Amazon is probably the best-known global marketplace on the Internet. No matter what you sell, it is tempting to sign up and get your product on this platform. Of course, the company is more than happy to welcome new sellers, and it will only take you a short time to get signed up. However, the fact that it’s easy to sign up is not always an indication of how good this marketplace is going to be for you. It is a crowded marketplace, so you need to ensure that it is the right platform for your product before moving forwards.
Take a look at the aspects to consider when selling on Amazon:
Open to all
As well as being open to manufacturer sellers, Amazon is a competitive arena for resellers. This means companies who are selling someone else’s product, and, in that case, you will find hundreds of others all selling the same product. Of course, competition is healthy, and it forces price wars but can end up leaving you selling short on your profit margins which makes no sense at all. To get ahead in the market, you can choose to partner with a marketing expert to improve your chances of success. In Los Angeles Nuanced Media is an excellent marketing agency for US businesses who want to boost their Amazon business.
Beats to its own drum
If you sell on Amazon, you play by their rules it is that simple. Although you are selling your product, most of the data Amazon collects about your customers belongs to them. This means it is harder for you to understand your prospects and know who you should be targeting. Amazon retail can use this information when it comes to deciding which products to sell and target on their marketplace.
Then there is also something called the Buy Box, which is what determines which product gets the sale when sellers are competing with the same product, and the customer clicks add to cart. If you are selling a product head-to-head with Amazon, you won’t get as many sales because they will have the Buy Box advantage. Add to this the fact that they also have pricing software, which is state of the art and immediately alters prices, especially when competitors lower their costs. Amazon Retail is not in this to lose sales, and they have a much bigger profit base to cut their margins from.
Fulfilment by Amazon
Any third-party seller will be offered Fulfilment by Amazon, as this is what the platform prefers you use. This means your products are put into Amazon’s network of many different fulfilment centers, and when your customer orders, they do the work and fill the order rather than you. This can be an advantage as it means you do not have to process an order, pack the product,and post it.
Customer service standards
Amazon dictates that any customer inquiry must be responded to within 24 hours. 365 days a year, no excuses. This means you must be prepared to comply with this, or face being penalized.
Amazon is cast iron in its decision that each brand is responsible for securing distribution. This means Amazon does not intervene and help brands remove any sales from unauthorized resellers. So, if you have a legitimate product and you are doing no harm to the customer, you can sell any product, and there is nothing the brand can do via Amazon to stop you.
How businesses work on Amazon
As a reseller, you are unlikely to get any more than your fair share if you sell on Amazon. So, if there are nine other competing businesses selling the same products, you will never really get more than 10% of the sales unless you undercut everyone in which case you will be damaging your profit margins. This means as a reseller, it might be a useful second selling platform, but you should probably put more time and energy into your primary reselling sources.
As a retailer, you also have to be aware that any number of other competing resellers can source the same products as well. If you are a reseller, you must also ensure a clear paperwork trail that identifies provenance from your sourced products. Grey market sellers generally will not thrive on Amazon because their seller performance team can challenge at any stage and ask for paperwork to confirm the authenticity of the product.
- Exclusive resellers
Of course, this is a different story if you have an exclusive sourcing relationship with a company. Many companies feel that they will only use a few resellers and limit the ability of people to set up as a reseller widely. In these relationships, the sellers must represent their brand, ensure they have adequate stock and keep their MAP/MSRP prices in place. The biggest concern here is that the supplier can go direct to consumer by setting up an FBA program with Amazon.
- National brands
As a national brand if you have done your marketing correctly, customers will be aware of you and probably look on Amazon to see if they can find your presence. The thing you have to remember is that Amazon is popular with buyers. They may consider purchasing your brand, but if they can’t find it on their favorite platform, they will move on and use a competitor. So, if you have a national brand, it is worth looking into selling on Amazon as one of your channels. Businesses who are only regionally successful are going to struggle more to get decent sales from Amazon. Still, it may well be worth it as you do not have other resellers competing with your product.
These are some of the key things to consider when thinking about selling on Amazon. The marketplace isn’t for everyone, but most companies can succeed with the right guidance. It can also be a place to boost your sales and improve your reach all under one roof!
Ryan Flannagan is the Founder & CEO of NuancedMedia, an international eCommerce marketing agency specializing in Amazon. Nuanced has sold $100s of Millions online and Ryan has built a client base representing a total revenue of over 1.5 billion dollars. Ryan is a published author and has been quoted by a number of media sources such as BuzzFeed and Modern Retail. To connect with Ryan, check out @Ryanflannagan on Twitter or via Linkedin