Should we sell on Amazon?

[Madeira]

Good Morning,

I'm hoping to get some perspective regarding selling on Amazon. We received a call from them inviting us to sell on their site but I'm skeptical, for some reason that I can't put my finger on.

Can anyone offer any insight good, bad or neutral into selling on Amazon?

Thanks.

[jbart]

Re: Should we sell on Amazon?

It can really depend on the type of products you sell. I have been involved with multiple companies selling though amazon and integrated with Miva. If your products typically sell as individual items, or you can be priced competitively and offer free shipping then Amazon works well. If your items individually carry a large shipping cost or require freight transit it is more difficult to be competitive on amazon vs a standard website due to the lack of flexibility in the way they charge for shipping. One of the stores I worked with sold mostly small items that were inexpensive to ship and a handful of large items that were typically sold stand alone. This store did lots of business on amazon - up to several hundred orders a day during the busy season - and listed several thousand skus. Stone Edge Order Manager was invaluable in keeping inventory and shipping records posted properly when selling on multiple channels.

Another store that I was involved with sold mostly large items that carried a steep single unit shipping charge, but since they shipped freight after you purchased a few units the per piece shipping would become much more reasonable, Amazon has no way that I know of to modify shipping based on the number of units - It charges shipping on a per unit basis and then multiplies by the number of pieces. This made the pricing very high and non-competitive for orders of multiple units - assuming we priced it not to lose money on single unit sales.

Staying in the buy box can be a very competitive issue. If you are listing more than a handful of items i would look into the automated price comparison engines which will make it more likely your item shows up as the main option for customers. research the current offers in your niche and compare a few dozen items that you sel to what people are currently selling for from the buy box. If you feel you could not be competitive and get the box, typically with a lower price and faster advertized shipping, then amazon may not be the place for you.

I think some of the amazon merchants live be the creed: "Sell at a loss, and make it up in volume !" ;)

[nottheusual1]

Re: Should we sell on Amazon?

We didn't like them selling at "our" customers post-facto or promoting competing products - but that's the rub - they are Amazon customers first. Plus, I'm with jbart (above) regarding the merchant creed.

[Bruce - PhosphorMedia]

Re: Should we sell on Amazon?

To me the question is: if you can't compete on price, you have to compete on something else...namely service and perhaps even more importantly, service differentiation, which starts with having "customers" you can connect with. Used to be, that something like this was good, even to sell at a loss, because you could acquire a "customer". But to me, Amazon makes it more and more difficult for the purchaser to be YOUR customer.

[Madeira]

Re: Should we sell on Amazon?

Thank you to everyone for your replies.

jbart, Can you tell me what you mean by this? "Staying in the buy box can be a very competitive issue."

What is the buy box? I've never heard of it.

[papi34]

Re: Should we sell on Amazon?

What is the buy box? I've never heard of it.

http://www.amazon.com/gp/help/custom...deId=200401830

[nottheusual1]

Re: Should we sell on Amazon?

They keep hands in both your pockets!

[jbart]

Re: Should we sell on Amazon?

If you don't get the "Buy Box" you might as well not be selling on Amazon a lot of the time. At one time I was managing an amazon account that ran algorithms against the buy box 6 times a day for 3500 skus. If you cannot closely monitor or automate your buy box position Amazon will not give you the results you are looking for. As I said before I would take a cross section of the popular products you sell. Compare the buy box prices currently on Amazon, then subtract the fee % for your category, then decide of the remaining amount of profit is worth the investment of time and resources to become an active amazon seller. And don't forget shipping, a lot of items that win the buy box offer free shipping.

example:

widget A - currently sold on your Miva site for $120 + $5 shipping cost you $75 + $10 shipping = profit of $40 per sale

Widget A - Buy box price $100 with free shipping. Less 15% amazon fee ($15)= $85 - Cost is still $85 = profit of $0 per sale

That would not be an uncommon situation.

You would be better off lowering your Miva Site price and paying for inclusion in Google Shopping. Or just selling a lower number a the higher margin on your own site.

If you do become a seller you will find that some products you sell may be much more or less popular on Amazon than your other sales channels. Sometimes these hidden gems are enough to justify the entire program - but you cannot count on that.

[Madeira]

Re: Should we sell on Amazon?

Well....there's a lot more to think about than I realized. When you say the account ran algorithms against the buy box, do you mean checking the competitions prices?

Thanks for all your help. I did research online about Amazon for a few days trying to get a decent handle on it, and I received more info here after 1 post.

Much appreciated.

[jbart]

Re: Should we sell on Amazon?

Yes, comparing our price to the other sellers for that item and adding in shipping to get a total price, then checking to see if we had the buy box or if someone else had it. If we did not then our price would be lowered a certain amount to compete - but only to a certain minimum price we were comfortable selling it for.

If you end up with a really popular item inventory control can become very important too as during the busy season you could deplete your entire inventory of a product in less than an hour, but still be selling it on your Miva site at the same time. It is these kind of situations that make a 3rd party inventory solution that can handle both Miva and Amazon an absolute necessity.

[MattK]

Re: Should we sell on Amazon?

Like it has already been stated, a lot depends on what you sell. I am kicking myself for not selling on Amazon earlier. I am in a unique position because I design and make all of my products so I don't have a direct competitor (sort of). Anyways, I just started FBA (fulfillment by Amazon - they ship it out of there warehouses) and wow what a difference. As far as the increased cost, I just raised my price. I don't sell everything through FBA but price does not seem to matter. Lots of buyers don't want to get in their car, live in a rural area, handicapped, etc. so price is not as important. Also the shipping charges are far less or free to the consumer. If you don't know what FBA is, it is for PRIME members and there are a lot of them. Also, Prime members get second day shipping which seems to be the biggest hook. I am seeing a 30% increase in sales with FBA.

My Two Cents,
Matt

[Brandon MUS]

Re: Should we sell on Amazon?

Yes, comparing our price to the other sellers for that item and adding in shipping to get a total price, then checking to see if we had the buy box or if someone else had it. If we did not then our price would be lowered a certain amount to compete - but only to a certain minimum price we were comfortable selling it for.

Would love to hear more about this if you are able to share. Were you using their API (GetLowestOfferListingsForASIN/GetCompetitivePricingforASIN) or did you roll your own?

[jbart]

Re: Should we sell on Amazon?

No we were using a 3rd party service. There are several available. Each has different pros and cons depending on your business needs.

[JoeG]

Re: Should we sell on Amazon?

Be careful....unless you have unique products that Amazon can not source themselves, they will have the ability to analyze YOUR sales, pick your top selling products, then jump into YOUR market to compete with you!

This is not a rumor or hearsay, I've seen it happen.

Having said that, they offer you a giant marketing channel that is hard to match.

I don't have any experience with Google Shopping and would love to hear from sellers using that channel.