Selling on Amazon

Part 1:A Beginner’s Guide

First Things FirstWhen 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 StartBefore 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 2010Sales 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

EBay strengths:• Auction listings (Amazon does not have

auctions)• Collectibles market (eBay is good for one-of-a-

kind items)• Anyone can create any listing at any time• Other strengths?

EBay vs. Amazon

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

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

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

• Amazon50 sellers, 50 items, 1 listing

• Winner: AmazonEasier 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

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?