Last Updated: December 2024
In the fiercely competitive realm of e-commerce, where more than 60% of sales in the Amazon store are generated by independent sellers, mastering the art of the right Amazon selling strategy is imperative for brand owners.
Particularly crucial for small and medium-sized businesses, this strategy is the cornerstone for achieving visibility, driving sales, and ensuring overall brand prosperity.
In this article, we’ll delve into the essential components of the right Amazon selling strategy, unlocking the secrets that can elevate your brand’s presence and profitability on the world’s largest online retail platform.
Amazon Selling Strategy to Save You Cost and Time
Don’t Go All the Way
You don’t have to put all your stuff on Amazon right away. Just start with a few things to get the hang of it. Beginning with a small number of products helps you figure out how things work on Amazon, so you can make things easier when you expand.
Whether you’re teaching your team about Amazon or trying out Amazon stuff for the first time, take the time to understand it before making changes.
If you’re not sure about selling on Amazon, think about this: your competition is probably already doing it.
To make sure people on Amazon notice your brand there are more than 310 million active customers and over $300 billion in sales each year, so it’s important to be there too. Even if it’s just a few products, being on Amazon can bring in more sales for your business.
Be a Good Manager and Let Others Do the Work for You
Entering the realm of Amazon as a new seller may bring challenges such as accelerated shipping, feedback management, ratings, optimization, and sponsored search. These are genuine concerns that require attention, but fortunately, there are effective solutions available.
Outsourcing Expertise: Outsourcing tasks that fall outside your core strengths is not only affordable but also highly effective. Numerous Amazon professionals offer services at rates ranging from $10 to $50 per hour.
Secondary Profiles: Amazon allows you to create secondary profiles within your Amazon listing, facilitating the delegation of seller central management.
While the prospect of joining Amazon might seem overwhelming, shaping your entry strategy to align with your business goals and structure can minimize risks and make the process more manageable.
As a business owner, you are in the best position to understand and navigate the intricacies of your business.
What Options Do You Have For Amazon Selling Strategy?
1. Fulfilled by Merchant Listing
| Aspect | Fulfilled by Merchant (FBM) |
| Definition | Basic Amazon listing where you manage all aspects |
| Customer Service | Handled by the seller |
| Picking, Packing, Shipping | Done by the seller |
| Returns | Managed by the seller |
| Usage | |
| Primary Listing | Minimize using FBM as the primary listing |
| Backup Inventory | Acceptable as a backup for Amazon fulfillment center stock |
| Suitability | Best for low-velocity sellers or high-cost items |
| How to Do It Wrong | |
| Best Products | Avoid having the best products fulfilled by the merchant |
| Competitive Categories | Inadvisable, especially in competitive categories |
| Visibility in Results | Typically found beyond page 20 and lacks Prime designation |
| How to Do It Right | |
| Example | Top-selling outdoor ice maker on Amazon |
| Characteristics | Sells infrequently, expensive, and heavy (129 lbs.) |
| Strategy | Appropriate for items with low sales, high cost, and weight |
| Shipping Considerations | Drop-shipping from the manufacturer may be cost-effective |
2. Fulfilled by Amazon Listing
| Aspect | Fulfilled by Amazon (FBA) |
| Definition | Advanced version of Amazon listing where the seller sends inventory to Amazon’s fulfillment centers |
| Seller’s Role | The seller remains in control, but Amazon handles picking, packing, and shipping, as well as basic customer service tasks |
| Prime Eligibility | Items become Prime eligible, enhancing appeal to buyers and Amazon’s search algorithm |
| Usage | |
| Simplification of the Selling Process | Ideal for simplifying the selling process online |
| Control Over Listing Information and Price | Allows sellers to maintain full control over the product listing information and pricing, essential for enforcing MAP pricing |
| How to Do It Wrong | |
| Price Competitiveness | Purchasing inventory and sending it to Amazon without ensuring competitive pricing may lead to slow sales |
| How to Do It Right | |
| Example Scenario | Buyer clicks “Add to Cart” for a $499 item from “Professional Grade Products,” even though the same item is available for $399 from another seller |
| Amazon’s Default Choice | Amazon promotes the $499 offer as the default choice because it is Fulfilled by Amazon, gaining significant positive clout in the search algorithm |
| Impact on Buy Box Dominance | Fulfilled by Amazon can help another seller increase both sales volume and margin, even with a higher price |
Use a Loss Leader
Loss leaders are products intentionally sold at a loss, potentially below cost or just beneath acceptable profit margins. This widely adopted retail tactic is particularly effective on Amazon.
Consider it akin to the razor and razor blades strategy. In this approach, shaving supply companies often sell razors at a loss but make up for it by selling replacement blades at a significant markup.
Customers willingly purchase the pricier razor blades later because they are still more cost-effective than buying entirely new razors. Voila—profit!
So What Is Your Amazon Selling Strategy to Make This Happen?
A. Building Up a Good Seller Rating
Selling anything on Amazon requires a high seller rating. Offering products at a loss initially can help you secure those crucial first sales, establishing you as a reliable and trustworthy seller.
B. Building Up Item Reviews
Loss leaders are handy for new products or brands without any Amazon reviews. For instance, authors using Amazon’s Kindle Direct Publishing often benefit from Free Book Promotions to create buzz before selling the book.
However, be cautious, as this strategy might make people question the product’s value at its regular price, especially if you’re emphasizing quality or luxury.
C. Getting Buyers to Your Seller Profile
Buyers intrigued by one of your products might discover additional items you offer. Guiding them to your seller profile provides a comprehensive view of your selection.
Loss Leaders as Profile Attractors
Offering a product at a loss serves two main purposes:
- Low Price Attraction: People may click on the listing due to the low price. Even if they don’t buy that particular item, they might explore your profile for more appealing products.
- Post-Purchase Exploration: After making a purchase, buyers may explore your store for compatible accessories or related items.
Profile Navigation
- Image Above: Clicking on the link on a listing directs visitors to your seller profile. The top link leads to the manufacturer’s storefront, and the lower one goes to the seller who won the Buy Box.
- Image Below: Manufacturer’s storefronts are strategically designed to entice buyers interested in any of their products.
Profit Consideration
- This strategy thrives if you can generate profits when visitors explore your seller profile.
- Example: Selling a computer at a loss should be offset by selling related items like mice, mouse pads, keyboards, flash drives, laptop cases, etc., at substantial profits.
Suitability
- Effective for sellers with similar or complementary products.
- Less suitable for sellers with a broad range of unrelated products.
D. Use Data-Driven Pricing
Many sellers tend to rely on gut feelings and personal opinions when deciding on prices. Unfortunately, this approach often leads to prices that are either too high to attract buyers or lower than what could maximize profits.
Considering that Amazon prices shift millions of times daily, it becomes challenging for humans to analyze the data quickly and set the most effective price.
E. Stick to High-Quality Products
Certainly, someone has to sell cheaper stuff, especially when using loss leaders. But, sticking to high-quality products usually works better.
Why? Because happy customers mean fewer returns and bad reviews. For a detailed plan on getting more reviews,
Avoiding returns saves you money and lets you focus on selling. Plus, with a high Amazon seller rating, you’re more likely to make sales without relying on loss leaders.
And here’s the thing: Amazon customers aren’t too stingy. Unlike eBay, where everyone’s hunting for deals, the average Amazon buyer cares more about a good experience and a good product.
F. Prioritize Customer Service to Win the Buy Box
The Buy Box is like Amazon’s ultimate prize and the ultimate aim for most successful Amazon selling plans.
It’s often stated that about 83% of all Amazon sales happen through the Buy Box, and sellers who secure it can often charge prices around 20% higher than their rivals. It’s as significant as having your website ranked #1 on Google.
Amazon uses a bunch of metrics to figure out who gets the Buy Box, but the key is simple: treat your customers as best as you can.
Conclusion
In summary, mastering effective Amazon selling strategies is crucial for brand owners. From utilizing loss leaders to securing the coveted Buy Box, these tactics can significantly impact success.
Despite challenges, the potential rewards are substantial, positioning brand owners for success in the dynamic world of e-commerce. Adaptability, strategic thinking, and a commitment to customer experience are vital for thriving on Amazon.
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