Amazon has long ceased to be an insider tip when it comes to buying and selling products online. After all, the marketplace offers both buyers and sellers a number of advantages.

This article deals with the different ways of selling products on Amazon.

WHY SHOULD YOU SELL ON AMAZON GERMANY?

As a marketplace, Amazon brings merchants and customers directly together. So that customers have a wide range of products to choose from and merchants have a large audience for their products from the very beginning, which initially has to be compiled in their own online shop. To be precise, Amazon already has over 44 million customers in Germany in 2016, of which 17 million have a prime account. There were more than 64,000 registered sellers that year, making Amazon’s reach unparalleled.

In addition, more and more people are starting product searches directly on Amazon instead of using search engines as Google. In 2016 34% of product searches started directly on Amazon. As the number of users and the range of products are increasing, this proportion will certainly continue to rise.  It becomes clear that the presence of Amazon is playing an increasingly important role.

Furthermore, the conversion rate is correspondingly high at about 10% on average, thanks to the high trustworthiness of Amazon. The payment process is also handled conveniently by Amazon, so you do not have to worry about it yourself. Amazon is generally easy for sellers to use and can take some work off your hands-

WHAT ARE THE POSSIBILITIES TO SELL ON AMAZON?

AMAZON SELLER CENTRAL

Seller Central offers an easy way for merchants to sell their products on the Amazon marketplace as a third-party vendor. Basically, anyone can register for free for the basic account and start selling after entering to the most important company information. For sellers who have more than 40 orders per month, the professional seller account may be worthwhile. However, using this account will result in a monthly fee of 39 euros.

Amazon wants to take care of the payment process and pay the seller at regular intervals (in general every 14 days). This means that both buyers and sellers can rely on secure payment processing. In addition, as a seller you can advertise your products through “Sponsored Product Campaigns” and if you have a registered brand even through “Sponsored Brands” and thus increase the visibility of your products. The payment model for these ads is CPC (cost-per-click). Amazon thus offers a suitable analysis tool for this purpose. You also have the opportunity to analyze the demand for goods and receive feedback.

Generally, the seller is relatively free with Seller Central and can handle the sale of his goods independently. If you are interested, you can use FBA (Fulfillment by Amazon). In this case, Amazon takes car of shipping and storage of the goods and returns. According to Amazon itself, many customers prefer sales handled by FBA. 

However, Seller Central has some disadvantages. Since it is the easiest way to use Amazon, marketing opportunities are limited. Amazon offers various ways to promote products, but they are limited to Sponsored Product Campaigns and Sponsored Brands. 

In principle, however, Seller Central is well suited to operate smaller shops on Amazon and to keep control of its own products and prices. 

AMAZON VENDOR CENTRAL

First of all, not every merchant can directly sell through Vendor Central, because an invitation from Amazon is necessary. Amazon must therefore first of all draw attention to relevant merchants and invite them to join the Vendor-Central-Program.  If you agree, Amazon buys a stock of your products and becomes the seller of your goods. For this reason, Vendor Central is primarily intended at manufacturers and well-known brands. As mentioned above, customers prefer products shipped by Amazon. However, trust is even higher in products that are sold by Amazon. By using Vendor Central, you can increase the willingness of your customers to buy even more.

Another advantage is that you can extend the content on your product. You now have the opportunity to add more detailed product descriptions and videos to make your offer more appealing. In addition, Vendor Central gives you additional marketing opportunities as you can now use Amazon Advertising and Amazon Marketing Services. In this way you can advertise your products in different ways. In addition, your products are now prime-qualified at no extra cost.

Before deciding to accept Amazon’s invitation, however, one should also consider the disadvantages, as it is not possible to drop out of the program and return to Seller Central without further ado. On the one hand, you’re giving a lot of control with the commitment. Amazon can now, for example, set the price of the free of your ideas. In addition, the vendor central program leads to a strong dependency on Amazon in the long run, as all requirements must be met if you do not want to forego the prize. The analysis capabilities of Seller Central are thus lost with this program. Anyone who wants to gain insight must adjust to additional costs. There is no longer any direct customer contact, which means that customer feedback is lost as a source of information.

WHAT TYPES OF SELLERS ARE THERE ON AMAZON?

Reseller (Buy-Box-Optimization)

Resellers have a lot of competition on Amazon because they are not the only ones who seller the product. By far the most sales is made by the retailer who wins the buy box. The Buy Box is located on the product detail pages on the right, where users add their desired products to the shopping cart. Hardly any customer takes the trouble to find out which sellers are still offering the product, but makes the purchase directly via the buy box. This means that other sellers of the product are hardly, if at all, ignored, while the winner receives almost all orders.

As a reseller you should definitely work hard to win the Buy Box. Amazon selects sellers for the buy box according to its own algorithm, which takes into account many different criteria. In general, you should make sure you get the best ratings by satisfying customers. You achieve this through helpful customer support, fast deliveries and fair prices. Distinctly positive assessments by the retailer always have a positive effect on the buy-box opportunities. This is followed by four other factors that are decisive for the Buy Box:

Low Price: Amazon tries to choose the best between low price and good seller statistics. This means that your price does not necessarily have to be the lowest if you have good ratings. However, it must not be set too high in comparison.
Amazon FBA (Fulfillment by Amazon): Amazon knows that customers have greater confidence and willingness to buy when shipping through Amazon. Therefore, FBA sellers are given preferential treatment in the Buy Box selection.
Amazon Prime: If you use FBA, you can also benefit from Amazon Prime. Customers who have a Prime Account naturally prefer to order Prime-qualified products to take advantage of their Prime account. This is also taken into account in the Buy Box.
Shipping time: You should try to offer the fastest possible shipping. Amazon is naturally interested in customer satisfaction and therefore prefers sellers who deliver products as quickly as possible.

Private Label Seller (Amazon Seo)

Whoever manufactures and distributes their own brand does not have to worry about the buy box, as there is no competition in this area. Merchants of private labels, on the other hand, have to work hard to make their own products visible, because as many as 90% of Amazon users only look at the first results page. This contains only 14 results in desktop version and  16 on the mobile version. In order to receive as many orders as possible, it is therefore essential to work on getting among the first 16 – or better still among the first 14 – results. To achieve this, Search Engine Optimization (SEO) must be run on Amazon. The Amazon algorithm takes into account 35 different ranking factors that can be optimized. Below you will find a list of the most important ones:

Relevance of the search query: In a search, Amazon first filters out those products that are relevant for the search query. Your product description should therefore contain important keywords for potential customers to search for.
Sales: A factor that you can only influence indirectly at the beginning and that needs some time. However, the more sales you generate over time, the higher your product is ranked.
Conversion rate: Similar to sales, the higher the conversion rate for a given keyword, the higher you rank for that keyword.
CTR (Click-through rate): The same applies here. A high CTR for a keyword leads to a higher ranking for the corresponding keyword.

Since, apart from the first point, all mentioned aspects are dependent on the customer, here are some tips on how to increase the mentioned numbers:

Appealing thumbnails: Choose advantageous images for your products that show them clearly and easily. They should motivate the customer to click on the result.
Fair price: Make sure that you don’t overestimate the price and that there aren’t too many cheaper competitor products.
Shipping costs: Amazon customers naturally prefer to order free shipping.
Amazon Prime: If possible, offer your products with Amazon Prime. Prime-shipment increases the conversion rate very much and is also a valuable ranking factor.
Product reviews: It is important that your customers are satisfied with your products and leave positive feedback. It is obvious that products with good ratings are much more likely to be viewed and bought.
Vendor ratings: You should also pay attention to seller ratings. Provide your customers with satisfactory support and ensure the fastest possible delivery times.
If you consider these aspects, both your conversion rate and your CTR will increase, which will ultimately automatically generate more sales.

WHAT SHIPPING METHODS ARE AVAILABLE (FBM VS. FBA)?

FBM

FBM stands for Fulfillment by Merchant and means that the seller handles the entire order process, including warehousing and shipping of the goods, independently. We also take care of our customers ourselves. FBM offers the advantage of full control over the shipping process. Sellers have the opportunity to pack their products in the best possible way and safely. If Amazon takes care of shipping the goods (FBA), the products are packed by Amazon employees and the seller has no influence over them. Of course Amazon is also not interested in delivering damaged goods to the customer, but the seller has clearly individual possibilities to adapt the packaging to the product.

A disadvantage of FBM is that the independent processing of orders requires a lot of work. Anyone who has been running their own online shop for a long time and has the appropriate staff will probably have no problems with shipping the goods, while smaller or new traders can quickly get this work done. In addition, customers have more confidence in shipping through Amazon and therefore prefer it, so FBA vendors are a major competitor.

FBA

FBA stands for Fulfillment by Amazon. With this model, Amazon will take care of shipping your goods for a fee. These are then stored in a Amazon warehouse and packed and shipped by Amazon staff.  The biggest advantage of FBA is probably that a lot of work can be transferred to Amazon. In addition, many customers prefer shipping through Amazon. Another advantage of FBA is that you can offer your products with Prime if they are qualified. Most Prime users want to take advantage of Prime-shipment, as they pay money for membership and are reluctant to use traditional shipping products. If you offer your products with Prime, you can also add the large number of Prime members to your customer base.

With FBA, you give Amazon control over the packaging of your products. If you choose to use FBA, please let Amazon know exactly which products you are using and whether there is something to consider when packaging. In addition, there is the monthly fee for storage in Amazone’s logistics centers. It is therefore important to consider whether the additional costs are worthwhile.

WHICH SHIPPING MODEL IS BETTER?

As you can see, both shipping models have their advantages and disadvantages, so you can’t say that one of them is more recommendable than the other. If you are already familiar with the shipping of goods and are experienced in handling the work involved, you can basically save the additional costs for FBA and take over the processing of the orders yourself. This is also recommended for those who want to keep control over the packaging of their goods and value direct customer contact.

Especially for new merchants, however, FBA can be worthwhile. Although the monthly fee has to be paid, you can then benefit from the trust that customers place in Amazon’s shipping service and, if necessary, also Amazon Prime. This often makes it easier to generate initial sales and establish yourself as a trustworthy shop. In addition, the work involved in shipping the goods can be transferred to Amazon.

WHICH CRITERIA MUST BE FULFILLED IN ORDER TO SELL SUCCESSFULLY ON AMAZON?

Especially if you decide against FBA or the Vendor Program and want to ship your products independently, you will first have to work on winning the trust of your customers and drawing their attention to yourself. Here you can find out which criteria play a role:

Merchant ratings: Trust in sellers who have little or no feedback is not particularly high. Sellers with very poor ratings are basically not trusted. Therefore, make sure to satisfy your customers by meeting them in case of problems and keeping your promised delivery times to get positive feedback.
Product reviews: Of course, confidence in the product should also be encouraged. If you pack your products yourself, do it carefully and safely. Defective or poorly packaged products inevitably lead to poor reviews that can be avoided. Also pay attention to the promised delivery time and select product images which correspond to the actual appearance of the product. Even bad reviews due to excessive deviations can be easily avoided.
Competitive prices: Of course, your price should not be too high, but even significantly lower prices than those of the competition can lead to mistrust and indicate poor quality. Therefore, choose a reasonable price that appeals to customers.