Should you sell on Amazon? – Inspire Technologies, Inc.

Should you sell on Amazon? It’s an interesting question that should be asked by all merchants. The simple question brings up many common replies to avoid selling on Amazon.

Our business is too big or too small to sell on Amazon.
Their commissions will not leave us with any profits.
There are too many merchants to compete with.

I want to present the question from a different perspective. Why not sell on Amazon? All of the points noted above have weight, but they also leave out a number of benefits. My first reason to have any online merchant sell on Amazon is to improve their business process. Amazon is a leader. Being an Amazon merchant will sharpen business processes and make the organization a better competitor in a global marketplace. Let’s assume you already have an online store and sales are okay, but they’re not doing as well as you would like. You can open a merchant account on Amazon for as little as $40 per month. Listing only a dozen items will get something far greater than the profit from the sales of products. You will get a firsthand education on how the largest online retailer meets customer expectations with three core values: selection, price and convenience. Amazon’s Sellers Central is a merchant’s portal to the Sales Order Management system. It also provides feedback on the metrics that it uses to rate an online merchant. The key metrics are as follows:

No problems.

Each Order that ships on time earns 100 points towards the seller’s Order Quality Score. Positive customer feedback can earn bonus 10 extra bonus points.

Minor problems.

Customer inquiries must be answered within 24 hours. Amazon will keep track of customer service response times and orders that have minor shipment delays. These minor problems do not impact a sellers rating, but are tracked so that you can review them.

Moderate problems.

Orders that do not ship by the promise date and order that are canceled by the merchant will cost the merchant 100 points. The default shipping lead time is three days. However, a merchant can modify the shipping lead time for each item. Common causes for canceled orders are due to inventory issues at the merchant or the supplier. A solid inventory management system is key.

Severe problems.

This includes negative feedback, and customer claims for incorrect or damaged goods (refer to Amazon’s A-to-Z Guarantee). Orders with severe problems will take 500 points away from the Order Quality Score.

Amazon scores these metrics and provides a simple grade based on their findings. The calculation is simply the total number of points divided by the number of orders. Consumers can see the merchant ratings and can use them in their purchasing decisions. Amazon will turn off merchants that have too low of a seller rating for a few days. Merchants with repeated poor performance will be banned from selling on Amazon.

Any online business could improve customer experience by applying the Amazon Seller Rating system to its own business processes. It will bring out the weak spots in your systems and your processes as well as shortcomings that may have been overlooked, or deemed as reasonable within your organization. Apply what is learned from selling on Amazon to your own e-commerce store as it can be a great way to make your business an e-commerce leader in a global marketplace.

In my next entry I will provide the top ten reasons to sell on Amazon.

You might also like