Some companies think that just uploading their product catalog to Amazon will mean that customers will start buying their products right away, and their revenues will explode overnight. In this short video I explain why that's NOT the case and how to know if your brand is really ready to launch on Amazon.
Find a transcript of the video below.
Selling on Amazon is not really something that you can just "dip your toe into", and expect to start seeing results from. Amazon sells more than 3 billion products across 11 marketplaces and Amazon U.S. has the highest number of products, with over a 606 million product count. Hence, just uploading your products to the catalog is not going to guarantee that anyone can even find your products. So it's worthwhile considering whether your company has the time, resources, and money to invest in really giving Amazon a good shot - otherwise it's just not going to be worth it.
REASON 1: Pricing & Profitability
The first thing to really get a clue into is pricing of your products and how that is going to relate back to profitability at the SKU level, once your products are available on Amazon. There is a variable component to selling on Amazon, and then there are going to be fixed fees associated with using Amazon's fulfillment network, known as FBA.
REASON 2: Understand the benefits of FBA
What FBA allows brands to achieve is Prime eligibility. What Amazon's own figures have shown is that sales can increase from 30 to 50% once an items is switched from merchant-fulfilled (coming directly from a brand's facility) to FBA. So this is an amazing opportunity for brands to be able to use Amazon's logistics network as if it were your own. Sometimes it can seem more expensive than using your own warehouse and fulfillment network that you've set up internally. But do the math - how much will a potentially smaller margin be offset by a fairly dramatic increase in sales once that switch occurs?
Related: Read the pros and cons of Amazon Seller Central (FBA)
vs Vendor Central
REASON 3: You’re prepared to invest.
The 3rd way to know if your brand is ready to sell on Amazon is that you're prepared to make an investment in the platform. You have to be prepared for an upfront investment in getting your inventory to Amazon and setting up all of your systems, as well as understanding how Amazon's algorithm works and putting some promotional budget behind getting your brand represented in the correct way on Amazon, and allows people to feel comfortable buying from you.