EcommerceBytes-Update, Number 217 - June 15, 2008 - ISSN 1528-6703     2 of 9

The Nitty-Gritty of Selling on Amazon.com

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AuctionBytes has seen a surge in interest from readers about selling on multiple marketplaces. In February, we interviewed Amazon.com's Matt Williams to learn more about selling on the Amazon marketplace (http://www.auctionbytes.com/cab/abn/y08/m02/i22/s02). In today's issue, we bring you Amazon's answers to questions we commonly hear from online sellers who are considering - or are already - selling on "the river." Questions range from category restrictions to trust-and-safety concerns. Read Amazon's responses to seller questions, and then leave your comments on the AuctionBytes Blog.

Q: Amazon restricts third-party sellers from listing in certain categories. Can you talk about category expansion plans as they relate to small sellers?

A: We do not pre-announce which categories we are going to open and whether those categories will include sellers. That said, it is one of our goals to open as many categories to give sellers opportunity to sell in as we can reasonably support. We take in feedback from our customers and other factors in determining which categories to open up next.

Q: Is Amazon's third-party business growing in terms of unit sales, outside of the FBA program? Why or why not?

A: The percentage of unit sales from third parties has remained steady at around 30% for the past few quarters, during which time Amazon's overall unit sales have grown, so yes, unit sales by 3P is growing both inside and outside of FBA. We think that the reason is because our third party sellers continue to work hard, just like Amazon itself, to offer our customers low prices, fast selection, and fast delivery. Also, we've continued to roll out new and improved services that help sellers better leverage Amazon's platform, such as FBA, WebStore, and Product Ads.

Q: Does Amazon want to increase third-party sales?

A: Yes.

Q: Some sellers say they run into problems with Alliance over performance issues. Is there a "one strike, you're out - forever" policy, and why can't sellers with good track records talk to Amazon to make an appeal?

A: There is no one strike, you're out policy. Sellers who are blocked can and do appeal to seller-performance@amazon.com. We request appealing sellers to provide an action plan to fix the customer experience problems that led to their account being shut down. The sellers with good track records are reinstated if they provide good action plans and demonstrate evidence that they can meet the high standards of customer service that Amazon expects of them.

The majority of blocked sellers have received many early warnings for performance issues. As preventive measures, we give sellers early visibility into their customer experience metrics such as the negative feedback rates and claim rates submitted by buyers, and communicate the selling performance standards we expect of them.

Q: Amazon has a unique way of reimbursing sellers for postage costs. Why wouldn't Amazon want customers to know that third-party sellers are subsidizing the shipping costs?

A: Amazon simplifies the buying experience in marketplace by having fixed shipping costs. It is easy for the buyer to compare prices from multiple sellers right on the listing page by looking at the selling price alone. Buyers do not later discover hidden excess shipping charges during checkout. It also simplifies the seller's experience as the shipping costs collected by Amazon are, on the whole, more than the typical shipping costs for the basic shipping methods used. Sellers have varying shipping costs, and in some cases (depending on the product types they are selling, the source of the product they are shipping from, the destination locations they are shipping, and the shipping service level they are using to ship the product). It might be true that they are occasionally subsidizing their own shipping costs. For example, one oversized book may cost a seller more to package and ship. That said, across multiple items sold, shipments costs usually average out for the seller.

Of course any seller is free to set a selling price which would cover excess shipping costs on such items. In that case it is not really true to say that the seller is subsidizing the shipping costs, rather the seller is taking into account the fixed shipping credit they will receive from Amazon, to arrive at a fair listing price for their product. This approach will usually leave them with the net profit they are seeking after shipping costs are taken into account.

Q: There is rumor that Amazon may move Pro Merchants to the Merchants@ program. Is that true, and what exactly would that mean for Pro Merchants?

A: Our early adoption program for FBA has entailed a number of sellers being moved to the M@ program. The M@ program is a scaled and proven technology already used by some of the largest merchants on Amazon selling in non-media product categories. We will be shortly discontinuing this process as we will be able to offer FBA directly to sellers in their Marketplace Seller Account. We plan to offer the most compelling features we've developed for the M@ program to Marketplace Pro Merchants such that there will be no difference between the two.

Q: Webstore by Amazon lets merchants set up their own store using Amazon's technology. What's the feedback from sellers, and what is the biggest thing holding sellers back from signing up for the program?

A: The feedback we've received from WebStore customers has been very positive. There really isn't a single overriding reason some haven't signed up - we're seeing a lot of interest.

Q: If you could tell Amazon.com's third-party sellers one thing, what would it be?

A: Amazon has a thriving third-party ecosystem where lots of sellers are making a great business for themselves. We continue to invest in this area of our business and introduce innovative new features such as Fulfillment by Amazon and WebStore by Amazon - if you haven't given these a try - you should!

Amazon concluded the Q&A session by supplying an answer to a question about WebStore (http://www.amazonservices.com/webstore) we asked after our interview with Matt Williams earlier this year:

"Feedback from both Sellers and Developers has been very positive. Sellers love the ease-of-use, especially the fact that they can setup their e-commerce site in minutes using our WebStore 1-Click technology. Sellers also really appreciate the fact that Amazon helps to drive traffic to their site through search engine optimization and search engine submission features. Developers have commented that WebStore makes it trivially easy to create any site look-and-feel while taking advantage of automated merchandising and content plug-ins to create a site which dynamically merchandises itself. There is not really anything holding back sellers from signing-up for the program. We've been experiencing significant growth in the adoption of the WebStore by Amazon product."


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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