An extremely important e-commerce channel, Amazon has unique features and benefits. In this article we will look at 1) what is Amazon, 2) how to sell successfully on Amazon, 3) advantages and disadvantages of selling on Amazon, and 4) Amazon success stories.
- 1 WHAT IS AMAZON?
- 2 HOW TO SELL SUCCESSFULLY ON AMAZON
- 3 ADVANTAGES AND DISADVANTAGES OF SELLING ON AMAZON
- 4 AMAZON SUCCESS STORIES
WHAT IS AMAZON?
Unquestionably the biggest e-commerce platform in the world, Amazon is an internet giant with global presence and reach. The company began as an online seller of books but quickly adopted emerging trends and branched out into areas such as sales of entertainment media like DVDs, VHSs, CDs, online video and mp3 streaming and downloads, software and video games. It also expanded to begin selling electronics, clothing items, food, toys, children’s items, jewelry, and household items. A few years ago, the company diversified into the production of consumer electronics including the Kindle E-book reader, Kindle Fire Tablets, Fire TV and the Fire Phone. Recently, the company has also started offering cloud computing services.
The company is headquartered in Seattle, Washington in the United States. It began as the company Cadabra, incorporated by Jeff Bezos in 1994 and went online as Amazon.com in 1995. The company has individual retail websites for the US, France, Germany, the UK, Canada, Spain, Brazil, Italy, Australia, India, Mexico and China. There are plans to launch sites for Sri Lanka, South East Asia, Poland, Netherlands and Sweden. Some products can also be shipped to several other international locations.
The Business Model
Amazon allows both individuals and businesses to sell their products through the website. The company offers the Seller Central website to manage all aspects of selling via the website. Through this website, a seller can add product information, add inventory and manage orders and payments. Sellers can chose to ship items themselves where certain Amazon.com shipping rates will apply based on the product category or they can chose to use Amazon to fulfill orders. In the second scenario, merchandise is stocked in Amazon fulfillment centers and are packed and shipped by Amazon for an additional charge. Amazon also provides customer service for these items.
Amazon offers two selling plans to prospective sellers. There is a professional selling plan where a monthly subscription is charged in addition to a per item fee. There is also an individual plan for people selling less than 40 items per month where only per item fee is charged. The professional plan includes additional services such as top placement in product pages, ability to sell in more categories, customize shipping plans etc.
If a seller chooses to use fulfillment by Amazon, additional fees will apply. All third parties can chose to sell as either individual or professional sellers.
Inside Amazon: Secrets of an Online Mega-Giant
HOW TO SELL SUCCESSFULLY ON AMAZON
Important Things to Know Before Selling on Amazon.com
- Where will products be listed? The main product page is always the lowest cost offer that is fulfilled by Amazon. Under the product’s name is an ‘offers’ link, where the rest of the product offerings will be listed.
- How will the order of the merchant offers list be determined? Some of the factors that determine this order include competitive pricing, the number of sellers, history as a seller with Amazon, and number of seller reviews.
- How can products be moved to the top of the list? The best way to move products up a list is to make sure that any items sold through Amazon are done so in a smooth and efficient way. Quicker than this method is to either sell a popular product at a lower price or sell a product with less competition to start building credibility as a seller.
- Who benefits the most from selling on Amazon.com? Certain types of sellers are more successful than others. These include those who sell unique items that they product themselves, those who sell niche items or things that appeal to hobbyists and those that sell refurbished or used items.
- Should products be associated with a product already listed? Amazon allows products to be listed only once so if a product is connected to an already listed item there is a higher chance it will be seen.
- Why can some shipping methods not be used at first? Sellers start off with some basic shipping methods and gradually earn the right to offer better shipping methods such as two day shipping when reliability has been established.
- How can seller reviews be increased? Reviews cannot be solicited in exchange for money or reward. If the customer is given a great experience from beginning to end, they will be more likely to leave a positive review on their own.
Tips for Selling on Amazon
Creating Successful Product Pages
A vital step to creating a successful sales business on Amazon.com is to create easy to find and informative product pages. The key areas in this regard are:
- Create a Strong Headline: The first thing to do to create a successful and attractive product listing is to create a heading that gives all the necessary information without being full of spam. Items to be included include the brand and any highlighting features or special benefits. Don’t try to fill up with too many keywords as this can result in keyword spamming.
- Enter Keywords as other ‘Search Terms”: Any important keywords that do not make sense in the title can be entered here. Be sure not to repeat those that are already in the title.
- Search for Your Own Product: After creating listings, make sure you attempt to search for your own product. This is a good test because you will get an idea of how easy or difficult it is to locate. If you cannot manage to find it, it is a strong possibility that others won’t either. In this case you may need to go back and adjust the keywords. Just by searching as a buyer would, you begin to think as a buyer would and often that can help enhance listings.
Selling on Amazon has its positives and negatives. There is enormous competition with hundreds of sellers vying for the same customers. But, there are also an estimated 90 million unique visitors to the site every month. According to Amazon, new sellers in the marketplace can often see a 50-percent increase in total revenue once they start selling seriously on Amazon. Some tips to achieve this type of success are:
- Don’t be Afraid to Compete on Price: In the marketplace, one of the major aspects that create product differentiation is price. This is a basic fact and there are ways to use this to continue to be profitable. The seller should try to list items that have enough margin to absorb a lower price offer along with other selling costs.
- Get a Professional Seller Subscription: Though smaller sellers may want to start out on an individual plan, eventually it is a good idea to move to a pro plan. This offers less per listing charges and a monthly subscription instead. There are other benefits as well such as the ability to upload bulk listings, better reporting on sales, more selling options and the ability to add new and unique listings.
- Try to Sell a Unique Item: Through a pro plan, a seller has the ability to add new listings to Amazon that will have no competitors. Niche products also often have a specific market that makes these items easier to sell.
- Market to Amazon Customers: In the Amazon marketplace, a seller has the opportunity to market to the buyer and turn them into a repeat customer. This can be done by making special offers such as a discount on the next purchase or something similar.
There are some basic mistakes that even experienced sellers on Amazon.com make periodically. These include
- Failure to Correctly Calculate Shipping Costs: Sellers have to offer shipping options according to Amazon’s criteria for different categories of products. These costs are almost never as low as Amazon estimates. Final amounts end up being higher and the cost has to be borne by the sellers. It is a good idea to add as much as between 50 to 100 percent of the quoted Amazon shipping cost to a seller’s own shipping cost to get an accurate estimate of expenses.
- Failure to Correctly Price Items: It is necessary to do a marketplace analysis of similar items and see how much they are being sold for. This helps correctly price an item so that it sells quickly. Many items are bundled into Amazon free shipping inside one package which is convenient for customers. To offset this, the item should be priced low enough to offer benefits without the Amazon shipping convenience. But make sure you factor in Amazon’s charges to know exactly how much you will get out of the transaction.
- Failure to Market Items: It is vital to market items strongly by added good quality images and strong descriptions. In the case of used items, be candid about any defects to avoid false expectations that could lead to returned items and poor reviews.
- Failure to Sell a Unique Item: If you have an item to sell that is not listed, this doesn’t mean that there is no demand for it. In fact it could be the opposite and you may be able to sell it to a niche user at a premium price.
- Failure to be Available to Ship: Items need to be shipped out quickly once an order is placed. If a seller expects to be unavailable to ship for a few days, then it is a good idea to take down the listing temporarily. Faster shipping leads to better ranking.
- Failure to Plan for Returns: In cases like software, it is difficult to offer returns. But telling a customer this can often lead to bad reviews and a fall in seller status. It is a good idea to plan for such an eventuality or sell these types of items without a return policy.
- Failure to Contest a Bad Review or Claim: If there is a bad review from a customer that is not justified, you can ask Amazon to remove it. You can also contest Amazon pointing you out for shipping close to deadline. Customers can be reminded to leave a positive review.
- Failure to Keep Track of Sales and Queries: It is vital to stay on top of sales and queries and responding to both fast. If an item is not shipped in time you may get a lower seller rating and if a potential customer is not satisfied they may move on or leave a bad review.
ADVANTAGES AND DISADVANTAGES OF SELLING ON AMAZON
There are many advantages and disadvantages of selling through Amazon.com (But of course you should be selling on Shopify and Amazon). These include the following.
Advantages of Selling on Amazon.com
- Higher Sales: Given the incredible scale of Amazon as a marketplace, there are more chances of selling more products at better prices. Sellers report an average of a 50 percent increase in sale on joining the Amazon marketplace.
- Better Access to Customers: A visitor to Amazon won’t be looking for your store. But they may be searching for your products. Access to these products may not be possible if not for the Amazon marketplace. Once you have a customer in the door, it is in your power to turn them into repeat customers by offering a great product and great service.
- Marketplace Infrastructure: In physical markets, similar sellers often group together to benefit from numbers. Similarly, in the Amazon marketplace, buyers get a variety of options and a better shopping experience. Additionally, single stream checkout and support help create a smooth shopping experience.
Disadvantages of Selling on Amazon.com
- Additional Fees: Despite increased sales, there are also added costs of the marketplace. Most of these are deducted as a percentage of each item sold and may vary by category of items. This makes it necessary to understand and calculate margins to make sure you remain profitable.
- Marketplace Infrastructure: Both an advantage and a disadvantage, the marketplace is meant to showcase products, not sellers. This means that there is more need to differentiate but also more restrictions on how to do so.
- Inventory Sync: It is often a challenge to understand stock level and keep these reconciled. There may be manual work required despite the existence of applications to help do the same.
AMAZON SUCCESS STORIES
Angelynn’s Jewelry Organizers
Lynn Williams had been selling her unique jewelry organizers with some success for a number of years. She questioned whether her business was big enough for Amazon, but feels that her decision to eventually sell on Amazon was a miraculous transformation for her product. Lynn came up with her idea back in 1991 but couldn’t get it off the ground till 2005. In 2008, she started selling on Amazon. This is the point where the business took off. Sales steadily increased and now 98 percent of her business is through Amazon.
She began by working 80 to 120 hours a week and handling all shipping from her home. She eventually moved to the fulfillment by Amazon model despite reservations about maintaining her profitability. She moved her lower priced items to this model and saw an increase in shipping because of additional Amazon benefits such as free shipping and Amazon Prime. She eventually moved all items to this mode and now runs a streamlined operation with reduced workload for herself.
Her product remains admired and respected and she manages to maintain a five star rating. She sells to high end clients, often celebrities but also to places like college dorms and to clients worldwide. This range of customers is possible only through a platform such as Amazon, because people are familiar with it and trust it to be reliable and secure.
A scientist by profession, Daphna Haykin-Frenkel creates and sells natural vanilla products and through Amazon, has managed to reach clients worldwide. Passionate about her work, Daphna has spent years researching her product. She felt that the hardest part of her endeavor was to find the right clients. Once she decided to start selling through Amazon, this aspect became simple and streamlined.
The business began by selling vanilla flavor, beans and sugar. They have since expanded into 40 natural flavors and gourmet spices. Though the company still sells through their physical store in New York City as well as their own website, Amazon remains their biggest sales channel. The ease or order procession and excellent customer treatment by Amazon are two major reasons for their preference for selling here.