What You Need to Sell on Amazon
There are several things to keep in mind before you start selling on Amazon, and I will try to highlight several of those key areas below. For one, keep in mind that not all categories are currently available for the integration between Shopify and Amazon, so review your catalog to ensure that you understand which product categories are currently eligible.
Secondly, you can get overwhelmed with all of the different terms, acronyms, programs, and requirements to sell on Amazon. I recommend you start off with a few products and test the waters before exporting all of your eligible products to Amazon as there will naturally be a learning lesson along the way. Finally, it is worth understanding what available options are out there for your products and which to pursue.
Making Your Way Around Amazon (Basics; Vendor vs. Seller)
While this guide is meant to summarize key strategies and initiatives you can use to grow your business on Amazon, let’s go over a few of the basics, starting with the difference between selling on Amazon (‘seller’, ‘3P’, or ‘marketplace seller’) and selling to Amazon (‘vendor’).
1. Amazon Seller Central with Fulfillment Options
When you’re a seller on Amazon’s marketplace, you own the inventory until a customer receives it. You can opt in to have Amazon facilitate fulfillment and customer service to customers or do it yourself (see below). In most cases, being a third-party seller is the easiest and least expensive way to start selling on Amazon. Sellers utilize the Seller Central portal, with some different features available than the Vendor Portals.
As a seller, you have two different fulfillment options:
Fulfilled by Amazon (FBA)
You send inventory to an Amazon Fulfillment Center (FC) and they manage shipping and returns from customers. You can control how much inventory to send to FCs as needed, and you pay storage fees for the product in addition to a fulfillment fee for every unit sold to customers. Keep in mind you, still own the inventory until a customer receives it.
Fulfilled by Merchant (FBM)
You fulfill directly to customers and manage shipping, returns and customer service. This is a good option for made-to-order products or for products that require a longer lead time for processing.
2. Amazon Vendor Express and Amazon Vendor Central
As an Amazon vendor, you sell direct wholesale to Amazon; they then own the product once they receive it. The available options are Vendor Express, which is open to anyone, or Vendor Central, an invite-only program.
Benefits of being a vendor:
- Vine program
- Self-service promotions including Gold Box Deals
- Marketing placements on category pages, corporate emails, etc.
- Access to additional category initiatives such as Gift Guides, Holiday Collections, etc.
- Access to programs such as Prime Now, Fresh and Pantry
- Lower chance of account being suspended for unknown reasons
Disadvantages of being a vendor:
- Less direct control over pricing
- Fulfillment is more complicated and offers less control
- Slower payment terms
- Typically is the more expensive model
- Increased reliance on Amazon Vendor Manager and Retail teams
While there is overlap between features available on the Seller vs. Vendor Portals, we will primarily focus the remainder of this post on features available on Seller Central since this is the focus of the Shopify-Amazon integration.
Account Suspensions & Listing Removals
While Amazon encourages sellers of all size to sell on the Amazon marketplace, it is laser focused on the customer experience and thus has the ability to warn, suspend, or block a seller account for poor performance metrics or for behavior it deems outside of its Terms of Service (‘TOS’).
It is critical that you maintain healthy performance target rates (i.e. order defect rate, late shipment rate, etc.) to prevent customers from having a poor customer experience. Amazon will typically give you notifications and warnings if you fall below those thresholds, and it may sometimes suspend the offer of a specific listing while it asks you to remedy any current issues. If the issues continue to exist, it can result in an overall account suspension, which then requires you to submit a Plan of Action (‘POA’) to plead why you should have your selling privileges restored.
Another, and more common, reason for account suspensions is for engaging in activities that Amazon states is a violation of their TOS. Examples include incentivizing unauthorized reviewers with free products or money, selling counterfeit items, rights owners notice complaints, soliciting only positive feedback from reviewers, and more. Additionally, opening up a second account without approval for multiple accounts could lead to a suspension.
In summary, once you launch your account it is your responsibility to ensure your performance metrics are healthy and that you ‘play by the rules’ - even if it seems like your competitors may not be (i.e. buying reviews from review clubs, posting fake reviews on competitive products, etc.). Your goal is to have a healthy and active account not only for now but also for the future.
Making Your Way Around Amazon: Additional Programs
There are no shortage of programs and opportunities for brands on Amazon. While we won’t be able to review every potential opportunity in this guide, we will summarize several of the key areas that you may be able to utilize to grow your brand.
Fulfilled By Amazon (FBA)
FBA is a service provided by Amazon where you can leverage Amazon’s fulfillment and customer service capabilities for your products. FBA allows brands to send product to Amazon Fulfillment Centers to be stored and fulfilled to customers.
Amazon also handles customer service and returns for FBA products, and the products become Prime Eligible as a result of the FBA program (this makes your products eligible for Free Two-Day shipping for Prime customers or Free Standard Shipping for Non-Prime customers).
The reason this is so important is that Prime customers spend considerably more than non-Prime customers, and many customers use the ‘Prime only’ filter when searching for products. A study from Piper Jaffray estimates that nearly 1 of every 2 households in the US has a Prime Membership, and several estimates from other firms claim that Prime Members spend at least 2-3 times more than non-Prime members.
In summary. if you do not use FBA, then you are responsible for storage, fulfillment, customer service, and returns for your product. Follow these instructions to connect Shopify with Fulfillment by Amazon.
Seller Fulfilled Prime (SFP)
Many brands are unaware of the SFP program and that they could potentially qualify for making their products Prime Eligible through their own direct fulfillment to customers. To qualify for SFP, you need to meet a high performance bar and meet several metrics during a trial period required to enroll in the program. For example, you must be able to ship 99% of orders the same day you receive them (if orders come in after 2PM local time, orders can go out the next business day). Additionally, you can make your products Prime Eligible in certain regions if it is too costly to be Prime Nationwide. Keep in mind, if you’re in an eligible city, you can use Shopify’s integration with Postmates and Uber to provide same-day delivery to your local customers.
Amazon estimates that SFP listings that became Prime Eligible for the first time saw an average sales lift of more than 50%. Also worth noting that there is no additional cost to brands to enroll in SFP outside of the shipping cost.
Subscribe & Save
FBA Subscribe & Save allows customers to purchase eligible products at a discount through a subscription program. There is a wider range of categories that allow for Subscribe & Save, and it is a great option for products that customers buy regularly. This allows brands to build greater loyalty with customers, and reduces the chance that your customer will buy a competitor’s brand. To enroll for eligible products, your FBA account must be in good standing, have a feedback rating of 4.7 or above, and the account has to be active for at least 3 months.
The Brand Registry program has gone through several recent changes at Amazon, providing private label sellers with registered trademarks access to a variety of new tools. Namely, brand registry now requires a brand to register their character/word trademarks with the USPTO (or relevant government trademark office), and that the trademark must match the brand name printed on products or packaging.
This allows brands to utilize the brand registry tool to report and better manage their registered copyright or trademark infringements. Additionally, brand registry is now a requirement for several new tools that are opening up to sellers, including EBC (see section below), Amazon Stores (a new storefront for brands to showcase their brand and products, Headline Search ads, and more.
Because of the recent requirement for all brands to have a registered trademark in order to be eligible for Brand Registry, there is reportedly a long wait time for the USPTO to provide you with your registration number when you get approved, so if you are private label brand I highly encourage you to look into this very soon.
Seller Central has a rich interactive dashboard that allows you to track several key metrics including sales, traffic, and conversion rates (note traffic and conversion rates are not available to Vendors currently). It gives you the ability to look at this for several different time ranges and rollups, identify sales trends and new opportunities, analyze refunds and negative feedback, and much more. I highly recommend spending some time getting familiar with the reporting options as you will inevitably uncover data that will influence your approach to growing your products (i.e. products to increase traffic via ads, items that have product issues or high returns and need to be improved/discarded, etc.).
Category and Product Restrictions
Because of a variety of reasons including reducing counterfeits, as well as increasing quality and safety, several categories require special approval in order to sell those products. The categories list can be found on Seller Central, and in order to gain approval you may have to be ‘ungated’ and provide invoices from your supplier, government agency documents (i.e. FDA), etc. In most of these cases you will need to register for the Professional Selling Account option for Seller Central.
Additionally, Amazon restricts certain products and categories, so if you believe that your product may fall in a ‘grey area’ it is best to research this ahead of time on Seller Central.
North America Unified Account
Through this program, Professional Sellers have the ability to easily cross-list their products on Amazon Canada and Amazon Mexico. In a matter of minutes, you can export your listings to the other country marketplaces, adjust pricing rules, exclude products that you do not want to sell, and much more.
It is recommended to verify each listing that you export to ensure everything looks right, and that your pricing logic makes sense. There is much more information available on Seller Central, but the good news is that this does not require creating a brand new account in other countries (as is the case with non-North American Amazon marketplaces).
Amazon EU / Global Selling
Amazon has a variety of programs to make it easier to sell to its marketplaces across the world, particularly in Europe. A great opportunity to start gaining exposure to the EU is through the Amazon European Fulfillment Network (EFN). This gives you the ability to send inventory to one FC in a local marketplace in Europe (most often the UK), and then via the FBA program that FC will then fulfill to the customers of the other four European Amazon Marketplaces, including returns, and show up as Prime Eligible.
Thus, you can fulfill to customers of Amazon Germany, France, Spain, or Italy through your Amazon UK inventory. This also simplifies the need for only a single VAT for the ‘home’ country you select, until you pass a certain sales threshold in which case you will need to collect tax and register for a VAT in each corresponding country.
Exclusives is a pre-approved sellers-only program on Amazon that helps showcase brands of exciting and innovative products that can only be found on Amazon and that brand’s site or store. Brands that are approved into the program gain access to several opportunities to drive traffic and conversion to their Amazon pages, including incremental merchandising and promotional opportunities, promotional tools, enhanced detail pages including product videos, and a Brand Development team to assist with managing your Brand on Amazon.
There are several qualifications needed to gain access to the program, including an exclusivity clause where brands won’t sell wholesale during that time period. The cost of the program is 5% over their category referral fee.
Multi Channel Fulfillment (MCF)
MCF is a growing program in which Amazon allows you to utilize your FBA inventory to fulfill orders to other channels, including your own Shopify store. The costs of the program have come down over time and this may be a good opportunity for brand owners to fulfill orders from their Shopify site or alternative marketplace via Amazon, even if only on occasion (such as during holidays or spikes in demand).