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AuctionBytes Blog
Covering auctions, collectibles and marketplace selling.

AuctionBytes Blog The AuctionBytes Blog has been giving a voice to online merchants since its launch in 2005. Named one of the world's top 30 blogs in 2008 by "Blogging Heroes." Weigh in with your thoughts on the joys and pitfalls of selling online.
Wed Mar 20 2013 15:32:28

Opinion: Fees Not the Only Consideration When Selling on Amazon

By: Lisa Suttora
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A recent Reuters article suggests that a growing dissatisfaction among Amazon sellers over fee hikes is driving them to consider alternative selling venues. While rising fees are always of primary concern for sellers, the Reuters analysis fails to address the most compelling reason for third-party merchants to have an Amazon sales channel.

Amazon offers its sellers unique benefits not available in any other marketplace...

Ability to Scale

The ability to scale without incurring massive operations and logistics overhead is one of the most powerful benefits of selling on Amazon.

For years, one of the primary roadblocks for expanding an online store has been the ability to cost effectively warehouse and ship large volumes of products. Limited by the number of orders they could physically process in a day, small businesses looking to scale had few options other than opening a warehouse and hiring a team. A costly expense that can easily cripple a growing business.

With Amazon FBA (Fulfillment by Amazon), even a one-person operation can now affordably outsource the order fulfillment process.

By leveraging the services and fulfillment infrastructure provided by FBA; rather than spending eight hours a day packing and shipping orders, online sellers can now focus on revenue generating activities like sourcing and marketing.

Many wholesale suppliers are now willing to ship directly to FBA on behalf of the merchant, an approach that further reduces fulfillment costs.

Amazon makes it easy to run the numbers on the cost of Merchant Fulfilling vs. FBA by using the Amazon FBA Calculator.

Amazon's Multi-Channel Fulfillment gives sellers even more reach with the ability to ship eligible orders from other marketplaces (or a website) through the FBA system. Additionally, both the FBA International program and FBA Export allow sellers to expand internationally without the need to fulfill individual orders.

But scale isn't the only reason to exploit your Amazon sales channel…

High Quality Buyers and Massive Traffic

As one of the world's fastest growing market places, Amazon knows how to attract buyers - and lots of them!

With more than 120.8 million unique visitors in December 2012, Amazon brings an abundance of buyers to the site. Third-party FBA merchants also enjoy increased visibility in front of Amazon's best buyers - the Amazon Prime customer.

Amazon's Prime customers spend as much as 150% more upon becoming Prime members. With free 2-day shipping on orders fulfilled through an FBA warehouse, and an easy 1-Click checkout, Amazon has all but eliminated any buying friction for Prime members.

It's no wonder that Amazon is the first stop when Prime members come online to shop. Robbie Schwietzer, vice president of Amazon Prime, recently told Businessweek. "In all my years here, I don't remember anything that has been as successful at getting customers to shop in new product lines."

And while Amazon's ability to bring buyers in the front door continues to increase, they're also succeeding at making Amazon.com the go-to choice for product research.

The Amazon Search Engine

According to Forrester Research, 30% of shoppers now go directly to Amazon to research a product before buying, bypassing Google completely. While Google attracts 13% of online product search, Amazon is quickly becoming the search engine of choice for online shoppers.

These days, not having a presence on Amazon means your products may not be found online.

Marketplace Alternatives

While the Reuters article asks whether or not sellers can afford to sell on Amazon, the real question is - can you afford not to sell on Amazon? Based on the benefits and exposure that Amazon brings, for most sellers, having an Amazon sales channel is a must.

Is Amazon the "perfect" marketplace? There is no such thing. Every marketplace has its unique issues. Price and margin compression as well as increased seller competition (both from third-party merchants and Amazon) are challenges faced daily by sellers.

It should be noted that this week, eBay unveiled a new fee structure as part of their 2013 Spring Seller Release. As part of the release, eBay has posted a comparison fee chart for eBay and Amazon sales.

While at first glance, eBay's new fees appear to be less than Amazon's fees, it's important to note that PayPal fees are not included in eBay's fee calculations, while Amazon's posted referral fees do include payment processing costs.

Ultimately, the decision to sell in any marketplace must not only be determined by fees, but also by the benefits the marketplace brings to your business.

Lisa Suttora is an ecommerce marketing strategist, and founder and CEO of Lisa Suttora International and WhatDoISell.com. Since 2004 Lisa has worked with online merchants in 7 countries and over 2500 niche markets to grow thriving online businesses. Approximately 98% of Lisa Suttora International customers have an Amazon FBA sales channel (many with a multi-channel presence on eBay and other marketplaces). For further information on selling on Amazon and to get your free copy of the strategy webinar "Vision. Strategy. Moxie. How to THRIVE in Ecommerce in 2013" visit www.thrivein2013.com.



Comments (11) | Permalink
Readers Comments

Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
by: andrewjtitcombe This user has validated their user name.
       Web Site
Wed Mar 20 17:15:17 2013
When I had ''real stores I paid a fortune in rents as well as local taxes (called business rates here in the UK)  On top of these,  I had to pay light,heat ,phones, etc etc not to mention wages. Having an online store via Amazon and using FBA is well worth paying for. Even eBay is and though I do complain about the costs, I simply need to remind myself of how expensive it was OFFLINE to run a store that only served my locality Thanks Lisa - Amazon is a great place for an online retailer to be (and maybe the offline one as well)
Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
by: pace306 This user has validated their user name.
       
Wed Mar 20 22:24:30 2013
Amazon has its pros & cons - but the difference between it and eBay is honesty.

Amazon doesnt have Uunpaid buyers
Amazon doesnt have VERO
Amazon HAS traffic
Amazon does lie about seller protection

Shall I go on?

Yes, in some cases Amazon fees are higher then eBay - but in some cases its just plain worth it. It doesnt matter if the eBay fees are lower if:

1) theres no visibility
2) theres so many junk listings you cant be seen when they do get around to putting the server YOUR items are on - they cant be seen
3) ebay coddles the bad buyers
4) eBay & paypal play the lets drain the sellers wallet game

FBA when done right ROCKS. You can get more sales then you can handle - the only negative is that Amazon is MUCH more easy going on returns and they will take back almost anything in any condition - so if you dont have a home for "defectives" you're sunk.
Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
by: Moonwishes This user has validated their user name.
       Web Site
Wed Mar 20 23:28:14 2013
When I started using Amazon again, after a long hiatus, as a secondary selling site, I got much more than I expected. Within a few months going promerchant was a no-brainer as I had more than 40 sales per month plus I was allowed to list items that I couldn't before. Currently Amazon brings at least half or more of my sales each month. It is worth it. With no fees other than when something sells (Plus the promerchant fee) it isn't a killer to have lots of items listed like at ebay where you pay and pay and pay. Oh and then Donoho gets a $30 million paycheck for forcing thousands of small sellers out. Wonder what will happen with stock owners someday find that ebay truly is nothing but a shell and has no value as it all went into DonHO's bank account.

I don't see Amazon's fees as bad at this point since items sell and I make money and that is the whole point. Unfortunately due to my kind of inventory I can't use the FBA system so I can't speak to that, but I sure see a lot of others using it and they all seem to be the equivilant of the penny sellers we used to see. I'd be curious about how much some of them are making.
Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
by: LaLaLa123 This user has validated their user name.
       
Wed Mar 20 23:57:52 2013
More sales and more profit.  Less trouble.  Yes, Amazon is worth it.
Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
by: teddychan This user has validated their user name.
       Web Site
Thu Mar 21 00:13:28 2013
I'm sure Amazon is better than eBay for selling many types of products. But unique collectibles? Not so much. Amazon will not let third party sellers describe their products as unique. Amazon will combine your product listing with another product listing if it thinks they are the same item, even if they're not. Amazon has ZERO enforcement of competitors selling fake items, or even undercutting your listing of a real item with their fake!

I had 8000+ different items listed on Amazon and zero on eBay a few years ago. Amazon charged me 15% commission including on my S&H fees. I more than replaced my Amazon sales with eBay sales just by listing 500 or 600 items at any given time, and at a higher profit margin. I wouldn't go back to Amazon if they paid me.
Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
This user has validated their user name. by: JusTrains
       Web Site
Thu Mar 21 00:53:00 2013
@teddychan

The small antiques & collectibles market is a common denominator in both Amazon and eBay. With the former... there hardly is any. I've tried but it's just not enough to go to Amazon with my niche. And with eBay, well... that's what they started with and it's what they've dropped in favor of 'new' or hand crafted/unique items.

In my retail stores if my marketing returns 3% in sales I'm good. Sometimes I've hit 8-10% with effort, but with ALL the real coolectibles (not junque) on eBay, I figue if I can connect with 3% of 10,000,000 people who pass thru, I'd be doing very well! Heck! Even 1% would kepp me content!

I have tried several others but for my market niche, eBay cannot be beat for that traffic no matter how bad they mess it up. Ok, well, maybe not quite, but the others pale by comparison in their traffic and for the fraction of product their members offer on those other sites.

Now, if I was sell electronics, media, and the such... I'd be crying the blues along with everyone else - from what I see & hear anyway on these posts.

Even still, it is very wise to be making the effort to host your own website apart from eBay. My 2,000-2,500 eBay store closed two years ago becuz... the train had left the station!
Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
by: FREDDY This user has validated their user name.
       
Thu Mar 21 09:46:43 2013
There are pros (?) to selling on Amazon:
Fees are high., If you do not have lowest price - probably no sale., Software to automatically lower price on Amazon - you get to be in a race to the bottom., If you have only one item and it gets put in the shopping cart - there is sits for days - unsold and unavailable., Returns are higher than probably any other site and you have no choice but accept., Feedback is low-around 10% and that is how Amazon and everybody else rates you. One negative or neutral (neutral is negative because it isn't positive) can have a real impact of your ratings.Called Amazon re low feedback numbers. They told me how to send out emails to past buyers - politely asking for feedback,sent out around 80. Only one feedback was rec'd and that was a negative and that was for ''bugging'' him about feedback. I just did exactly what cr recommended.,  Mandatory shipping fees for media category is great - level paying field? however, for a book it cost more to ship than you are allowed. You can make a fortune selling books for .01 each?? You do however make out if ship multiple to the same buyer - in fact that is the only way to make a profit. However, you will probably get a negative due to the higher shipping. If you refund some of the shipping, Amazon will not reduce refund any shipping fees as a result., If you sell in electronic accessories- you seen a jump from 8 to 15% in fees on product alone - plus fees on shipping. That's a big jump., Selling thru FBA - more hoops to jump thru - package a certain way only or products gets thrown out. Have to have right wording etc etc etc..Was there not an article recently re FBA and a seller being sued for selling a bootleg DVD???? Seller claimed it wasn't his because all get co mingled????
Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
by: Moonwishes This user has validated their user name.
       Web Site
Thu Mar 21 12:25:21 2013
>>There are pros (?) to selling on Amazon<<

Yes there are! I'm selling things there and I don't sell for the bottom of the barrel price either. Every once in a while, I double check what other items are selling for after one of mine sells. Example the other day I sold something for $8.99, the only two other listings for the same item are both $5.99. This is not a rare example either. I'm very happy to be selling on Amazon and I don't think the fees are much worse than any other place. What is important is how much you sell and how much money you make. I don't understand the penny seller mentality myself and I won't participate in it. But compared to what I hear about ebay these days, I would much rather be selling on Amazon than there. I sell on ecrater and Amazon and am happy with both.
Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
by: pace306 This user has validated their user name.
       
Thu Mar 21 13:22:01 2013
With eBay and Amazon, you have to find a perfect balance for the goods you carry. Theres NO perfect solution - neither is perfect by a long shot.

Some items on Amazon (not to mention categories and brands) and blocked - so you have no choice BUT eBay (as painful to say that as it is).

On the other hand there are some items that dont sell on eBay (for me) that fly on Amazon.

(Lets skip Sears and Buy.com aka Rakouten for now).

Its the issues I mentioned above that are the obstacles for me - especially on eBay.

eBay knowingly lets certain companies misuse VERO to remove sellers who they dont want selling thier items on eBay, thats something that doesnt happen on Amazon.

Amazon is VERY unforgiving on customer service. Amazon will run you right off if you DONT do alot of customer coddeling - but they WILL uphold your return policy (restocking fee, length of return period (if its reasonable) etc - where eBay tries to buy customers (bad ones) then tells you BS about "seller protection".

My Amazon sales have caught up to my eBay sales and I hope this year to not only surpass the eBay ones - but to DOUBLE them.

By no means is Amazon a panacea - but they allow me and enable me to do more - eBay just rolls out stupid SR1 updates which are meaningless and in most cases cost me money, time and lots of aspirin!  
Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
by: Mr. Me This user has validated their user name.
       
Mon Mar 25 10:53:51 2013
Fees are not the problem... problem is that Amazon treats sellers like crap!
Forced returns for any reason, shortchange on shipping cost, one-sided a-z guaranty policy, just as bad as ebay ........
Opinion: Fees Not the Only Consideration When Selling on Amazon   Opinion: Fees Not the Only Consideration When Selling on Amazon
by: 2Angels This user has validated their user name.
       
Fri May 2 08:10:02 2014
FBA Multi-Channel does not export apparel items, only media items. If they want more FBA sellers they need to be able to fulfill international orders as well for other categories. It has prevented me from using FBA.


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