DO YOUR HOMEWORK BEFORE SELLING ON AMAZON
With myriad options and gray areas on the E-Commerce giant, how can you determine if your CPG product catalog and Amazon’s marketplace will fit?
Rebel suggests three important factors to consider BEFORE placing your products on Amazon.
Tip 1: Evaluate Seller Account Types. What will your relationship with Amazon be?
Amazon sellers have two choices: Vendor Central and Seller Central. Both avenues have pros and cons, and some companies utilize a hybrid approach and use both seller account types.
Vendor Central is an invite-only seller account, in which Amazon purchases your product wholesale and handles everything, including listing, pricing, and shipping the products. Amazon generally only extends this invite to larger brands where there’s a lot of interest from their consumers. While this option is optimally turn-key for retailers, it has its drawbacks: it lacks order data availability, there’s no pricing control, and there’s less flexibility in profitability adjustments.
A majority of Amazon sellers choose the Seller Central account. Seller Central mirrors the prototypical e-commerce experience in which sellers lists, prices and determine shipping solutions for fulfilling customer orders, similar to what brands do on their own websites.
This account type also has its positive and negatives. On the positive side, you have access to customer order data that’s invaluable to growing your brand. Also, you have full pricing and messaging control for your products. Drawbacks include determining your own logistics structure (which can be daunting if a company scales up quickly) and not receiving the “Sold By Amazon” designation, which studies indicate gives consumers more confidence in the product and can increase sales.
Tip 2: Do the math. Can you scale and make Amazon profitable?
Profit. That is why brands all over the world sell their products on Amazon: determining if you can be profitable on Amazon while playing by their rules is crucial. Amazon cares about the consumer first and it’s the largest marketplace in the world, which gives them complete autonomy.
There’s a litany of factors that determine true profitability on Amazon, but let’s focus on the basic fees all sellers encounter. (These fees don’t even include shipment and fulfillment costs.)
Referral Percentage (Featured Categories)
Tip 3: Competition, Competition, Competition
Amazon is a championship competition, and you should make sure you’re not too late to the game. For example, if you search for “batteries under $15” on Amazon, over 500,000 results are instantly aggregated. So it might not be a great idea to sell your company’s batteries unless you have huge brand recognition, or a unique selling proposition to help you stand out. Selling a niche product with few competitors makes it easier to win Amazon’s vaunted “Buy Box,” which by default selects the first seller for a product listing.
Do some simple Amazon product research for keywords/brand names of interest to your product. Pro tip: tools such as Jungle Scout and AMZ Finder allow you to dive deeper into product competition using predictive modeling based on sales velocity and Amazon search volume.
You probably have (just) a few questions about selling on Amazon. Rebel’s here to help. Contact us.