Friday, March 17, 2023

How Does Third Party Selling On Amazon Work

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Why Does Inventory Management Matter On Amazon

What to look for on Amazon when buying 3rd party items

You can be doing all of the right things on Amazon to get people to your listings, but if you arent in stock, youll lose 100% of your potential sales.

Effective inventory management is more important than ever, especially if youre an Amazon seller. In the past year, Amazon has introduced monthly long term storage fees for slow-moving inventory, increased FBA fees, and launched the new Inventory Performance Index metric.

There have also been improvements to the basic inventory management features available in Seller Central. What these changes have in common is a mission to help Amazon merchants manage their inventory more effectively.

Are you struggling with managing your inventory properly? Do you keep running out early or having trouble fulfilling orders properly? . Here are the that can help

First off, what is the Buy Box?

The Buy Box is a section on the right side of an Amazon product detail page where customers can add a product to their cart or make an instant purchase. Amazon generates over $150 billion in sales every year. Of those conversions, over 90% occur using Amazons Buy Box.

If you sell on Amazon and want to increase sales online, winning the Buy Box is pivotal. Retailers featured on Amazons Buy Box for product pages sell more products.

  • Promotional messages such as Sale
  • Suggestive commentary such as Best Seller
  • Symbols

Diversify How You Ship And What You Sell

Use alternate fulfilment methods such as cross-docking or drop shipping to test the viability of large numbers of new products without having to purchase them in advance. Once you find out what sells and at what price, and what doesnt sell, you can better decide what to stock in your warehouse or FBA.

You dont want to be at the mercy of only one or two suppliers, or a small number of high performing products. Look into streamlining and automating the processes you use to seek out new suppliers and list new products. To be competitive, you should be able to change what you sell at any time by quickly identifying the best new suppliers and listing their products for sale.

However, product diversification is no quick or easy task.

You need to do sufficient research into potential suppliers to ensure you make a good choice. Find out what, when, and how product, inventory, pricing and order data is shared. What are their payment terms and are they negotiable? Remember to compare UPCs to current Buy Box prices. Youll need to use these numbers when you talk prices.

What Is Amazon Fulfillment By Merchant

Amazon Fulfilled by Merchant makes you responsible for picking, packing, and shipping the products you sell on the Amazon Marketplace. FBM does not give you the option to list products as Prime.

FBM Pros and Cons

While youll avoid some of the fees that come with FBA, youll be required to abide by all of Amazon seller rules . Not easy, but doable if you already have the right infrastructure in place to handle all of the above.

Unfortunately, With FBM you will not have access to selling via Amazon Prime , which in turn will lead to less sales than a comparable FBA offering.

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The Logistics Of Selling On Amazon

There are two different types of seller accounts. Individual and professional. An individual account is ok if you are selling a few items or just when you are learning and need to get the basics entered. Once a business wants to scale in any way, a professional account at $39.99 a month is worth it. It allows for no per item processing fee, and gated category and brand approvals. Anecdotally, we see that listings for professional sellers rank better and sell more.

Set up a new Amazon account for your selling business with a business email. This is not for secrecy but simplicity. Do not try to hide from Amazon, they are smarter than you.

Each item has its own catalog page that is called a listing. Many mainstream products already have a listing with a BSR . Each item is ranked with #1 being the best. The lower the rank, the better that the product sells. Once you start digging into sourcing, many sellers create their own listings for bundles or products that they bring to the platform.

What Is An Amazon Variable Closing Fee

The Pros and Cons of Selling Through 3rd Party Retailers ...

The Amazon Marketplace variable closing fees are fixed for media products and vary for non-media products. These fees pertain to the shipping details of your sold product.

Amazon Seller Fees for a Sold Book :

Now that you know about the structure of Amazons seller fees, lets look at an Amazon fee example. Imagine youre a book merchant who just sold Harry Potter and the Sorcerers Stone for $15.99. Suppose the customer paid $3.99 for shipping and NO gift wrapping. Assuming that youre not a Pro Merchant subscriber, heres how Amazon will deposit your revenue:

Dont let these fees scare you.

Amazon is a major source of traffic for online retailers and is competitive with other marketplace rates. Being aware of and understanding the Amazon selling fee structure is the first step on your way to managing a Marketplace campaign effectively.

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Is Selling On Amazon Worth It

At this point, you might be wondering if its worth it to sell products on Amazon.

The good news is with the right products, sophisticated marketing tactics, tools, and seller support brands selling on Amazon can absolutely be successful. Although the competition for almost every category on the marketplace is fierce, there are still plenty of opportunities for brands to thrive.

To be a successful Amazon seller, you should:

  • Research potential niches before deciding on the products you want to sell.
  • Understand pricing, costs, and fees. This can include manufacturing costs, shipping, packaging, selling fees, and more.
  • Ensure your business operations including inventory management and forecasting are in good shape.
  • Acquire expert knowledge of marketing, branding, and advertising. We recommend partnering with an that specializes in Amazon advertising.
  • Leverage cross channel promotions. Thanks to recent tools like Amazon Attribution, brands can measure the impact of their marketing efforts across multiple platforms and channels.
  • Avoid complacency. Brands who rest on their laurels will be crushed by emerging competitors.

And most importantly, be prepared for whatever Amazon throws your way. Changes can happen every single day. Looking for a partner to help you navigate these challenges? Read more about what it takes to


How Should I Price My Stock

Sellers should use a pricing strategy in line with their overall business strategy. It is important your repricing software allows you to decide, who you want to compete with and also who you dont want to compete with. There isnt one quick fix for all sellers since everyone is different, but what you do get with a modern repricing solution is the ability to match your repricing rules to your own business, so youre competing only where you can win a sale.

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How Amazon Wins On Amazon

There are more than 2,000,000 third-party sellers operating on the Amazon marketplace.

And yet, Amazon has all the data, including but not limited to:

  • Which products customers search for.
  • What they actually buy.
  • How much they buy at what prices.
  • Where they cant find the brands they were searching for.

Although Amazon is a publicly held company, its investors have tolerated years of razor-thin margins, which has partly played out by way of Amazon selling products at next to no profit or even at unprofitable levels.

Amazon would make more profit in the short-term by letting third-party sellers earn the sale.

However, the company has taken the approach, in each category of products, of pursuing all of the strategic brands it believes need to be in the catalog to attract Amazon customers to shop first on Amazon over any other site online or offline.

To do this, Amazon has made a number of sourcing agreements with brands to acquire products at prices that dont allow Amazon to make any significant profit.

This is because the objectives here are for Amazon to bring the right selection at prices consistent with or lower than market prices, available all of the time to Amazon customers.

To make these objectives possible, Amazon has chosen selectively to forgo short-term profits in pursuit of long-term customer loyalty.

The answer is that Amazon isnt making money, at least in the short-term, and its entirely comfortable with that.

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Seo Fba Best Practices

Beware of fake Amazon 3rd party sellers

Amazon SEO practices are largely unknown, but they are not difficult to extrapolate. The infographic above should assist you in gaining a better understanding of how SEO works on Amazon.

This is one great way that brands and sellers can stand out in the Amazon FBA platform and get more attention than others. Search engine optimization is all about optimizing your content based on the way that people search for things online. Its about giving people a website or listing that they can interact with and that delivers the information and answers that they need.

If you arent using SEO in your Amazon FBA listings, youre missing out on an easy way to get those sales away from your competition.

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Choose Your Fulfillment Method

You have two options when it comes to shipment and fulfillment. The first is Fulfillment by Merchant . That means that its your responsibility to maintain inventory, label, package, and ship your products to each customer.

The second option is Fulfillment by Amazon this means that your inventory is stored in Amazons fulfillment centers, and you dont need to worry about packaging and shipping. However, if you do choose FBA, youll need to meet the prep requirements. These include correct labeling, removing any other scannable barcodes, and packaging each unit within one secure package.

Poly bags must have warnings to prevent suffocation, and expiration dates must be clearly marked in the correct format. There are also a number of other prep requirements that you must follow in order for your products to be accepted.

Set Up An Amazon 3p Seller Account

Before you can start selling on Amazon, you need to set up an account. To do this, youll have to prep a few things:

– Individual Seller or Pro Account

– Make sure you understand

– Gather your business details

If youll be selling fewer than 40 items a month, you can choose to be an Amazon Individual Seller. This means youll pay 99 cents per sale plus transaction fees.

For businesses planning to sell more than 40 items, youll need to sign up for an Amazon Pro Seller Account. This means that youll pay a subscription fee of $39.00 and transaction fees.

And if youre manufacturing your own products, you can choose to have an Amazon Vendor account and become an Amazon wholesaler if you meet certain requirements. It is invite only for those brands that are considered nationally distributed brands currently. There are pros and cons with Vendor Central for manufacturers and brands. Recently Amazon quit sending purchase orders to thousands of those selling through the Vendor Central platform causing many to question the long term viability of choosing this route.

When you set up your Seller Central account, youll also need to choose where youll ship from and to, and include your bank and contact information, along with your legal name and address.

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General Fees And Expenses

When starting an Amazon business, one should take into account that, like most marketplaces, Amazon charges substantial fees. These fees vary according to the type of account and the items sold. The Individual Selling Plan comes with no monthly charge but with a $0.99 per item sold charge.

The Professional Selling Plan has a monthly charge of $39.99 and no charge per item sold. The best choice depends on your sales. Then there are the sale-related fees. Referral fees are based on the items category but range from 6% to 20% of the sale.

A variable closing fee of $1.80 applies to items in the Media category. Added to these costs will be fees associated with the acquisition of your products, shipping, returns, taxes and any other business-related expenses which will vary depending on its size.

This is why sellers on Amazon can never lose sight of the bottom line or they will find themselves losing money. They have to compete very hard on price and manage their margins with precision.

We Help Retailers Succeed On Amazoncom


Amazon is known for its vast selection, a significant portion of which is offered by third-party sellers companies who leverage Amazons global marketplaces to offer products for sale. In fact, more than half of the units purchased on Amazon are sold by these sellers companies ranging from large brands to small start-up enterprises. Opening our marketplaces to sellers is good business for Amazon and the companies, and it delights our customers through increased selection.

Our North America Sales organization is responsible for seller recruiting and development. We build awareness of our marketplaces as well as a suite of seller services including Fulfillment by Amazon and Amazon Pay, and programs that include product advertising and brand-building, customer service and more. Each year, tens of thousands of businesses join our marketplace. We work hand-in-hand with those in the United States, Canada and Mexico to help them effectively establish their presence on our marketplace, grow their selection and increase their revenue.

We are a team of sales, business and technical professionals who are passionate about helping businesses thrive and creating great experiences for customers.

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What Are The Pros And Cons Of Amazon Fba

The vast majority of sellers will tell you that the pros far outweigh the cons when it comes to Amazon FBA. However, there are some things you should know.

First, the Pros

  • Your products are associated with Amazons powerful name. This helps instill trust in your potential buyers.
  • Shipping fees will be lower because Amazon has negotiated shipping rates with major carriers.
  • You can offer expedited free shipping through Amazon FBA, making your products more attractive to buyers.
  • Because FBA orders qualify for , youll be tapping into the 112 million + Prime members who spend, on average, more than twice what non-members spend.
  • FBA orders are handled at Amazon the same way Amazon handles its own orders. That way, the buying process is seamless and youll have the added protection of Amazons own policies. If your item is damaged, youll be reimbursed.

Now, the Cons

A Survival Guide For Third

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Business as usual is coming to an end for many third-party Amazon sellers. Competition on Amazon U.S. is reaching new heights and its only going to get worse from here.

  • Chinese sellers are flooding the marketplace thanks to preferential treatment from Amazon and the USPS. Because their costs are lower, Chinese sellers are underpricing and outselling U.S. competitors in their own backyard.
  • The original categories of top third-party Amazon sellers have saturated. So theyre entering new categories categories you may be selling in and all of the systems and resources that launched them to the top of their original categories are coming with them.
  • The supply chain is shrinking fast. Manufacturers and brands are cutting out the middleman you and other third-party sellers and going direct. According to Forbes: The number of manufacturers selling directly to consumers is expected to grow 71% this yearto more than 40% of all manufacturers.

When you add it all up, its easy to see that the long-term viability of the reseller model is very much in doubt. The situation isnt hopeless, however. This guide lays out what you can do as a third-party seller to put your business in the most competitive position possible.

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Accelerate Speed To Market

Onboarding a new supplier can be tedious and time-consuming. Some, if not all, of your suppliers product data will need to be scrubbed so its consistent and complete. Duplicate entries and missing records must be found and fixed. Non-text characters must be removed from product titles and descriptions. Abbreviations and acronyms need to be standardized. Normalizing thousands of SKUs by hand, one at a time is boring, low-value work. Mistakes are going to happen. But in order for your products to be found and bought, your product content must be complete, accurate, compelling and fit Amazons content and format requirements.

Then you have to list the products for sale by matching UPCs to existing listings or ASINs or by creating new listings. Matching UPCs to ASINs by hand takes a lot of time and effort. However, using an unreliable automated solution like Amazons Inventory Loader can result in major problems.

  • AIL searches for matches by UPC without determining package quantity. Products offered in 2-packs, 6-packs, etc. arent clearly identified.
  • Other third-party sellers make mistakes when creating new listings. Mistakes which result in incorrect UPCs and/or incorrect or missing manufacturer part numbers.
  • You may have 10-15 different ASINs for a single UPC so AIL can match UPCs to the wrong ASINs. The resulting fallout is costly customer returns, order cancellations, negative feedback and maybe even account suspension.

What Expertise/tools Do You Have And How Will They Grow My Brand

Pharmapacks – conquering 3P third party marketplace selling on Amazon in eCommerce with Aisha CSO

In addition to asking what a third-party seller could do for you, you should also reflect on what you can do for yourself.

  • What capabilities, expertise, and core competencies do you have in house?
  • What capabilities couldnt you develop in-house?
  • What software and services does your potential third-party seller have and how will they supplement your business?
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