Posts

Top ten reasons for and against selling on Amazon

/in /by

With all the online marketplaces available should you consider selling on Amazon?  With the work I do at Inspire Technologies, I have a unique perspective on the pros and cons for selling on Amazon.  The list is not any order.

Reasons to Sell on Amazon

  1. Amazon is the World’s largest online marketplace.  Therefore your products will be seen by the largest group of consumers.
  2. It is simple and inexpensive to get started.  Ex. the profession plan only costs $39.99 per month.
  3. Amazon handles all of the customer payments.  As a merchant you have a low risk of fraud.  Amazon will handle the merchant transaction and your account will be credited for sales.  This has additional value for overseas sales that have an increased risk of fraud.
  4. You can choose to sell your products only in the United States or Worldwide.
  5. If Amazon already has the item defined in their catalog it is easy to link information to your product content.
  6. Amazon has some of the best product reviews.  Good product reviews are an excellent sales tool.
  7. A merchant can be the manufacturer of an item or someone working from their home.  It does not matter.  Each merchant will be rated using a common set of metrics by Amazon.
  8. You can sell almost anything on Amazon.  They are the 21st century General Store.
  9. Consumers will find your niche items.  Amazon’s customer base is large and global.  If you have a specialized product and want to reach a global market, Amazon is the place.  Niche items can also demand better profit margins.
  10. Merchants that sell on Amazon must provide excellent customer service functions.  Apply their best practices across all of your sales channels to improve customer service and it will help your sales.  Here is a link to a blog I had written about using Amazon’s sales metrics.

Top Reasons not to Sell on Amazon

  1. Amazon gets to see all product sales.  If a product is selling well Amazon will purchase the item directly from the manufacture and become your competition.
  2. Product content uploaded by merchants become part of Amazon’s product catalog.  For example, any image or product description uploaded can be used by all merchants selling that product. This can be beneficial or can be disastrous when the product content uploaded is incorrect.
  3. Incorrect product descriptions will drive returns.  It is not uncommon for there to be ten or fifteen ASINs for one UPC.  The product content can vary, be listed in a different department or represent a different package configuration (sold individually or in a 12 pack).
  4. There is a lot of competition for commodity items.
  5. Amazon charges a sales commission on all products sold in their marketplace.  The commission rates vary, 15% is common for most product categories (note that this includes credit card fees that typically cost a merchant 3%).
  6. Amazon owns your store.  They can turn it off at any time.  I have seen accounts get suspended for days or completely terminated due to merchants not meeting Amazon’s requirements.  Here is information on Amazon’s A-to-Z  guarantee  as well as a link to the restricted products.
  7. Amazon can warehouse and pick your items. It is called Fulfilled by Amazon (FBA).   This can be convenient but adds a number of additional costs to a sale.  Here is a link to their FBA fees.
  8. Offering products for sales that you cannot fulfill will drive your seller ratings down. To be successful on Amazon you will need to have a solid system to accurately manage inventory and orders.
  9. Product feeds are used to add and maintain product content, prices and inventory.  The product feed specifications are different by department and are continually changing.
  10. Your competition has access to your prices.  Amazon provides tools to allow merchants to retrieve competitive product prices.  It helps drive lower prices, but you need the right applications to leverage this raw data (this is a service that Inspire provides).

Conclusion

Amazon is the global Internet marketplace.  If you plan to do any Internet sales Amazon should be the first major marketplace you sell through. Amazon will drive your sales but maintaining profit margins can be difficult.  Amazon will educate you so use them to sharpen your business process and use the increased sales created by Amazon to get better discounts from your suppliers.  Don’t stop with just one store.  Open your own private branded store or stores in other marketplaces.  A high SKU count is key to a profitable Amazon store.  Inspire Technologies has developed the Item Intelligence system that can help your business streamline the process of listing product on Amazon.  Give us a call to learn more.

-Joe Hainey

Beware of Amazon Restricted Item Rules!

/in /by

Selling on internet marketplaces like Amazon can be a wonderful experience. You have a great opportunity to market your products worldwide. However, you need to make sure you conform to each particular marketplaces policy on what you can and cannot sell through their store.

Amazon is a great example! When you first agreed to sell on Amazon you received their rules and regulations. It is your responsibility to review it and make sure you are in compliance, as well as check back often to make sure any revisions they make don’t affect you. You cannot sell anything hazardous, prohibited by law, or alive to name the obvious. However while some things are obvious others are not.

A prime example is Amazons Prohibited Content rules. Amazon posts a list of items prohibited to sell on their site, so as a seller, you need to be aware of this list. But know that this list is not all-inclusive. It is your responsibility to make sure ANY item you sell does not fall into one of their prohibited categories. Amazon is very serious about not allowing prohibited items to be sold and they will monitor your inventory to make sure you are in compliance. If any prohibited items are found in your offerings, Amazon will quickly suspend or terminate your selling privileges. If you have any inventory in their fulfillment centers, they can destroy your inventory without any reimbursement to you, no matter what the product is, prohibited or not.

So, if you receive an email from Amazon advising you to remove prohibited items from your listing within 48 hours of the notice, take it serious! Amazon will work with you as a seller to fix your listings, but be forewarned that if you don’t comply, your Seller Central account could be shut down permanently…. and there goes your profits!

So what, you ask, are examples of prohibited items? They can be found in many categories! Many are obvious: Alcoholic Beverages, Illegal Drugs, Drug Paraphernalia, and Weapons.

But did you think about that pair of snakeskin boots you’d love to own? Yep, any product made from the skin of snakes, crocodiles or seals are prohibited! Do you take a joint pain supplement to help relieve your joint pain? Many supplements are made from shark cartilage; however you won’t find these on Amazon because products that contain parts from sharks, whales, dolphins, or porpoises are also prohibited!

Do any of your products contain an expiration or ‘use by’ date? Amazon prohibits selling anything that has passed the stamped date on the product. Perishable products must be removed from your inventory 50 days prior to their expiration date. Note that if these items are sold by Amazon thru their FBA fulfillment program they have the right to dispose of these items without returning to you! So please make sure you organize your inventory and pick items from your inventory according to these dates. Are any of your products labeled as ‘tester’ or ‘not intended for resale’? Better get these items off your seller central inventory list as they are also prohibited by Amazon!

These are just some simple examples of items you may not think would be prohibited but there are also items that are not so simple to identify. If you look at Amazon’s example of permitted listings within the Drug category, you will notice under their “Examples of Permitted Lists” that drugs approved for over-the-counter purchase, or dietary supplements are approved AS LONG AS they are not otherwise prohibited by Amazon policies. If you review their extensive list “Examples of Prohibited Listing” under the Drug category, you will see many examples of prohibited items. If you offer anything that could be even remotely considered within this Drug category make sure you know for certain that the product is allowed to be sold.

Inspire Technologies can help you manage your prohibited items. In addition to the items posted by Amazon, you can supply us with a custom list of potential keywords for items you might offer that Amazon would consider prohibited and/or restricted. Working with Inspire as your partner, we will monitor your product titles and descriptions and exclude those prohibited items from any feeds we send to various marketplaces. But even this can be tricky to be all-inclusive. Amazon recently found medicated shampoo to be a prohibited item, as well as surgical stainless steel scissors. What seems like simple everyday items to most of us could cause your site big problems!

Moral of this story, once Amazon finds you to be out of compliance and suspends or terminates your store it can be extremely difficult, if not impossible, to get them to turn you back on. You could spend countless hours trying to get your status restored. So the best advice we can offer you is to make sure you understand the “Restricted Product Rules” for any marketplace you intend to offer your products through and make sure you adhere to all of their rules and regulations.