Why Amazon is winning despite loosing money every time you place an order.

Ever wondered how prices can be so competitive on Amazon, delivered to your door next day and often allowed free returns? How can this be sustainable?

Well, you have to thank the advertising business line of Amazon. For you to find the amazing new toaster you were looking for, a manufacturer or brand owner paid big bucks to get good digital real estate via Amazon Advertising. This is where the money is for Amazon, and what all the other ecomm retailers are trying to replicate (quite miserably so far I must say).

Amazon Advertising is (mostly) a keyword auction within Amazon (think Google inside Amazon). As with any auctions, the more people show up to the event, the higher the bids. As of late in 2022, there were about 2.2 million sellers and vendors in the US bidding and fighting for keywords. That’s a lot of bids.

Same story here in Canada, but with the added twist that Amazon often recommends to US vendors and sellers to ‘try their advertising strategy’ up North… Where its cheaper (and in CAD$) to harvest search terms, gather data on campaigns to then deploy on amazon.com… Despite of this, from our experience, advertising costs in % of sales (fancy acronym ‘ACOS’) remains generally cheaper in Canada, albeit traffic somewhat limited.

If you are trying to figure-out your way in the Amazon jungle, give us a shout. We love that stuff. 



What is your experience ? PPC dollars or native Amazon Marketing ?