Selling on Amazon: All you need to know

Every second, the Amazon marketplace generates over $5,000 in sales worldwide. Undeniable proof of the strike force of the world leader in e-commerce. Amazon thus represents a golden opportunity in terms of visibility for many e-tailers. However, this immense visibility logically leads to fierce competition. So how do you make your mark as a seller? How can you be profitable?

With an average of more than 16 million unique visitors every month, Amazon is now the No. 1 e-commerce site in France. What’s more, the Amazon marketplace is also part of the daily lives of its 22 million French visitors. As you can see, this e-commerce giant has everything to appeal to e-tailers looking to expand their business. However, it’s essential not to rush into anything. Amazon has many features and functions that many people are unaware of. Here’s a simple guide to understanding the platform, its specifics, its advantages and tips on how to optimize your presence and sell well on Amazon.

What is a marketplace?

A marketplace is an e-commerce platform that brings together sellers and potential buyers. These multi-seller sites offer visibility to sellers through their large audience, in return for commissions on each item sold.

Marketplaces have been around for a number of years now, and are part of everyday life for the vast majority of us. It all began in 1995, with the appearance of CtoC marketplaces.

Subsequently, other marketplaces were created, differentiated by the way they put buyers and sellers in touch with each other, either on a B2B or B2C basis.

With the advent of the pandemic and the digital transformation of industries, these are multiplying and growing by leaps and bounds. What’s more, many companies are digitizing their supply chain and online sales.

Among the best-known marketplaces, of course, is the leader: Amazon. In 2021, this platform will have generated over 9 billion euros in sales, exclusively on the French market.

What is Amazon?

First launched in 1995, the Amazon marketplace began selling books exclusively. The platform was an immediate success, shipping books to over 40 countries in just one month.

Today, Amazon offers everything from watches to video games to home furnishings. Amazon is everywhere. Only certain products cannot be sold, as we shall see later.

Can a private individual sell on Amazon?

Of course, individuals can sell in the same way as professionals. All you need to do is open a “Basic” account, if you make fewer than 40 sales a month. This is also the ideal account for selling second-hand items.

There are, however, certain conditions to be met, particularly with regard to the region in which you live and the products you will be selling.

Conditions:

• Be of age
• Reside in the 102 countries supported by Amazon
• Have a telephone line in that specific country
• Have a bank account on which you can receive online payments in one of the 64 accepted countries
• Sell unrestricted, authentic products, some of which have been authorized by Amazon

If you do not meet the selection criteria, your account may be temporarily or permanently suspended.

Services offered for sale on Amazon :

As a seller, once the conditions have been met, various order processing and shipping services are available to you.

Before you start selling your products on Amazon, you need to choose the shipping method you prefer. There are two possible ways of doing this:

• FBM (Fulfillment by Merchant)

Using FBM means taking care of shipping, returns, refunds, etc. yourself. In this case, you’ll be responsible for all administration and costs, including additional delivery charges.

This means you retain control over your entire sales process. It also means you’re responsible for any delays or cancellations. Even if the error comes from the carrier, you are liable in Amazon’s eyes. Your sales performance will be affected. If your sales do not meet performance criteria, your seller account may be suspended.

• FBA (Fulfillment by Amazon) or “Expédiée par Amazon” (Shipped by Amazon )

Subscribing to FBA means benefiting from Amazon’s logistics system. For a small additional fee, this option frees you from the entire logistics of your products, from storage and customer service to delivery and order processing. Please note that in order to subscribe to the FBA option, it is essential to meet certain conditions:

• Ship a minimum of 5 parcels per day
• The cancellation rate must be less than 1%.
• On-time delivery for 99% of your orders

The products you sell with Amazon FBA are then eligible for Amazon Prime delivery, i.e. free delivery within 24 hours. What’s more, unlike FBM, you won’t be held liable for delays or damaged packages. So your performance won’t be affected.

Then, to ensure your products are visible to your prospects, there are two possible marketing levers:

• Natural” search engine optimization (SEO) (more on this later)
• Amazon Ads. Your products will then be promoted by Amazon. Various advertising formats are available, but all are based on a bidding system. You pay every time a user clicks on your ads – this is known as CPC (Cost Per Click) advertising.

What’s special about Amazon?

Before taking the plunge on Amazon, keep in mind a few of the marketplaces‘ special features. These include…

Increased competition

If Amazon is the world’s number 1 marketplaces today, it’s partly because it centralizes millions of sellers and products. The increased competition and demands of Amazon mean that sellers must differentiate themselves from the competition. There are a number of ways to do this:

• The Buy Box

The Buy Box is the yellow “Add to Cart” button on every product page of the marketplace. As its name suggests, it allows visitors to add a product of their choice to their shopping cart. The Buy Box thus represents a key stage in the conversion tunnel.

However, this yellow button is not accessible to all sellers. In fact, when several sellers offer the same product, only one of them will be on the Buy Box. To benefit from the Buy Box, certain eligibility conditions, defined by Amazon’s algorithm, must be taken into account.

What’s more, on Amazon, pages are sorted by product, not by seller. This means that ineligible sellers are less visible, with their products placed alongside their competitors, and can only differentiate themselves by price or delivery quality. This reduces their chances of conversion, since 80% of buyers select a seller present on the Buy Box.

• Buy Box eligibility requirements :
• The Perfect Order Percentage must be greater than 95%. This is the number of perfect orders divided by the total number of orders over the last 90 days.

A perfect order respects several criteria (delivery times, order cancellation rate, delay rate, customer response time, customer evaluations, etc.).

Order management

As far as order management is concerned, as a seller, it’s essential to ensure that the synchronization and updating of your orders is operational. Indeed, if you have various sales channels such as your CMS, Amazon or even your store, everything needs to be centralized on a single central system. This can be achieved with the help of cutting-edge technological tools such as Shippingbo, a single interface for managing your inventory, orders and shipping.

Sales commissions

As you know, selling on Amazon represents a certain financial cost. Amazon charges sellers a commission for every product sold on their platform. These commissions vary between 8% and 15%. Find out more about the percentage Amazon charges below.

Performance criteria

In addition to the need to offer an impeccable service to consumers, in the midst of unbridled competition, Amazon imposes performance criteria. The Amazon marketplace uses four indicators to measure the performance of your business:

• Defective order rate (must be less than 1%)
• Order cancellation rate before processing (must be less than 2.5%)
• Late shipment rate (must be less than 4%)
• Reimbursement rates

When these performance standards are not met, Amazon notifies you and gives you 60 days to improve your results. If the notifications follow each other and your performance is deemed “poor” by the e-commerce platform, your seller account may be suspended. You can then request reactivation, but you’ll need to provide an action plan to rectify the situation.

Regular monitoring of these indicators is therefore essential. You can use the “Customer Indicators” tool in your sales account to check your performance.

What percentage does Amazon take?

As you can probably imagine, selling on Amazon comes at a price. There are 4 different and variable types.

Sales plans

First, there are the fixed costs corresponding to the sales plan. There are two of them:

• The individual plan :
• Price: €0.99 per item sold via Amazon.co.uk.

This cost is in addition to the selling expenses set out below.

• Professional :
• Price: €39 per month

This offer is profitable if you sell 40 products or more per month, and allows you to benefit from Amazon advertising.

Selling expenses

Once you have subscribed to the sales plan, various sales fees must also be taken into account for each sale and vary according to the product category:

• Between 8% and 15% of the total amount paid by the buyer. Most products have a minimum charge of 30 centimes.
• A small exception is Amazon accessories, which are subject to a 45.9% commission.

Shipping costs

Shipping costs are then added, depending on whether or not you subscribe to Amazon FBA, “Shipped by Amazon”. These charges are calculated in cubic meters per month and vary according to product category and seasonality.

• If you’re an FBA user: charges are billed monthly according to the average space used in the warehouses. It also depends on seasonality: there are 2 seasons: January to September and October to December, the second being more expensive. Please note that additional charges apply to long-term storage, i.e. for more than 1 year.
• If you are not an FBA user, shipping costs are defined according to your sales plan:
• Individual Plan – Amazon sets the shipping costs and passes them on to you.
• Professional plan – you define the shipping costs. Amazon will then pay them back to you in the form of a shipping credit. (exception for books, videos, DVDs or music)

Other costs :

Other costs are also likely to arise:

• Long-term storage costs
• Withdrawal order fee
• Overrun charges
• Large-volume selling expenses

The advantages of selling on Amazon

After analyzing Amazon’s specific features and observing the commissions it charges, the question is: why sell on Amazon?

• Visibility: the figures are clear: with a customer base of over 300 million, your products benefit from considerable visibility.

• Credibility: Amazon’s processing, shipping and after-sales services are beyond reproach, giving the seller greater credibility and trust from consumers.

• Internationalization: Amazon gives you easy access to foreign markets, thanks to its international infrastructure and country-optimized listing system. By expanding your business beyond the French market – particularly in Europe (Italy, Germany, Spain) or the United States – you can significantly increase your visibility and sales. On average, sellers who open their Amazon store internationally see up to 30% growth compared with those who remain limited to France. An essential strategy for accelerating your e-commerce development.

• Low marketing costs: selling on a marketplace has never been easier. Few marketing strategies are required upstream. However, with increasing competition, it’s essential to stand out from the crowd.

• Security: Amazon attaches great importance to the security and protection of its platform. Technical problems rarely occur, and payments are made via Amazon Marketplace without having to divulge your bank details – a reliable and secure system.

To sum up, here is the triple benefit of selling on Amazon:

→ Acquire qualified traffic

→ Benefit from the platform’s logistics and tools

→ Sell your products internationally without taking risks

How do I sell my products on Amazon?

To sell well on Amazon, certain practices can be adopted:

What to sell on Amazon

As a first step, it’s essential to carry out a survey to identify flagship products and potential niches on Amazon. To do this, you can analyze merchandise sales volumes, identify goods with low competition, observe average prices, reviews, etc. You can also use Amazon trends to identify potential niches.

Keep in mind that value for money is paramount. There’s no point in going head-to-head with the big brands already established on the platform: it’s better to meet a precise, targeted need.

Optimize your product sheets

Once you’ve made your selection, it’s essential to optimize your product sheets.

• Optimize your titles for SEO and encourage people to click on your ads.
• Describe your article in detail, simply and understandably. Break down detailed descriptions into bullet points so readers can digest the information.
• Choose the right image format. They need to be numerous, from different angles. They also need to be of high quality to be zoomable.

Pricing strategy

Needless to say, competitiveness reigns supreme on Amazon. Your pricing is therefore essential if you are to be profitable, while remaining in line with the products already on the market. Too low a price would be a mistake on your part. A tool is available on Amazon to help you calculate your product’s revenue potential and margin. What’s more, the calculator automatically takes shipping costs into account.

SEO strategy

Once you’ve selected your products, you need to optimize your SEO to get the best possible ranking in search results. Keywords need to be carefully selected. Free tools are available to help you prioritize them. Once the keywords have been defined, they need to be integrated into your product listing, titles and descriptions.

Customer reviews

Unsurprisingly, customer reviews are a source of trust and credibility in your product and, more generally, in your brand. Managing customer reviews is therefore a key part of your strategy, since the products at the top of the list are the most highly rated.

The response to your potential negative reviews is not to be neglected. It allows prospects to see that you’re responsive, that you’re listening, and that you’re dealing with negativity. Visitors will be reassured.

In other words, the quality of your products, their price and shipping logistics are among the key satisfaction criteria.

Careful logistics strategy

To sell your products successfully on Amazon, you need to optimize your logistics. When you launch your business on the Amazon marketplace, you can start by using Amazon FBA. This will enable you to delegate all your deliveries and after-sales service with complete confidence. This will guarantee impeccable service to your customers. Once your products are well established on the marketplace, you can choose to continue delegating your services. Or, you can take back control of your order and shipping management, at your own expense, with the help of robust, scalable technologies such as Shippingbo, which will enable you to ship as fast and efficiently as Amazon.

Conclusion

Selling products on Amazon can be done with ease, but achieving profitability is another matter altogether. Amazon remains an undeniable leader in online sales, offering fertile ground for many sellers.

However, the challenges and requirements of this platform should not be overlooked. An in-depth understanding of Amazon’s mechanisms and algorithm is crucial to taking full advantage of it and generating significant traffic. Choosing the right product and market niche is only the beginning; you then need to combine financial and logistical strategy to maximize your performance.

That said, selling on Amazon is only part of the equation. Finding a competent marketplace feed manager can greatly facilitate the expansion of your business on other platforms, such as Darty. If you’re interested in this diversification, our guide “Selling on the Darty marketplace“ can be a rewarding read. Exploring both Amazon and Darty can offer a competitive edge and access to a wider, more diverse customer base.