What You Need to Know Before Selling Your Product on Amazon
Amazon is one of the most powerful tools to help increase your sales and bottom line, but it can also be complex and frustrating. Understanding the platform’s key components will help you better manage your success on Amazon.
The Amazon platform has a complex ecosystem of rules and best practices. Understanding the following key points will help you ensure the health and success of your account.
How the Platform Works
As a customer, Amazon looks like one giant site, but for sellers it is actually broken up into smaller platforms depending on the type of products you sell and relationship you have with Amazon. Here are the main platforms people utilize to make their products available on Amazon:
Seller Central - For physical items (not including books sold by the author). This is the platform where most sellers will start. You can find training videos available on Amazon’s website to help you get started.
Anyone can open a Seller Central account and it provides a lot of flexibility for resellers and brand owners looking to sell on Amazon. Seller Central (SC) guidelines (SC):
- You set the price.
- You determine inventory levels.
- You are the seller of record.
Seller Central is the recommended platform for non print on demand physical products for most brands.
Vendor Central - For physical items primarily of larger brands (not including books). This platform is invite only. On Vendor Central, you sell your products to Amazon, who resells them for you on Amazon.com. Vendor Central (VC) guidelines:
- Amazon sets the price.
- Amazon determines inventory levels.
- Amazon is the seller of record.
Kindle Direct Platform - For e-books and physical books printed within the KDP (formerly CreateSpace) program. Kindle Direct Program (KDP) guidelines:
- You set the price.
- Amazon determines inventory levels.
- Amazon is the seller of record.
Amazon has other platforms available to sell physical products:
- Merch by Amazon - A print-on-demand platform for shirts and other merch
- Amazon Handmade - This platform is similar to Etsy for handmade and unique items
Each platform has its own login. Be sure to research the correct platform before opening your account.
Be Customer Obsessed
The most important thing to remember when trying to evaluate whether you can be successful on Amazon is if you can be in alignment with their core values. Amazon has 14 guiding principles. These principles are the foundation of many of Amazon's policies.
One of the most important of their principles is being “customer obsessed”.
If you focus on engaging for positive customer experiences, it is easier to abide by and understand many of Amazon’s policies. This ranges from shipping promises and return policies, to creating your listings.
Setting Up Your Account
Since most non-authors will be on the Seller Central platform, much of this article is tailored to that process.
On Seller Central, Amazon offers two selling plans: Individual and Professional. Before you begin registration, decide which plan is a better fit for your business. In general, if you are anticipating more than 40 sales a month OR you plan to use any third-party tools, you will want to choose the Professional plan at $39.99 a month. Amazon allows sellers to connect specific tools that can help with ad management, sourcing, inventory management, and feedback to your Seller Central account. This is done with a system called MWS. In order to access these MWS connected tools, you have to have a professional selling account at the monthly price.
*Important Note: If you have had an Amazon Seller Central account before (at any time) you will want to request permission to open a second account.
Sellers are misinterpreting Amazon’s announcement that it no longer requires permission for you to open a second account.
This is not carte blanche to open accounts. It is, in fact, Amazon abdicating its responsibility or liability for accounts that are set up improperly. We have a rash of suspensions in-house right now because sellers opened second accounts for the wrong reasons, or they were shut down for linked accounts because they did it incorrectly.
Sellers must understand they still need a compelling – defensible – reason for a second account and they have to follow all of Amazon’s rules. This is not a ‘Plan B’ account.
-Cynthia Stine, president of eGrowth Partners.
To enroll on Amazon Seller Central, you will be asked to provide the following information:
- Bank account number and bank routing number
- Chargeable credit card
- Government-issued national ID
- Tax information
- Phone number
Video call verification may be required for new accounts. Once your account is opened, Amazon generally will hold your funds in reserve.
Understanding Amazon Fees
Regardless of the type of products you sell, understanding the fees involved in selling on Amazon is essential. Amazon fees can be substantial, so it is important that you understand they work before you list your first product. Amazon provides a tool called the FBA Revenue calculator that can help you determine the selling fees for your products. Once your product is listed on Amazon, you can also use the Fee Preview Report.
You will hear anecdotally that Amazon takes about one-third of the selling price. While that often is the case, the actual fees can range from 10%-100% depending on the price, category, and size of an item.
The bulk of Amazon fees are made up of two components: the referral fee and an FBA size tier fee. The referral fee is a percentage based on a category; different categories have different percentages.
Fulfillment by Amazon (FBA) fees include shipping, handling, and customer service. This fee is only charged if you utilize the FBA program to sell your products. The size tiers is a flat fee based on the dimensions (length, width, height, and weight) of the product.
It is important to review Amazon size tiers before having packaging created for your products, whenever possible. Being over the size tier by as little as 1/8” can increase your fees 3-10 dollars per item sold.
You also need to consider storage fees. Storage fees are based on the nature of your product, its dimensions, and how long the item is in Amazon's warehouses before it sells. There is a small fee for products stored for a short time. Long-term fees, however, can become expensive very quickly at up to $6.90 per cubic foot for items stored in Amazon's warehouse for over 12 months.
Making Your Products Prime Eligible
Amazon Prime customers receive benefits which include free fast shipping for eligible purchases and exclusive shopping deals, among many other perks. Making your item available via Amazon Prime can increase your sales significantly. We have seen many of the clients within our agency increase their sales velocity by 300% or more, simply by having a Prime offer on their listing.
There are two main ways you can make your product available via Amazon Prime on Seller Central (items on Vendor Central and KDP are always available via Amazon Prime).
FBA (Fulfilled by Amazon)
With FBA, you store your products in Amazon's fulfillment centers, and they pick, pack, ship, and provide customer service for these products. FBA can help you scale your business and reach more customers.
Participation in FBA means your items will be Prime eligible. To utilize the Amazon FBA program you will ship your product to multiple designated warehouses across the country. This changes your logistics, so keep the following in mind:
- You can use partnered shipping and LTL shipping with Amazon for lower rates.
- You may be asked to send your items to multiple warehouses across the country.
- You get to decide how many of each item you would like to send in.
- The fees for Amazon FBA can seem high. Be sure to consider that the cost of shipping the item to the customer is included in this fee.
SFP (Seller Fulfilled Prime)
Seller Fulfilled Prime is the Prime program that allows you to deliver directly to domestic Prime customers from your own warehouse.
You will be required to send products via expedited shipping and abide by strict shipping deadlines. By displaying the Prime badge, you are committing to fulfilling orders with Two-Day Delivery at no additional charge for Prime customers.
Unfortunately, this program is currently closed to new applicants. However, you can put your name on the waitlist, and when enrollment reopens, Amazon will notify you at the email address associated with your account.
Outselling Your Competition
When it comes to your listings on Amazon, always keep in mind that customers are primarily finding your products through search. This means that your listings need to be optimized to drive organic traffic. Additionally, running ads and coupons for your products can show Amazon your product can sell for specific keywords. This increases your organic ranking.
When creating your listing:
- Make sure titles are keyword rich, descriptive, and concise.
- Use the featured bullets to improve indexing and conversion.
- Utilize all of the image and video allowed for your listing.
- Keep a copy of all of your listing copy and images, just in case.
Stock Outs: How can they destroy your business?
On Amazon, sales beget sales. If a listing has no stock available from any sellers, your competitors continue to get sales while you do not. This will, in turn, lower your organic ranking, which causes a drop in sales.
It can be a vicious circle that can destroy months of hard work. You want to avoid this at all costs, and Amazon has some great tools to assist you with inventory management. When a great listing is combined with a sound stocking strategy, monitoring and project and sales rotation gets easier. Make sure you follow all of these tips so you can maximize your total possible sales.
Starting on Amazon
If you want to sell on Amazon, it is essential that you take the time to do the research, and do it correctly. If you have time constraints, consider hiring a partner that can help you with Amazon. It is a time-demanding platform with a lot of structured data that needs to be monitored on the backend.
If you are looking to start your own business on Amazon, my recommendation is to start small. Be sure to research the shipping and category requirements for all products you list and sell.
Doing your research, being customer obsessed, and creating amazing listings are just a few steps along the way to increasing your sales and profitability on Amazon.