Selling on Amazon Marketplace

Definitive Guide on how to sell on Amazon Marketplace


In the previous guide, I have shown you how to start selling online and when you sell in a marketplace vs on your own website. My advice is to have a mixed approach.


So, you want to sell your products on Amazon?


Then you are in the right place.


Specifically, the guide includes five steps:


  1. Check if your business is a good fit

  2. Analyse Amazon selling options

  3. Prepare to sell with the Amazon checklist

  4. Selling strategies - a look at most the popular

  5. Master Amazon SEO: three techniques to boost your sales


Step 1: Check whether your business is a good fit for Amazon


It’s important to assess the realistic chances of being successful on Amazon.


With Amazon, it takes a few minutes to sign up and start selling. This is just one of Amazon’s strategies to maximise signups by making it easy. However, just because it’s easy to sign up, it doesn’t mean it’s easy to sell.

Before we move into the seller account setup (please check Step 2 of this Quick Win), it’s important to assess the realistic chances of being successful on Amazon Marketplaces. There are a few considerations to make:


  1. When you sign up on Amazon as a seller and you upload your product, chances are that already dozens (or even hundreds) of other sellers are selling exactly the same product.

  2. As we said before, this could be the reason why sellers lower their prices and enter a price and profit margin war, ultimately damaging their margins and making it pointless to sell on Amazon.

  3. It’s wiser to differentiate yourself from the competition in order to make your business sustainable for the long term.


For all these reasons, you need at this point to assess your Amazon fit. It would be easier to just make a competitors’ research on Amazon to find out who your competitors are, how much they are selling their products for, in which country and which margin. Unfortunately, Amazon doesn’t share the billions of information they collect about sellers and it makes it very difficult for anyone to determine whether there is a good Amazon fit.


Another thing to consider is that there are two types of sellers on Amazon:

  • Amazon Retail, which sells a vast range of products.

  • Third-party retailers, who typically specialize in one or more categories.

  • As we said above, since there is no limit to the number of sellers who can use the Amazon platform, multiple merchants frequently sell the same item. When multiple resellers sell the same item, suddenly there is a competition to win the Buy Box.

Step 2: Analyse Amazon selling options


What is Amazon Buy Box and why it’s so important?

The Buy Box is the box on a product detail page where customers can begin the purchasing process by adding items to their shopping carts. To give customers the best possible shopping experience only offers from Buy Box-eligible sellers can compete for Buy Box placement.

As many as 82% of sales go through the Buy Box.


The other not so good news is that Amazon Retail almost wins the Buy Box. Because Amazon owns its marketplace, it makes its own rules for its own benefits and those of its users, not for the benefits of third-party sellers.


Finally, Amazon has an automatic repricing software, which lowers the prices of a product that has already been lowered by third-party sellers to win the price war. Amazon Retail doesn’t make any money, sometimes they actually lose money on a sale, so I would strongly recommend you do not compete directly with Amazon Retail.

Competing directly with Amazon Retail is not a sustainable long-term business model.

This means that if you want to compete with Amazon Retail, you are going down the road of losing profits, even if your sales increase.



Amazon wants sellers to use Fulfilled By Amazon (FBA)

FBA is available to all third-party sellers. You upload your products on Amazon, then your products are sent to Amazon fulfilment centre. And when the customer places an order, the item is dispatched from the fulfilment centre, not from the sellers’ address.



FBA lets sellers join Amazon Prime


Products in FBA are eligible from Amazon Prime free Two-Days Shipping. There are millions of Amazon Prime customers and listing your products to FBA gives you a competitive advantage, which is, in turn, helps you to win the Buy Box competition.



Sellers are not allowed to market or re-market a product to customers


Amazon takes care of packing, shipping, distribution and it takes away from the seller the opportunity to start and improve their relationships with customers. You can still use your own CRM on your channels, just not on the Amazon marketplace.



Sellers should answer support enquiries within 24 hours


Even if sellers can’t nurture the relationship with customers and re-sell the same product on Amazon marketplaces, sellers have to answer their enquiries within 24 hours.

Customer support is one of the metrics monitored by Amazon when considering who wins the Buy Box sellers. More on this in Step 4.


These high standards of customer care can become a problem for many sellers, who simply do not have the resources to answer any questions and deal with customer service so quickly and so efficiently.


Having said this, let’s go through the business models that every seller should check before applying to Amazon Marketplaces, to make sure the business of selling on Amazon is sustainable for a long time.



A view on different business models: Exclusive Sourcing Relationships, Oversize Products, Private Labels and National Brands.



Before we describe the different business models available on Amazon Marketplaces, I’d like to introduce some context in which sellers operate, this will help better understand strategies to adopt.

Some sellers have agreed on exclusive sourcing relationships with their brands, which means they prevent other sellers to sell the same brand on Amazon. These sellers will likely do very well on Amazon because they do not have to compete for the Buy Box.



Exclusive Sourcing Relationship


In this context, brands increasingly disagree to negotiate exclusive sourcing relationship with sellers because they realise the potential on Amazon and want to start selling directly themselves. Brands can increase their odds to sell more if they take this direction.

Therefore the dynamics of selling on Amazon changed a lot with the introduction of FBA. Thanks to it, now brands can take the control of their own sales and many resellers are starting to lose the opportunity.



Private Labels


On the other hand, to keep open the opportunity to exclusively outsource brands, resellers are starting to become more aware of new selling techniques. One of these ways is becoming increasingly popular and it’s the private label.

With private label, resellers can become exclusive resellers of their own brands. With private labels reseller buy the product directly from the manufacturer and add their logo/ branding on the package so it looks like it’s their business.

Given the manufacturer is already designing and inventing the product, resellers do not have to do any of this, they just add their logo and label on the packaging and let FBA shipping and distributing.


To learn more about Private Label and how to start selling, please check Step 3: Selling Strategies.



Oversize Products


While Amazon allows selling oversize products, the costs for shipping on FBA are such that it makes it pointless to sell. If you are such a company, I advise you to make extensive research before you start selling on Amazon.



The National Brand


If a brand is well known nationally and able to create a good awareness, chances are that some of the hundred million Amazon customers are also looking for this brand. If they don’t find it, they will buy from a competitor’s brand.

For such a brand, it makes a lot of sense selling on Amazon as it can create a decent amount of sales.

Of course, there are risks of cannibalization of different channels, but with incremental sales, some well-known brands can do very well financially.


So if you’re about to get started on Amazon as a third-party seller, it’s critical to understand what sourcing/distribution advantages you will have, as those gains are likely to be short-lived.



Step 3: Amazon seller account checklist


Once you register as a seller, the clock starts and you got 30 days before your bill is due to be paid. So before registering, prepare the necessary information and insert in your account correctly and quickly.


It all starts with the Amazon Services page, where you can register as a new seller.


Setting up your seller account


So you have done brainstorming, market research, ordering of new product and decided which strategy to use to sell. Now it’s time to decide which of the two accounts you need:


  • Individual/ small seller account

  • Professional / big seller account


Let’s start with the individual / small account, where you also have the option to select FBA. The first condition to sell small is to sell less than 40 items a month.

The Individual seller plan doesn’t have a monthly fee, and this plan is pretty appealing if you’re just starting out and in a more experimental mode with your products. That way, you won’t have to pay Amazon $0.99 for each item sold, which is the fee that Individual sellers have to pay.


The professional account let you sell more than 40 items per month and costs $39.99/ month.




Necessary Paperwork


To get through the process you need this checklist readily available, including:

  • Business Information: Your legal business name, address and contact information

  • Email Address: An email address that can be used for this company account. This email account should be set up already, as you will start receiving important emails from Amazon almost immediately.

  • Credit Card: An internationally chargeable credit card with a valid billing address. If the credit card number isn’t valid, Amazon will cancel your registration.

  • Phone Number: A phone number where you can be reached during this registration process. Also, have your phone nearby during registration.

  • Tax ID: Your tax identity information, including your Social Security number (for the UK National Insurance Number) or your company’s Federal Tax ID number.

  • State Tax ID: State tax ID information for states in which you have tax nexus. This physical presence is typically impacted by company offices, warehouses/3PLs, and call centres. If you plan to use Amazon’s Fulfillment by Amazon (FBA) program, there may be further tax nexus implications.

In addition to this above, you also need to prepare questions and answers that Amazon is going to ask about your business.


Amazon questions and the answer to prepare


How do you handle product returns?

As an Amazon seller, it is imperative that you think about your return process.

  • Are you going to handle the Amazon returns yourself, or send them to a company that specializes in testing/grading returns and making the product available for sale again (e.g., tradeport.com, openedboxreturns.com)?

  • Who on your team will handle Amazon customer inquiries?

The key is not just having all of the answers, but also respecting Amazon’s requirements to respond to all customer inquiries within 24 hours, any day of the year.


If you plan to use the FBA program will you plan to commingle your product?


I very much recommend using FBA, given its visibility potential to 50MM+ Amazon Prime customers. If you decide to go that route, you’ll need to decide whether you plan to commingle your products with FBA inventory of other sellers of the same products.

Amazon gives FBA sellers this option of sending product into Amazon’s Fulfillment Centers, where they might get commingled with other FBA sellers’ product, leading to your products possibly getting mixed up with counterfeit or low-grade versions of what you purport to be selling.

Unfortunately, if a commingled unit gets picked to fulfil an order on your account, you are left explaining to Amazon why a customer complained about getting a counterfeit item.

You need to work through this issue very early on because if you decide to use FBA but not use the commingled (“stickerless”) option, you need to activate your account to become a “stickered” FBA account right at the beginning before you create your first FBA shipment into Amazon.


Have you checked to see if the products you plan to list are in categories that Amazon has gated?

Amazon has restrictions on who can sell in certain categories, and while the ungating process is usually surmountable, it’s important to recognize that if your desired categories are gated, you will have to apply very quickly to get ungated.

Check out Amazon’s approval category page before you decide to register on Amazon, and you can learn more about the ungating process if it applies to your product categories.



List of skills for selling online successfully


As we said above, technology only makes it easier to display and sell your products online, but it doesn't replace human skills that every seller should master fairly quickly to succeed profitably and long-term. This is a list of skills and knowledge you need to succeed.


Great Content Marketing


Whether you launch your product or use marketplaces, content marketing is still king. Product titles, product descriptions, how to write blog posts, email marketing, copywriting are vital skills that come handy in every situation.


Amazon Search engine


Amazon A9, Google Algorithms, Bing algorithms are names that search engines use for organising the information online and make it accessible to users to find. While Amazon A9 is still not very mature as it operates in simple ways, Google and Bing are extremely sophisticated search engines and knowing how to master them, how to position products on top, what factor influence ranking and positioning is vital for the success of your store.


If you list your product on Amazon, it's useful to know how it works. Here is an example: I have searched for “Royal Canin dog food” and I have got over 1,000 results.



But when I have simply added “Luca”, which is my name, to the keywords, A9 searched for “Royal Canin Dog Food Luca” and I have been shown 0 results.




Clearly, Amazon A9 is not able to differentiate the 2 words in the same way Bing and Google do.


Let’s look at a more relevant example.


When I remove the brand Royal Canin and search for “dogfood” altogether, Amazon shows over 70,000 results:




Now look at how the competition gets dramatically reduced by a simple variation of the word into “dog food” with over 10,000 results:



The competition has been cut for more than half by just splitting the word in two.


What does this tell us?

Make sure you are populating your keywords with as many variations as possible to increase your visibility and sales.



Clear control and understanding of your suppliers


Another skill necessary for selling well on Amazon and eBay or any other marketplace is the management of your suppliers. If your product sells well, do you know how to avoid supply stockout? For example, if you need 15 days to supply Amazon with your product, it makes sense to order your product 16 days before you start selling it or before it runs down to zero.

This means that you need to be on top of your supplies otherwise Amazon will rank you down for a few days of a product shortage.



Step 4: Selling Strategies - a look at the most common selling techniques


Fulfilled by Merchant Listing (FML): how and when to use it


Fulfilled by Merchant is the basic listing on Amazon. You create the listing, manage all customer service and take care of packaging, picking, return and shipping.


When to use it


I would recommend not to rely on Fulfilled by Merchant as your primary channel to sell on Amazon. The reason is that it can become really messy. Keep it as a backup listing just in case your FBA stock is empty and you need to ship a product last minute. Also, another reason is that these types of offers are not very well seen by A9, the ranking algorithm and it doesn’t help you to win the Buy Box either.


So when should you use this type of shipping?


When you are in one of these three situations:


  • Your item doesn’t sell often

  • It’s heavy

  • It’s very expensive



Fulfilled by Amazon Listing (FBA): what is it and when to use it


We have mentioned FBA above. Just repeat the concept: FBA is available to all third-party sellers. You upload your products on Amazon, then your products are sent to Amazon fulfilment centre. And when the customer places an order, the item is dispatched from the fulfilment centre, not from the sellers’ address.


All of this is paid to Amazon, it doesn’t come free.


When to use it


Use this method when you want to simplify the process of selling online and also maintain full control over the product listing information and price.


Remember also that Amazon promotes products that are listed via the FBA program and I show you an example.


If a buyer were to click to “Add to cart” to ‘work pants for men’ they would buy from the brand Dickies.


Note that on the image below the same product is for sale at a lower price but only Dickies has the “Amazon Choice” label.




Why does Amazon promote more expensive work pants for men?


Because they are fulfilled by Amazon is one of the reasons.


Amazon FBA gives lots of benefits to sellers, even though it has to be noted that to get the Amazon badge “Amazon’s Choice” there are other factors that come into play, which we will see in more details in Step 4.



Vendor Express / Vendor Central: when you are selling TO Amazon, not on Amazon



With Vendor Express your company can sell to Amazon and anybody can join. Amazon acquires products and sells them themselves, which means they decide on the end price.


When to use it


If you want to just on Amazon without the worry of shipping, customer care, returns, this is the way to go. You can take advantage of the large customers base on Amazon but you also need to be ready to sacrifice some of your margins.


To sign up go to https://vendorexpress.amazon.com/ and sign up. If you already have an account Amazon even as a customer, you can use the same credentials. I would recommend though, that if you sign up as a company, to use the company email address.




Because Amazon decides the end price, one of the disadvantages of Vendor Express is that the price of your goods will most likely be reduced, and your margins too. Amazon asks you to lower them even more for large quantities. However, let’s not forget that Amazon works to sell your items, which means they take care of promotion, distribution, returns, customer care, which saves you money.


Signing up to Vendor Express is a time-consuming process, Amazon requires lots of information about your products and this is sometimes discouraging for most sellers.



Dropship central: you sell it to Amazon, which sells it to the end customers, and you pack it and ship it to them.


In a simple sentence, Dropship works this way: Amazon sells an item to a customer, then it gives the seller the time to build it.


When to use it


If an item is expensive and sells only once or twice per year or is physically too large to ship twice, this can be a useful method. The seller gains the Prime designation, have to build/order the items only once Amazon has already sold it and the seller gains the SEO boost Amazon gives to the products it sells directly.




Amazon Store: your store on Amazon


Vendors and sellers can use Stores to showcase their products and collections to enhance the brand experience both on desktop and mobile.

Stores are not exactly a strategy, it is another advertising opportunity to showcase products and brands. But it’s important to talk about it now because some brands use two or more strategies together to boosts sales, and we will see in the next paragraph some examples of this.


Some advantages of using Stores are the following:


  • Take advantage of Amazon traffic

  • A potential boost of SEO and increase sales volumes

  • Ability to access new customers with pre-existing products

  • Opportunity to introduce your brand to new customers



“Amazon Stores” is a free self-service product that allows brand owners to design and create multi-page stores to showcase their brands, products and value proposition on Amazon.


The Store Builder tool empowers brand owners to create their own Stores in minutes and have them live within 72 hours. A simple, self-service interface means anyone can easily create a Store—no prior website experience required.


There are three types of stores you can create using the preset templates Amazon provides:


  1. Product Grid: a simple way to display product selection. The example above with Dickies is built with Product Grid.

  2. Marquee: Curated display with additional space for a selected image and copy of your products and customers quotes.

  3. Showcase: Ideal for brands that want the flexibility to create a more content-rich experience, this template allows brands to feature a broad selection of products and provides plenty of space for product information and visual content.



Hybrid methods: when 2 or more strategies can boost your sales


Here we are going to see one example of mixing methods to boost sales.


FBA and Stores


Dickies makes quality workwear and sells directly on Amazon through FBA. However, they also sell directly on Amazon with Stores.


Although most sales will likely go to Amazon, by creating what the algorithm sees as a competitive listing, Dickies is not only keeping Amazon’s stock in check but also has a backup listing in case of Amazon stocks out. Get all of the optimization gains by selling directly to Amazon and still not be dependent on Amazon to get the stock or price the product appropriately.


Also, Dickies is a very well recognised and appreciated brand in the US for work and outwear clothes and apparel. Probably many of Dickies customers buy those clothes because:

  • They trust the brand

  • Want to take advantage of Amazon Prime benefits and quick deliveries


This is why it makes sense from financial and brand perspectives for Dickies to mix their strategies on Amazon.



Step 5: Three techniques on how to master Amazon SEO



Amazon SEO is very different than Google SEO. This is the first aspect to keep in mind. We have introduced Amazon A9 algorithm in the previous section and we know now that search on Amazon is made purely because users buy something, so from a marketing funnel prospective users on Amazon are much lower in the bottom of the funnel and close to the purchase than users on Google. Which is great news for sellers!


In this step we learn how to optimize your product page so you get the following results:

  • Better positioning in search results for given keywords related to your e-commerce store;

  • Better chances of selling once users arrive on your product page.


Improve your conversion rate: includes prices, reviews and image quality.


Let’s start from when users arrive on your page and on how to improve conversion rates.

Sellers might think that the key metric is profit and this is partly true, profits are important to determine success. However, the Amazon conversion rate is actually the most important metric to measure because it gives you the idea of how well your efforts are influencing your success.


Also, the reason why the conversion rate is important is that it’s one of the Amazon SEO ranking factors. A spike in sales that your competition didn’t see will dramatically impact your ranking position.

This can be hard to accomplish if you have just started and you are ranking on page 20. Therefore I would recommend sending traffic to your Amazon product pages.


Tip: send traffic to your listing from Facebook Ads, Google AdWords and other channels to drive sales and improve conversions rates on Amazon

Customers’ reviews


It’s not enough to just send traffic though, it’s hard to sell anything if your listing is not optimized, which means getting customers’ reviews. Also, reviews, which 85% of consumers trust as much as a personal recommendation (according to BrightLocal), can be responsible for your ranking. You can notice the correlation between product reviews and positioning, normally products that have a large number of positive reviews are ranked on the top.

From this, we can conclude that having more reviews has an impact on click-through rates and can lead to more sales, which in turn has an impact on overall product ranking on the site.


So at the beginning you can also use third-party tools to get reviews, I like the following:


  • FeedbackGenius

  • SalesBacker


With these services, you can write custom email sequences to your buyers that help develop a customer relationship and ask for honest feedback and reviews.


Product Prices


As we said before, also the price is a ranking factor. It’s unfortunate that sellers have to give up some of their margins to rank higher and make more sales, but the reality is that if you have 20 competitors or even 80 competitors unless you are a very well known brand, customers normally choose the lowest price.


Images


Images are also very well known for boosting conversion rates. As Amazon says:


“Images should be 1,000 pixels or larger in either height or width. This minimum size requirement enables the zoom function on the website. Zoom has been proven to enhance sales. The smallest your file can be is 500 pixels on its longest side.”

Include high-quality images that follow these guidelines and you should have your product listing ranking to a point where your conversion rates don’t suffer.


Relevance: to rank higher your product needs to be relevant to great product titles and descriptions


As we have seen before, the A9 algorithm is returning results for a query. The result is based on relevance and on a strong match between product and query. But how do improve relevance?


Let’s see what Amazon says:


"Customers must be able to find your products before they can buy your products. Search is the primary way that customers use to locate products on Amazon."

"Customers search by entering keywords, which are matched against the information (title, description etc.) you provide for a product.”

So relevance is the result of several elements, mainly title and description as that two help determine where a product is located in the search results.


Optimizing for Title


The title is the most important element in your Amazon product listing, it can easily make or break your rank.

In the title the following elements should be added about your product:


  • Brand

  • Product line

  • Material or key feature

  • Product type

  • Colour

  • Size

  • Quantity


From experiments and experience, the product title can dramatically change a product rank in search results for the better if it contains also keywords.


Therefore I recommend making a list of important keywords and placing them in the title. Let’s see the example. If I search for “dog food”, I can see that ALL of these brands on page 1 have the same optimised title:


  1. Brand name first

  2. “Dog food” second

  3. Special benefits of the product

  4. Quantity / size




As we can see in these examples, an additional two things are evident:


  • The product titles are long (115-144 characters)

  • All those listings start with the brand name



Optimize for descriptions


Descriptions are not responsible for directly influencing rank, but they are responsible for conversions. And, as we have seen, conversions can influence rankings, we can definitely suppose that descriptions indirectly influence rankings.


How?


  • Relevant call to actions (Buy Now, Order today)

  • Talking about your brand and product

  • Adding keywords in the description


Bullet points go hand in hand with the product description. They are quick and easy to read because they are scannable. Tell customers about the benefits of your products (not your features).


Work your relevant keywords into these bullet points in a natural way, so as to add value to each tidbit of information about your product.



Amazon customer satisfaction and retention: support speed, managing negative reviews.


Customer satisfaction and retention are not directly linked to the A9 algorithm, but they are strictly linked to customer support. Amazon is monitoring how sellers reply, how quickly they reply if they comply with Amazon’s 24 hours reply window.

As we have seen in Step 1, if sellers are not equipped with customer retention and support, they will not have much of a chance of succeeding. Providing a bad product, which is not relevant to what the user paid for, can result in a bad review. And more bad reviews will decrease your chance as a seller to sell more.


How to manage bad reviews?


To manage positively product reviews, the first step is proactive monitoring: responding to negative reviews and highlighting positive ones show customers that you stand behind your products. Actively-managed reviews instil confidence in users and begin the conversation between customers and businesses.


But there are several types of bad reviews:

  • Really negative reviews

  • Minor negative reviews


Comparison shoppers like to see all the downsides in a product before purchasing: if they see that the worst flaws are minor, overstated or simply don't apply to them, it can actually make them more confident in the purchase.


If a customer expresses their unhappiness in a review, respond to their feedback and see what you can do to make them feel better about the transaction. This demonstrates that you take customers seriously and proves that, even if something goes wrong, buyers will be treated properly.

© 2020 by Luca Tagliaferro. All rights reserved.