Amazon is one of the largest online marketplaces in the world. From small mom and pop shops to the Fortune 500, Amazon is where you can find them all. And that makes sense, especially considering the fact that the platform attracts hundreds of millions of buyers every year.
The numbers below speak for themselves. There is no question about it ─ Amazon is on fire:
469,8 billion USD
The platform has a daily (!!) turnover of more than 1 billion USD. In 2021, turnover amounted to a record-breaking 469,8 billion USD.
300+ million customer accounts
There are 300+ million active customer accounts worldwide. So there are more Amazon customers than there are people living in Spain, France, Germany and the UK combined!
5th largest marketplace in Belgium
Amazon is making great strides in Belgium. For example, Amazon’s French online segment is currently the 5th largest marketplace in Belgium. Amazon is also opening its first Belgian delivery hub in 2022.
So, to say that Amazon is doing okay would be an understatement. The numbers clearly show that there are numerous opportunities when selling on the platform. But what exactly is the reason behind its success? And why would it be a shame for you to miss out on joining Amazon?
Amazon is one of the most visited online stores to exist… ever! And consumers’ search behaviors are shifting more and more from Google to Amazon. For example, 63% of all product-related searches in the USA take place directly on Amazon. Belgium and the Netherlands will no doubt follow this trend.
The bottom line is that you are no longer reaching the majority of your consumers on Google! Nowadays, more and more consumers are ‘Googling’ directly for products on online marketplaces such as Amazon. So why would you want to steer clear of those?
A large portion of your potential buyers typically come into contact with new products through online marketplaces such as Amazon or Bol. Are your products not listed on those? Then you are creating a blind spot in your potential market share. 80% (!) of Belgian and Dutch consumers discover new items and brands through online marketplaces such as Amazon. Do you really want to miss out on that?
Do you want to start selling on Amazon? You can do so without start-up costs or hidden snags. You can set up an additional online sales channel in just a few clicks! And in doing so, you will get to introduce your products to thousands of potential buyers, for free.
Amazon’s model is based on commissions: for each product sold, you give Amazon a small piece of the pie. There are no upfront costs involved and therefore you’ve got nothing to lose in joining the platform. You only pay once you start to actually sell products.
The entire sales process takes place on Amazon’s state-of-the-art platform, where consumers can make purchases in a well-thought-out, reliable and optimized environment.
Don’t have any experience selling online? Amazon offers support in terms of customer service, logistics, data analysis, inventory management, advertising and financing…
Don’t worry about whether or not consumers will actually find your products amongst the huge selection on offer. Amazon has a comprehensive advertising platform that you can use. We will discuss this in more detail later on in this guide.
In short: Amazon’s success is no surprise. The platform responds perfectly to the market. They deliver quickly, have a functional website, competitive prices and a huge selection.
Moreover, Jeff Bezos understands better than anyone else that the entire buyer’s journey that consumers go through is shifting to online marketplaces such as Amazon. Across the globe, 46% of all online transactions are already occurring through online marketplaces. In Belgium and the Netherlands, that number is currently only at 12 and 16% respectively.
A bright future awaits companies from the BeNe-region.
Provided that they take full advantage of their early-mover advantage…
Are you ready to future-proof your business?
Find out how to start selling on Amazon right here.
If you are active on Amazon, there are two possible positions from which you can sell: Vendor or Seller. In other words, first-party sellers (1P) and third-party sellers (3P). Let’s go over the different options, so that you know what is the best way for your business to sell on Amazon.
These are the 1P vendors who are invited to join the Amazon platform, meaning this is an invite-only group. Vendors have a wholesale relationship with Amazon. This means that Amazon orders products in large quantities from the Vendors. Afterwards, Amazon itself is responsible for sales prices, stock management, deliveries, customer service, returns of goods, etc.
One downside to this model is that Amazon Vendors relinquish control completely. Once Amazon has purchased your products from you, you no longer have any say over what happens next. This sometimes leads to unpleasant situations, such as Amazon putting your products on offer for cheaper than on your own website or in other countries, without your permission. You have smaller margins on your products and payout is slower than with 3P sellers.
On the other hand, Vendors’ products usually sell well from the get-go. This is because Amazon ensures good organic rankings for their own products. If you are an Amazon Vendor, you are automatically part of the Prime service: unlimited and free delivery, with no minimum order value.
Most of the total sales on Amazon occur through Sellers. 56% to be precise. These 3P sellers market their products directly through Amazon. The portion of sales on Amazon occurring through Sellers also increases year by year.
This makes sense, because maintaining control of your own product sales is the more obvious choice. That way you stay in control of your inventory and your pricing, while enjoying a direct payout from Amazon whenever a sale is made.
The downside, however, is that without the right strategy and support, Sellers are less likely to get the results they want early on. They will first have to convince the Amazon platform that their products are ‘worth it’. We will go into more detail regarding how to organically rank higher on Amazon later on in this guide. Or you can enlist the expertise of a marketplace agency ─ like Merkado.
In terms of inventory management, Sellers have two fulfillment options:
There are also different options when you go for the FBA model:
However, it is important to keep in mind the difference between FBM and FBA. While FBA will cost you more money, it also comes with a number of benefits:
To summarize, there are three possible positions from which you can sell on Amazon: Vendor, FBA seller and FBM seller. But if you are only just starting out selling on Amazon, it is more likely that your choice will be between the latter two.
You now know the positions from which you can sell. But, once you start selling, what does that actually look like?
When a consumer wants to purchase a certain product, they will first go through the product page. It is crucial for sellers to have a clear understanding of what that page looks like. Because you will have to set this up by yourself as part of the product listing ─ more on that later.
1. A full photo of the product
Recognizability is the most important factor here. A clean photo of the product, without any packaging and with a completely white background, works best. Add additional images from different perspectives for optimal results.
2. The product name
Make sure your product name is easily recognizable to buyers. The more the product name matches their search behavior ─ and thus the more recognizable the name is ─ the faster consumers will find your product page.
3. The price
Here you will find the price of the provider who has made it onto the Amazon buy box. If a promotion is being run for the product, then the price discount and the remaining duration of the offer will be shown here. We will talk more about the buy box later on in this article.
4. Product variations
Is your product available in different colors, sizes or scents (e.g. for candles)? Then this is where a potential buyer will discover all the options.
5. Product information
A bullet point overview that briefly describes the product’s key features and benefits. Be as complete as possible here. Strong product information is crucial to increasing your conversion rate.
6. The buy box
Here you can see which distributor you would be buying this item from if you add the product to your shopping cart. If there are multiple sellers, you can compare them when you scroll down the product page a little bit. But 83% of all sales happen directly by clicking the buy box
On Amazon, multiple sellers can sell the same product. However, each individual product will be shown to consumers only once. The buy box on Amazon determines which seller gets to sell a particular product. It is a crucial component of the platform, because each product only has one product page, and therefore only one buy box.
In order to ensure that its platform offers the highest possible quality, Amazon rewards sellers who provide customers with the best experience. Only the ‘best’ seller gets to sell the product. The Amazon algorithm determines who gets to wear the crown and gets to see their name pop up in the buy box. To do so, it relies on a bunch of different factors. We will go into those in more detail later on in this guide.
We’ve spent plenty of time talking about how ‘fantastic’ selling on Amazon is. However, there are a few important things that you should carefully consider before getting started. Because Amazon is by no means a magic pill for your business.
Let’s take a look at two crucial questions that you should ask yourself before you decide to start selling on Amazon.
You can’t just sell any random product on Amazon and expect it to be a smashing success. However, for certain products it is pretty much a sure thing that they will sell well on Amazon. Ask yourself these questions in order to figure out if your product will sell well on Amazon:
Are you going to start selling on Amazon? Then there are several costs you need to consider. Let’s have a look at those next.
The first choice you will have to make is your subscription type. You can choose between two options: Individual and Professional. A standard and a premium package.
Which plan best suits your business? The Individual plan costs $0.99 per product sold, while the Professional plan will cost you $39.99 per month. If you do some quick math, you will immediately discover that the Professional plan is your best option if you sell more than 40 products per month.
We recommend starting out with the Individual plan. As soon as you notice that your sales start to increase, you can change your plan. This can be done at any time. But be aware that both subscription plans do come with additional selling fees…
For each product you sell, you pay additional selling fees to Amazon. These fees differ per product category, but on average amount to between 10 and 15% of your gross revenue per sale. Curious about the selling fees for your products? Discover them in this overview.
If you are operating as a seller under the FBM model, and hence you are taking care of the shipping for your orders yourself, Amazon obviously will not charge you any additional shipping fees.
When Amazon takes care of the storage and shipping of your products for you (FBA), shipping fees will apply. These fees are determined by both your product category as well as the shipping service the buyer wants.
You can find a complete overview of the costs to sell through Fulfillment By Amazon (FBA) here. Keep in mind the following other costs that may be added:
Let’s look at a hypothetical example to clarify what costs are covered by each of Amazon’s sales plans.
In this case, one sale will result in about €12.99 worth of fees – i.e. 25% of your gross revenue. This of course does not yet account for personnel costs, warehousing fees, etc.
Therefore, when selling a hairdryer through FBA, you incur €11.11 in additional costs. But this does not yet account for the monthly storage cost (€36 per feet/per month).
Of course, costs vary significantly per product category. Do the math for your own products using the selling fees per product category and the FBA price list.
You now know what selling on Amazon looks like and what costs are involved in the process. There’s only one decision left to make: are you going to join the wonderful world of Amazon?
Read on to learn how to set up your account.
Already have an Amazon seller account? Then skip this step and start making your first products go live.
Create your account on Amazon, and be sure to have key information for your business on hand when doing so (check what you need here). Once your registration is successful, you will have access to Seller Central. This is the central hub from which you can start your Amazon adventure.
Amazon’s Seller Central is the beating heart of your Amazon activities. This is where you list the products you want to sell (more on this later), update your inventory, manage your sales account, and so on.
In addition, Seller Central also houses a number of important features on Amazon:
Once you’ve set up your seller account and browsed Seller Central, you’re ready to sell your first product. But how exactly do you go about doing that?
De Amazon Seller Central
Your seller account is all set up and you are slowly starting to cruise your way down the Amazon highway. Next stop: your very first sale.
In order to sell a product on Amazon, you first have to add a listing. Keep in mind that, when consumers browse the Amazon marketplace, they get to see each individual product only once. This also means that you can list each individual product only once. Therefore, you first have to ask yourself whether or not your product is already on Amazon.
If there are other sellers selling the same product, you can subscribe to an existing listing. That’s good news, because this has a number of advantages:
On the other hand, there are some drawbacks to subscribing to an existing product listing:
If your product is not yet on Amazon, you need to create a new product listing. To do this, upload the following product information:
When you combine all this information, you have created your product listing. Consumers can now find and buy your product on Amazon. Unfortunately, your potential buyers don’t always come across your new product very easily. To increase your chances of being seen, you can optimize your product listing….
Creating a product listing for your own product will obviously take you longer than subscribing to an existing listing. But it does give you a competitive advantage: there are no other sellers! To make sure that you can reap the full benefits of that advantage, make sure you create a top-notch product listing. These tips will help get you there.
A+ content can really help win over potential buyers. According to Amazon, it even increases conversion rates by 5%!
There you go, now your product name and your product text are optimized and your images perfectly match the content. Potential buyers will now easily find your product on Amazon.
The next step is for you to take control of the buy box. This is key, as the buy box determines which seller has the right to sell a product. But how do you go about this? We’ll teach you in the next chapter.
What happens when different sellers want to sell the same product? When someone makes a purchase, it’s not like you can easily split profits between the various sellers. After all, in the end only one person gets to deliver the product.
That is why Amazon gives control of the buy box ─ and thereby the right to sell a certain product ─ to the merchants who offer consumers the ‘best’ service. This is based on a few different criteria. Let’s walk you through them.
If you want to compete for the buy box, there are a few minimum requirements you have to meet. Once these criteria are met, only then can you compete with other sellers. The criteria are:
Are these criteria met? Only then can you join in and compete for the buy box. At that point, the following criteria come into play…
Consumers are always looking for the best prices for the products they wish to purchase. They use Tweakers or visit Test Aankoop, scouring the Internet for the best deals.
Meanwhile, Amazon’s goal is to generate as many sales as possible. Therefore, to remain competitive, Amazon will reward sellers with low prices. They get a better chance of controlling the buy box.
Which might make the opportunists among us say “alright, then we’ll simply put our price 1 cent below the competition’s”. Sorry, we have to disappoint you. In order to avoid futile bidding wars, Amazon does not reward minimal price differences.
Since Amazon wants to provide a smooth experience for its customers, it seeks to eliminate the smallest risks. When you have low stock, there is a chance that a buyer will not get his or her product delivered on time. Therefore, Amazon will always favor sellers that keep a well-stocked inventory.
Sellers with satisfied customers are rewarded with a higher probability of making it into the buy box. This means that a seller who does not have the lowest sales price can still take control of the buy box. This is because his customers are much more satisfied than his competitors’ customers.
When we talk about a positive consumer experience, we are referring to:
So you are now completely ready to move on to your very first sale. But, as you know, the competition is cut-throat out there. How are you going to make your first sale stand out? You’ll find out in the next chapter.
Hooray! Your products are online. Cross your fingers, say a quick prayer, and then the orders will start pouring in in no time, right? Our sincerest apologies, but that’s not how Amazon works. Unfortunately.
It is very important that you actually start selling your products as soon as possible. Because by selling more, you rank higher in search results, your product gets more reviews, you get the chance to prove that you offer good customer service ─ and all of those things increase your chances of taking control of the buy box.
But how do you best go about making your first sale? Let us give you a few tips.
A quick start is vital when you launch a product on Amazon. It allows the algorithm to pick up on your product early on, and that of course leads to the one thing we want most: more sales! (yes, please).
One way of making your product more attractive to Amazon, is through price manipulation. That’s right: your price is not the only thing that matters on Amazon. But it does help you a lot when you want to gain control of the buy box!
That is why we recommend setting a low price for your product when you are first starting out. Really, really low. We know, it sounds a little crazy. But in the long run it will be a good investment. If you are having trouble wrapping your head around the idea of setting your price really low, then try to look at that margin you are losing as a kind of marketing budget.
After all, this sort of price manipulation will allow you to generate more sales. It gives you a great trial period during which you can prove to Amazon that you can guarantee a good delivery time, service, etc. Once you have proven that, you can raise the price again, without having to give up the buy box.
Advertising on Amazon can mean the difference between success or failure on Amazon, especially when there is a lot of competition for your product. Ads allow you to reach potential buyers with a very high purchase intent. By advertising the right products in the right place, you can give your sales a huge boost.
Just like on Google or any social media platform, Amazon offers a massive selection of advertising opportunities. Based on a pay-per-click (PPC) model, sellers can put their products in the spotlight.
Let’s go over the possibilities.
A second possibility for ‘sponsored products’ is to advertise on the product page of a relevant item. Let’s look at a quick example. Suppose someone is browsing the product page of a razor blade. Then Amazon will display relevant items underneath the product listing of that razor. In this case: extra blades and toothbrush attachments. But you could just as easily advertise shaving cream there.
Advertising on Amazon can be critical for your sales results. It allows you to get in front of consumers faster, at crucial moments in their buyer’s journey. Fantastic, right?
Of course, this does come at a cost. Fortunately, Amazon has an extensive advertising platform that allows you to perfectly set how much you want to spend and in what way (daily budgets, budget caps, …). This allows you to get the results you want, while avoiding unpleasant financial surprises along the way.
Did you make it this far reading our blog? Awesome! Then you have enough knowledge to start taking your first steps in the Amazon landscape. Whether you start doing it by yourself, or you enlist the help of a marketplace agency like Merkado, we’re sure you’ll have a bright future ahead.
But be careful. There is still a whole range of additional opportunities, sales strategies and different nuances that will help you get the most out of your Amazon adventure.