With 6 million buyers visiting Amazon every day, it is tempting for a small business to explore listing their products to take advantage of this sales channel. However, it is not for the faint of heart. Here are seven secrets to a great selling experience:
- Select the right products. Try to find a product in your business that is unique enough that it can stand out, but will not damage your core business. Often the competitive Amazon environment finds you selling your key product on Amazon at a much lower price than you are selling it elsewhere.
- Actively manage your reputation. A poor product rating or seller score can kill your momentum. Always comment on customer low rankings. Try to use low-star comments as ambassadors to how you handle customer service.
- Create and defend your brand. Try to list products that have a brand you control. Then register your trademarked brand with Amazon. This will help keep competitive sellers off your listing.
- Aggressively get on the first page. Buyers will not typically go beyond one or two search result pages. The more you know your common search terms, the better you will perform. Also take advantage of Amazon-sponsored ads if they are cost effective. For seasonal products, introduce them before the season starts. The combination of low category volume, sponsored ads and a low introductory price will help your product move up the listings faster.
- Understand the buy box. Multiple sellers can be on a single listing. The lowest price gets the key selling default called the buy box. If you don’t have the buy box you will get very few sales. So early on, be tenacious about getting and keeping the buy box.
- Beware of parasites. Amazon is FULL of them. They are virtual sellers who will source similar products and jump on your listing. They will then lowball the price and take over the buy box. Even if they don’t get the low price, they will force you to sell at a loss, burn through your inventory, then take over your listing. Branding will help, but be prepared to face this problem.
- Weigh the pros and cons of FBA. Fulfillment by Amazon (FBA) is the preferred way Amazon wants you to sell. By sending inventory to Amazon and having them fulfill orders you get their Prime banner and no shipping hassles. If you don’t ship FBA you’re in for distorted delivery ship dates, lower sales and poor search results. Even if you choose FBA be prepared for multiple state sales tax hassles, and three to four week lead time to replenish your inventory.
While Amazon can boost your sales, be prepared for lower margins and the need for constant attention. Look for ways to use Amazon to augment your core business, not replace the success of your current business model.
As always, should you have any questions or concerns regarding your tax situation please feel free to call.