Amazon’s sprawling marketplace naturally has developed pockets where consumers are more prone to spend top dollar, alongside budget-minded categories. After looking across the top 1,500 level 3 and 4 subcategories by monthly search volume, roughly 15% had a majority of top 50 BSR products priced above the median price for that category – a rate that stays largely consistent even after splitting up categories by median price. 

There are a few clear, sizable differences separating the most premium categories from the least premium categories. Specifically, the most premium categories listed above have a much larger share of overall category revenue captured by the top five brands (also called Market Shape) and sported much higher year-over-year (YoY) revenue growth in March 2024. Notably, there weren’t large differences in terms of page one ad density and average share of searches that include a brand name.  

Biggest Takeaways for Brands

• Brands entering premium categories are going to be challenged
  • The low degree of revenue fragmentation gives existing, large brands a significant advantage in these promising markets
  • New entrants will need to put a significant focus on branding and driving upper-funnel demand to give them the best chance to grow given these market dynamics
    • Premium brands can cultivate a rich brand presence on the site through programs like the Brand Store page, enhanced product page content, and video, while also driving demand through top-of-funnel advertising tactics 
• There is a significant runway for premium brands on Amazon to thrive
  • There are a sizable number of categories where consumers gravitate towards higher-priced vs. budget options
  • Amazon is where a large share of consumers visit on their buying journeys and premium brands need to be where their customers are in some fashion
    • Once a brand reaches a level of popularity, consumers will search for it on Amazon regardless of whether or not the brand sells there. Any sales naturally go to competitors
• Before entering any new category on Amazon US, understand the market dynamics to price effectively and choose the optimal assortment
  • Many premium brands that achieved success on Amazon US did so through a focused assortment strategy
    • Often, this has taken the form of offering entry-level or the most popular products on Amazon, reserving new or top-end products for the D2C site
  • While being a lower-priced option can be helpful, this analysis underscores that in certain circumstances being priced below the competition may be a hindrance
    • Be sure to account for the median price across top sellers at the deepest relevant subcategory possible to better shape your overall strategy

Methodology

Momentum Commerce analyzed products on Amazon US associated with subcategories nested three to four levels below top-level categories (e.g. Beauty & Personal Care > Makeup > Makeup Remover). Products had to have appeared on search pages ranking within the top 1 million search terms on Amazon over the month of March 2024, with the majority of products on a given search page associated with a given category. Best Seller Ranks from April 1, 2024, were used for the purposes of this analysis to segment ‘top 50 products’ in a given subcategory from others in the sample.