Amazon dominates online retail and shows no sign of slowing down. A 2018 NPR/Marist Poll showed that a staggering 92 percent of online shoppers say they’ve bought at least one item on Amazon. The marketplace giant also reported that its 2017 net sales increased 31 percent to $177.9 billion, compared with $136 billion in 2016. Amazon continues to grow, and brands looking to launch or develop their online presence would be wise to make Amazon central to their plans.
For a strong start to your Amazon channel, here are five questions to ask yourself before you enter the jungle.
1. How will I protect my brand on Amazon?
Familiarize yourself with Amazon’s product compliance requirements, which are strictly enforced. Violating any state, federal, or Amazon compliance requirements can result in your listings being taken down for weeks or even months.
Prepare your brand for potential trademark infringements and counterfeiters. Amazon’s Brand Registry is an excellent way to protect yourself against Intellectual Property Rights violations. According to Amazon, brands enrolled in Brand Registry are finding and reporting 99 percent fewer suspected infringements than before Brand Registry’s launch. Amazon reports that it takes action on more than 95 percent of all notices of potential infringement received from enrolled brands within eight hours.
In 2017, Amazon introduced the Transparency program to help brands protect themselves and their customers against counterfeit products. Enrolled brands can place Transparency codes on their product packaging, which Amazon warehouses and consumers can scan to verify a product’s authenticity before shipping or purchasing.
2. Who are my competitors?
Unless you find yourself in the rare position of launching a new type of product, you’ll find that Amazon is filled with competitors, which can make launching on the marketplace feel intimidating. Don’t let that turn you away. While many competing brands are on Amazon, the quality of their products or marketing varies greatly, giving you the opportunity you need to establish a foothold.
You’ll need to take calculated risks. Evaluate the landscape and your competition so you can make data-driven decisions. Some of your products may not be ready for Amazon at launch, but you can introduce them later as your brand builds relevancy and recognition.
3. Are my sellers brand advocates?
In a healthy partnership, both parties benefit. However, not all distributors and sellers are brand advocates. Some distributors may provide your product to unauthorized sellers, which often results in MAP violations. This not only harms your bottom line, but it can also undermine your brand integrity.
When you choose your partners, choose wisely. Working with a third-party seller can provide many otherwise inaccessible advantages, including marketplace expertise, marketing resources, and access to additional channels. Only work with retailers and distributors that you trust to abide by your policies and who are committed to helping your brand succeed.
4. How will I distribute my products – FBM, DS, or FBA?
Shipping your products yourself is known as Fulfilled by Merchant (FBM). FBM allows you to avoid Amazon’s fulfillment fees and customize your packaging to perfectly fit your products. You can even include personalized thank you notes to build a relationship with customers.
- If you are able to guarantee Two-Day Delivery from your own warehouses, Amazon allows you to offer Seller Fulfilled Prime (SFP) to customers with Prime. SFP lets you feature the Prime badge on your listing, which can incentivize Prime shoppers to choose your products. While FBM provides you more hands-on control of your products, it can be expensive and requires additional time and resources.
Drop ship (DS) is the practice of selling a product on Amazon without having it in stock. When a customer places an order, the seller purchases the product from the manufacturer, and then the manufacturer ships the product directly to the customer. The seller never sees or handles the product, unless they act as both manufacturer and seller.
- Drop shipping is a low risk and profit-maximizing approach, but it comes with its own challenges, including less control over inventory supplies and shipping quality, and customer support can be difficult to manage as you scale.
The most traditional distribution method is Fulfilled by Amazon (FBA). FBA products have the Prime Badge, letting consumers know they can expect Two-Day Delivery, which helps increase conversions and sales.
- Offering Prime services is increasingly important as the number of Prime members continues to climb. In April 2018, Amazon CEO Jeff Bezos disclosed in a letter to shareholders that Amazon had exceeded 100 million Prime members. After Prime Day 2018, Amazon reported that it had, “welcomed more new Prime members on July 16, 2018 than any previous day in Amazon history.”
5. How will I build relevance and gain traction when I launch on Amazon?
Products with reviews are more likely to be purchased than products without reviews, according to an Internet Retailer Survey. For listings with less than five reviews, Amazon offers the Early Reviewer Program, which provides verified buyers a small credit to their Amazon account if they leave a review. In the interest of honest reviews, Amazon provides a credit regardless of whether the review is positive or negative. The program lasts for one year or until the listing receives five reviews, whichever comes first. Brands pay Amazon $60 for each listing they enroll in the program.
Cost-per-Click (CPC) Amazon ads are another excellent way to build brand awareness and relevance. Amazon advertising with CPC campaigns can place your products in front of highly targeted or more generalized audiences, depending on your Amazon marketing strategy needs.
Last but not least, your listings need strong organic discoverability, especially if you’re operating on a tight budget. Creating detailed, easy-to-read, and keyword-rich titles, bullet points, and product descriptions will drive your organic discoverability and help you populate higher on SERP. Research keywords and trends to ensure your listings appear for shoppers’ search terms.
Once you’ve answered these five questions, you’ll know if you’re ready to sell on Amazon. If you find that you’re not, you’ll know what steps you need to take next.
Josh Neblett is co-founder and CEO of etailz, Inc.