How Does Selling On Amazon Work For Brands?

Brands can leverage the traffic of Amazon for their own sales by selling directly on the platform.  Doing this can achieve more brand recognition and improve your sales and profitability, but it needs to be done the right way.  You might wonder how does selling on Amazon work, but getting your first sale can be easier than you think.

Individual Vs Professional Account

Your first decision is whether you want an individual or professional seller account.  I would recommend signing up with an email address that is different than your regular amazon buyer account so that if other people need access you are not giving them the keys to your personal buying habits.  This is your first hurdle to learning how does selling on Amazon work.

With an individual account, you can create an account for free and do not get charged unless something sells.  You can create new listings for your products, but you pay an extra $0.99 whenever something sells in addition to the selling fees.  You also have limited reporting and cannot use external software (usually) to manage your account.  If you plan to sell a few items (less than 40) per month as a hobby, this can be the right choice.

The professional account does have a fee of $39.99/month, so if you plan to sell 40 or more items per month, this is the right choice.  You also get more robust reporting and the ability to use 3rd party apps and tools.  You also can upload listings using a spreadsheet, which can come in very handy if you are making new listings for the catalog.

As a brand, you will likely want to create listings on Amazon for your products, regardless of whether you allow other sellers to sell your products on Amazon.  You can control the way the listing looks and the actual copy when you create the listing.  Having the ability to upload a spreadsheet to create listings is not only quicker but when someone changes your listing (it happens more than you think), you can re-upload the spreadsheet and “fix” the issues.

Shipping Yourself or FBA (Fulfillment By Amazon)

How does selling on Amazon work using FBA? FBA is a way of selling on Amazon where you ship the items into Amazon’s warehouses (and you pay to ship it there at a very reduced rate) and Amazon stocks the item and ships it when sold.  It does carry additional “pick and pack” fees that are close to the cost to ship it yourself.  It can depend on what you are selling on Amazon, but the convenience can often outweigh the extra fees.  Amazon also manages the customer service aspect so if an item is late, doesn’t deliver or other issues, they will work with the customer on a resolution.

You might wonder if it saves a lot of time to sell on FBA?  When you sell using FBA, you ship items together in a box, one time.  So if it’s 20 different widgets, you ship them all to the warehouse in one box.  You might have to ship different amounts to different warehouses (you don’t get to pick which one it goes to) but usually, if you ship 18 or more of the same item, it ships to the same warehouse.  Instead of taking the time to individually pack, label, and ship items individually to customers, you are doing it more in bulk.  

If you are a Prime member, you know that members prefer to buy Prime offerings.  Even when a merchant fulfilling the same item might be a dollar or two cheaper.  So it results in more sales with less effort.  

If you ship items from your location, it’s called FBM or Fulfilled By Merchant.  You are responsible for making sure the items get shipped daily regardless of the number of orders and your staffing.  This can place limits on 1-2 person operations because it’s hard to take vacations or days off if you have to ship product daily – Monday through Friday.  Shipping costs depend on what class of mail but you might spend anywhere from $4-$20 shipping an individual item.

How Can Brands Sell On Amazon?

How does selling on Amazon work for brands? As a brand, you are in many ways just like a regular retailer.  There are fees associated with each item that sells, so you often find higher prices on Amazon because the seller needs to recoup the fee and a profit.  As a manufacturer, you can have an advantage because you have a lower cost than someone who purchases the product wholesale.  This might allow you to sell the product at retail prices and make a higher margin.

The fees that Amazon charges for selling are easy to calculate using the FBA Revenue Calculator.  If you do not already have the item in stock, you can find something similar to the product you want to sell and it will give a good estimate.  The fees for selling on Amazon are related to the price of the item, so a higher priced item will have a higher fee.  You will need to plan on higher fees with FBA but the ease of selling through FBA often makes up for it.

How Can Brands Control Their Listings?

The best way to control your listing and what it contains is to establish a brand registry account.  This can be done if you have a trademark for your product and submit an application.  Amazon verifies the trademark and establishes the account.  This is not the same as an Amazon selling account and can be done regardless of your having a selling account.  Setting up a brand registry is the first step to controlling your listings.

Once established, this does not gate your listings or prevent sellers from selling your genuine product.  This does allow you to add video and EBC (enhanced brand content) to your listings that has been shown to increase conversions and sales.  This is one of the biggest features of having brand registry.  You are also able to use Sponsored Brands PPC and have the ability to advertise in placements that you cannot use in regular sponsored product ads.  You also can have a brand “store” where you feature your story and more about your brand in addition to your products.  This can drive more brand loyalty and sales.  

Selling on Amazon can be confusing and getting started is not always easy, but with a partner, you can find your way around the platform.  If you need an Amazon consultant to help you with setting up your account or launching PPC, schedule a call with us to learn more.