Analysis of Amazon's Shampoo Category
Amazon has quickly become the US’s largest online retailer, dominating the ecommerce space across almost every category. One of the main reasons that the company has been able to do this is by offering a vast assortment of products and brands. Being that Amazon carries almost all brands in every category and that being listed on its site is practically a perquisite to selling anything online I wondered if there were any insights into what makes a brand successful that could be found through scraping product pages. In this project I specifically scraped the shampoo category in order to find meaningful takeaways for a brand looking to enter or expand their presence on Amazon.
Scraping Methodology and Data:
To scrape Amazon, I created a Scrapy spider that was able to extract the ASIN (product identifier), brand name, current price, list price (reflects original price if item on sale), description, product detail bullets, product title, rating, number of reviews, product dimensions, merchant name (whether the item was sold and shipped by Amazon or other) and price per ounce from a product page. The spider successfully extracted this information where available from 4675 shampoo products out of the ~20,000 listed.
Much of my analysis rests on the assumption that higher amounts of product reviews is an indicator of a product’s sales on site. While product review amount sales volume may not be a perfect correlation it is well known that they are a primary driver of traffic and are the best quantity indicator of customer engagement available on a product page. Using this assumption I sought to address 3 strategic decisions that every seller must make when working with Amazon:
- The channel strategy- that is whether to be set up as an owned vendor that sells their products to Amazon for Amazon to sell their products to customers, displayed as “sold by and shipped Amazon.com,” a “Fulfilled by Amazon” vendor that sells their products to the customer directly but uses Amazon as a warehouse and distribution service for a fee, displayed as “sold by X and shipped by Amazon.com”, or a marketplace vendor that sells and ships their own product, displayed “Sold by and Shipped by X.”
- Whether to put focus on brand recognition in marketing or on product quality.
- How many products to list.
I also did an analysis on common word stems that came up on product titles and descriptions in order to see if there was a discernible difference between the 4675 product “field” and the top 100 best sellers in order to identify possible market gaps and successful marketing techniques.
The charts below display my findings on channel strategy (SKU stands for
“stock keeping unit,” a term referring to a single item):
In the shampoo category there is a high supply of marketplace items that receive very little customer engagement compared to the owned and FBA channels. This makes it clear that the customer in this category prefers items shipped by Amazon and that succesful brands are choosing these channels. Unless there is an extremely compelling reason to list on marketplace unique to a vendor I would recommend listing through the owned channel or FBA. The decision to list as owned by Amazon or FBA needs to be made with a tradeoff of two priorities in mind: driving a higher volume of sales or retaining price control. While the data shows that vendors can expect more engagemnt being owned, being FBA allows them to control pricing and not be subject to price swings that can negatively effect margins.
In order to find the importance of branding versus product quality I split the brands into 10 groups based on the percentile of total reviews they received. With the brands split I was able to see how dominant the top brands in the category in terms of total reviews accrued, how their engagement on different at the product page level and how their star ratings differed on their products. The charts below display what I found:
There is clear dominance of the top brands in terms of total review share, with the top 10% accounting for over 70% of all reviews. These brands also have 50% more reviews on their product pages than the next group. However, the “Ratings By Percentile Group” boxplot shows that product quality does not appear to be a driving factor for differentiating this top group, with the top 6 groups having similar spreads and medians on their product reviews. The conclusion here is that product quality does not appear to be the differentiating factor between high and low engagement brands and therefore other factors such as brand recognition and product marketing must be responsible.
The importance of brand recognition can be seen in the chart below, where I plotted the SKU count versus the the review totals for each brand:
From the chart it appears that for the most part a brand needs to have at least 60 listings to have significantly more reviews than the average brand (remember that this data only accounts for about 25% of the shampoo listings).
In the final part of my analysis I wanted to see if top products were addressing different needs or being marketed differently than the general population. To to this I performed natural language processing techniques to count word stems in the descriptions of the products listed on Amazon’s 100 best selling shampoo brands and compare it to the stems of the 4675 shampoo sample. I plotted my findings below (top 100 being on the left, the larger sample being on the right):
One of the more actionable insights to take away here is that dandruff is the third most mentioned term within the top 100 descriptions while not even appearing in the top 20 terms of the sampl. This could mean there is a lack of products addressing dandruff issues and thus could be an area for a brand looking to expand their presence to focus on. Another insight is that the stem “natur” appears as the second most mentioned term in the sample while not appearing in the top 20 of the top 100. This could be an example of a misguided marketing tactic that isn’t resonating well with the customer or an oversaturation of the market- many brands appear to be listing “natural” products with none becoming extremely popular. This means that brands may want to shift investment away from these products.
In conclusion the shampoo category seems to be brand-driven where large brands have robust assortments where customer has a clear preference for listings shipped by Amazon. This means there should be a larger effort and budget being put towards marketing rather than product quality. There is also a possible lack of products addressing dandruff and oversaturation of “natural” products.