Amazon equals big wins for the little guy.
Despite some concerns that Amazon’s enormous eCommerce presence would squash local small businesses, many savvy SMEs are taking an “If you can’t beat ‘em, join ‘em” approach, and using the online marketplace to their advantage.
In fact, more than half of Amazon’s sales are made by third-party sellers who list their own products. Amazon reached US$194 billion in global sales in 2019, and this figure is projected to keep growing over the next ten years.
For small businesses, selling on Amazon offers a number of advantages:
There are two main ways to sell on Amazon: as an Amazon Vendor or an Amazon Seller. So which one is right for you?
In fact, more than half of Amazon’s sales are made by third-party sellers who list their own products. Amazon reached US$43.7 billion in global sales in 2017, and this figure is projected to keep growing over the next ten years. For small businesses, selling on Amazon offers a number of advantages:
As an Amazon Vendor, you act as the manufacturer/distributor/supplier, and you are responsible for getting your products to multiple Amazon warehouse locations. You can also incur fees for products that don’t sell quickly enough. Although you take a hit on profit per product as a Vendor, you can make up for it with higher sales volume potential. There are two ways to sell as an Amazon Vendor:
Not sure whether selling as an Amazon Vendor is right for you? Here’s a rundown of the major advantages and disadvantages of this method of selling.
If you’re a relatively small business, you might find that being an Amazon Seller offers more support than being an Amazon Vendor. In fact, more than half of Amazon’s sales are made by third-party sellers who list their own products. Amazon reached US$43.7 billion in global sales in 2017, and this figure is projected to keep growing over the next ten years. For small businesses, selling on Amazon offers a number of advantages.
Amazon Sellers use the Seller Central Portal, where you own the products in your inventory until your customers buy and receive them. You can choose to manage fulfillment using Amazon’s FBA service, or you can do it yourself. Typically, being an Amazon Seller is the cheapest way to start selling on Amazon.
As a Seller, you have two different fulfillment options:
Like being an Amazon Vendor, there are plenty of benefits to being an Amazon Seller – but some potential downsides as well.
Amazon Selling plans, Seller fees, Fulfillment fees and more.
There are certain costs and fees that you should be aware of, as well as small investments you can make to increase the saleability of your listing before you start selling on Amazon.
Before you get started selling on Amazon, you’ll need to think about some key set-up costs:
Here are the main seller fees you’ll need to pay for selling on Amazon. If you plan on selling less than 40 products a month, Amazon’s Individual Selling Plan charges $0.99 per item plus referral fees. A Professional Selling Plan is $39.99 a month and only comes with referral fees (not per-item fees).
What is an Amazon referral fee, you might ask? Simply put, it’s a percentage of your total item price paid to Amazon after a sale is made, and the percentage differs depending on the category of product being sold. You may also see what’s called a variable closing fee.
This fee applies only to media products (books, for example), and typically costs $1.35 per item. Why does Amazon charge a variable closing fee? It’s likely to ensure the company makes a profit on lowpriced items. Finally, you’ll want to be on the lookout for the Amazon commission if sold.
This is pretty straightforward – it’s the commission fee Amazon will charge if your item sells, and it represents a percentage of the overall price per item. Note that this fee changes depending on your location, but Amazon will provide you a breakdown of the commission fees once you sign up as a seller and list items.
Both Individual and Professional Amazon Sellers can choose to use Fulfillment by Amazon (FBA) to stock, pack, and ship products – but there are some costs to consider.
FBA fees include boxes and packaging, and even cover returns handling if your buyers return items to Amazon. There are two fees associated with Fulfillment by Amazon:
FBA fees are based on the size of the product you’re storing and shipping. Size include any packaging for your product, such as shoe boxes, blister packs, or retail packaging. There are two size categories:
As with any business venture, choosing your fulfillment method for Amazon is all about proper planning and research to ensure it’s as cost effective and efficient as possible.
We'll be touching on two things: sorting out your processes and defining your sales strategy.
Whether your business is a one-person operation or you have a team on hand to help, it’s important to dedicate time to reviewing your processes and growing Amazon as a viable sales channel. Think of your Amazon presence as a standalone venture that should be reviewed and improved on continually. For many businesses, this means testing different tactics and scaling those that work.
Before you pull the trigger on your Amazon store, make sure you’ve ticked all of the following boxes:
As a starting point, follow these steps to give yourself the best chance of success:
As you begin to grow, consider utilizing a dedicated team with the knowhow and time to implement strategies specific to selling on Amazon.
TradeGecko gives Amazon sellers everything they need to seamlessly manage inventory, orders and more to streamline operations and focus on growth.
Give your business the commerce superpowers it deserves so you can focus on growth and scale with confidence. With TradeGecko you can manage your entire business from one central location - inventory, orders, accounting, fulfillments and more.
TradeGecko’s Amazon integration helps you to manage stock levels on Amazon, retrieve sales orders and process them. Integrating Amazon with TradeGecko is free, as long as you have a TradeGecko account and an Amazon Seller account. Using the two systems together allows you to streamline and automate operations including: