Knowing how to sell on Amazon gives you a key tool for financial security and freedom. It enables you to reach an ever-expanding market of hungry buyers, and offer them what they’re looking for… wallet out and ready to buy.
It’s not a walk in the park. Yet it’s also not the most difficult thing in the world. Millions of Amazon sellers worldwide have succeeded, and you can too.
This article is designed to show you what it takes to sell on Amazon. When you finish it, you will know three things:
- Whether or not selling on Amazon is for you
- How to start off on the right foot so you don’t waste precious time and resources
- What successful sellers already know that you probably don’t
Why Sell On Amazon?
There are three clear reasons to sell products on Amazon:
- Market Size:Amazon is the biggest e-commerce store in the world
- Customer Service:Customers trust Amazon because of Its dedication to excellent service
- Intent to Buy:Customers visit Amazon with the intent to buy
Amazon’s Vast Market Size
Today, Amazon is one of the most renowned and trusted brands on the internet. And it’s huge–
According to recent industry figures by ComScore, Amazon is the leading e-commerce store in the United States. It generated more than 107 billion U.S. dollars in 2015 net sales. And, as of Q4 2015, Amazon reported more than 304 million active customer accounts worldwide.
Amazon’s Commitment to Superior Customer Service
Another good reason to sell on Amazon is because Amazon has already done the hard work of building trust for you. This is due to two rules:
- Quick Delivery:Global consumers have full confidence in the Amazon buying experience. Customers also love the free shipping and fast deliveries that come with Amazon Prime.
- Return Policy:Amazon has one of the best return policies of any online retailer, known as A-to-Z Guarantee Protection. Amazon will guarantee the condition of the item sold and its timely delivery from third party sellers on all of its websites. And, this feature is one of the most important forces behind the incredible success of third party sellers on Amazon.
Because of these two rules, customers have flocked to Amazon.
No other online retailer has been able to develop a better reputation and shown a dedication to expanding its global logistics and delivery systems like Amazon.
For example: In 2015, we saw Amazon invest heavily in their logistics platform. This expansion included leasing 20 Boeing 767 jets, purchasing thousands of Amazon-branded trucks, drone delivery technology, and opening more fulfillment centers across the world than expected (totaling well over 104 in North America alone).
Amazon’s Visitors Have Buying Intent
There are some websites most of us visit almost every day:
- You go to Google for information
- You go to Facebook to see what your friends and family are up to
- You go to Youtube to watch videos
These are all search platforms. They offer different types of content based on what you’re searching for. Amazon is just another search engine, except for one big difference:
People go to Amazon to SEARCH FOR and BUY PRODUCTS
Amazon has over 190 million unique visitors per month on its website. That’s a lot of eyeballs. Eyeballs with the intention to buy.
It’s impossible to drive that kind of traffic to your product if you (only) sell it on your own website. This is another reason why learning how to sell on Amazon is so important to succeed in the product business.
To learn more about how Amazon became the leading e-commerce store, we recommend you read The Amazon Way: 14 Leadership Principles Behind The World’s Most Disruptive Company. It tells the story of how Amazon changed from a book store into the ‘the everything store’, offering limitless selection and seductive convenience at disruptively low prices.
So Amazon customers come with the intent to buy. And Amazon definitely has the intent to sell. Before we move on to explaining what FBA is, it is important you deeply understand this.
Just like Google has their own algorithm to rank websites, Amazon has one as well. Amazon’s algorithm is called A9. And understanding how it works is the key to selling on Amazon successfully.
Amazon’s A9 Algorithm Explained
Amazon may be a search engine– yet it’s far different from Google or Bing. Amazon’s search engine’s prime goal is to ALWAYS to make Amazon more money.
If you get nothing else from this article, remember this much:
The more you sell on Amazon, the more Amazon makes… and the more actively A9 is to feature your product in the search results. Amazon wants you to win, because when you win, so do they!
That being said, if you aren’t winning, they will quickly replace you with someone else who is.
That’s why it’s crucially important to use tools like AMZ Tracker to put yourself in the top 5% of people selling on Amazon. Click here to learn more about the AMZ Tracker Tool Suite and how it can help you dominate your market.
Let’s Look at the A9 Algorithm in Action
When the customer hits Enter after filling in “Ice Tea Infuser Pitcher” for example…
A9 instantly finds the most relevant results from its catalog and then ranks them into an order that is most relevant to users while leading to the most product sales.
NEVER forget this important factor: A9 ranks products in an order that it believes maximizes Amazon’s Revenue Per Customer (RPC).
As you can see the top result has the most reviews… and is also the cheapest price. This makes it a fantastic buy for the customer. Now– the lowest priced product will not always rank #1. But since Amazon is known for its low prices, a low price does have an advantage (note that the third ranking is significantly more expensive).
Which Factors Does A9 Use to Rank Products?
Google built a search engine to find information. The Amazon search engine is built to sell products. While Google looks at social signals, backlinks, traffic etc., Amazon is 100% motivated by maximizing its Revenue Per Customer (RPC).
To do this, A9 captures every evolving data point and ultimately determines which products, at that moment, are most likely to lead to an immediate purchase and a returning client.
While we do not know everything about A9 (no one but Amazon does), we’ve identified the five main factors that the Amazon A9 uses to rank products:
- Best Seller Rank (BSR)
- Other Conversion Factors
- User Experience
- Fulfillment by Amazon (FBA)
It all begins with relevancy. A ‘microphone’ is not a relevant result for a ‘tea pitcher’ search.
2. Best Sellers Rank (BSR)
If A9 deems a product relevant for a search, it will rank it by important conversion factors. One of the most important ranking factors is Best Sellers Rank (BSR). In short, BSR is a reflection of your product’s most recent sales– how well it is currently selling on Amazon
Amazon cares more about recent sales than it does about sales over a long period of time! It’s pretty simple: more recent sales means a higher ranking. And higher rankings will lead to more sales because your product appears closer to the top of the search results.
This is why AMZ Tracker works directly with Vipon.com to offer our members promotions. The promotions boost recent sales, increasing BSR. To learn more about Vipon.com and all the benefits of AMZ Tracker membership, click here now.
3. Other Conversion Factors
Although BSR is important, to successfully sell on Amazon you’ll need to consider several other conversion factors. Examples of conversion rate factors include (i) total customer reviews, (ii) answering customer questions, and (iii) quality of images and (iv) pricing. Beyond this, Amazon also prefers to rank products with multiple variations in their listing (such as different colors or sizes).
4. User Experience
Amazon has figured out the secret to maximizing its revenue per customer (RPC): make customers so happy they keep coming back. That’s all about offering a consistent customer experience that meets the user’s expectations.
These factors include negative reviews and seller feedback, inventory management, perfect order percentage (POP), order defect rate, packaging options and time on page & bounce rate (how quickly they leave a page).
5. Fulfillment by Amazon (FBA)
Finally, sellers who use the Fulfillment by Amazon (FBA) distribution system will rank higher than sellers who sell their products through the FBM (Fulfillment by Merchant) option.
For example, if we search for ‘ice tea infuser pitcher’ again, you can see on the screenshot below that all top search results are Prime eligible. This means they are FBA sellers (we’ll explain Prime later on in this module). There isn’t a single FBM (fulfilled by merchant) seller there.
Why is that? Because Amazon knows that by fulfilling orders themselves they can maintain a high level of service for their customers. Which, as we’ve just explained above is crucial to their success.
In North America, Europe and parts of Asia, Amazon has built an extensive fulfillment network across these areas which has important ranking implications. By controlling the fulfillment, Amazon controls the user experience.
So, if you are serious about selling on Amazon, you need to offer FBA.
What is FBA?
FBA stands for Fulfillment by Amazon. If you use FBA, you still have to send your products to Amazon. But they will pack, ship and provide customer service for you. Amazon takes a small fee to provide this service, but the benefits far outweigh the expense.
Here is a video made by Amazon explaining how FBA works:
Amazon has made and will continue to make HUGE investments in building out their fulfillment network. Already, it covers the United States, Canada, Mexico, Europe, and Asia. The benefit of this is fast shipping to the customer, and fair distribution costs to FBA sellers.
To sell on Amazon and succeed, you need to see FBA as an asset and not a liability. Amazon does charge for this service, and some might say it’s higher than doing it yourself. But we don’t think so, and here’s why:
- More time to work ON your business, instead of IN your business:Cut out the time you spend packing, shipping, driving to the post office, and providing customer service. Amazon takes care of this for you. Spend your time growing your business.
- Improve your product search ranking for important keywords:Registering your product for FBA will also help your product to rank higher in Amazon search algorithm which means more people will see your products. Remember, more eyeballs results in more sales.
- You can offer Prime shipping and other benefits to your customers:Only FBA inventory is eligible for Amazon Prime customers and, getting in front of these customers is big business.
Why Does Prime Matter For Amazon Sellers?
Amazon Prime is a paid service ($99 USD per year, with a free 30-day trial) that gives Amazon shoppers a few distinct advantages. But most importantly, Amazon Prime gives its members in the United States free two-day shipping on most items, among several other perks:
- Your customers know that packing, delivery, customer service, and returns are all handled by Amazon. And, Amazon has the most trusted and liked return policy.
- Your customers also benefit from a growing assortment of other benefits, such as gift wrapping and an up-to-the-minute countdown for One Day Shipping, as well as access to Prime Video and Prime Music.
Beyond the Unites States, Prime services (renamed Amazon Premium in several markets) is fueling Amazon’s international growth. It’s currently available in the United Kingdom, Spain, Japan, Italy, Germany, France, Canada, and Austria.
For a description of Prime services in these marketplaces, check out the article: ‘What Amazon Prime Is Like Around The World’.
When it comes to shopping on Amazon, Prime is king. Although Amazon is notoriously tight-lipped when it comes to sharing numbers about its businesses, Consumer Intelligence Research Partners reports that as of end 2015 there are 54 million Prime subscribers in the USA alone. Prime customers have access to free shipping for most products.
And here’s the key takeaway: With a few exceptions, only FBA products qualify for free shipping for Amazon Prime customers. Getting in front of these customers is big business: reports suggest that Prime members spend nearly twice as much as non-Prime customers. For example, in the United States members spend more on average, about $1,100 per year compared to the $600 per year for non-members.
In recent years, Amazon has been investing heavily in their logistics network to improve their shipping speed. They’ve launched 1-2 hour delivery service, called Prime Now, which will continue to evolve in the near future.
The evolution of FBA and Prime are part of a larger retail ecosystem where technological advancements are increasingly favoring online purchases and rapid delivery times.
Because consumers know that Amazon offers the highest quality customer experience and most diverse product catalog, more and more customers are choosing Amazon and Prime services for their purchases.
How to Sell on Amazon With Private Labeling
The consumer mindset has shifted. Customers are now looking to buy a quality product that’s different from what else is out there. Big brand names are becoming less important.
Enter Private Labeling
Private labeling is when you outsource your manufacturing to another company, apply your own brand to the product, then sell on Amazon.
Everyone does this. Have you ever noticed that some appliances like washers/dryers, or even TV’s are exactly the same, but have a different brand name? Did you know that 16 different appliance brands buy their appliances from GE? We’re talking big brands, the ones you’ve heard of.
Even giant corporations use private labeling!
Today, you can source domestic or global suppliers for a differentiated private label product, and compete with national brands on Amazon. For example, you can find a supplier who manufactures white label tea pitchers, customizes it for you, adds your brand and tada: there’s your private label product!
It’s a great way to expand your product offering without building manufacturing facilities and creating your own product design and development cycle. Processes which require a fortune to complete.
Still not convinced?
Here are a couple more reasons we believe you should private label products rather than sell someone else’s product on Amazon.
- You have control over pricing.The manufacturer can’t tell you how much to price the product for because it’s your brand. Private label products are, on average, 28% less expensive than their name-brand equivalents. Note: this does not mean you have to sell for a low price. If your brand is solid and the market can bear it, you can charger higher than average prices. Control over your pricing should also lead to higher margins.
- You control the marketing.As they say, perception is reality. You can create your own high-quality brand to give yourself an advantage over your competitors. You can even charge a premium because of brand goodwill or perceived quality– even if you’re selling the EXACT SAME product as your competitor.
- You get the buy box.If you’re selling someone else’s product, chances are, there are a large group of sellers selling the same thing and competing for the buy box. The buy box is the ‘Add to cart’ button on a product listing. If you’re selling your own brand, guess what? You get the buy box because you’re the only seller.
4. You’re building an asset: your brand. By taking the time to build your own brand, you not only have the value of the products that you sell, the cash coming in, but you’re also building an asset with your brand. If you brand yourself correctly, it’s going to make it easier to expand to a larger range of products, because your customers know that they can trust your brand. You can even sell your brand equity to an investor and get paid a premium for the goodwill that you’ve built.
This concludes our intro to selling on Amazon successfully. By now you have a good high-level view of what it takes to succeed.
Amazon gives you all kinds of tools to help you succeed. Because when you succeed, so does Amazon. Yet Amazon is a very competitive market place and successful sellers need an additional edge.
That’s what AMZ Tracker is for. We give you all the tools that Amazon doesn’t provide. Tools like:
- Product Keyword Rankings at a Glance
- Boost your Sales Velocity with Vipon.com
- Track Your Competitor’s Sales
- Find New Lucrative Products With Unicorn Smasher
- And much more
At AMZ Tracker our goal is to not only teach you how to sell on Amazon, but also give you the tools you need to meet even your loftiest goals.