Selling on Amazon — Is It Worth the Trouble?
With Amazon holding over 49% market share for all US e-commerce sales since 2018 (yes, you read that right), in many ways, they have to be considered the pinnacle of modern-day business success stories. Their now-infamous growth has become the benchmark for what was possible at the dawn of the Internet, and something unlikely to ever happen again in quite the same way.
A proportion of these incredible sales go to their Marketplace sellers — small businesses like yours and mine. For those of us who trade using our own websites, or other e-stores, selling on Amazon could be a huge deal. But is it worth it?
As someone who sells on multiple platforms, here’s my overview of progressing to Amazon — which I personally did after selling both on eBay and my own website for an additional source of income.
Before you dive in headfirst
Think about what Amazon can do for you, and whether you’re a good fit for each other. We know as consumers that Amazon is all about price, protection, and efficiency. We shop there because it’s cheap, we know we can return stuff if it’s wrong, and we get speedy, reliable delivery (especially, but not exclusively, with Prime).
It’s important to remember these points when you’re considering whether to sell on Amazon, because these are the points you are trying to compete with Amazon themselves (as well as other marketplace sellers) on. The most important of them all is price.
The best way to learn whether or not you can compete on price is to monitor the prices of the products you’d be selling over the course of a month or so. In other words, you don’t need to have the lowest price today. Many Amazon Marketplace sellers come into their own when Amazon goes out of stock — yes, it hardly needs stating that for many items, you’re most likely competing with Amazon itself, with its huge buying power. Happily, the average price will usually fluctuate more than you might think over the course of a month, especially towards the holiday season, where there is such high demand.
Setting up your account
So, you’ve decided to proceed. Great news!
To set up an Amazon seller account go to https://services.amazon.co.uk and follow the process, which is fairly straightforward, except for two details:
Initially, you’ll be met with 2 main options:
- Monthly subscription plan, or
- Pay more fees on each purchase
As it may take time to get approved to sell in your categories (depending on what they are), I would suggest you avoid paying the monthly subscription at first. I had to get refunded this (and chase Amazon for the refund) because I was unable to sell in my entire first month due to their strict approvals system. However, once up and running, you’ll probably do the math and find that it makes sense to pay monthly due to the lower fees per sale.
Those of us who shop on Amazon will be pleased to know approval is needed to sell almost everything. For new sellers, it can be something of a deterrent, and one not you have to face on eBay, Etsy, or other similar platforms.
It took me around a month to get approval to sell shower gels, and it’s worth noting Amazon can remove this privilege without any reason, whenever they see fit, and become the exclusive seller of a product. The reason I wound down my activities on Amazon was that they became the exclusive seller of nearly all my profitable items (meaning the product wasn’t open to Marketplace sellers anymore). But of course, every product category is different, and it’s worth giving your own products a try.
Approval for most reseller items (products that aren’t made at home) will require invoices from trusted wholesalers (to prove your items are the real deal), and possibly written approval from manufacturers.
Are there existing product listings?
For mass-produced products, listings usually already exist. If you’ve sold on pretty much any other platform, you’ll be used to the annoying and persnickety job of creating your listings. Actually, on Amazon, a big advantage in their system is that there are only a handful of listings per product, and probably only one ‘main’ listing. This means you simply find your item using the GTN (barcode number), and then add yourself to the list of marketplace sellers for that item.
This is why price is so important on Amazon. Unlike other platforms where you can influence your buyers with sales patter, good photos, testimonials, or whatever it takes to sell the product, the only real deciding factor on whether you get sales — those all-important buy box wins (more on these in a moment).
For home-made products or unique items, the process is slightly different. You might have noticed the small line under the main bar in the image above: ‘I’m adding a product not sold on Amazon’. If items are homemade, you will need to add them to the Amazon catalog because they won’t already have a GTN/EAN. Certain categories are locked to home-made products (food and alcohol, for example), but the majority require a simple application for approval in much the same way as other items you may want to list.
‘Buy Box’ Wins
When you’re the lowest price for a product, you may be eligible for a ‘buy box win.’ This is also influenced to a lesser extent by your seller rating as well. A ‘buy box win’ is exactly what it sounds like — your business is featured as the go-to choice for a product on Amazon. If you think you can win a lot of ‘buy boxes’, it’s a great indicator that you’re well-suited to Amazon.
In this example, ‘BARGAINS-GALORE’ has the buy box for this product, so it is the featured price. If the bottom right product box is clicked instead, the other sellers for this item will appear. It would take a click on this small box to find your listing if you did not have the lowest price for this product, which emphasizes why price is so important on Amazon — most people are only going to notice the ‘buy box’ price.
Should you use “Fulfillment by Amazon”?
Something you will see dotted around in a lot of places is the option to upgrade your account to ‘Fulfilled by Amazon’ — touted as an amazing next-level option. This label means you’re the kind of seller Amazon loves, and you can even be awarded the Prime badge. Even though this will apparently increase sales by 30-50%, your internal alarm bells may go off as the costs to you also increase dramatically.
Here’s a video that explains the “Fulfillment by Amazon” system in more detail:
My advice is to see how well you’re selling on Amazon in general before trying this. You need significant volumes of sales to make it work, and quite considerable profit margins to take the hit for Amazon’s logistical fees.
A simple trick to boost sales
I did say price is the only thing that matters, and by and large, that’s true. But there is one other thing you can do as a new seller.
Next to your seller account on the buy pages, you’ll see a star rating. Interestingly, it only takes a couple of reviews to get a 5-star rating instead of text stating that you are unrated. Getting rated is critical to your success, since being unrated could put off a lot of potential buyers. By giving your existing clientele (or your friends) an incentive to make those first purchases in exchange for a 5-star review, you’ll see your generosity returned in spades in the form of new sales.
You should also use Amazon’s option to invite all your customers to leave reviews. While there isn’t the same kind of review culture on Amazon that there is on eBay, you will eventually build up a number of reviews.
Amazon vs eBay
I’ve mentioned eBay and personal websites as comparison points to Amazon. In particular, eBay offers a good comparison. Both companies are huge juggernauts of e-commerce. But how do they compare to each other?
Pros of Amazon:
- Minimal effort to list products
- Easy to be seen if you can lower your price enough
- Not as reliant on ‘knowing the system’ when it comes to listings
- No need to write your own sales copy for existing products
Pros of eBay:
- Easier to influence your sales with listings
- Rewards sellers with ‘top-rated’ status to boost sales and trust
- More control of pricing and setup
- Playing by eBay’s rules is almost guaranteed to see your business grow
- Easier to create an identifiable store and brand
Both systems have their benefits and work differently depending on what you sell. But let’s not forget the pros of having your own site.
Amazon vs. e-commerce websites
The main drawback of both Amazon and other marketplaces is control and ownership. They are great as supplementary incomes in addition to your website, but access can be taken away from you in an instant. While it’s not common for this to happen if you behave, the sad fact is, you don’t really own your business if you solely trade on these platforms.
Of course, it can be debated about what makes a business, but if someone (or even an algorithm) can take away a huge revenue channel at the click of a button and there’s very little you can do, then it’s far from ideal.
So while they can make great additional sources of income — maybe even superseding that of your site — you should always try to drive new customers towards your hub website to purchase directly from you, if you can.
On your own website, you can offer customers lower prices because you won’t have seller fees. You can also offer other incentives to buy from you, like discount codes, postage discounts for larger orders, subscriptions, and much more.
And here’s a tip to maximize your website sales if you also sell on the big platforms: if you include a leaflet or card inside every Amazon sale letting customers know about your business website, a small percentage of those customers will start buying directly from you in the future. It will be a small percentage because people trust Amazon and eBay to the point where they will pay more to buy from them, but slowly and surely, some will choose to buy from you directly. Add a coupon code to the leaflet/flier to track their success.
Should you sell on Amazon?
It can’t hurt to try. As I mentioned, Amazon doesn’t require any upfront costs if you choose the non-subscription option, and is relatively painless to list items in the right categories (although approval for some is slightly tricker).
Let us know how you get on. In the meantime, if you want to set up your own e-commerce store, check out our flexible Stellar Shared Hosting plans.