if there are different categories you can strategically place your products in to grow your market share as a whole.
3. Parent-child products over different subcategories
If you have a parent-child product grouping, you could place the parent product in one subcategory and the child product in another, cross-selling and upselling between the two. It may be worth appraising your product catalogue and seeing which products could be a supporting product of another line, then linking them together across different subcategories.
4. Product bundles
By bundling two, three or four products together without upsetting your core business can be a quick and easy way to test and learn from these different subcategories and structure, and try to increase your market share.
Everything we’ve discussed today is all focussed on increasing your market share within Amazon subcategories.
If you’d like to discuss anything I’ve talked about here or want to reach out to me and my team, we’d be more than happy to talk to you about your catalogue. Get in touch.