Amazon has over 310 million active customers , and over 150 million people use Amazon Prime. Thus, Amazon provides access to many markets, allowing you to reach a massive number of potential customers and attracts sellers with multiple amenities. However, selling on Amazon also means facing a large number of competitors (there are over 185,000 active sellers , considering only those offering more than 5,000 products), and abiding by stringent rules concerning customer service quality. No wonder that starting sales within this marketplace is on the one hand tempting, but on the other hand raises questions and doubts. We are going to try and resolve them in this article.
Many people view Amazon as a sales platform, a worldwide version of websites such as Allegro or eBay. In contrast to those, however, Amazon is a shop, so there are several different rules to be met when selling there, from setting up an account to shipping and customer service. Errors that you might get away with on other platforms may even result in a blocked account on Amazon. However, this does not discourage entrepreneurs. The latest fiscal numbers from Amazon show that the company made $75.5 billion in sales revenue in the first quarter of 2020. You must be well prepared to sell on Amazon so that you are not surprised by anything.
Sales on Amazon: Where to start?
You’ve decided that you want to enter foreign markets and chosen Amazon as your marketplace. What's next? Let's start with a few basics, such as setting up an account, selecting products, and creating a listing.
ACCOUNT SELECTION
We have two types of accounts to choose from:
- An individual account
- A professional account
The individual account is free; however, it allows you to sell up to 40 items per month. In addition, for each product sold, you pay $0.99 to Amazon–in addition to the commission, of course.
The professional account allows you to sell an unlimited number of products without a fixed fee for each item (except for commission), and it costs $39.99. The Pro account also provides additional privileges for retailers: It allows you to add products in an aggregated file and manually create product listings.
OPENING AN ACCOUNT ON AMAZON
Let's start with an essential piece of information stating that only companies can sell on Amazon in Polish conditions. Individuals do not have this possibility. This is an additional safeguard and a guarantee of quality, which does have influence on the trust customers have in the service. This safeguard guarantees that customers have the confidence that all items come from trusted, legally registered sellers.
Before you set out to open an account with Amazon, prepare the following :
- Business email address or Amazon customer account
- Chargeable credit card
- Government ID (identity verification protects sellers and customers)
- Tax information
- Phone number
- A bank account where Amazon can send you proceeds from your sales
- Finally, the account is activated after a phone call or by confirmation by mail
SELECTION OF PRODUCTS FOR SALE–USEFUL TOOLS
When conducting sales on Amazon, you will reach many customers. However, you will also be joining a large group of other sellers. Customers get to choose from among 12 million products. If you expand this to Amazon Marketplace sellers, the number is closer to more than 350 million products.
So how can you select competitive goods that have a chance to be successful abroad? It is best to use specially adapted tools to check sales trends as well as their potential. One such tool is Expandica, for instance. Expandica allows you to:
- Determine the popularity of goods
- Estimate the sales level
- Predict margins
- Analyze market presence
- Create a demand report
Other such tools include >Ubseller or Market Intelligence. You can get familiar with several of them to learn which one suits you best.
This way, you can also check the profitability of sales. Because you have to consider both the demand and the costs of maintaining the account, you will read about them in one of the following paragraphs.
Google Trends is also a practical tool, thanks to which we can learn about trends, as the name itself suggests. It does not provide hard data but allows you to observe the extent to which people in particular countries are interested in specific phenomena or products. Below, we present the chart for searching the word "running" in the UK. With an apparent increase at the turn of December/January as well as April/May.
Before preparing your offer, make sure that all your goods have assigned EAN, GTIN, or UPC codes in the case of craft goods. Without them, you will not be able to add the product to Amazon.
How to sell on Amazon? Fees, withdrawals, and commissions
The question of fees and commissions is a comprehensive one in Amazon's case. As previously mentioned, the account itself can be free (Individual) or payable (Professional)–$39.99. Additional fees are associated with the following:
- The Fulfilment by Amazon service–depending on the quantity/volume of goods in the warehouse and shipments carried out
- Additional services such as packaging (if you do not do it yourself)
The commissions that Amazon charges on the gross price of each item sold is yet another matter. They depend on the category in which we sell and sometimes also on the type of goods sold. For example, the commission for the sale of jewelry up to EUR 250 is as high as 20%, but for items over this amount, it is only 5%.
Most referral fees are between 8% and 15%. There is also a minimum sales fee of at least 30 cents per piece if, according to the price list, the commission should be less than that. Amazon's commissions are variable and regularly verified, so when creating a sales plan, you need to take into account the fact that Amazon may be charging more or less from our revenue in a year’s time.
All settlements with Amazon are made using a credit card (it is also possible to use a debit card) attached to the account. It is not possible to pay via PayPal or classic bank transfers.
Amazon makes payments to the seller's account after deducting the commissions due.
Step-by-step sales on Amazon: Creating a product listing
Amazon is a structured and enclosed system in which products of one type are grouped within one product card. When talking about one kind of product, we mean identical products with the same code, i.e., matching brand, color, and size. Thanks to that, everyone can check how many similar goods are on sale and how many sellers offer them on the product page.
In practice, this means that if we add a product for which a product card has already been created in Amazon (another seller has previously added a product with the same EAN code), our offer will be pinned to it.
For example, the card for this product (Crash™ Team Racing Nitro-Fueled) was created by a company that was the first to add its EAN code to Amazon. As the next seller, you will not be able to add a title or description, and your offer will be added to the listing in the Buy Box (bottom right corner):
To add an offer to an existing product card, simply select "Inventory -> Add a Product", search for an identical product, then click the "Sell yours" button and complete the necessary information about your product (price, shipping).
With your own e-commerce, you can also integrate Amazon with it, using many tools so you can add products, update their status, and manage orders without going into your Amazon account.
The buyer is redirected to the list of all sellers by clicking the link with the number of offers in the Buy Box (marked with an arrow on the screen above) and can choose from among them. However, clicking the "Add to cart" button right away causes the best offer to be added to the cart, which is not necessarily the cheapest one, but one with the most benefits, such as free shipping or same-day shipping. If a company's offer regularly wins the Buy Box (which means it is the best), it may apply to take over the product card to be able to edit it. In order to do this, you need to contact the Amazon Helpdesk.
Below, you will find tips on creating a product card, which is useful if you are the first to add a product to Amazon or take over the product card to be able to edit it.
📝 PRODUCT DESCRIPTION
Each product should be given a concise title so that the user can find it right away, without wondering whether it’s the item they are looking for. However, before creating the titles, we advise you to familiarize yourself with the Amazon sales rules because, in some categories, you may encounter slightly different requirements.
The titles themselves are highly descriptive, and according to the service guidelines, they should include the brand name + model name + product name + type + number + color/size.
Under the title, it is possible to add so-called bullet points, which will provide additional information about the product. It is best to distinguish the most important features of the offered item in these bullet points.
The main description is an extension of the above-mentioned features and functionalities where you can write whatever you want there to encourage your customer to buy. You have 2,000 characters at your disposal. The description (as well as the title and the bullet points) must be created in the languages of the country to which you are addressing your offer. If you don't know it well, find a copywriter who specializes in a given language. It is better not to attempt to save money on good quality product descriptions, especially at the beginning when you don't have any ratings yet.
The description should not only be flawless and clear, but it must also be legible and well formatted with crucial information provided in bold and bullet points.
Keywords should be included in all sections of the description: The title, the bullet points, and the main description. However, they should be used naturally. Excessively satiating the text with such keywords will not only be counterproductive, but may also discourage the buyer, much like an overly pushy seller does.
How do you know what keywords to use? There are easy-to-use, partially free tools that will show you which phrases are most frequently searched for by users:
On the Keyword Tool website, you can search for keywords by using a search engine and service. You can also check trends for individual countries. You can read more about how to use the tool in our previous article regarding eBay.
📸 PRODUCT PHOTOS
The Amazon product card can contain up to 9 images. The main image should adhere to obvious restrictions that are not worth breaking, as this may result in the blocking of your account. The main photo must have a white background. It must not contain any additional content, slogans, or logos. Other items not included in the offer cannot be shown in it. For instance, if you sell badminton rackets, you cannot show the birdie or net, but you can show, e.g., a box or a cover if it is included.
Images should be 1,600 pixels or larger on the longest side.
There are eight other pictures left to be added. This is not a large number, compared, for example, to Allegro, where you can add a maximum of 15. Therefore, choose them to tell as much about the product as possible and present its advantages in the best possible way. Remember that the consumer cannot touch, smell, or try a given item. They rely solely on descriptions and pictures.
You can use, for instance, infographics and close-ups on details. In the case of subsequent photos, there is more freedom allowed than in the case of the main picture. You can also use images with models in which the product will only be a part of the scenery but will allow you to show it in use or will influence the imagination of potential customers.
Read more about product photos here.
📬 SHIPPING PRODUCTS ON AMAZON
How does Amazon work in terms of shipping? Here, there is a relatively high degree of freedom. However, it is high if you consider the numerous restrictions and rules that Amazon follows in other spheres. There are three ways to ship an item:
- On your own, otherwise known as Merchant-fulfillment
- Using the Fulfilment by Amazon (FBA) service
Each of these solutions obviously has its advantages and disadvantages.
Merchant-fulfillment
Self-service shipping saves you money, of course, but you may find that it is only seemingly the case. Amazon requires at least 90% of orders to be shipped within at least two working days. It may turn out that this will require, for example, hiring an additional employee or result in constant stress related to ensuring you can do everything in time.
Amazon makes it somewhat more comfortable for you to carry out shipping yourself. There is the option of paid and free shipping as well as direct label printing for couriers from your seller's panel.
When you’re operating in this model, you can decide to work with an external logistics company. It is also becoming increasingly popular among e-commerce owners to use the services of external logistics companies, which operate similarly to the Fulfilment by Amazon service. The goods are therefore stored in an external warehouse, and once an order is placed, it is completed and sent to the customer.
Fulfilment by Amazon (FBA)
Since Amazon introduced the requirement regarding the two working days for shipping, many retailers have decided to use FBA as their only guarantee to meet these requirements. Sellers using Fulfilment by Amazon send their products to Amazon's warehouse, where orders are stored and then packed and shipped. So, the service really does allow the seller to be relieved of a considerable burden, not only in terms of shipping but also in terms of storage space. Thanks to this solution, sellers can reduce some of their fixed costs. Additionally, Amazon also honors returns and complaints.
Amazon is strongly promoting this solution, which is why, thanks to the FBA, retailers also gain the following:
- A higher position in the product ranking
- Free shipping for Amazon Prime members
- A possibility to win the Buy Box
FBA fees are highly individualized, as they depend primarily on the storage space occupied and the number of orders. In addition to the sales fee, Amazon charges two other types of payments, and they are for:
- Processing the order
- Storing the products
Both can vary depending on several factors, including seasonality (storage in the Amazon warehouse becomes much more expensive in the fourth quarter during the holiday season) and product subcategories (e.g., FBA charges an additional $0.40/product in the case of clothing brands). Besides, Amazon imposes fines for non-compliance with the packaging and labeling guidelines for parcels.
Read more about logistics here.
📢 Sales and advertising on Amazon
It is hard to imagine selling on Amazon without advertising, especially at the beginning in the case where your offer is not niche and competing with prices can prove to be deadly for your margin. There are three types of Amazon Ads:
- Sponsored Product Ads: On Amazon, this advertisement type works almost the same way as it does on Allegro. The products covered by this type of ad are displayed at the top or bottom of the list, so they are more visible to the user–they also include information that the offer is sponsored. Payment works much like it does with Google Ads, i.e., we only pay per click (CPC), and we select products for advertising by keyword. At first sight, it isn't easy to distinguish them from ordinary offers.
- Headline Search Ads: This option allows the promotion of three products simultaneously. It is not only a promotion of products but also of your brand. A rectangular banner with a logo is displayed above the search results, and next to it, there are three selected products shown with a title and rating. However, it is better to leave this form of advertising for later, when you get to know the whole "ecosystem" of sales on Amazon and find out which products are worth advertising in this manner.
- Product Display Ads: They are displayed in specially designed spaces on product and category cards. They appear in two places, both under the "Add to Cart" button and under the description. A great advantage of this form of advertising is the possibility of targeting it on the basis of purchasing intentions, thanks to which you can promote, for example, sports socks to a person looking for shoes, or offer goods competitive to those they are watching. However, this form of advertising is only available to Amazon Vendor program participants.
- Video Ads: They are reserved for the largest players only. They are a display and video advertisements that are displayed not only on the Amazon home page but on all other pages belonging to the user.
These types of advertisements are managed via the Campaign Manager.
🛑 Account blocking
The web is filled with desperate questions, "Why did Amazon block my account"? Indeed, Amazon strictly adheres to their rules, and they sometimes block the seller's account if the seller does not act according to the rules. It is best to learn from other people's mistakes, as it will enable you to easily avoid similar ones.
In order to sell without unpleasant surprises, you should do the following:
- Process 90% of orders within two working days,
- Respond to a minimum of 90% of inquiries within 24 hours
- Select product images correctly
- Use the correct company name to which you are entitled
On the other hand, you cannot:
- Use customers' e-mail addresses and their phone numbers in a way different than specified in the regulations–the phone numbers are intended for couriers, and the seller is not allowed to communicate with the customer this way
- Create several accounts
- Offer counterfeit and prohibited products
The reason for having your account blocked may also be the return of the goods caused by the following:
- Damage
- Receiving used goods
- Non-compliance of goods concerning the photographs or descriptions
- Shortages in the shipment
🔓 REMOVING THE LOCK ON AMAZON
Amazon usually tells you that you have 17 days to appeal an account suspension, or they will close the account. If you have not successfully appealed in that time, Amazon needs to put you on a 90-day clock to determine a date for disbursing your final funds. During this period, not only can you not sell, but you do not have access to your funds collected on Amazon. The most important thing for the store is the relationship with the customer, and keep in mind that the customer is always right, even if you are the one who is right.
So, don't deny it. Don't blame others. It won't help. You must show remorse and express your willingness to correct the error while doing your best to actually fix it! You can see what went wrong on your account. Maybe you have too many negative opinions, too many returns, or are too slow to provide answers to questions?
If your account is blocked, you must not create a new one. Instead, thoroughly explain the situation, find the reason, and contact Amazon.
Selling on Amazon: Summary
- Amazon differs from platforms such as eBay or Allegro in that they are a shop, so there are many different sales rules on Amazon, starting from setting up an account to shipping and customer service.
- Before you start selling on Amazon:
- Choose the type of account
- Prepare appropriate documents, e.g. a photocopy of your ID card or the credit card
- Get acquainted with the fees you will have to pay and the commissions charged.
- When preparing the product listing, you must consider the preparation of appropriate descriptions (in the proper language, including keywords) and high-quality product photos.
- When selling on Amazon, there are three shipping options for your products:
- Merchant-fulfillment
- Fulfillment by Amazon (storage and shipping by Amazon)
- To push yourself forward on Amazon, advertising is practically a must. There are many options: advertising a specific product, advertising a set of products (e.g., from one brand), graphic or video ads.
- Amazon strictly follows its rules and blocks accounts of sellers who do not act in accordance with the regulations. However, if this happens, you should explain the situation, find the reason, and contact Amazon.
