Selling on Amazon can be very rewarding. The sheer amount of traffic that Amazon attracts as well as the key features and benefits it offers consumers (Prime shipping, reviews, a wide selection of products) makes it the #1 shopping website in the world. If you are an online merchant, there are some key elements that you need to consider before becoming an Amazon seller.
Amazon as a Selling Platform and Competition Between Sellers
There are thousands of other sellers on Amazon. Before you even consider adding your products for sale on Amazon, you will have to do some research on who else sells your products and what the prices they offer compare. The Amazon marketplace is already very crowded. Manufacturers, resellers, suppliers and also Amazon itself might be selling the same products that you have to offer. Try to find out if you have a niche category of products for sale. A true niche is a product or category of product where you offer an advantage i.e. price, terms, shipping. If, for example, you are selling electronics and do not have very competitive prices, you are out of luck.
Also, some manufacturers will only allow a handful of resellers to sell their products on Amazon. You have to be careful about that as well. You do not want to upset your suppliers trying to sell on Amazon.
Commissions, Profitability and Reviews
Amazon fees are a bit steep. You should be ready to pay upwards of 12% commission for every order you receive on Amazon. Also, for any product that is less than $5.00, Amazon also charges a dollar per order. All these fees add up, so you must make sure that you have good margins on the products that you would like to sell on Amazon. I would make sure that you at least have a 40% gross profit margin to be able to sell on Amazon.
It’s also essential that you ship products fast and make sure that the description for the products you list are 100% accurate. You want to get as few negative reviews as possible since that affects your conversion rates significantly. If you have less than 95% positive reviews on Amazon, users will hesitate buying from you.
Methods of Uploading to Amazon
If you plan on listing just a few products (less than 50) on Amazon, it’s pretty easy to do so – even manually. The keys to great listings on Amazon are:
- Competitive prices
- Detailed descriptions
- Multiple images of the product from different angles)
- A video review of the product is a plus
- All packaging details and technical specs
- UPC Number (If you manufacture the product, you can buy UPC numbers online)
However, if you have hundreds and thousands of products to list, things can get a bit complicated. There are two ways to list items in bulk on Amazon:
1. The Inventory Loader Excel Spreadsheet Provided by Amazon
This method is pretty straightforward as long as you have one of these unique product identifiers: ASIN, ISBN, UPC or EAN. If you do not have any of these identifiers, you will probably need professionals experienced dealing with this issue..
However, if you do have one of the identifiers for every product you want to list, you can just use the Excel template provided by Amazon to list and validate all items. Just be careful; the instructions and the Excel template can get confusing with all the add-ons you need to install as well as the validation of the fields. Review the instructions using the link above and if you feel like you need help, contact us.
2. A 3rd Party Solution such as SingleFeed or GoDataFeed
Another option is to use a 3rd party feed integration system such as SingleFeed, GoDataFeed or ChannelAdvisor. The pricing ranges from $99 – $5,000 per month. To use these methods, you must still have product identifiers (UPC, ASIN, EAN or ISBN) as well as all details for your products. You must also have XML or API integration from your eCommerce site or internal inventory management system.
Requirements and Validation
Even if you can manage to figure out the methods above to upload your products to Amazon, you are still not in the clear. Amazon still needs to validate all the fields and approve your listings. For example, you need to get special permission to list Apparel items on Amazon. There are also limitations and regulations for listing other types of products. You have to know all these rules and make sure that all of your products are validated. You should also check Seller Central to see the status and identify and correct errors of the products you have uploaded.
The “Buy Box” Rule, Price Comparison and Automation
Once you have listed all your products on Amazon and managed to validate them all, your job is still not done. Now, it’s time to make money!
The most important elements to consider when selling on Amazon are (1) getting the “Buy Box” and (2) having the lowest price. If you are dealing with thousands of listings, it will be impossible to manage this manually. That’s where 3rd party tools such as Appeagle come into play.
Appeagle costs $99 per month and basically downloads all your listings from Amazon. It integrates with your Seller Central and updates your listings based on the rules you setup in your Appeagle admin panel. Some of the things you can do with Appeagle are:
- Update pricing based on rules.
- Automation to try and get the “Buy Box” on Amazon (Buy Box means the “Add to Cart” on the product page).
- Automation to beat your competitors’ lowest price by $0.01 (Lowest price gets the most action).
- Advanced pricing rules based on your product price.
- Reports and further improvements.
Amazon Fulfillment Options
If you have gone through all the steps mentioned above and set up everything correctly on your Amazon Store, it means you are now making good money and processing orders. The next step is to take the bestsellers that have over 50% gross profit and send it to Amazon for the “Fulfilled by Amazon” option. “Fulfilled by Amazon” basically means that Amazon stocks the items and ships them on your behalf. Since Amazon has millions of “Prime” members who receive their item free within 2 business days, most of these members prefer “Prime Shipping,” which means that the order is fulfilled by Amazon. This option will allow you to do volume on your best selling products.
The key here is to set minimum quantity alerts so that you always supply products to the Amazon warehouse and never let your best sellers go out of stock.
As easy as it might seem, selling on Amazon and making money is no walk in the park. You have to be aware of many details, technical issues, you have to integrate, automate and make sure that you have the right tools to monitor your listings. Competition is fierce on Amazon so you have to be on top of your game to turn a profit. Remember: if you do not innovate and automate, Amazon will make all the money. Contact us if you need help listing thousands of products on Amazon in bulk or optimizing your current listings. We can help!