Amazon is one of the most popular company in the world that accesses 95 million customers monthly worldwide.
Amazon is one of the best options to sell a product to an existing customer list instead of putting extensive effort and expenses to get sales by personal promotion and marketing. Further to their existing customers, Amazon supports product promotion with keyword advertising and sellers pay when customers click on the product advertisement.
Amazon offers to sellers 2 methods: Fulfilment by Amazon (Amazon FBA) and Fulfilment by Merchant (Amazon FBM):
With Amazon FBA, sellers send their products to an Amazon warehouse for storage so that customers orders are dispatched by Amazon employees immediately. A faster delivery makes a customer even happier. Sellers pay expenses to Amazon for storing, processing and dispatching products, handling returned products and customer support. Money refunds for returned products are handled by the seller. Amazon FBA system helps sellers to manage inventory, shipping and customer service. With Amazon FBM, the sellers keep their products in their company and will handle orders, shipping process and costs (alternatively sellers supplier can ship the product to Amazons customer). With Amazon FBM there can be a better business to customer quality service since there is a better personal control of the selling process (orders, product handling, stock and delivery). FBM provides higher earnings with respect to FBA but with FBA there is a faster product delivery to customers. With Amazon FBA versus FBM, the number of sales is considerably increased.
With FBA Seller Central, the seller can label and ship products to Amazon’s warehouse (located in many parts of the world) and can also track stock (see above map).
FBA has 2 sellers plans. One is for individuals and one is for professionals (companies). Selling as an individual has no monthly fee and there is a charge $1 per sold item. Selling as a professional, there is a monthly fee of $39,90 and is suitable for selling more than 40 items/month. If a seller expects more than 40 items sold per month, then it might be best to consider opening account as a professional, since with individual account a seller would pay $1 additionally per item ($1X40 items=$40). With a professional account, a seller also gets marketing benefits like promotions, coupons, gift wrapping and shipping customisation per product types.
A greater advantage comes with Seller Fulfilled Prime Program to get more sales since it provides customers and sellers with a 2 days product delivery with free shipping. This feature offers a competitive advantage to a seller with respect to other sellers. Of course, a seller must meet certain requirements to be eligible for such program.
A further greater advantage is that Amazon provides also a Buy Box feature that increases sales considerably. This feature is determined by an Amazon’s algorithm and therefore it’s not as an option available on demand.
What a seller should consider:
- Research the best Amazon sellers and check their reviews one by one to differentiate from the massive competition.
- A customer must always remain satisfied in terms of product performance, quality, delivery condition and shipping time.
- Sellers must be aware of customs duties and taxes requirements for shipping their products to another country.
- Amazon’s customer reviews always enhance sales considerably.
- If many other sellers provide the same product, then profit margin is reduced. A seller must differentiate from competition with respect to products, features, shipping time, etc. It’s ideal if you offer a product that very few other sellers provide (it’s better if no one else provides it). You can also differentiate if you offer a bundle/set of products as one product.
- Amazon grants the right to the customer to return a product within 45 days and so seller needs to wait longer to get paid.
- Amazon stores millions of products. A good protective product packing might be a very good idea to avoid potential package/product damages (that can affect negatively customers satisfaction).
- Amazon provides space to sellers for storing their products and they charge per month. Therefore the smaller the product, the better the profit (unless high volume sales occur). At the same time, the heavier the product, the more expensive the shipping is. Thus a large and heavy product for $10 provides minimal profit with respect to a small, light product for $30.
- A seller is expected to connect to Amazon from one PC (security) and must not pay or artificially provide incentives for product reviews. Amazon can ban a seller for unprofessional actions.
- Check Countries Accepted for Seller Registration.
Further recommended research to do:
Learn more with the Udemy.com video tutorial How to Sell with Amazon FBA for Beginners.
Learn more about all selling guidelines in Selling on Amazon.com.