The Amazon.com Merchant Platform
February, 2012
What Is A Marketplace?
Online marketplace-
Refers to a type of Ecommerce site where product and inventory information is provided by multiple third parties,
whereas transactions are processed by the marketplace operator. Online marketplaces have become a driver of new
business for online merchants that leverage them as channels for increased sales.
-Wikipedia
• Trusted Source
• High Traffic Volume
• Loyal Customer base
• Vast Product Catalog
• Shopping Destination
• In an Online Marketplace the seller primarily needs to focus on sourcing,
listing his inventory, managing orders, fulfillment and customer support.
• The marketplace platform takes care of the Technology infrastructure,
payment processing, managing fraud & risk etc
Examples of other Online Marketplaces include , Buy.com, Sears.com,
Newegg.com, Overstock.com, soon to be Walmart
Why Amazon?
Amazon has a desirable customer base
Amazon Customer Growth
• 152 million active customers world wide (*)
• 79 million monthly unique visitors in the US (Sept ‘11)
• 8.3 million daily unique visitors in the US (Sept ‘11)
Desirable customer demographics—Average household income:
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Amazon: $75K
Amazon / Consumer Electronics: $83K
Prime customers: $96K
Prime consumer electronics customers: $119K
71% are home owners; 41% have children in household
Why Amazon?
Amazon sales keep growing >40% YoY
$34.2B in revenue in 2010, +44% in 9M 2011
• Already $32.4B in 9M 2011
• Q3 Net Sales grew to $10.88 billion (+44% YoY)
• 54% of Revenues came from Non-Media (including Industrial & Scientific)
Historically,
Q4 is Amazon
strongest
quarter
Media
Non-Media
Why Amazon?
Third Party merchants play a key role in Amazon growth
In the first 9 months of 2011, 37% of units sold on Amazon
were sold by Third Party Merchants
Growth of 3P Units Sales (in %)
37%
Who Is It For?
EVERYONE
Whether you are a enterprise business or a stay at home mom Amazon.com will
allow you to tap into their 150 Million users to sell your product on their platform
Starting out selling on Amazon is easy because you can start with just one product.
•
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•
•
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Retailers
Manufacturers
Importers
College students
Stay at home Moms
Online Sellers
Books, Beauty, Music, DVD, Video/VHS, Baby, Camera & Photo, Electronics, Grocery & Gourmet Food, Health & Personal
Care, Home & Garden, Musical Instruments, Office Products, Personal Computers (in Electronics category), Toys & Games,
Software, Sports & Outdoors, Tools & Hardware, Video Games and Wireless Antennas
**Automotive, Cell Phones & Accessories, Clothing & Accessories, Jewelry & Watches, Motorcycles, ATV & Protective Gear, Shoes
** Amazon Approval required
How it Works?
Upload Your Product Inventory
With Selling on Amazon, it's easy to upload your inventory. Once you've registered use the Web-based tools,
a free desktop software application, or text files to get up and running fast.
Customers See Your Products on Amazon.com
Amazon.com is a leading web site and is a stop for millions of online shoppers. By listing your products on Amazon.com,
reach millions of potential customers every day.
Customers Purchase Your Products
Amazon.com makes buying your products a snap. With features like 1-Click and a brand millions of consumers trust, we help customers make quick, easy, worry-free
purchases.
You Ship Products to Customers
Amazon notifies you by email when an order has been placed. You simply pack and ship your item to the customer (unless you let Fulfillment by Amazon do the work).
Amazon Transfers Payments to You
Amazon deposits payment into your bank account, and sends you an email notifying you that your payment has been sent.
Costs
When your item sells, Amazon collects the sales price and shipping costs from the buyer, deducts a referral
fee of 6 to 25 percent of the sales price, and a per-item fee of $0.99. The $0.99 per-item fee is waived for
Pro-Merchant Subscribers.
Sale Price........................$100.00
Shipping Price..................$ 5.95
Amazon Commission.......-$ 8.47 (8% Consumer Electronics)
Closing Fee..................... -$ .99 (For non- Pro merchants)
Gross Earnings.................$96.49
**Variable Closing Fees Charged on Books, Music, Software, Video Games
•How Do I Get Paid?
After a sale occurs and you have sent Amazon confirmation that the order has been shipped, Amazon processes the payment from the buyer and credits your
net proceeds from the sale to your Marketplace Payments account.
•When Do I Get Paid?
Typically Amazon settles your previous days transactions and provides you a settlement report. Funds are then set to be disbursed within 1 weeks time.
If you're a new seller, there is an initial 14-day holding period before funds will be released from your Marketplace Payments account.
Product Detail Page
The Product Page
Live
How Do I List My Items On Amazon.com?
Add a Product Tool - Good
Under the Inventory tab, you’ll notice a link labeled “Add a Product”. This process begins
with a simple form that allows you to located the product already on Amazon, which is
necessary due to Amazon’s single product page per product. (If the product doesn’t already
exist on Amazon, you can create a new product.)
Seller Desktop - Better
Seller Desktop is a free desktop application that gives you a GUI for listing
your products. It is almost always quicker than doing them one-by-one
through the Add a Product tool. With Seller Desktop, you can list products,
create variations, and upload everything to Amazon when you’re ready.
Enterprise Integration - Best
Complete selling solution to Amazon integrated with an existing Order
management / CRM software. Ties into current EDI and Accounting software.
Inventory management, re-pricing , Order management, and post sale
management with integrated shipping solutions.
Listing A Product
Listing A Product Demo
Live
FBA (Fulfillment By Amazon)
Cant Pick and Pack? No Problem…
Fulfillment by Amazon is designed to help your operation succeed in fulfillment while you focus on your business.
Step 1: You send your products to Amazon.
You send your new or used products to Amazon's fulfillment centers.
Step 2: Amazon stores your products.
Amazon catalogs and stores your products in our ready-to-ship inventory.
Step 3: Customers order your products.
Step 4: Amazon picks and packs your products
Fulfillment by Amazon picks your products from inventory and packages them.
Step 5: Amazon ships your products.
Amazon ships the products to your customers from our network of fulfillment centers.
FBA Advantages
-Increased
sales
The reason sales increase when using Fulfillment by Amazon is that now your products can qualify for Amazon’s Free
Super Saver Shipping (meaning Amazon can offer its customers free shipping on your products with orders over $25),
AND Amazon can also offer its Amazon Prime members Free, Two-day Shipping on your products.
-Prime Eligible
When customers see "Fulfilled by Amazon" beneath your product listings, they know their orders will be fulfilled in a
secure and timely manner. Customers will Qualify for Free 2 Day shipping at no additional cost to the Merchant.
FBA items stand out on key Amazon.com pages with logos and text that emphasize Fulfillment by Amazon
-Reduced Shipping costs
Leverage Amazon’s volume when it comes to shipping costs. Amazon can ship your product to the end user faster and
cheaper than most fulfillment centers
Warehouse CostsSince Amazon is picking and packing your orders, there is no need to manage your own warehouse or fulfillment
center. You can literally work out of your garage
Returns / Customer ServiceOne of the advantages of using Fulfillment by Amazon is the use of Amazon's customer service to handle customer
inquiries, refunds and returns.
FBA Costs
•Inventory Storage .45 CU. FT/ Month
Amazon charges a fee to store your items until they are shipped to fulfill an order. An avg. DVD would
cost $0.02 to store for 30 days. They only charge you for the time the item is in the warehouse, so if it
sells in 15 days, your warehouse charge would be $0.01
•Order Handling –
Media Items do not incur a handling charge. Non-media pay $1.00 per order.
•Pick & Pack - Media items are charged $0.50 for items under $25.00 and $1.00 for items over
$25.00
•Weight Handling - The rate is $0.37 cents per pound but Amazon only charges you for the
actual weight of the item to the nearest pound. If a DVD weighs 4 ounces it would cost $0.37 cents in this
calculation. I am used to calculating the packaged weight for postage but Amazon uses the item weight
before packaging
Example:
Product: Kensington K72356US Mouse-in-a-Box USB Desktop Mouse
Weight: 1lb
Price: $19.95
FBA FEE
Item Price………………….…19.95
Amazon Commission………. 1.20
Order Handling……………… 1.00
Pick & Pack……......………... 1.00
Weight Handling…………….. 0.37
30 Day Storage……………… 0.01
Total cost to fulfill a 1 lb Package $2.38
FBA FEE
Follow Amazon’s Rules
Amazon has a low tolerance
Get to know Amazon’s rules. Getting banned is a bad idea, so follow their rules.
Mistakes That Will Get Retailers Kicked Off Amazon
• Manipulating ratings and reviews
• Marketing to Amazon Customers
• Substituting Items
• Counterfeit or Sub Par Merchandise
• High ODR (Order Defect Ratio)
Best Practices
Selling on Amazon Can be extremely profitable.
Follow these steps to ensure continued success
Provide Excellent Service
Check For Orders Daily
Be Flexible With Your Pricing Strategy and Promotions
Determine What Your Margins Are
Maintain a Low ODR (order defect ratio)
Make Use of Seller Central Reports
Remember to send your orders out within two business days
Maintain Positive Feedback
Sell Quality Product
Get ready for the Holidays
Helpful resources
• Sign Up For A Seller Account
https://sellercentral.amazon.com/gp/onboard/workflow/Registration/login.html?passthrough%2F&passthrough%2Faccount=fba_soa&passthrough%2FsuperSource=OAR&passthroug
h%2FmarketplaceID=ATVPDKIKX0DER&passthrough%2Fld=SC-30
• Simply –Amazon
http://simply-amazon.com/
• How It Works Tutorial
http://www.amazonservices.com/content/sell-on-amazon.htm?id=hm1&ld=AZSOAHelp#!how-it-works
• How To Videos
http://www.amazon.com/gp/help/customer/display.html/ref=hp_lnav_dyn?ie=UTF8&nodeId=200281720
• Getting Started Checklist
https://images-na.ssl-images-amazon.com/images/G/01/rainier/help/pdf/Getting_Started_Guide.pdf
• Fulfillment by Amazon Video
http://www.youtube.com/watch?v=HOicZ_AgsSA
Thank You!
Q&A
Eli Sakkal
Elisakkal@Gmail.com
Please feel free to contact me if you need further assistance with your new venture.