What is the Amazon Flywheel and how can it help sellers?

May 26, 2020

Everyone has heard about the Amazon flywheel and it has become a business strategy admired by multiple companies. The Amazon flywheel is a version of Jim Collins’ business model from his book ‘Good to Great’ and since its inception in 2001 by Jeff Bezos where he drew the diagram on a napkin, the model has been the envy of many companies.

What is the Amazon Flywheel?

The Amazon Flywheel is the strategy that arguably has made Amazon as successful as it is. The general idea is that the flywheel uses customer experience to drive traffic to the platform meaning more 3P sellers will use Amazon as a marketplace. This in turn provides more selection of goods available on site which improves customer experience. The process repeats itself as Amazon continues to grow. As Amazon becomes more successful, another process is added, they can improve their cost structure so that they can provide even lower prices which again improves the customer experience further driving the original process to continue.

Amazon Flywheel
Bezos’ sketch of the Amazon Flywheel

Initially, it takes a lot of force to get the flywheel to begin. However, as momentum builds, the flywheel rotates more easily until it becomes all but self-sufficient. The idea of this flywheel is not exclusive to just Amazon’s success, but will help sellers on Amazon as well.

What should sellers take from Amazon’s Flywheel
  • Customer experience is the key to the flywheel

At the heart of everything that Amazon does is customer satisfaction. If a customer finds their time on a site easy to use and have a good experience, they are more likely to buy more and use the same marketplace again. The same can be said about your ASINs, if customer experience is a priority when creating your listings on Amazon, conversion and brand affinity are more likely to be higher.

  • Success is continuous

This is proven by Amazon’s SEO. The more sales you make leads to a better ranking and drives your listing closer to the top of the search results to be better seen. By selling more on Amazon you ultimately guarantee that you will convert more consumers. This leads you to spend more on advertising and further push more conversions to your ASINs. The key is to continuously sustain and drive momentum as once the flywheel begins, it becomes difficult to stop as long as their is stock available.

  • All Amazon account processes are interlinked

The flywheel helps establish the idea that you cannot differentiate different parts of optimising your Amazon account as they are linked. For example, by optimising content on listings to increase conversion, you will gain a larger budget to advertise via DSP & Ad Console to boost impressions and vice versa. Brands who understand that the different Amazon account processes all work in parallel with one another will have a much broader understanding in creating a successful Amazon sales strategy which boosts sales and improves internal account processes and maintenance.

Is the Amazon Flywheel easy to manage?

It is impossible for one person to check and update all the areas needed to keep the flywheel gaining more momentum as it requires so many skills. This is why all our Full-Service clients have a crack team of Amazon experts behind them, ranging from translators, account managers, data analysts and PPC & DSP specialists. Find out if Molzi’s Amazon Full-Service management solution is the right choice for you. Our team prides themselves as an off-shoot of your team so if you have part of your Amazon account processes covered, we can fill in the rest.

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