Although many ecommerce merchants consider Amazon to be tough competitor, some online shopkeepers can boost sales and send traffic back to their own site using two of Amazon's ecommerce services.
Selling on Amazon and Product Ads on Amazon are two Amazon services that many retail ecommerce businesses can use, taking advantage of Amazon's brand and web traffic to improve sales. In this "eCommerce Know-How," I will describe these services, explain how to use them to improve your business, and point out the potential costs and pitfalls.
Selling on Amazon is Like a Comparison Shopping Site, But with More Traffic
According to Internet data company, comScore, Amazon.com had more than 54.5 million unique visitors from the U.S. alone in January 2009. That amounts to a lot of potential customers searching on Amazon for products of all kinds.
For a $39.99 monthly fee, Amazon will let almost any ecommerce merchant upload inventory to the Amazon site, either manually adding items, uploading them as a text file, or using a free Amazon application. Your products will be listed alongside similar or even identical products on sale from Amazon or your other competitors much the same way that shopping or price comparison tools list a number of sellers and their offer prices.
Any of Amazon's 50 million monthly visitors can find and select your products, placing an order through the Amazon payment interface and shopping cart. This means that a customer might have products from your site, Amazon, and other online retailers all bundled together in one order. If that doesn't bother you, this Amazon service can send a lot of orders to your store.
Selling on Amazon Video
A Few Gotchas When Selling on Amazon
Although this service can be a powerful marketing tool, there are at least four things to watch out for when selling on Amazon.
First, Amazon can be particular about the products they list and offer little recourse when they (frequently) make a mistake. For example, Amazon refused to list a toy cap gun that I sell in one of my stores. I was told that it was a forbidden item. But my competitors had listed the identical toy. When I tried to communicate with Amazon, I was sent to a useless set of terms and conditions.
Second, Amazon will control the shipping prices, so you will need to pad your item's price. Perhaps, as a ploy to get you to use Amazon's own fulfillment services, selling on Amazon will force you into razor thin shipping prices, and make it impossible to recover the cost of your packaging materials. You can still turn a profit, but you'll have to watch your margins very carefully.
Third, only list profitable items. Many of your competitors are not using this tool well; in fact, they are undercutting their own profits. Just as with price comparison sites, some merchants are offering their products too cheaply, don't be part of the problem. List items with a reasonable profit margin built in; no one should treat ecommerce like a charity.
Finally, don't forget to factor in the monthly fee. $39.99 is very expensive. If you are not getting 100 or more additional sales each month from Amazon, you're not getting your money's worth.
Place Ads on Amazon
If you would rather not list your items on a competitor's site, but still want to take advantage of Amazon's traffic, consider placing pay-per-click (PPC) ads that will send customers back to your store.
The service is very similar to Google AdWords, but in many ways provides a more targeted audience. Amazon does require some minimum bids for popular categories. When this article was written, those minimums included:
- Apparel and accessories 30-to-50 cents per click
- Baby 15-to-25 cents per click
- Computers and peripherals 55 cents to $1 per click
- Electronics and office 40 cents to $1.25 per click
- Furniture 40 cents per click
- Health and beauty 60 cents to $1 per click
- Home and garden 15-to-70 cents per click
- Jewelry and watches 20-to-75 cents per click
- Sports and outdoors 25 cents to $1 per click
- Tools and home improvement 30 to 50 cents per click
- Toys 15-to-25 cents per click
Some categories require preapproval from Amazon before you can post ads, others will be up and running just a few minutes after you set them up.
Place Ads on Amazon Video
Summing Up
Many ecommerce sites can take advantage of Amazon's millions of monthly visitors by either listing products directly on Amazon or by running targeted PPC ads.
Related Articles
- Use Comparison Shopping Sites To Boost Leads
- The PeC Review: Shopzilla Is a Good Site That Could Use Better Instructions
- Amazon Exec On Outsourcing Fulfillment
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This article is filed under Marketing & Revenue Growth and has the following keyword tags: Amazon, multi-channel.
7 Comments
GoENGO_com says:
Armando, I'd like to hear how successful the Amazon selling program has been for small companies. We manufacture a small first aid-type product that sells for $7-13 at retail. Driving more traffic to our product is very important. I just wonder if Amazon will throw us on the bottom of the search results, resulting in our paying $40/mo. for almost zero promotions.
Armando Roggio says:
@GoENGO_com
I have two different experiences posting products on Amazon.
I first used it for a client. I was working freelance doing both marketing consulting and site development. The client sold a relatively high margin product, and Amazon was a smashing success soon accounting for a significant percentage of the business' revenue.
I also had a very poor experience selling relatively low margin toys via Amazon. Their shipping charges killed me because, as I mentioned in the article, Amazon set the shipping price, and I could never come close covering my shipping and packaging expenses. In general, I lost about $1 on every order.
The lesson is that not every form of marketing will work for every business. Savvy marketers are always testing, always changing, and always willing to fail--a little-- on the way to success. I would suggest giving Amazon a try (that was what I had in mind when I wrote the article). Carefully monitor your success and make a choice after you have seen it in action.
Lorraine Pierce says:
You guys always have incredible timing with your articles! I've been working on our first product feed for Amazon this past week. Launching a PPC campaign in the Beauty category. Hoping that it will have a higher conversion rate than our Google or Yahoo PPC campaigns.
We're kind of testing the waters with the PPC campaign. If all goes well, then we'll consider listing products directly on Amazon. However, that requires UPC coding for all our products, which we don't have yet. That also requires some dough for the UPC coding registration. So, the PPC campaign will determine wether or not we pursue that extra expense.
I am impressed with the traffic stats on Amazon. And that my particular category is not as flooded as other high traffic sites, like Ebay.
Thanks for the article, and your perfect timing again!
jnohl says:
Just wanted to mention that you can set your own shipping terms on Amazon if you sign up through their Seller Central site. You will have to explain to them the categories that you are primarily interested in, and they will send you an invitation.
Armando Roggio says:
@jnohl, Thanks.
Barbara Bowman says:
We've sold on Amazon for over 4 years. It is our experience that unless you have a high margin product (at least 3x mark up) there is not much left after Amazon takes their cut. With the Amazon commission taking avg. 20% of the purchase price AND 20% of the shipping cost there is not a lot (if anything) left if your margins are smaller.
Another important note about placement in their search. Although this has never been verified by Amazon, we notice that our orders come in "waves" so consistent that we suspect there is a "rotation" that goes on where Amazon shows your products one week and not the next. Further we do random searches for our products and sometimes we simply can't find them at all.
Last note regarding Amazon customer loyalty. We thought perhaps customers would come back and by direct from our web site but that is definitely not the case. Even if we offer a lower price on our site customers still stick with the familiar Amazon.
Armando Roggio says:
@Barbara Bowman, Great comment thank you. I am very interested in the "rotation." I may send an email to Amazon and ask about it.
