Competition for online sellers is heating up with the rise of the online marketplace Temu, operated by the Chinese e-commerce company PDD Holdings. It’s sparking fear and uncertainty with the uncharted territory for sellers seeking answers on protecting their products, profits, and businesses from global competitors.
Last week, Amazon tapped into the South African e-commerce market when it opened its doors, hoping to leverage the “significant room for growth” in the space. It told Locate2u online retail accounts for only 4% of total sales in South Africa. Compared to other countries, it is believed that there will be massive growth opportunities.
For retailers to capitalize on this potential, they need to understand how products are ranked. While Amazon’s algorithm is proprietary, there are certain aspects that can help sellers get ahead.
Locate2u sat down with international trainer and CEO of Insaka eCommerce Academy, Warrick Kernes, for a wide-ranging interview.
Temu’s ‘skeptical’ rise in e-commerce
Not only are small businesses worried about Temu’s sudden rise to prominence with its cheap product prices, but Amazon is also weary of its existence.
Kernes met with Amazon South Africa before it launched in the country and confirmed its suspected unease with the rival. “When I sat with the head of Amazon South Africa two weeks ago, the first thing he asked me was, what do I think about Temu? So it’s on their radar too.”
Temu’s explosive growth has raised eyebrows worldwide, and consumers are skeptical of the quality of the fast-fashion e-commerce products. Some US officials have even accused Temu of unfair and unethical practices.
But can one compare apples (Amazon) with pears (Temu)? Amazon is fast with deliveries, which customers are willing to pay for. Temu takes more than two weeks to deliver to some countries, although their prices are exceptionally low.
Experts like Kernes say it’s an interesting dynamic to see how many people are shopping on Temu, trusting the brand from the get-go. “I think that it’s only just getting started.” He believes the “problem” will get “far worse” before it improves. Kernes says: “Worse in the mind of online sellers because there are many online sellers.”
Managing a Facebook group as part of his e-commerce academy, Kernes says most of the over 40,000 seller members are talking about Temu “eating people’s lunch.”
However, those who are most affected are entrepreneurs who sell generic products. However, understanding Amazon’s algorithm is crucial for sellers looking to succeed significantly as the retail giant expands into new markets.
Amazon’s algorithm: The impact on sellers
To stay ahead of the competition, sellers must understand Amazon’s unique dynamics, particularly its product ranking algorithms.
Drawing from his expertise in e-commerce, Kernes advises retailers to “embrace the opportunity.” He says “there’s a very special thing that happens” with how products are ranked. While Amazon’s algorithm is a mystery, he says, “it’s no secret to see that” the highest-ranked products have a strong sales history.
If a product has sold well in the recent past – both in terms of sales and velocity – it’s likely to be recommended to more consumers who search for similar items on Amazon. Why? Much like Google’s algorithm, Amazon is designed to recommend products based on customer search queries.
Pro tips: Rankings and reviews
Bestsellers will rank higher organically, which leads to increased visibility and, in turn, more future sales. Coupled with positive customer reviews, the algorithm creates a “self-reinforcing cycle” to rank products on Amazon’s search results.
Kernes explains: “That higher organic listing on the platform means there’s more visibility for future customers, which means you’ll get more sales in the future. Add that with the element of reviews; positive ones will hopefully also rank higher.”
He advises sellers to be “ready to take advantage of opportunities from day one.” The sooner you start selling, the sooner you start ranking. And as the sales pour in, start gathering reviews.
“Just being ready at day one means you get to take advantage of the snowball effect,” Kernes adds. This gives you a competitive edge since “your competitors are going to struggle to catch up. You were already there from day one.”
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About the author
Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.
