The Ultimate Amazon Data Analysis: 2024 Q1

Consumer trends toward digital retail are continuing an upward trajectory, and the competition FBA sellers face for shoppers' attention has never been fiercer. Amazon's revenues grew in Q1 of 2024, largely thanks to 61% of Amazon's sales from third-party sellers.

Amazon's advertising revenue from all sources grew substantially year-over-year in 2024 Q1. Coupled with the ongoing growth of third-party seller services, the data lays out a highly competitive landscape where effective advertising is essential to seller success. Creating effective ad campaigns is further complicated by shifting consumer behaviors, the dominance of specific ad formats, and even inventory challenges.

This report delves into the Q1 data to explore Amazon seller trends and the nuances behind the numbers. Read on for our latest insights to help you boost sales.

By the Numbers: Unpacking Amazon's Third-Party Sales

Amazon's Q1 2024 net sales grew 13% year-over-year, reaching $143.3 billion. This substantial growth underscores continued consumer demand for products across diverse categories in the online retail space. It also suggests a healthy environment for FBA sellers with plenty of room for exploring and expanding product offerings.

Third-party seller services also experienced a 16% year-over-year increase, totaling $34.6 billion in Q1. Many sellers either founded or expanded their Amazon-orientated businesses in 2023, adding to the marketplace's competitiveness. The figure also highlights Amazon's reliance on FBA sellers and the pivotal role sellers play in Amazon's overall success.

Amazon isn't just relying on sellers to help it remain a vibrant and diverse marketplace either. Ad revenue is a significant part of the company's total revenue, with $11.8 billion earned just from third-party advertising services in Q1, a 24% year-over-year increase. While there are almost 10 million Amazon sellers, less than 2% average more than $100,000 in sales. Effective ad campaigns can be the key difference between someone who just has products for sale on Amazon and a successful FBA business.

Essential Amazon Advertising Metrics for 2024

CPC is on the rise

The average cost-per-click (CPC) for Amazon is up around $1.14 entering Q3. While the average CPC for the year is down YoY, the overall trend going back to 2021 is toward rising CPC. This is not surprising, given the growing number of third-party sellers vying for ad space. The average CPC on Amazon in Q1 2024 was $0.95. While a higher CPC can eat into profits, it's important to remember that it can also signify a healthy and competitive marketplace. To better understand Pay-Per-Click advertising you can find our full guide here. 

How to optimize for CPC

• Refine your keywords and focus on high-converting keywords relevant to your product.
• Better product listings have compelling titles, images, and descriptions that improve click-through rates.
• Experiment with ad formats such as sponsored products, sponsored brands, and sponsored display ads to offer varying levels of visibility and targeting options.
• Monitor your campaigns closely to regularly review ad performance and adjust bids.

ACOS in 2024 and beyond

Advertising Cost of Sales (ACOS) is the ratio of ad spend to attributed sales. Essentially, ACOS tracks how much you spend on advertising for every dollar earned in sales. You can get a rough estimate by simply dividing your total ad spend by your total sales. However, a more useful metric comes by comparing sales tied to advertising to the money spent on that specific campaign.

Average seller ACOS has not shifted significantly YoY, suggesting that most sellers are fairly adept at creating effective and efficient campaigns. Currently, the average ACOS is 30.5%. However, a good range to target is 25% to 36%.

More importantly, sellers need to consider the potential ACOS when setting their bid range for ads. For instance, if all of your other costs for selling a product add up to 70% of the sale price, an ACOS of 30.5% would lose you money.

Strategies for managing and improving ACOS:

Analyze and review campaign data regularly to identify areas for improvement, such as underperforming keywords or products.

Set realistic ACOS goals based on your profit margins and business objectives.

Use automated bidding tools to optimize your bids and achieve your target ACOS more efficiently.

Monitor and adjust campaigns by accounting for the latest trends and your own performance data.

Optimizing ad spend to grow your FBA business

Around 70% of sellers allocate less than $2,500 monthly to Amazon advertising, but the overall trend indicates sellers are investing more in Amazon ads each year. This is likely due to the increasing number of sellers and the competitive nature of the marketplace. As more sellers recognize the importance of advertising to reach potential customers, ad spend is expected to continue rising.

In Q1, the average daily ad spend per seller was $250.80. Of course, this statistic includes both the largest and smallest sellers on the platform. Of the almost 10 million sellers with products on Amazon, only around 200,000 report more than $100,000 in sales. However, the average daily ad spend is still a good measure of the competition you face when bidding on ads

Strategies for optimizing ad spend:

• Set a realistic budget based on your revenue goals and profit margins.
• Focus on performance by allocating a larger portion of your budget to campaigns that generate the most revenue.
• Diversify ad formats to reach a wider audience and test different strategies.
• Continuously monitor and adjust your ad performance and make data-driven adjustments to maximize ROI.

Thriving in a Crowded Marketplace

The Amazon marketplace is a dynamic ecosystem full of opportunity, but it's also a battleground for FBA sellers fighting for market share. To thrive in this environment, FBA sellers need to continuously adapt and innovate. As more sellers stake out a claim in the Amazon marketplace, better Amazon seller advertising has gone from a "want to have" to a "must have." The Q1 24% YoY increase in Amazon ad revenue from third-party sellers underscores this fact.

From keyword optimization to campaign management, Mayan leverages data and insights from MIT data scientists and account managers who have been in your shoes. If you are ready to unlock the full potential of your FBA business and achieve lasting success on Amazon, Sign up today to discover the difference our optimized PPC campaigns and leading ad automation tools make.