In the fierce competition of the e-commerce market, sellers always need to judge the degree of market competition through various data in order to make the optimal product selection decision.
And traffic cost, as a key measurement standard, can help sellers gain insight into the competitive situation of a certain niche market. This article will provide a detailed analysis of how to use the "value of goods flow" as an indicator to determine the strength of market competition, and share specific analysis methods.
The definition and calculation rules of cargo flow value. Cargo flow value is an original indicator proposed by Seller Elf, which mainly measures the drainage cost by calculating the proportion of single click cost (PPC) to product selling price, and then judges the degree of market competition. Simply put, the lower the value of goods flow, the lower the cost of attracting traffic, and the less competition may be. The specific calculation formula is as follows:
Freight flow value=historical highest PPC bid (phrase matching)/median price of top 3 ASINs clicked * 100%
Why choose the median price of the top 3 ASINs? The top 3 ASIN data for click rankings come from Amazon ABA reports, which are usually accurate and have reference value. The higher the ranking of products, the more prominent their display position, and the stronger the buyer's intention to purchase. Therefore, referring to the prices of these ASINs can better help sellers understand the overall market situation.
For example, taking the keyword "iPhone 14 Pro Max case" as an example, assuming the traffic value of this keyword is 16.1%, this means that the cost of attracting traffic through this keyword accounts for 16.1% of the product price. Assuming the median price of the top 3 ASINs for this keyword is $21.99, the historical highest PPC bid for this keyword can be calculated as $3.54, which is $21.99 * 16.1%.
Based on this data, sellers can know that the cost of attracting traffic through advertising in this niche market is approximately $3.54. This helps sellers make more informed decisions when selecting products.
How to judge the degree of market competition through the value of goods flow? A lower value of goods flow means lower drainage costs and less competitive pressure, which may indicate that the market is not yet saturated and there is significant room for development. A high value of goods flow indicates fierce competition in the market and high drainage costs, possibly because the market is already saturated.
Taking "dog toys" and "cat toys" as examples, although the overall search volume and demand of these two markets are similar, their traffic costs are vastly different. Through analysis, we found that the traffic value and PPC bidding of the keyword "dog toys" are significantly lower than those of "cat toys", indicating that the competition in the "dog toys" market is relatively small and the traffic cost is also relatively low, making it suitable for sellers seeking low competition markets.
Comparative analysis: Assuming the selling price of both dog toys and cat toys is $100, in the "cat toys" market, sellers may need to spend $7.6 on drainage costs, while in the "dog toys" market, sellers' drainage costs are only $3.6. This gap indicates that the competition in the "dog toys" market is much lower than that in the "cat toys" market, meaning that sellers can obtain more traffic at lower costs.
How to avoid high competition markets when selecting products? Through in-depth analysis of the value of goods flow, sellers can effectively avoid markets with high traffic costs and instead choose niche markets with lower competition and greater potential. For example, when a seller sees a low traffic value for a certain keyword, they can prioritize developing this market in depth, while when the traffic value is high, they can choose cautiously.
Specific operating steps:
Preliminary screening: Use the value of cargo flow to preliminarily screen the market, selecting segmented markets with lower traffic costs and less competition. Amazon search result analysis: After clicking on the target keyword, you will be redirected to the Amazon search results page to further analyze the product situation in this niche market. Through the Seller Elf plugin, sellers can view the products on the first few pages of search results and analyze their price, sales, and other data, thereby gaining a more intuitive understanding of market competition. In depth analysis: Sellers can also choose the top 100 products in terms of sales volume to conduct a more in-depth market analysis, evaluate the competitiveness and entry barriers of the market.
Summary: Freight flow value is an effective market competition analysis tool that can help sellers determine the flow cost and competitive pressure of the market. In the process of product selection, sellers can avoid selecting niche markets with high traffic costs by analyzing the value of goods flow, and prioritize those with huge potential and less competition to achieve more efficient operations and faster profit growth.
At the same time, by analyzing Amazon's relevant data in depth, sellers can further understand the dynamics of the market and make more accurate decisions.