It’s easy to hit the panic button when Amazon sales start to steadily decline. Initial instincts may say spend more money to quickly improve sales. What if we said that declining sales meant it was time to step back, assess the data and formulate a strategy? More often than not, a dashboard is presented with no insights as to what it means or what it could be indicating. That’s where we come in as true partners working to provide an explanation in addition to the data.
We recently reviewed an Amazon account where ad spend had remained relatively stable, but both advertising sales and ROAS were declining. That combination matters. If spend hasn’t materially changed but the same dollars are suddenly producing fewer sales, the question shouldn’t immediately be “How much more should we spend?”
Here are 5 things we check before increasing ad budgets.
Is the problem traffic or conversion?
This is one of the first questions we want answered as it really drives what strategy we’re using to fix the sales issue. If fewer people are reaching the listing, we know it’s a visibility problem. If people are reaching the listing and suddenly fewer people are purchasing, we know it’s a conversion problem.
Those are two very different problems that require two very different strategies.
Are your products staying in stock?
Anyone who has sold on Amazon knows that inventory can be a headache, and out of stocks can be detrimental. Inventory shortages on Amazon cause more than a few missed sales; it also dings algorithm search performance, advertising performance, and overall product visibility. Amazon is constantly working to give its customers the best buying experience, and the algorithm reflects that. Knowing this, have you checked your inventory history? Have any of your SKUs been unavailable lately? Were certain variations consistently out of stock? Even just being low on stock can have a negative impact on algorithm performance.
Has customer sentiment changed?
It’s possible for a product to continue to receive traffic while conversions start to decline. One logical explanation for this data pattern is a change in reviews, ratings, or customer experience-related questions. An established listing might still have a 4.6-star rating across 600 reviews, but if 3 of the last 5 reviews are negative, that could indicate a recent problem that’s impacting conversion. Customers are savvy and often look at the “Most Recent” reviews to see if product quality or the overall experience has changed over time. That’s why we look at recent review trends, not just the total rating.
Did the competitive landscape change?
Your strategy could stay exactly the same while the market around your changes. A competitor could have increased their advertising, taking new-to-brand customers that would have normally been yours and causing a decline in sales. This is where metrics like share of shelf, share of voice, and keyword-level competitive activity that we provide become especially useful.
If impressions are declining, a competitor could be taking more of the visibility. However, if impressions remain relatively consistent and sales still fall, maybe the issue is happening further down the funnel.
Are your ads becoming less efficient?
At this point, we’re looking at your ad strategy. If ad spend stays relatively flat while ad-attributed sales and ROAS both decline, that’s a signal worth investigating.
Which keywords changed? Which products lost efficiency? Did CPCs rise? Did conversion rates fall? Are campaigns driving traffic to products that no longer have a strong enough offer? The goal is to identify the underlying issue before allocating more dollars toward it.
Reporting tells you what happened. Strategy tells you what to do next. Amazon gives brands an overwhelming amount of data, and we understand that digesting it all can be really tricky when faced with everything else on your to-do list.
When Amazon performance starts slipping, we recommend working through the diagnosis before reaching for the budget. Check inventory. Check customer sentiment. Check the competition. Separate traffic problems from conversion problems. Then evaluate advertising efficiency.
Sometimes the answer will be more investment. But first, make sure you’re investing in the right problem.