The Amazon marketplace gives online retailers big and small the opportunity to sell to millions of potential customers, significantly increase sales, and acquire loyal shoppers.
Competition on Amazon can be fierce. By some estimates, Amazon receives nearly 90 million unique visitors each month. Those visitors collectively spend more than $80,000 a minute all day, every day. And, according to Amazon, new marketplace sellers often see a 50-percent increase in overall revenue, when they sell on Amazon in earnest.
As with any retail channel, there are things that sellers can do to improve their chance of success. What follows are five tips aimed at helping online retailers sell more on Amazon.
1. Be Ready to Compete on Price
On the Amazon marketplace the key differentiator separating one merchant from another is price. This is a fact of doing business on Amazon, and is not necessarily an obstacle to profitability. Rather price competition should inform which products a retailer chooses to promote in the marketplace. Only list products with a sufficient margin to be competitively priced on Amazon and still offer a reasonable rate of return given inventory, order handling, and overhead expenses.
It is also a good idea to remember that selling on Amazon is a form of advertising. Promoting a product on Amazon does not, as an example, require a merchant to buy pay-per-click ads.
Imagine that a retailer is selling “Widget X” on its site for $10.00. That retailer is also buying PPC ads on Google and Bing at a cost of about 10 cents per click. On average, 5 percent of the PPC clickthroughs convert, meaning that PPC advertising costs the retailer about $2.00 per sale. After the PPC advertising, therefore, the retailer is really getting $8.00 for each “Widget X.”
Now imagine that this same retailer offers “Widget X” on Amazon for $9.25. There are no advertising expenses, and in a worst case, the retailer must pay a 99-cent listing fee. Thus the seller makes at least $8.26 for selling “Widget X,” and could be making much more if it has more sales volume.
2. Get a Pro Merchant Subscription
Amazon charges “Individual” sellers a flat 99-cents per transaction, but retailers with a Pro Merchant subscription don’t pay any per-transaction fees. Instead, Pro Merchant sellers pay $39.99 per month to list products on Amazon.
An Amazon Pro Merchant retailer with 100 monthly transactions would pay an average of 40-cents per transaction, while a retailer with 1,000 monthly transactions, which is not at all unreasonable, pays about 4 cents per transaction.
Amazon Pro Merchant subscribers also get four additional benefits.
- Upload in bulk. Pro Merchant subscribers can list items in bulk, meaning that rather than listing and maintain items one at a time, sellers can post their entire catalog to Amazon using spreadsheet templates or application programing interfaces — APIs.
- Enhanced reporting. Pro Merchant subscribers get better reporting options, which may make it easier to manage Amazon sales.
- More selling options. Pro Merchant subscribers may offer much higher value items, while “Individual” sellers have pricing limits.
- Unique items. Pro Merchant subscribers may add new, unique listings to the Amazon marketplace.
3. Add Unique Listings
The Amazon marketplace has a significant number of products available for sale, but it does not have everything.
Online retailers that have niche or unique products, and that have a Pro Merchant subscription, may add those products to the marketplace. These newly listed products have no competition on Amazon, so that sellers can offer the items at a relatively high margin.
4. Automate Listings
As mentioned above, Pro Merchant subscribers may list products in bulk via an API. This is a feature that successful marketplace sellers should use.
In the best case, use the API to integrate selling on Amazon directly into an ecommerce platform so that the platform automatically updates inventory levels and product descriptions on Amazon. Likewise, Amazon orders should appear in the ecommerce platform’s regular order processing workflow, so that sellers need do nothing extra or different to process Amazon orders and care for Amazon customers.
For many of the best ecommerce platforms, there are ready-made modules or extensions that make automating Amazon listings easy.
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5. Market to Your Amazon Customers
When a retailer makes a sale on the Amazon Marketplace, the shopper is an Amazon customer. But that retailer has an excellent opportunity to market to that customer, and, perhaps, earn long-term sales.
The best technique for converting a shopper may be to offer a discount on the customer’s next purchase. As an example, if the shopper just bought a “Widget X” for $9.25 on Amazon, send a post card with a coupon for their next “Widget X” for $9.00. Or send a postcard a coupon for some “Widget X” accessory at 20 percent off.