When you are a brand, it's important to protect your products. Selling on Amazon might be something that you are concerned about because you feel there is little control over it as a brand. In this article, I want to explain how brands can sell and be profitable on Amazon. I think there are 2 ways to do this:
- Sell directly – create an account and send items in as a 3rd party seller or working with Amazon as a 1st party seller.
- Sell through retailers/partners – selling to other businesses who then list and sell your products on Amazon as 3rd party sellers.
Amazon can be profitable because of the amount of traffic it receives. Each month more than 197 million people around the world visit Amazon.com Amazon had 49% of the US ecommerce marketshare in 2018 – more than ebay, walmart and apple combined. Add to that the fact that 95 million people have a Prime membership in the US and over 50% of sales on Amazon come from 3rd party sellers. It’s the 8000 pound gorilla in the online market space.
How Selling On Amazon Works
Let’s start with #1 – selling directly. This one is feasible if you have the staff to manage your account, or you use an amazon account management company like Wildcat Brand Management. You would sign up to be a 3rd party seller at amazon – go to sell.amazon.com to create an account and get started. You can choose to ship items your self (merchant fulfilled) or have amazon ship them – FBA or Prime shipping. Either way, you set up items and once they are available – either you ship them or ship the product to amazon and amazon ships them – you get paid when they sell after your fees. Fees depend on a lot of things, but it’s around 35% of the price you sell for. **Again, not an exact number ** You can use the Amazon FBA calculator to determine your actual fees for the item you are selling before you sell it.
How do you make money in this scenario? When you are selling on Amazon and you sell an item, your price is typically the MSRP or retail price, but your cost is usually 25% of that if you are using keystone pricing. So if an item costs you $4, you wholesale it for $8 and the MSRP is $16, when you sell it you are charged fees for the amazon marketplace (think of it like paying for advertising) and you have your cost for the item and the rest is profit. You 100% control the price of your product.
If you ship it yourself to the customer, then you have to deduct your cost for shipping (you can offer free shipping or charge for shipping). If you sell via FBA the fees are slightly higher and you pay to ship it to the Amazon warehouse (at a very reduced cost). But you have the convenience of not having to worry about getting it shipped and prime customers are very loyal to Amazon. If you are a small operation, this makes it easy to go on vacation or take days off and not have to worry about customer support and shipping for this channel.
In this case, you often have to create the listings and brand image. If you have a trademarked brand, then you can use your brand registry access to make the listing pop with Enhanced Brand Content and Videos. Either way, you are writing the copy unless you hire a company to create it for you. You are finding keywords and writing features and benefits of your product.
Option #2 is to allow another merchant/ 3rd party seller to purchase the items from you and resell them on Amazon.com or other platforms. In this case, you are receiving your wholesale price for the product with not a lot of risk for the sale of the product. If you have a trademark, you can easily have a brand registry and control some of the aspects of your listings. You may write the listings yourself or work with the 3rd party to create the listings. You want to work with them to ensure your brand image is consistent and presented in the correct way.
In this case, as part of selling on Amazon, you can establish a contract or agreement with the 3rd party to help with keeping the selling price at MSRP or above and other issues that might occur.
Profitably Selling On Amazon
To be more profitable on Amazon, you might want to do a few things to drive the demand outside of Amazon. You can use PPC (advertising) to get eyeballs on your listings on Amazon and increase sales, but here are some other ideas to drive some traffic.
- Be a proactive marketer. Being proactive means getting your brand name out there, doing lives and connecting with customers through emails. All of these things drive demand for your product and can build your brand as well as sales. Getting people on an email list on your website before they click over to Amazon is a great idea so you can market to them in the future.
- Be competitive and know your competition. Understanding your market means you know who you are selling against, what it costs, and what it retails for. You need to know your competition on Amazon and write your listing based on keywords that your buyers are using to find your product. You can create better listings using EBC and videos in your listings to really showcase your product to the consumer and increase conversions.
- Maximize your offerings. Add more products to Amazon so that you are grabbing as many of the sales as possible. Even if you sell to Brick and mortar stores, you can sell on Amazon and protect them with your reseller agreements for pricing limits. This makes sure that buyers don’t go into BM stores and search for your product and find it cheaper on Amazon. But the amount of buyer traffic on Amazon says it’s too big to be ignored.
- If you find out your product is already on Amazon but you didn’t create the listing or authorize sellers, you can work with a brand management company to ensure your brand is protected against unauthorized sellers or help manage the sellers you have on Amazon if they are not following MAP or MSRP.
If you are a brand and you want to get help setting up an Amazon account, you can click on the schedule a meeting tab to set up a time to talk, free of charge. We love helping brands sell more and be more profitable on Amazon.
Amazon is a huge eCommerce platform but it can be hard for brands to break through the noise to get sales. At Wildcat Brand Management, we manage your amazon account from A-Z so you can improve sales and you can go back to managing the rest of your business.