What does it take to be a profitable merchant on Amazon.com, a place where your "landlord" is also one of your biggest competitors?
Sellers fear that, if they do achieve success on Amazon, the site will actively begin to compete against them by targeting their suppliers and undercutting their prices. But Joshua Kluger doesn't worry about such possibilities. "In my opinion, that is a waste of thought and energy," he says.
Kluger sells through his own Past Generation Toys website, eBay, and Amazon.com, as well as other marketplaces. And he's doing just fine selling in the ultra-competitive collectible toy category. Past Generation Toys (PGT) has been online since 2007 and uses Amazon Webstore as its hosting service for the Past Generation Toys website.
"I am in Amazon's "house," so I expect them to watch and collect sales data and see what areas they can move into," he adds. "By definition, that is what they do and they do it well. They usually sell out of the offering, and then it's back to business as usual."
But Kluger, 37, of Alexandria, VA, hasn't thrived in Amazon's "house" by sitting still, either. "There are times that I'll price my items lower than Amazon in hopes of getting the Buy Box," he explains. "Amazon rarely gives up the Buy Box to anyone, but savvy customers know how to find the best price, and since I offer free shipping on all orders delivered within the lower 48 states, it makes the math easy."
Kluger got into the toy business as a collector of 1980s GI Joe, Generation 1 transformers and vintage Star Wars action figures. He made the transition from collector to dealer when he purchased a lot of 20 GI Joe figures on eBay and decided to sell the ones he didn't need. The rest is history.
With lots of ecommerce hosting services available, choosing Amazon's Webstore offering was an "easy decision," he says. He was sure his toys and collectibles would be competitive in price to others on Amazon because pricing parity is a requirement for both the Amazon.com marketplace and Amazon Webstore. The ability to offer Amazon Prime free two-day shipping for items fulfilled by Amazon was another incentive. So was the integration of Payments by Amazon.
Kluger said Amazon helps drive traffic to his website by optimizing Web pages to help search engine spiders correctly index the site, and by using automatic submissions to shopping engines to keep product listings updated. "We are growing revenue about 9-10% per year, with the vast majority of that growth coming from Amazon.com and 3% coming from the Amazon Webstore."
PGT uses a third-party tool called MailChimp to send an email newsletter "about twice a month." Kluger is an enthusiastic user of Amazon's FBA (Fulfillment By Amazon) service, though rising fees mean he uses FBA less frequently than in the past. He's also keen on using a repricing tool to automatically adjust prices to keep inventory moving.
"The best tip I can tell a seller is to detach your personal opinion from what you sell," he advises. "For Past Generation Toys, it's all plastic and resin, meaning no matter how cool we think something is, after a certain amount of time it needs to go. That keeps cash flow moving which means you can buy more products. Hoarding inventory can and will close a business."
Kluger offers these additional tips for those selling online, whether they're in Amazon's domain or not:
- Start planning early for the holiday rush. (PGT starts in March.)
- Don't send out newsletters too frequently.
- Consider including general information about your industry, product or hobby in your marketing communications.
- Make it easy for recipients to unsubscribe if they wish.
- Be social. Kluger says his Facebook and Twitter pages are a must.
Kluger hopes one day to open a brick-and-mortar store near the nation's capital. PGT just expanded to Buy.com and plans to be on Sears and Newegg.com in time for the holidays. He also expects to begin using Amazon Product Ads next year.
"We are doing a lot to get our name out there," he says.
Amazon.com explains, "with Amazon Webstore, you have control over the branding and operation of your own website, store and phone ordering, and customer service applications." More information is available on the Amazon Webstore home page, FAQs are on this page, and you can find pricing on this page (click on "See Features and Options").
There's also a small developer ecosystem to help Amazon Webstore merchants found on the Amazon Webstore Solutions Provider page.
You can see how others have rated Amazon Webstore and their reviews on the EcommerceBytes Storefront Solutions and Shopping Carts chart.