There are many reasons why selling on a massive marketplace like Amazon might be a good bet for your business. Here's what you need to know in order to decide whether it's the right solution for you.
Is Amazon right for my business?
Nearly 90% of UK shoppers use Amazon and most visit the website at least once a month. These are tempting figures. Yet listing and selling products on Amazon requires time and a financial commitment, so it must make commercial sense for your business.
For exclusive items or companies planning to expand overseas, Amazon can be a brilliant partner, offering huge pools of new customers and access to foreign markets. But for products with tight margins and high competition, you need to carefully weigh up the costs of selling on Amazon, as the platform takes a commission on every sale.
Another consideration is your capacity to deal with escalating orders, increased shipments and customer enquiries. For example, the platform expects sellers to respond to questions and queries within 24 hours, any day of the year, and this isn't always achievable for a small business.
How to list and sell your products on Amazon
1. Choose your product categories – more than 20 categories are open to everyone, while others require Amazon approval – see a full list here.
2. Decide on a Professional or Individual selling plan-the Professional selling plan is £25 a month, with an additional fee on every item sold that varies by product category. For individuals selling less than 35 items a month, there's no subscription cost. Instead, you pay £0.75 per item sold, plus other fees depending on the product category.
3. Register for a seller account and list your products
4. Set-up your shipping options - decide whether you will manage this yourself or through Amazon. Fulfilment by Amazon is the platform's own shipping service that picks, packs and ships on your behalf, as well as storing your products at one of their fulfilment centres. Costs vary depending on several factors, such as the size and weight of your items.
5. Start selling and promoting.
The benefits of selling on Amazon
• Enhanced customer experience. Amazon provides a slick customer experience – from personalised product recommendations to one-click purchases – which gives sellers the opportunity to put their products in front of a large pool of potential new customers who otherwise may be difficult to reach.
• Lower marketing costs. Standalone e-commerce websites have to spend a lot of money on advertising to attract people's attention. Amazon comes with an existing customer base.
• Shipping and payment support. The platform also manages all back-end infrastructure, such as payments, and offers technical support.
Things to bear in mind
• High competition. Amazon is a popular marketplace with thousands of products. Getting your items to stand out is a constant challenge.
• Commission fees and international currency exchange rates: Given Amazon takes a cut of every sale, you need robust margins in order to realise a return. And, if you do start selling to new international markets, keep in mind that you will receive payments in foreign currencies. Amazon can exchange these on your behalf, but they set their own rates so they might not be as favourable. You can also choose other providers to manage your incoming payments in foreign currencies. Find out more with our comprehensive guide to managing currency volatility.
• Amazon owns the customer relationship. Since their shoppers are not officially your customers, you can't analyse their data in the same way you can through an e-commerce site. This limits your ability to offer targeted discounts or personalised shopping experiences. However, you can track data through your Amazon sales dashboard, including sales by item, sales and orders by month, page views, and brand performance.
Beating your competitors
It's important to ensure your products stand out. This means crafting accurate and detailed product descriptions, being responsive to customer reviews and understanding your competition. If you're new to selling on Amazon, start by looking at what people are saying about competitors' products. Spot common problems or needs and consider how your product descriptions can be better tailored or articulated to address these.
Another avenue is Amazon Advertising, which displays your items as 'Sponsored Products' within search results. Amazon has lots of different options for this, depending on your budget.
Understanding Amazon's algorithm
Amazon's A9 algorithm decides where your products are ranked in search results based on your sales conversion rate, product relevancy and customer satisfaction. These are governed by factors including good customer reviews, the quality of your product images, descriptions and titles, order processing speed, and a high in-stock rate for your products.
To improve your product descriptions and titles, focus on keywords. These are the words shoppers use to find your products and you can discover what these are using tools such as Sonar and Helium10. These will show you the relevant keywords for your products alongside search volumes. Decide which ones to use and weave them into your product titles and descriptions. You can then track their performance using tools such as Amazon Keyword Ranking and Index Checker.
Whether you decide to sell on Amazon or not, selling overseas comes with its own set of challenges, including foreign exchange fluctuations that can cause you to lose money on your international payments, if you don’t plan in advance. Find out how American Express can support your business with cross-border payments.