Amazon’s Brilliant Secret to Selling More Products is Free and It’s Hiding in Plain Sight
Amazon is the world’s largest e-commerce company with over $469 billion in net sales last year and over 200 million Prime members. While it doesn’t have the cheapest prices, the most intuitive platform, or even the only convenient membership (as it once did), there is one thing it has that entices consumers to buy again and again at higher prices.
Even with higher prices and competition from Walmart and Target, each with their own membership programs to rival Amazon Prime, Amazon has created a very strong unique value proposition. One that competitors cannot compete with. And he hides in plain sight.
What Amazon has that others don’t are tons and tons of product reviews.
As obvious as the reviews may seem, Amazon doesn’t have just any old reviews. It has pretty much all the reviews. Its review catalog has many advantages. It lends itself to more qualified purchases, product confidence, fewer returns, and not only higher revenue but higher profit margin. And even if you’re not in the business of selling online, almost any business can use Amazon’s Selling Secrets to sell more products or services, without reviews.
Here’s why Amazon’s wide range of reviews is a very effective selling strategy:
Reviews qualify purchases
People don’t just buy things knowing whether or not they’re likely to be happy with their purchase. But because they see everyone’s experience going into it, there’s a lot of social proof with products that have high ratings from a lot of people. This increases buyer confidence, which leads to more purchases.
Indeed, there are a number of products that we as consumers may wish for, but are skeptical of. As marketing claims become bigger and more dramatic, consumers know that these claims often fall flat in reality, leaving consumers tired of sales messages. But when paired with a large number of user reviews, seemingly bold claims can be confirmed. On the other hand, loss of trust slows down sales.
Qualified purchases mean fewer returns
With a large number of reviews, buyers can better understand what they are buying and have a realistic expectation of what they will receive. So when that protein powder tastes chalky or the library needs some assembly, that’s to be expected. All pitfalls are expected, and since the item is always purchased independently of them, the consumer weighed the cost-benefit and decided it was still worth it.
When people have a good idea of what they’re getting into (good and bad), they’re less likely to want to return a product, a big expense for retailers. In fact, studies have shown that the average cost of a returned item is two-thirds of its sale price.
Meanwhile, returns at stores like Walmart are commonplace. So while you can buy just about anything at Walmart, you can also return just about anything, and for any reason. And when you buy things you don’t really know about, you’re more likely to be dissatisfied and return the products.
Social proof generates value
A product with a high rating from a high number of reviews inherently has a large amount of social proof. A large amount of social proof means value. And high value justifies high price.
In cases where a high price reflects a high value, consumers are not put off by the cost. Instead, they are drawn to the value and confidence they have in their purchase decision. In other words, it is the price to pay for a safe bet.
Overall, more qualified purchases and fewer returns mean more purchases, higher profit margins, and happier customers.
Businesses in almost any industry can apply the principles of Amazon’s selling strategy. And that doesn’t mean you have to amass a large library of reviews. The key to increasing sales and profit margins without big marketing budgets is finding ways to increase consumer confidence and satisfaction.
For example, a business can build consumer trust by providing lots of ideas and information. The value of reviews is that they are honest. Most marketing materials fail to mention the realities of using a product or service. Instead, they only include the perks and often sell those perks. While honest marketing is more effective because the inclusion of realistic information effectively sets customer expectations accurately. In return, customers are not disappointed with their purchase, but satisfied.
Instilling trust can also be as simple as being confident in what you offer. For example, an unconditional guarantee effectively builds consumer confidence, especially for any company making very bold claims for products or services at a high cost.