Selling on Amazon 101
23 Oct 2018
So you want to sell on Amazon but don’t know where to start? Getting to grips with everything Amazon could be a little daunting. In this post “Selling on Amazon 101” we will be highlighting a few key aspects of selling on Amazon. This isn’t an in-depth guide but rather a foundation broken into six chapters to give you direction. We have also linked to a few other posts that might contain some more advanced strategies or guides.
In this post we will be covering the following:
1. Why sell on Amazon?
With the increasing advances in technology, everybody including your grandmother is shopping online. The way we are shopping is changing and this mostly thanks to Amazon. Amazon is growing at an exponential rate which all points to one thing, customers are embracing this new way of shopping.
Years of endurance, offering an innovative approach to online shopping and focusing on customer service has created an army of diehard Amazon fans that order everything online. You too can tap into this massive loyal customers base and make use of their brand and infrastructure by selling on Amazon.
Every day more and more people are going online to do their shopping.
We live in a world that demands speed. Services like Amazon Prime and Prime now (which has over 100 million users since April 2017) has made buying on Amazon even faster. Allowing you to get same day or next day delivery on millions of items.
According to expandedramblings.com Amazons’ US E-commerce share jumped almost 7% from 43,5% in 2017 to 49,1% in 2018. This is largely due to the faster delivery times offered on millions of items which drove sales up.
You might think that having both an Amazon presence and a online store could be counterintuitive, but if implemented correctly they could complement each other perfectly. Selling on Amazon has never been more relevant and looking at the forecast it’s only going to grow. People want their products quickly, effortlessly from a vendor they trust. If you are ignoring this channel, you could be leaving lots of money on the table.
2. Where to start?
When starting your Amazon seller journey, it could be overwhelming. It’s important to understand the different seller platforms and fulfilment options to understand how Amazon could work for you. The decision you make will depend on the nature of your products and business model. Lets look at the different platforms.
Planning your Amazon campaigns will determine the success of your campaigns.
2.1 Amazon Seller Central
Amazon Seller Central is the most popular platform for merchants to start selling their products on Amazon. With Amazon Seller Central you still own the inventory until the customer receives it. You have the option to let Amazon facilitate the fulfilment (FBA) and customer service, or you can do it yourself (FBM). A little more about these topics below.
2.1.1 FBA – Fulfilled by Amazon
With Fulfilment by Amazon (FBA) you pay Amazon a monthly fee, send inventory to the Amazon fulfilment centre (FC), and in return, Amazon takes care of the shipping, returns and customer service. FBA is excellent for many reasons including selling high volumes, saving time, saving storage space and being listed for Amazon Prime. The main disadvantages are the extra costs involved which could cut into your profit margin and also you have less control over your stock.
2.1.2 FBM – Fulfilled by Merchant
If you sell niche, custom products and want complete control, then FBM is the way to go. Another advantage is the possibility of better margins because of the lower fees. But this also means you have to handle all the shipping, customer support and returns yourself. Making use of FBM also means you won’t qualify for Amazon Prime shipping which by itself could be a significant disadvantage.
2.2 Amazon Vendor
As an Amazon Vendor, you act as a supplier to Amazon. In other words, Amazon owns the product once they receive it unlike being a seller. Vendor express is available to anybody and Vender central is on invite-only. We will dive a little deeper into both Vendor options below.
2.2.1 Amazon Vendor Express and Amazon Vendor Central
Amazon Vendor Express has a lot of the same autonomy like on Seller Central but Amazon will order in bulk from you. Its kind of the step before Vendor Central thats on invite only. Being a Vendor also allows you to enrol in programs like Prime Now and Fresh and Pantry which offers same-day delivery on selected products. Depending on your niche this could provide a significant advantage. The downside to being a vendor is that you have slower payment terms, it’s usually more expensive which means smaller margins and the process is more complicated.
2.3 Account suspension
Amazon is extremely focused on delivering a seamless customer experience and will not tolerate anything less than excellent service. So much so that Amazon will suspend or block your account if you have poor performance metrics.
It’s important to keep strong performance metrics by avoiding late shipments, defect rates and providing an excellent customer experience. The good thing is that Amazon should notify you if you fall below the expected terms of service and will even sometimes stop a product listing until a specific issue is fixed.
If the problem persists, this could lead to your account being suspended. In most cases, Amazon will give you a chance to provide a plead as why you should carry on being able to be a seller. Other common reasons for suspending your account (violation of their Terms of service) is for selling fake/counterfeit goods and incentivising unauthorised reviewers with kickbacks. In other words. Play by the rules.
3. The “Buy Box”
3.1 What is the Amazon Buy Box?
The “Buy Box” is the white box on the right side of the Amazon product detail page which allows customers to add items to their cart. Because of Amazon’s’ customer-focused approach, only sellers with excellent seller metrics would qualify to “win” the Buy Box – unless you are the only one selling the specific product. Considering that 82% of sales go through the Buy Box, it’s essential to keep your seller metrics high to qualify for the Buy Box.
The “Buy Box”.
3.2 How to “win” the Buy Box.
Even though we use the term “win the Buy Box” it’s more a case of who wins or loses their share in the Buy Box. Let me explain. Amazon uses an algorithm to determine who “wins” the Buy Box and will rotate the Buy Box with competitive sellers during the day.
If you are meeting more of the requirements, you will effectively “win” the Buy Box more of time. There is no sure way of winning the Buy Box every time, but there are some factors to look at to increase your chances:
3.2.1 Fulfilment method
Amazon’s algorithm will consider the delivery time when deciding on who gets to win the Buy Box. FBA (Fulfilment by Amazon) has a shorter delivery time and therefore gets favoured over FBM (Fulfilment by M
The price plays a prominent role in deciding who wins the Buy Box although it’s not the most important factor as many people might think. Though overpricing will affect you negatively, it’s still necessary to know that there’s no need to cut your prices down to the bone. Just stay within the price range of other sellers within the Buy Box. You can also implement automate pricing. Amazon has an Automate pricing tool under Seller Central.
Automate pricing tool helps automate pricing decisions to improve conversions. Basically you set up automatic rules alongside the minimum and maximum price points you feel comfortable with and Automate pricing will then automatically adjust your pricing within the prescribed range. You can also peg your price to the Buy Box price and it will automatically adjust the price according to the rules you laid out.
If you are not able to keep your product in stock, your chances of winning the Buy Box drop significantly – this might seem obvious but is often not considered. Keep your stock amount updated and never depleted.
With Amazons’ focus on customer service it’s not surprising that your seller rating is a critical factor in winning the Buy Box. Customer returns, negative feedback and cancellations all impact on your seller rating and thus your chances of winning the Buy Box. You need to be on point with your customer service. Amazon will penalise you for not meeting their strict standards.
More about the Buy Box:
The lowest price does not always win the Buy Box. So going in at the lowest price will not guarantee a win. The Buy Box rotates, and other factors will also determine who wins the Buy Box.
Sometimes Amazon hogs the Buy Box for themselves – if they sell the same product. If they sell a product and have it in stock, they will almost certainly push their products, unless you are priced significantly lower. But in general its hard to compete with Amazon directly.
The Buy Box is for new items only and won’t display on refurbished or second-hand items. In media items, they do have a used Buy Box that will show up on the main product page, but this is only available for a few categories.
The Buy Box is geographical and will be placed to show available products that are likely in a warehouse closer to you.
Tip: It’s essential to keep an eye on your competitors, so for instance, if they are out of stock it might be a good idea to lower your price and increase ads.
4. Amazon SEO – Product list optimisation
When looking into product list optimisation, you will come across a few tools that claim to be able to trick the algorithm and get you to the number 1 spot. Generally, you should be wary of these kinds of tricks and stick to the rules. The rules are simple but at the same time hard to perfect.
Optimization is the key to success.
4.1 Understanding the Amazon algorithm
Amazons A9 algorithm considers two main things when generating a result. The first is a product performance and the second is relevancy. amazonseoconsultant.com did a great post explaining the algorithm more in-depth.
4.2 Keyword research:
The primary driver behind the results is, of course, your keywords and thus the foundation of your optimisation. Most customers using Amazon already know what they are looking for and they want to find it quickly. Their search result must yield relevant results to have a higher conversion rate which will help with all the other factors that make up a trusted seller.
You need to do thorough keyword research and be ready to make a few mistakes. There is no quick fix. You must test, analyse, optimise. Rinse and repeat. To help you with your keyword research Sonor has developed a free keyword research tool. This tool allows you to sort by volume making it extremely helpful to start your research with.
4.3 Keyword placement:
Keyword placement in your product listing details pages is a crucial factor for product listing optimisation and could have an adverse effect if not implemented correctly.
Here are a few tips to optimise correctly.
Title: Here you should place the most relevant keywords because it carries the most weight for the search result. It should clearly describe what the item is, what brand and what the primary benefit is of this product. The title should be no more than 10 – 20 words to not look like spam and still be easy on the eyes. Customers find it hard to scan long titles.
Seller central backend search terms: The seller central backend is great for adding all the keywords that are relevant but couldn’t fit into the other fields. This is where you want to add the keywords variations that won’t work in the visual fields. Amazon looks at the whole field as a set of keywords and is only indexing 249 characters. Spaces commas and hyphens are also included in the character count. There is no need to repeat any keywords. Try and get as many words in as possible.
Product description: Ad any further relevant keywords that did not fit into title and backend.
5. What is CTR (Click through rate) & CR (conversion rate)?
CTR (Click through rate) is the number of clicks that your product receives divided by the number of times your product is shown in the search results. Your CR (conversion rate) is the number of times a purchased occurred from the clicks. The higher your CTR & CR, the higher your product will rank. So to improve the click-through rate and conversion rate, there are a few factors to consider.
5.1 Product images:
When making a purchase online, what attracts you first is the image. Amazon knows how essential product images are and have set strict guidelines to optimise for conversion. The images should show the benefits to the customer and should be well lit and big enough to be able to zoom. Also, it’s a good idea to show variations of colour or the product at different angles.
Because of these strict guidelines, sellers outsource their image editing needs. Doopic offers an Amazon ready preset to optimise your images accordingly, which will save you time and frustration. Contact us for more information. If you want to optimise the images for yourself, read our blog about Amazon’s image editing requirements.
5.2 Customer reviews:
Excellent customer reviews are essential for conversions and is a way for potential customers to see how satisfied other customers are with the product. A high rating of 4 stars or more is way more likely to reach the top of the results and convert. Customers will almost always take the star rating into account before making a purchase.
Unfortunately, the reality is that negative reviews could popup and should not be ignored. If you receive a negative review, you should be proactive and offer refunds or replacements when necessary. Customers need to see that if they decide to buy your product and there is a problem that there will be support.
Responding positively and offering excellent customer service will almost always convert unhappy customers into loyal customers. Try and give your best possible service and try and avoid any negative feedback. It will affect your CTR and ultimately your CR.
The algorithm considers the popularity of the product when yielding results and the more you sell, the more likely your product will get sold again. Your products popularity is indicating to Amazon that your product is serving the customers’ search intent and by making use of a PPC strategy could speed up this process.
It’s important to keep your search terms relevant, your return rates low – this will increase your sales and will inevitably lead to more sales. Simple 😉
6. Grundlegende Werbestrategie für PPCs
Amazon offers a PPC (pay per click) model to have your products appear in a primary position in the search results. Implementing a PPC campaign is a great way to boost your product sales to increase your ratings and popularity. By using a PPC campaign, your product could be shown below or next to the top results.
Here is a basic strategy to start your PPC advertising on Amazon.
1. Start by using automatic targeting.Automatic targeting allows Amazon to place your ad to the most relevant search terms, which is a great way to start without having to do much and is also a great way to collect data.
2. The next thing to do is a wait a few weeks to let Amazon’s algorithm do its magic. Next, you want to have a look at which keywords performed best and then move over to a manual campaign. We would recommend starting with exact match keywords before moving on to phrase and broad match- which could quickly eat through your budget. By doing this, you will be able to focus all your spending on only the keywords that worked.
3. If you feel that you want to test still keywords that might not have featured in the automatic targeting campaign, feel free to experiment and play around with different bid amounts which could yield different results. There is no one path to the perfect campaign. It’s all about testing testing testing.
This is a basic strategy and only to get to grips with PPC advertising. As you progress, it might be a good idea to start looking into more advanced optimisation options. The path to selling on Amazon can be confusing, and hopefully, we helped you understand the fundamentals of this vast topic a little better.
If you have any questions regarding Amazon image optimisation please don’t hesitate to give us a call.
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