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Diversify or Standardize? The Seller's Dilemma

A Comprehensive Guide of Amazon Sellers

Posted by Amanda Stein on 2023-07-05 | 2 minute read

Diversify or Standardize? The Seller's Dilemma

There are three different Amazon advertising strategies available for Sponsored Product campaigns. The strategy you choose will apply to all Amazon bids in your campaign.

Down Only Dynamic Bids
Up and Down Dynamic Bids
Fixed Bids

*Amazon Bidding Strategy Options*

Sponsored Products operate on a PPC campaigns, (aka pay-per-click or cost per click), basis. You bid on certain keywords in order to appear in specific search queries related to your products. You will need to select one of these bidding strategies to start keyword bidding. Each of these will affect how you are able to bid on specific keywords.

There are other aspects to bidding on Amazon. You also want to adjust bids by placement, for instance.

In terms of the bidding amount, however, the following are the options available to sellers:

*How does Bidding on Amazon promote your Amazon PPC Strategy?*

Amazon sellers can automate the suggested bidding process for keywords they are targeting through the use of dynamic bidding. This feature provides sellers with a flexible way to control the process without forcing them to manually input every bid on Amazon.

There are several types of dynamic bidding strategy options available, including down only, up and down, and fixed bidding.

What Is Dynamic Bidding? Understanding the Amazon Bidding Strategies

By selecting “down only,” Amazon lowers your bid in every keyword auction when your ad is less likely to convert. Old campaigns from before January 2019 all use this bidding strategy.

An example of Dynamic Bidding is as follows: let’s say you place a bid on keywords at $1.30. If Amazon decides this default bid is less likely to convert for your ad, the bid will be lowered accordingly.

With Amazon down only bidding, the platform makes real-time decisions about the likelihood of conversion rates from your keywords.

Down Only Dynamic Bids

By selecting “up and down,” Amazon will have the authority to both lower and raise your Amazon bid in real-time. The amount and the timing of the changes will be based upon the probability of converting clicks into sales. This strategy gives Amazon permission to raise your bids up to 100% for top of search results and up to 50% for product details pages.

Up and Down Dynamic Bids

The “fixed bids” strategy means that Amazon cannot adjust your PPC strategy. So, if your bid on keywords is set at $0.30, it will stay at this price regardless of changes in the keyword’s likelihood to convert a sale. This option gives you the control to adjust your bids manually or leave your bids at their set price.

Fixed Bids Amazon

Each Amazon seller has their own unique products and niche. This means that each also has its own custom PPC strategy and requirements.

As a seller, you should decide what works best for your business. Your strategy should be good to apply to all your products or you might need to diversify.

Frequently Asked Questions & Answers

  1. What are some considerations a seller should keep in mind when deciding what strategy works best for their business?
  2. Answer: When deciding on a strategy, a seller should consider their target market, the nature of their products, their competition, and the resources they have available.

  3. How can a diversified strategy benefit a seller?
  4. Answer: A diversified strategy can help a seller reach a larger audience, cater to different customer needs, and mitigate risks associated with depending on a single product or market.

  5. What are potential drawbacks to diversifying a business strategy?
  6. Answer: Some drawbacks might include spreading resources too thin, confusing customers with too many options, or struggling to maintain consistent quality across a diverse product range.

  7. How should a seller determine if their strategy should be applied to all their products?
  8. Answer: This can be determined by assessing the similarities between the products, the needs and preferences of their target market, as well as the operating environment of the business.

  9. Why might a seller need to diversify their business strategy?
  10. Answer: A seller might need to diversify their strategy to adapt to changes in the market, to cater to a wider audience, or to leverage new business opportunities.

  11. What factors can influence a seller's business strategy?
  12. Answer: Factors that can influence a business strategy include market trends, customer behavior and preferences, competition, and the seller's resources and capabilities.

  13. How can a seller evaluate the effectiveness of their business strategy?
  14. Answer: A seller can evaluate the effectiveness of their strategy by monitoring key performance indicators like sales, profit margins, customer retention rates, and market share.

  15. What are the benefits of applying a single strategy across all products?
  16. Answer: Applying a single strategy can simplify decision-making, ensure consistency in product offerings, and create a unified brand image.

  17. When should a seller reconsider their current business strategy?
  18. Answer: A seller should reconsider their strategy if it's not yielding the expected results, if there are significant changes in the market, or if new opportunities arise that require a different approach.

  19. How can a seller adjust their strategy to better meet customer needs?
  20. Answer: A seller can adjust their strategy by seeking customer feedback, monitoring market trends, and continuously innovating and improving their products and services.

  21. How can a seller effectively manage a diversified strategy?
  22. Answer: Effective management of a diversified strategy may involve careful resource allocation, clear communication across different product teams, and regular performance monitoring and evaluation.

  23. What are some potential risks of not diversifying a business strategy?
  24. Answer: Risks can include over-dependence on a single product or market, vulnerability to market changes, and missed opportunities for growth.

  25. Can a seller's business strategy evolve over time?
  26. Answer: Yes, a seller's business strategy can and should evolve over time to adapt to changing market conditions, customer preferences, and business growth.

  27. Is diversification always a good strategy for sellers?
  28. Answer: Not necessarily. Diversification can be beneficial, but it also involves risks and challenges. It's important for each seller to consider their unique circumstances and capabilities.

  29. How can market research help a seller formulate their business strategy?
  30. Answer: Market research can provide valuable insights into customer behavior, competition, and industry trends, which can inform a seller's business strategy.

  31. What role does competition play in shaping a seller's business strategy?
  32. Answer: Competition can influence a seller's strategy by dictating pricing, product differentiation, and marketing efforts.

  33. How can a seller ensure consistency in their product offerings when using a diversified strategy?
  34. Answer: A seller can maintain consistency by establishing strict quality control measures, having clear brand guidelines, and ensuring all product teams are aligned with the overall business goals.

  35. What are some signs that a seller's business strategy is working?
  36. Answer: Signs might include increasing sales, high customer satisfaction levels, growing market share, and strong brand recognition.

  37. How can a seller balance the need for diversification with the desire for consistent product offerings?
  38. Answer: A seller can strike this balance by ensuring that all products align with the brand's identity and values, even if they cater to different customer segments or markets.

  39. What steps can a seller take to develop an effective business strategy?
  40. Answer: Steps might include conducting market research, defining clear business goals, understanding the competition, identifying target customers, and continuously evaluating and refining the strategy.