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Ecommerce
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May 16, 2024
HatLaunch generates 75% of revenue from digital advertising spend across Google and Facebook, which Clearco funds
Almost everyone you know has used Amazon to make purchases. The tech giant boasts 37% of market share among US ecommerce retailers, and generates sales of over $65 million dollars per hour worldwide. Although ecommerce businesses may prefer to generate sales on other platforms, there’s no denying Amazon’s visibility: Amazon’s app was downloaded 25 million times in August of 2022. The following year, the number of visitors to Amazon.com topped 2.27 billion. That’s a lot of potential sales for ecommerce businesses!
So, how can ecommerce brands join Amazon’s marketplace? Here is a primer for setting up an ecommerce shop on Amazon that will allow sellers to choose the most viable fulfillment strategy, create a listing, and start making sales and earning revenue.
An Amazon Seller is a brand or business that sells products on Amazon’s marketplace. Amazon sellers are responsible for more than 60% of ecommerce sales on the Amazon marketplace. These independent ecommerce sellers offer goods through Amazon’s Seller Central platform, which also includes both brand resources and seller apps. There are two types of Amazon sellers:
The first decision to make as an Amazon seller is which fulfillment method to use. Amazon has two options for shipment: fulfilled by Amazon (FBA), and fulfilled by merchant (FBM). There are pros and cons to both FBA and FBM. Both cost $39.99 plus selling fees, but selling fees can vary considerably between the two. For ecommerce businesses considering fulfillment options, the best choice meets the seller's needs, fits the business objective, and is suited to the product being shipped and sold.
In FBA, sellers ship goods directly to one of Amazon’s warehouses (Amazon will specify which warehouse). Amazon will then unload the goods, handle the customer service, ship the item to the customer, and pay sellers for each sale. FBA costs $39.99 per month, plus selling fees, referral fees, FBA fees, storage fees, and fees for any other services (like book rental or media sharing) used.
Despite the fees, FBA is popular with ecommerce sellers. FBA gives customers the option of Amazon’s 2 day prime shipping, and gives the seller more exposure to new customers and sales. However, since Amazon is handling the fulfillment, marketing, and transaction, Amazon will take fees that can eat into profits. For this reason, FBA is used mostly for resellers, drop-shipped goods, white label products, and small items with high margins.
In FBM, the seller will need to handle the transaction themselves. FBM items are shipped from the seller’s warehouse, by the seller. This is more work for ecommerce businesses, however, it does save on fees: FBA fees in the US start at $3.22 per item and increase based on size and weight. Despite the savings, FBM can be extra work for sellers and mean fewer sales, which is usually the objective of paying Amazon’s $39.99 monthly selling fee in the first place. For this reason, most Amazon sellers choose FBA. FBM is best for large or bulky items and brands that already have an established ecommerce presence and supply chain. Sellers can use FBA for most items, with FBM turned on for the few items that would be too expensive with FBA.
Amazon also has a free calculator to help sellers decide between the two fulfillment choices.
New ecommerce vendors should start looking at Amazon’s sales categories. Items where there are high sales and low competition show unmet demand, which may indicate an opportunity worth tapping into. Tools such as Jungle Scout and Helium 10 can give sellers information about where and when Amazon customers buy. With this information, sellers can then start sourcing items from suppliers, manufacturers, or retailers.
This part of the process might take some trial and error, research, and calculation. Ensure profit margins (and gross profit margins) are healthy from the start by taking seller fees, FBA fees, or shipping costs into account. Look at the historical prices for items, trends in pricing items, and the number of other sellers offering the item on Amazon to get some idea of appropriate costs – the last situation sellers want to be in is holding inventory that costs more than it can earn!
For seasoned ecommerce businesses bringing their products to Amazon’s marketplace, there’s likely no question about what to sell. However, brands should be registered under Amazon’s Brand Registry, which can help prevent copyright infringement and remove counterfeit listings. From there, ecommerce veterans can skip to creating a listing (and generating sales). Good Amazon listings are clear, easy to understand, and offer plenty of detail.
All Amazon sellers can benefit from the resources on Amazon seller central, which is ultimately where listings are created and products are sold. Amazon seller central will provide instructions on where to ship products for FBA, how to create listings, and daily sales. Amazon seller forums are another option to ask questions and get advice from others in the same situation.
Amazon’s share of the e-commerce market is large enough to have benefits for seasoned e-commerce businesses and new sellers alike. Whether or not businesses use the FBA seller system or run Amazon ads, Amazon’s platform offers plenty of visibility - which may be all your brand needs to reach its next level of growth. Clearco connects to your Amazon store to help determine your funding capacity and make the ecommerce Invoice Funding a quick process. For a relatively low cost, ecommerce businesses can easily find new markets on Amazon – so it’s worth giving it a try.
Kristen is the co-founder and Director of Content at Skeleton Krew, a B2B marketing agency focused on growth in tech, software, and statups. She has written for a wide variety of companies in the fields of healthcare, banking, and technology. In her spare time, she enjoys writing stories, reading stories, and going on long walks (to think about her stories).
