Embrace the Amazon Flywheel for Consistent Success as a Vendor
Amazon is known as a quintessential business success story, having used an innovative model to get involved in the ecommerce boom on the ground floor, and growing rapidly to become the world’s biggest online marketplace.
Like anything, Amazon didn’t achieve this kind of greatness by going along with the norm. It did it by embracing a unique, disruptive strategy that put the customer first and guided all future decision-making.
In this guide, we’ll take a closer look at the Amazon Flywheel, how it’s helped Amazon to dominate the ecommerce space, and how you can use the same concept to accelerate growth as a Vendor.
The Amazon Flywheel Explained
First things first: what is the Amazon Flywheel? The Amazon Flywheel (also known as the Amazon virtuous cycle) is a concept thought up by Jeff Bezos and leading American business author Jim Collins during a meeting in 2000. Sketched on a napkin as a crude diagram, the Amazon Flywheel was a basic idea of how Amazon would grow, using a few core elements that support one another in a cycle, creating a self-sustaining growth eco system.
The Flywheel begins with a customer placing an order on Amazon, which is then fulfilled quickly, cheaply, and easily through Amazon’s warehouses and logistical infrastructure. Because of the positive experience, the customer is more likely to make future purchases, thereby increasing demand. The equity from this demand creates further opportunities for Amazon to develop its customer experience, leading to more demand, and so on.
The Amazon Flywheel is not only built to connect Amazon to new customers, but also grow the marketplace by being attractive to Sellers and Vendors. With competitive pricing and fast delivery, the site’s customer base grows, prompting more businesses to sell their products on Amazon. The new wave of brands selling on Amazon helps to broaden its diverse product selection, which supports more customer growth, and sets the Flywheel in motion once again.
Collins imagined the flywheel effect as a big metal wheel, and the task of making it spin. Pushing it to make a full turn is slow going at first, but with enough persistence momentum starts to kick in, speeding the wheel up and feeding more momentum until it’s hurtling forward on its own.
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The Elements of a Successful Flywheel
Though the Flywheel strategy was created for Amazon, it can be applied to almost any business model, and has quickly become a cornerstone of countless business development programs around the world.
To zoom out and simplify the concept somewhat, a growth Flywheel can be boiled down to a few key pillars:
- Great customer experience.
- Enticing customers with a diverse selection of products.
- Prioritising a low-cost business structure.
- Competitive pricing.
- Smooth and efficient logistics.
How to Apply the Amazon Flywheel Concept as a Vendor
Using the concept of the Amazon Flywheel as a Vendor can better align your operations to Amazon’s model, and generally benefit your business by prioritising a great shopper experience and aligning your resources for growth.
The elements that make up the Flywheel are easy enough to grasp, but figuring out how to apply them within the bounds of a Vendor / Amazon relationship can often be challenging.
Here’s some practical steps you can use to apply the idea behind the Amazon Flywheel to your own brand for greater success on Amazon.
Build a Great Customer Experience
Customer service is the first thing you should think about whenever you’re looking to use the Flywheel to enhance your business on Amazon. This is where the cycle starts, and is a foundational constant that will keep the whole process going.
Just as Amazon provides a quality customer experience with its personalised recommendations, fast delivery, and huge product selection, you should be striving to make every touchpoint on the Amazon platform as positive as possible.
Some of the best ways you can build a great customer experience as a Vendor include:
- Optimising Amazon listings with high-quality images, compelling descriptions, and A+ content to ensure your audience has a clear idea of what they’re buying.
- Crafting a stronger brand identity with an Amazon storefront that communicates your values and gives shoppers a more immersive experience with your range.
- Delivering high-quality products through a smooth logistical chain and offering fast, helpful ongoing support.
- Running discounts, lightning deals, and coupons to maximise the value of shopping with you.
By building and maintaining a great customer experience along every possible variable, you’ll start off your own Flywheel with a satisfied customer base who are likely to make repeat purchases and recommend your brand to others.
Drive Traffic to Your Listings
With a great customer experience in place, you’ll need to make some sales to create repeat buyers, raise demand, and set your Flywheel in motion.
To start getting views and purchases on your listings, you can follow a few proven best practices, including:
- Improving your listings’ organic visibility with SEO by including popular keywords naturally in the titles, bullet points, description, and backend keywords.
- Having a robust Amazon advertising strategy that increases your visibility for specific keywords, and allows you to carve out a niche in spaces dominated by the competition.
- Promoting your products with discounts, coupons, value bundles, and other tactics.
With a little stimulation in these areas, your listings will soon be acting as a gateway to the great customer journey you’ve created, allowing you to set your own Flywheel in motion and start seeing the benefits.
Exercise Strategic Catalogue Management
Amazon owes a lot of its success to careful product selection, and prioritising items that support a great customer experience and the other elements of the Flywheel.
Making sure you have a strong and well-managed product catalogue will lay the foundation for consistent sales velocity and long-term growth, while catalogues that are neglected or bloated can slow your operations and become a burden.
For robust catalogue management, start by identifying your high-performing SKUs that drive the lion’s share of your sales, and make sure these are supported by consistent stock levels, competitive pricing, and sufficient advertising budget.
While boosting your high performers, it’s also essential to identify and address the products that are underperforming. Issues like high pricing, missed opportunities for keyword optimisation, or poor reviews can all be at the root of Amazon products that aren’t performing as well as you’d hope. Bundling, optimising, or retiring these SKUs altogether can help you create a more tidy, focused catalogue and ensure you’re applying your resources effectively.
Across all your SKUs, it’s also important to keep product lifecycles in mind and ensure they’re effectively managed. Any end-of-life inventory should be identified as early as possible and shifted to liquidation or clearance offers, helping you free up logistical bandwidth and liquid capital.
By using inventory management to ensure your catalogue is relevant, profitable, and always aligned with customer demand, you’ll fuel your brand’s Amazon Flywheel with every new sale.
Keep an Experimental Mindset and Find New Opportunities for Growth
Amazon didn’t achieve its global success just by being an early pioneer of ecommerce. They did it by prioritising experimentation and creativity, and finding new and disruptive ways to empower different elements of the Amazon Flywheel.
Though the Vendor Central model may not allow you to be as revolutionary as Jeff Bezos, you can still benefit from adopting a creative, “outside the box” mindset that’s conducive to constant improvement and new avenues for success.
One of the easiest ways to start experimenting for a more effective Amazon Flywheel is by running controlled tests of your advertising, for example trying different ad types and automatic vs manual targeting. As your advertising experiments run, you can also find new ways to maximise conversion by A/B testing your listings’ copy, images, and A+ content through Amazon’s Manage Your Experiments tool.
By trying out new, creative solutions to old challenges that come with the territory on Amazon, you’ll discover what works on a limited scale, then expand the concept for greater effect. With each successful experiment, you’ll unlock new ways to attract traffic, increase your sales volume, and build momentum for your brand’s success on Amazon.
Amazon Flywheel FAQs
By fully embracing the concepts that feed into the Amazon Flywheel, including impeccable customer service, a long-term commitment to smooth operations, and an innovative mindset, you can reap all the same rewards that have helped Amazon become the ecommerce powerhouse it is today.
We’ll wrap up with some common questions we hear from clients when they’re looking to form their own Amazon Flywheel strategy. For more support with unlocking the potential of Amazon, be sure to check out our other blog posts, or learn how our Vendor+ channel management service can help you get your Flywheel strategy right.
What is the Amazon Flywheel, and why does it matter to Vendors?
The Amazon Flywheel, also known as the Amazon virtuous cycle, is a self-sustaining model for growth that focuses on delivering a great customer experience to drive demand. As that demand grows, it attracts more sellers and vendors, which further enhances the product selection and customer satisfaction, starting the cycle again. For Vendors, understanding and tapping into the Flywheel on Amazon can mean stronger brand visibility, higher sales, and long-term success on the platform.
Is the Flywheel only relevant to Amazon, or can other businesses use it too?
Although it was created for Amazon, the Flywheel concept can be adapted to nearly any business model. It’s all about building momentum by investing in areas that naturally feed into one another, such as great customer service, efficient logistics, and competitive pricing. Vendors on Amazon can use this approach to align their strategies with the platform’s and drive scalable growth.
What’s the first thing I should do as a Vendor to get my own Flywheel spinning?
Creating a great customer experience should always take precedence when you’re forming your own Flywheel Strategy. This means creating listings with quality images and clear content, maintaining good stock availability, and ensuring reliable delivery and customer service. A satisfied customer is much more likely to return and recommend your brand, which is exactly how the Flywheel gains traction.
How do I drive traffic to my listings once I’ve got the basics in place?
To drive traffic to your listings, you should combine solid SEO practices with a targeted Amazon advertising strategy. Invest in ads that get your products in front of the right audience, and consider running deals or promotions to increase visibility and conversions. With consistent traffic flowing in, your Flywheel will start picking up speed.
Why is catalogue management such a big deal for Vendors?
A well-managed product catalogue helps maintain steady sales and makes your operations more efficient. Prioritise your best-performing SKUs with strong stock levels and competitive pricing, while also addressing underperforming products. Trimming back slow sellers or refreshing them with bundles or new content can help simplify your catalogue and direct resources where they’re most needed.
How can I use experimentation to grow my brand on Amazon?
Try experimenting with your ads by using different targeting types or formats to see what drives better results. You can also make use of Amazon’s “Manage Your Experiments” tool to A/B test your listings and content. These small-scale tests can lead to big improvements in traffic and conversions, helping your Flywheel to go on turning with greater velocity.
Does an Amazon Flywheel strategy work for small or newer brands?
Absolutely! The Amazon Flywheel isn’t about having a massive budget, it’s more about building momentum. By focusing on delivering value to the customer and continuously improving, even small brands can carve out a niche and build a loyal following. Start small, test what works, and scale from there.
