Selling on Amazon
Part 1:
A Beginner’s Guide
First Things First
When selling on Amazon, it is very important to understand Amazon’s
rules. Amazon is the market place and they are also the merchant. They
open the marketplace to third-party sellers but they still view the
customer as an Amazon customer and they have rules in place to ensure
that all customers get the best online shopping experience. Amazon
keeps track of things like order cancelations, late shipments, refund
rates, and, of course, feedback.
Sellers who do not meet these expectations and guidelines are subject
to suspensions and can even be permanently kicked off of Amazon.
Amazon is passionate about customer service. They would rather lose
revenue from poorly performing sellers than have unhappy customers.
I’d say it’s worked out pretty well for them so far.
Where to Start
Before creating an Amazon account
and starting to list products, read the
Amazon manual.
http://www.amazon.com/sell
Why Amazon Works
• Amazon has built a loyal customer base by
offering such great customer service
• Their third-party marketplace is organized,
standardized, and consistent
• Their seller policies ensure that only sellers who
perform at the highest level are able to maintain
seller accounts
• Leads to happy customers who want to buy from
Amazon’s marketplace over and over again
Amazon Sales Trends
Q4 2010
Sales up 37%
First $10+ billion quarter ($12.95 billion)
Amazon will continue to grow.
The time to get in is now!
Are my products a good match for
Amazon?
• It will be easiest to start selling on Amazon if
the products that you sell are already listed on
Amazon.
• If you sell new items and have multiple
identical units, you can list and sell on Amazon
quickly and easily.
• Just find your items, add your quantity, price,
and description and you’re done!
Notes on Listing Items
• When listing items on Amazon, it is important that the
item match 100%. The condition notes that you can
add are only for condition, not differences.
• You can’t list a five-CD set as ‘Acceptable’ condition and
say that disc number four is missing in the notes. You
can’t say that your MacBook Air is in ‘Good’ condition
but has a broken screen and no battery or charger.
• If you do this, the buyer can open a A-to-Z claim and
you will lose. If you lose an A-to-Z claim, you refund the
buyer, and the buyer keeps the item.
That’s Not Fair!
• As a seller, you may think that’s not fair. As a
buyer, you may think it’s the fairest thing in
the world. You didn’t get what you ordered, so
you get your money back.
• Sellers who don’t follow the marketplace rules
are punished. It ultimately creates a market
where the good sellers thrive and the poor
sellers are pushed out.
• Amazon is a buyer’s market!
Is it Hard to Maintain Amazon’s
Standards?
• I’m not trying to scare you; it’s really not that
hard. As a new seller, I just want you to be
sure that you know what is expected of you.
• Amazon is not eBay; they don’t play around
and give you 10 chances to learn how to list
your items. They expect you to read the
Getting Started Guide for new sellers.
• Learn the rules, list your items, ship your
orders; you’ll be fine!
Seller Accounts
• There are two types of seller accounts on
Amazon - Individual and Pro Merchant.
Individual Account
• Individual Plan (Sell Your Stuff). If you are
looking to sell only a few products or expect to
have less than 40 orders a month, sign up as
an Individual seller with Amazon which has no
monthly fee but instead a per product sold
fee of $0.99.
Pro Merchant Account
• Professional Plan (Sell Professionally). If you
expect to have more than 40 orders a month,
a Professional account provides you with the
tools and analytics to manage your products
on Amazon. With a monthly subscription fee
of only $39.99 plus selling fees on items that
sell, selling on Amazon is a low-cost, low
investment, incremental sales channel.
Which one?
As your sales or inventory increase, you may question
whether you should upgrade your selling plan to
become a Pro Merchant.
Here's a simple cost-benefit analysis that may help you
decide if a $39.99 subscription fee is worth it: 40 sales
per month = 40 x $0.99 fixed closing fee = $39.60. In
addition to off-setting your subscription fee through
the volume of your sales, you may also benefit from
the bulk listing and order management tools available
to Pro Merchants.
Fees – Open Categories
Fees – Gated Categories
Amazon ties their payment processing fees into the commission so there is only one
fee to calculate when setting your price.
You may sell in Tools & Hardware which is a 12% commission. Ebay charges listing
fees, 9% Final Value Fees, and Paypal gets about 3% so the fees are basically the
same. But you get a better price on Amazon so your margins are higher.
Super bonus: There is no such thing as a non-paying bidder on Amazon!
Why does Amazon have Gated
Categories?
Amazon wants a consistent marketplace that
their buyers trust.
Example: Amazon will not allow new merchants
in the Toys & Games category leading up to the
fourth quarter each year. They do not want their
customers to have a bad experience on Amazon
because a new seller doesn’t fulfill their orders or
a fraudulent seller taking advantage of the Q4
boost in sales.
IMPORTANT!
• If you want to sell toys in Q4 2011, start selling
now and establish yourself as an Amazon
seller. A good track record now will result in
opportunities later.
Fees Continued
Amazon allows sellers to charge their own
shipping to cover shipping costs. Book and
media sellers are allows to collect a fixed
shipping fee.
Amazon fees are deducted from your
payments account. You don’t have a bill at the
end of the month.
Payments
Amazon deposits your payments
directly in your bank account every two
weeks. You can request a disbursement
at any time.
I Sold Something! Now What?
• You’ll get an email notifying you of the sale
• Log in to your Amazon Seller Account and find
the order
• Print your packing slip, prepare your shipment
• Enter tracking information to be sent to the
buyer
• Confirm the shipment
• Done!
EBay vs. Amazon
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EBay strengths:
Auction listings (Amazon does not have
auctions)
Collectibles market (eBay is good for one-of-akind items)
Anyone can create any listing at any time
Other strengths?
EBay vs. Amazon
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EBay weaknesses
Constantly redefining itself
Variable fees, listing fees
Losing customer base
Lower prices lead to lower margins
Inconsistent listings and search results
Price buyers (can be high maintenance)
Other weaknesses?
EBay vs. Amazon
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Amazon strengths
Easier to list (when products listings exist)
Flat commission; no listing fees
Better prices
Better customers
Fulfillment By Amazon Program (stay tuned!)
Other strengths?
EBay vs. Amazon
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Amazon weaknesses
Hard to list one-of-a-kind items
Not a collectibles marketplace (yet)
Limited customer interaction (good thing?)
makes it difficult to market to your buyers
No auction type listings
Other weaknesses?
Think of it This Way
• When you compare eBay to Amazon in terms
of listing fees, compare them to casting a net.
When you have listing fees, even if they are
low, you have to take them into account and
they will limit the size of your net. You have to
catch enough sales to justify throwing your
net because each time you throw your net, it’s
costing you money.
The Amazon Net
• With Amazon, there are no listing fees. You
can throw as big of a net as you want. When
the cost of throwing your net is zero, you
don’t have to catch a lot every time you throw
it.
• Just throw as big of a net as you can!
Differences in Listings
• EBay
50 sellers, 50 items, 50 listings
• Amazon
50 sellers, 50 items, 1 listing
• Winner: Amazon
Easier to find exactly what you are looking for.
Consistent listings. Search results not jumbled
with unrelated items
Search DC9096: 726 results
(multiple sellers with multiple, identical listings)
Search: DC9096. 58 results
(All sellers with identical listings list under one page. Simple!)
New Merchant Offers
Feedback
• Feedback on eBay is very common, but less
common on Amazon. You can expect 5-10% of
your Amazon buyers to leave you feedback.
• Amazon is a 1-5 scale compared to eBay’s
positive/negative system.
• This means that even if you have all happy
customers, maintaining 100% positive
feedback on Amazon is very difficult to do.
• 98%+ on Amazon is equal to 100%+ on eBay
eBay vs. Amazon: Summary
• Amazon customers are very different from
eBay customers.
• On eBay, price is king and buyers will shop
around to try to save a buck.
• Amazon buyers know what they want and are
willing to pay a higher price.
• Prices on Amazon should always be higher
than on eBay.
Differentiating Yourself on Amazon
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You may see Amazon’s product pages and seller
offerings as only being differentiated by price. This is
not the case. There are many ways you can
differentiate yourself as a seller on Amazon including:
Feedback
Description
Price (not all buyers are price buyers)
Return Policy
Featured Merchant status
FBA (stay tuned!)
Creating Listings
• You are able to create your own listings on
Amazon, however you are restricted to listed
in the Everything Else category. Buyers can
find you here by searching, but your product
will not be categorized for customers to find.
You can upload pictures as well.
Adding Products to the Amazon Catalog
• You can add your product to the Amazon catalog
if your product has a UPC code. Just follow the
steps for creating a new product on Amazon and
enter the UPC code when prompted.
• This allows Amazon to keep a consistent
marketplace by easily identifying identical items
and listings. If you enter a UPC that is already tied
to a product, Amazon will take you to that
product page where you can then list your item.
My products don’t have a UPC and I
don’t want to list in Everything Else!
No worries! This is one of our best kept
secrets. Without this, we would not have been
able to leverage Amazon that way that we do.
You can BUY a UPC.
There are many sites that sell UPCs
Creating Listings continued
• Being able to add ANY new product to the
Amazon database is very powerful. You can be
the first to market with any item that Amazon
doesn’t sell
• Only problem is that other sellers can piggy-back
(leech?) off your newly created listing
• If a UPC costs you $20 and you sell 200 items with
that listing, it’s only $.10 per item.
• If you sell out or do not use the UPC for that
product anymore, you can change the Amazon
listing to something new. It’s YOUR UPC.
Questions?