Tips to Sell on Amazon
Here we will specifically analyze the Amazon store as MarketPlace (or sales platform). Although we are shown many advantages, we must take into account a number of elements to highlight:
- There are two types of tariffs and based on what one estimates to sell, it may be advisable to register directly as Pro Seller, despite paying about 39% per month for this service.
- When we upload our inventory in the Amazon store, we must keep in mind which categories of products we are going to sell. Except for the category of books, the sales commission per product is 7%. This means that for each sale we make 7% of our amount will remain in the pockets of Amazon. This means that the profit margin is reduced by more than 7%, since the calculation is made in the final price of the product. Therefore, it affects by more than 7% in the profit margin calculated on the taxable base of our product.
- With this 7% commission we get Amazon to advertise our products and at the same time that people start to know us. With the name of the store many people access directly to it to see if buying on the official website of the company can get a cheaper price.
- It is a good strategy to offer those who visit our store by Amazon to offer them a 5% discount coupon. At least, this way we are avoiding losing 2% of our margin and driving traffic to our store. And taking advantage of the campaigns that Amazon is making of our products.
Be aware that in this type of Marketplace, you should be leveraged. In short, financially our company has to predict how long it takes to pay Amazon to our company for the sales we make on its platform. In summary, in addition to the financial disadvantages that can cause a company with little margin of profit and a lot of sales is that:
When you sell on your platform has the sales history of each reference and in the end they incorporate as direct sales what they see that is most welcome. What could be more sales at the beginning can become a ruin, it is complicated to compete with a giant like Amazon that incidentally continues to sell to lose money, ... (in economics that was called unfair competition and was not allowed. ..).
Amazon is a company that retains payments to its sellers up to 60 days. And if you are a new company you will not be transferring the total. They will leave a guarantee fund in your account to deal with incidents or returns that you have with your customers. Later on, if you work well, you may be able to get that guarantee deposit, but it is better to assume that it will always remain there.
Customers who buy us through this platform are usually very demanding. Many times, they take advantage of the power they have with their comments to try to get additional discounts or some kind of improvement. And this is a serious issue, because if you start to have negative ratings or make claims followed by guarantees of your product, when it is perhaps a refund more than a warranty item, it will also start to affect your rankings. This can cause the account to be canceled from time to time and the money accumulated from your previous sales between 90 and 180 days will be paid to you. It is a major risk, more considering if you have made sales provisions and suddenly stop selling and you are left with an important stock.
And a subject that reflects a kind of unfair competition is that customer ratings are not allowed to products sold directly by Amazon, such as the Kindle. Therefore, Amazon only evaluates the reputation of its sellers but not of themselves.
If you are just starting out in your business, we recommend giving Amazon an opportunity, only by selling with a controlled stock strategy and financial leverage. Based on that strategy we can consider selling only by Amazon. You can learn to interact with your clients, how to turn negative situations or respond to comments. You will become an entrepreneur without realizing it.