Amazon wants to provide a smooth user experience for both buyers and sellers. Of course, the company does not do this purely out of the goodness of its heart; providing an optimal user experience helps maximise the online retailer’s profits.
There are a number of things that you can do to prepare if you are just starting out as a merchant on one of the world’s largest online marketplaces. In this article, we explain what these first steps look like and how you can overcome the most important challenges.
Product research: What sells well on Amazon?
Inventory can come from all kinds of sources:
- Merchants can buy items from local shops or from online retailers and then resell them on Amazon. This is also called retail or online arbitrage.
- Sellers can also buy products from a company and resell them on Amazon
- Manufacturers also offer their own branded products on Amazon
To find the right product to sell, you should do some product research. Take a look at the following criteria:
Manufacturing and purchasing costs and pricing strategy
First, ask yourself how much it costs to produce or purchase the product, and then ask how much you want your customers to pay. On the one hand, you’ll want to persuade your target group to buy, whilst on the other hand, of course, you’ll want to make a profit.
In the beginning, it can help to offer a product for the lowest possible price in order to attract buyers. You’ll also build a presence on Amazon, gain greater exposure and make your brand more popular.
Take a good look at your competitors’ prices. Can you afford to undercut them? Or would you like to offer your product at a higher price? If so, what is it about your product that justifies the higher price? Which pricing strategy you prefer is ultimately up to you. But think about it carefully. Don’t rush into the sales process without a plan in mind.
The sales rank shows how well a product is selling within a category on Amazon. Remember that merchants can list products in multiple categories. This means that an item may sell better or worse within one category compared to another.
A sales rank below 10,000 suggests that other products of that type are selling well. This is not an exact science, but rather rough market research.
You should not, therefore, let your sales rank discourage you or influence your decisions too much. There are a number of factors that determine sales success. However, the sales rank does provide a rough indication of how a product is performing on Amazon.
Decide on a sales plan
Amazon offers a number of selling plans to choose from. Before you register your brand on the platform, you should think carefully about which plan best suits your goals.
Choose from the following plans:
Individual Selling Plan
- You pay a per-item fee of £0.75
- This option is best if you sell fewer than 40 products a month, or if you have yet to decide exactly what you want to offer
- You don’t need to use any additional functions to help you with administration and sales
Professional Selling Plan
- This costs £25 per month, regardless of how much you sell
- Access to several sales functions is included as part of the plan
- You are allowed to use tools like Launchpad, which is designed to help beginners with sales, and Handmade, which supports sellers of handicrafts
Of course, you can also change your sales plan if you wish to do so.
Creating a seller account
When you create a seller account, Amazon will require the following information from you:
- Information about your product(s): Amazon will ask you a series of questions about your product(s). This includes the EAN number, which is checked against the GS1 database. You must also state whether you are responsible for the manufacturing of your product(s).
- Your stock
- The prices of your products
- Credit card information
- The email address of your company or shop, or your Amazon customer account
- Passport or ID card to prove your identity
- Business or company registration information with VAT number
- Telephone number where you can be called by Amazon during the registration process
- Your personal or business account information. This allows Amazon to transfer your sales revenue to you.
Tip: It is best to keep your private and business matters separate. Setting up a business email account will make it easier for you to do this.
Product category: What kinds of products do you sell?
If you want to sell on Amazon, you need to think about the type of products that you are selling. Whilst this may seem simple and straightforward, identifying appropriate categories for your products is critical if you wish to achieve sales success.
There are 20 sales categories to choose from on Amazon. You may also assign more than one category to a product, and you do not require approval to do this.
For some product categories and subcategories, however, you must apply for approval in order to protect the interests of Amazon customers. In this case, Amazon requires further information from the merchant and their company. You can find a detailed list of all of the product categories here.
Are you offering your products as a seller or as a vendor?
Most merchants start out as sellers, as opposed to vendors, on Amazon. Let’s take a look at the difference between sellers and vendors.
As a rule, the Amazon Vendor Program is only available to larger vendors. Amazon Vendor Central is an invite-only platform; sellers cannot apply for it. Once Amazon has accepted a seller as a vendor, the company buys large quantities of his or her goods and then sells these items to Amazon customers.
Under the vendor model, Amazon has full control over the sale of products. This means that Amazon sets the prices; however, it also takes care of shipping and helps promote the products on its platform.
The visibility of the product and the brand can increase and lead to more purchases, which in turn increases sales. However, these retailers need to be aware that they are ceding power over their products and many related aspects to Amazon.
If you choose to offer your products as a seller, you do so as a third party, and this is made clear to Amazon’s customers. Sellers use the Amazon Seller Central tool to list the products that they wish to sell.
Sellers can use the dashboard to set prices, place ads and manage all of their marketing efforts. They can use it to keep an eye on stock levels and orders
Amazon also allows you to use advanced product descriptions, A+ content and create a brand store.
The advantage of the seller option is that it allows you to retain more control over your product and your brand. However, you will have more work to do.
FBA or FBM?
As a seller, you can choose between two shipping models:
- FBA (Fulfilment by Amazon)
- FBM (Fulfilment by Merchant)
If you choose the FBA option, Amazon will take care of the storage, packaging and shipping of your products. You need to pay a fee for this, but it saves you a lot of work and storage space.
If you choose the FBM option, you will have to take care of storage, packaging, shipping, returns and customer service yourself. This gives you greater control over your business and your products, but it is much more work.
Creating product listings
If you want to make lots of sales on Amazon, you need to create effective product listings. These include the following information:
- Product title
- Bullet points
- Product descriptions
- Product images
Make sure that these elements emphasise the benefits of your products as much as possible. Each of these elements, with the exception of the product images, represent opportunities for keyword optimisation. Practising Amazon SEO helps ensure that you are listed for the relevant search terms, which makes it easier for your customers to find your products.
Pay attention to customer testimonials
Rather than being afraid of reviews, you should welcome them – even the less positive reviews.
Negative reviews give you a chance to address potential problems and improve your product or service. Your customers feel that they are being heard, and this generates goodwill and builds customer loyalty.