How to choose the Amazon sales model that suits you

Although Amazon has attracted countless sellers, there are still some people who do not settle in Amazon for various reasons. The two most common reasons include:

• there is no time

• Think there is a conflict in the channels

Many people think that Amazon is too powerful and may disrupt existing online or physical channels. This is actually nonsense. As far as Amazon's current influence is concerned, it will only bring incremental growth to sellers. For this group of people, you can consider the following sales strategies:

Sales Strategy

Sellers can list a few products first to get familiar with how Amazon works. Remember the fact that there is a high probability that your competitors are already selling goods on Amazon. If you don't enter this channel, your competitors are eating up the market share of Amazon. Think about Amazon's 200 million active users and $100 billion in sales, and you will know what to do.

Take Folding Chairs & Tables as an example. It specializes in selling folding chairs and folding tables. In the peak season of 2016, it launched a product on Amazon to test the waters, and the sales were very hot. Subsequently, Folding Chairs & Tables began to operate Amazon and self-built website businesses together, and both achieved very good results.

Another sales strategy is to create a new brand. The product can be the same as other channels, or the product can be packaged as an Amazon version. For example, Folding Chairs & Tables sells a set of products on Amazon and a separate product on its own website.

The advantage of this strategy is that it is relatively free. Not only can it reach Amazon's huge customer base, but it can also try different pricing strategies without affecting the established brand image.

A new brand strategy is a great way to meet specific market needs and test new products.

Amazon logistics, reviews, rankings, and search optimization are new areas for some companies. Outsourcing can solve most problems. Platforms such as Freeeup, Upwork, and Lancer all provide Amazon work outsourcing services.

The above are some suggestions for those who are hesitant to enter Amazon. Next, we will introduce some sales models of Amazon to help sellers sort out basic sales strategies:

Sales Model

FBM means that the seller is responsible for packaging, delivery and returns. Generally speaking, sellers should try not to choose this delivery method at the beginning, because this type of listing has the lowest weight in Amazon search rankings. In Amazon search, you will find that this type of listing ranks very low.

FBM is mainly suitable for products with very high costs. In addition, it can also serve as a supplement to FBA products to prevent out-of-stock problems in FBA warehouses.

If the product competition is fierce, choosing FBM is not a wise choice.

Take outdoor ice makers as an example. This type of machine can use FBM:

Ice makers are expensive, have a low repurchase rate, and are heavy, so they are more suitable for FBM. The top seller of this type of product has only 5 reviews, which shows that the product ranking fluctuates little.

In addition, the price of this product is very high, so it is not suitable to store a large amount of inventory in Amazon FBA, which is easy to accumulate funds. Moreover, the weight of the product is so large that the transportation cost is also high. Therefore, choosing FBM is the best fulfillment method.

FBA means sending product inventory to Amazon warehouses. After the products are sold, Amazon will be responsible for product packaging and delivery, and also provide tracking and return services.

When using the FBA delivery method, products will have a Prime logo. Prime users are Amazon’s most valuable customers because they buy frequently and spend more.

FBA can improve the ranking of your products in Amazon searches, allowing more users to see your products.

Using FBA can reduce the logistics work of sellers. To some extent, Prime is a shot in the arm to enhance consumer trust.

Vendor Central is where you sell products to Amazon, which is equivalent to being a supplier for Amazon.

The biggest competitor of sellers selling on Amazon is Amazon's own business, so instead of competing with Amazon, it is better to join its camp. However, Vendor Central accounts are currently invitation-only.

If you want access to Amazon’s customer base but don’t want to build an Amazon business unit, the VC sales model is the way to go.

Some VC sellers complained that Amazon’s order volume was too small or the purchase price was too low. In fact, when setting up a VC account, you can set the purchase price and purchase volume yourself, and you can edit it later.

If some products are very expensive or large in size and only a few are sold in a year, Amazon will adopt the Droship method. For example, for the freezer below, after Amazon receives the order, it waits a few weeks for the supplier to make the product, and then the manufacturer ships it directly to the consumer. Note that although the delivery time is more than 5 weeks, the product still has the Prime logo.

This model means that the manufacturer only needs to be responsible for making the freezer, and Amazon can handle the rest.

Sales model combination

Corentium, a seller, uses the FBM delivery method on Amazon. But it is also a supplier to Amazon. Although Amazon's listings get most of the sales, Corentium can control Amazon's pricing by creating listings with price advantages, and it can also respond to emergencies when Amazon runs out of inventory.

FBA has many benefits, including eliminating sellers’ shipping issues and improving product rankings. In addition, sellers can also use FBA to process orders from other channels.

For example, if a seller sells on both Amazon and eBay, eBay orders can be submitted to Amazon, and Amazon services will be responsible for delivering them to eBay buyers.

However, eBay prohibits sellers from shipping products to consumers from other platforms. Other platforms have not taken any measures yet.

In order to maximize sales, although it is more troublesome, the Hayabusa brand still adopts a sales method that combines FBA, FBM and VC.

This strategy is not suitable for all brands and is more likely to lead to price wars.

Sellers can consider the model that suits them according to their own situation. There is no absolutely correct model, but sellers should remember that sales can increase by 10-20% from FBM to FBA, and once they sell directly to Amazon, sales can increase by 40-50%.