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How to work with Amazon Marketplace

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How to Work with Amazon Marketplace - ©iStockphoto.com/TwilightShow

In November 2023, Amazon Marketplace turns 23. It’s a measure of just how much the ecommerce market has changed that a March 2001 press release, which heralds the early success of a then-new venture, refers to amazon.com modestly as a “leading online retailer”.

Fast forward to the present day and it’s not uncommon to see Amazon, the behemoth of global ecommerce, referred to primarily as a marketplace rather than as a retailer. This is a reflection of the extraordinary growth in the wider marketplace sector, especially over the past decade. In 2022, the world’s leading online marketplaces sold over $3.25 trillion in goods, with most sales coming from third-party sellers, according to an analysis by Digital Commerce 360.

Over these years, marketplaces have become crucial to all kinds of companies – not just to retailers and private sellers, but brands and manufacturers, and within different B2B sectors too. Put simply, businesses of all kinds must be present on marketplaces because that’s where their customers are to be found. And more than likely, that means being on Amazon, which pulls in an average of 5.3 billion visits from consumers every month.

What are the upsides of selling on Amazon Marketplace?

For manufacturing brands, in particular, this is certainly not bad news. Long gone are the days when brands sold to wholesalers and perhaps offered a few items via mail order. Today’s brands send their products to market on a multichannel hybrid basis. This will typically include selling via wholesale, via favored retailers, direct to consumer (D2C), and via marketplaces. It may also entail getting involved in newer forms of ecommerce, such as live-streaming and shoppable content.

Within this overall offering, marketplaces can offer a solid income stream, access to a certain amount of customer information, and a channel that can be calibrated for targeted purposes, for example, in clearing excess stock.

When it comes to Amazon specifically, there’s a huge opportunity because of its sheer size. In 2022, Amazon had 39.5% of online market share in the U.S. According to forecasts, the Seattle-based ecommerce giant will surpass Alibaba in estimated sales by 2027, when Amazon will generate over 1.2 trillion U.S dollars in online sales. Additionally, a recent study found that when it comes to online shopping, 61% of online shoppers begin their product hunt on Amazon.

What are the downsides of selling on Amazon Marketplace?

But some caution is also in order. In comparison to D2C, where a brand can be in complete control, Amazon Marketplace is mediated by Amazon. Inventory can appear alongside offerings from other companies. These competitors may discount the same items more aggressively, posing the risk of a race to the bottom. The consumer data is far less rich than that available via D2C.

The deeper lesson is that it is important for brands to think carefully about how best to approach selling via Amazon – and indeed via different marketplaces more generally – as part of an overall strategy.

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One way to think about this question is to consider how brands’ items get listed. Let’s briefly look at three options:

  • To become an Amazon Seller
  • To become an Amazon Vendor
  • To join Amazon’s Our Brands and/or Amazon Accelerator program

Of these, becoming an Amazon Seller is the option taken by many brands. This is a no-frills way to sell via Amazon Marketplace. Via Amazon Seller Central, brands gain access to “a one-stop-shop” where they can manage their “selling account, adding product information, making inventory updates, managing payments, and finding helpful content to help you navigate your Amazon business”. Fees are typically payable when brands sell items, including referral fees, calculated as a percentage of the selling price.

Essentially, you can see this as a way of doing business that keeps Amazon at arm’s length, but other brands have a closer relationship, and this has advantages in terms of Amazon giving their products more prominence. Via Amazon Vendor Central, invited brands sell directly to Amazon. Some brands sign up for Our Brands (“a collection of Amazon private brands and a curated selection of brands sold exclusively on Amazon”) and/or Amazon Accelerator, which “is designed to help startups and private label sellers grow their online brands by partnering with Amazon itself.”

It’s important to recognize there’s a trade-off in these closer relationships. The Our Brands program, for example, could potentially leave the techniques used by manufacturing brands open to Amazon’s scrutiny. By joining Amazon Accelerator, you give up some control over your brand and your products are limited to Amazon exclusively. Also, Amazon gains oversight of your product pricing and supply chain, as well as any promotional aspects.

What are the practical issues around getting items listed on Amazon Marketplace?

In the end, deciding how closely to work with Amazon is a question for individual brands, but whatever decision different businesses take, Amazon Marketplace is very likely to emerge as an important channel. In turn, especially where items are being sold at volume, this makes it important to get items onto the marketplace:

  • As efficiently as possible to minimize costs
  • In a way that maximizes the product’s impact

To focus on efficiency first, can be more difficult than brands initially expect. While Amazon Marketplace is set up to make it easy for vendors to begin selling quickly, it expects certain standards to be met. It has long stipulated the use of Global Trade Item Numbers (GTIN) to identify products and has been data cleansing to check this is the case. Get this wrong and sellers can be removed from Amazon Marketplace.

For those using Vendor Central, Amazon has stipulated that suppliers need to synchronize data through the Global Data Synchronization Network (GDSN). Additionally, Amazon recently announced that starting June 2023, new product listings for certain product types must include color name, size name, or product description attributes.

In each case above, what’s important to note is that Amazon is in charge of stipulating the data it requires and changes can have huge knock-on effects for brands.

From a different angle, something similar happens with the presentation of products. Amazon is not especially interested in how a brand might want to show its products to the best effect. Rather, Amazon wants to show products in a way that’s consistent with its own brand.

How do you solve the Amazon conundrum?

In part, as we’ve already noted, brands have a strategic decision to make here about how closely to work with Amazon. But whatever a brand’s take on this question, it’s worth then looking at the more practical problems not from an Amazon-specific perspective, but as a data question.

Different channels make different demands on brands, and to meet these demands brands need to be sure the data they supply – including product information, images, and videos – are 100% consistent and accurate. Without this certainty, problems cascade through different channels, costing time, money, and reputation.

In contrast, where a brand employs Product Information Management (PIM) technology, it can ensure its data is consistent and supplied in internationally recognized formats. This data can then be used not just to feed Amazon Marketplace, but other channels and marketplaces too. In South America, for example, MercadoLibre is the leading marketplace, while Zalando and ASOS are increasingly important within the fashion sector.

In conclusion, if brands have their data correctly aligned to make the most of Amazon Marketplace, they will be able to do the same with other opportunities too.

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Get our eBook to discover how to leverage the right tools to win in omnichannel commerce.