Do high Competition Niches Portend Low Profit?

The United Kingdom vs. Canada

Amazon is a thriving and expanding marketplace that allows sellers to trade their products in numerous countries worldwide. Nowadays, businesses that are selling in one country often grow and sell in more marketplaces. Besides facing new issues like Geo Ranking and regional customer fit, brand owners need to remember about the competition in the niche. 

The niche analysis is a standard procedure that goes ahead of product launching. High competition is usually considered as a sign not to enter a particular market. 

Nevertheless, this issue can be looked at from different perspectives. This data-based article aims to examine the potential of the same niche in other countries for one product. In one country a highly competitive niche, in another one — low competitive. So let’s have a look at the actual case and collected data to have a deeper understanding of the question. 

Niche Review

The chart below illustrates the profit in the category of the brand selling on Amazon in the United Kingdom and Canada. Canada was a new and a second after the United Kingdom distribution country for the brand. 

Before selling on Amazon, the brand was vending items throughout the supermarkets and other online marketplaces for more than 10 years in the UK. As a result, the brand was and is dominating in the niche.

Important to mention that the niche in the UK is 4 times bigger than in Canada. Even so, sales volume is 8 times higher in the UK than in Canada. The analysis of provided results concludes that the chances to make a more significant profit are in the bigger niche because one of the reasons niche is small is low demand on the product. 

Low demand for the product can be caused by no necessity in that product in the tested country. In such a case, it wasn’t an issue. Similar production distributed through the different channels was widely popular in the region. 

The United Kingdom and Canada Comparison

As shown in the following graph, the Search Volume in the UK and CA also strongly differ. It is 7.5 times higher in the UK than in CA. The data of the Search Volume in the graph is provided in a year period. 

The ground of the low Search Volume indicators is brand awareness. As the brand was selling its items in the UK for over a decade, the brand awareness was developed enough not to elaborate aggressive advertising strategy including Sponsored Brands ads. 

Simply speaking, Amazon users don’t trust the unknown as much as famous brands. So even if listings are fully optimized, including high-quality pictures, best performing keywords, and useful information, potential buyers still need to be led to the right product detail pages and know that products are worth their attention and money. 

On the other hand, in CA, advertising was required, as the brand has never appeared on their markets before, and brand awareness and loyalty were never developed. 

To improve brand selling results and attract a wider audience, it was essential to introduce the brand and products to potential customers. 

Recently, Amazon announced Brand Metrics Beta, a tool supporting sellers who wish to control brand performance within the platform. Brand owners now can monitor customers’ interactions with product detail page on purchase, views, adding to cart, views and purchase or no purchase, and customers that come back levels. 

Plus, the tool includes the comparison metrics to the best-performing competitors and other competitors across the niche. Comparing the new competitors in the new marketplace helps sellers understand what actions to take to surpass competitors and attract new customers. 

This latest update lightens the seller’s path of investigating efficiency, accomplishments, and, of course, weakness to find the loopholes that should be filled and improve the brand’s work on Amazon.

Conclusion

When the problem was identified, the brand’s marketing department and Profit Whales Team began active work on profitable Amazon PPC advertising. 

During the pandemic, it was important to diversify distribution channels in Canada and build up the high number of sales at least with the same speed as the market grows. 

In order to increase profit, a brand needs to launch all Amazon PPC advertising types: Sponsored Products, Sponsored Brands, and Sponsored Display. Such implementation with proper keywords will increase Impressions, Clicks-Through-Rate, improve Conversion Rate, and empower products and brand visibility. In addition, brand awareness will help customers to remember the brand and products and buy products repeatedly. 

Also, external advertising will attract traffic from third-party platforms what Amazon sees as organic traffic that will help to rank higher and boost product visibility as well.

To avoid such and other types of mistakes when launching products in new countries, visit the Profit Whales blog to read a data-based article, “How different are the product results on two Amazon marketplaces?”.