Are you looking to scale your online numbers to the max? Me too, that's how I got into Amazon 3P selling aka sell on the Amazon Marketplace or being an Amazon Seller.
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Sooooooo, let me welcome you to the world of third-party selling on Amazon (Amazon 3P). With millions of active sellers, this platform is a goldmine for solopreneurs or mid-market sellers like you. I mean, just look at the numbers. This is the share of paid units sold by third-party sellers on Amazon platform from 2nd quarter 2007 to 1st quarter 2023, according to Statista. It keeps growing and it's “killing” Amazon Retail (aka Amazon 1P or Amazon Vendor) as Jeff Bezos himself declared back in 2019.
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By becoming an Amazon seller you'll control your sales strategy, fulfillment method and selling plan. But understanding how to deal this marketplace effectively could make or break your venture. Believe, I've been there for ages as an Amazon reseller.
Ready to claim your piece of the pie in this lucrative market? Well, let's go then!
Seller Levels: 1P vs 3P
Let's first break down the different seller levels: from 1P to 3P best known as Amazon Retail vs Amazon Marketplace or Vendor vs Seller.
What is an Amazon 1P Seller
As a 1P seller you're a brand manufacturer that sells directly to Amazon or a big distribution company or a big wholesaler. You can't sign up for that, so it's Amazon Retail who'll give you a call or send an email invite. As an Amazon Vendor 1P Seller, you enjoy the prestige of being associated with Amazon but at the cost of having less control over your brand and pricing.
If you're not sure about the implications of being a 1P Seller (and there are many of them), before you sign the contract, do yourself a favour. As an Amazon 1P expert myself, I always recommend to my clients reading this 2 books by the guys at Buy Box Experts.
Although old and a little bit outdated, they reflect the main pros and cons of being an Amazon Vendor:
- Amazon Marketplace Dilemma: A Brand Executive's Challenge Growing Sales and Maintaining Control
- Controlling Your Brand in the Age of Amazon: The Brand Executive’s Playbook For Winning Online
What is an Amazon 2P Seller
On the other hand, as a 2P seller, you rely on distributor partnerships to ship your products. It can be convenient if you don't want to handle logistics yourself but remember that it adds another layer between you and your customers.
This would be a kind of Amazon dropshipping business model.
What is an Amazon 3P Seller
Now let's talk about 3P sellers (that could be you!) As a third-party seller, you use Amazon as a marketplace to sell directly to shoppers wether you fulfill your orders or not. You have improved margins and better payment terms compared to other levels. Plus, there's less dependence on maintaining ties with Amazon itself.
So now that we've explored these options let's venture further into what it takes for mastering third-party selling on Amazon.
Becoming an Amazon 3P Seller
I'd not want to be taken by too optimistic, but becoming a 3P seller could be your golden ticket. Of course, it depends on how you run things. Using this selling method, you'll have control over your brand, pricing and marketing strategy.
To start selling on Amazon as a 3P seller:
- Create an Amazon Seller account
- Decide on a sales strategy
- Choose a fulfillment method
- Select a selling plan
- Provide required business information
Keep in mind that all-important power comes with responsibility, that's what Uncle Ben said. It's up to you to handle customer service and fulfill orders efficiently. Failure to meet Amazon's high standards could result in penalties or even Amazon account suspension.
Product Research Importance
Ever wondered why product research is a vital step in your journey as an online seller? You see, the idea of selling on Amazon can be enticing. The prospect of reaching millions of potential customers and generating impressive revenue can power you ahead.
But what if the product you decide to sell doesn't resonate with buyers or gets lost in the vast ocean of items available? That's where product research comes into play (read more here: How to find the BEST products to sell on Amazon)
Product research gives you the ability to identify products that are both profitable and popular among shoppers. It aids in understanding consumer behavior, trends, and market competition. Professional Amazon research tools like Helium 10 Black Box, Jungle Scout or AMZScout can be a game-changers here, helping you source products that promise high returns. You can even use Amazon dropshipping suppliers.
This process not only helps mitigate risks but also gives you the option to make data-driven decisions for your Amazon business. It maximizes your chances of success by aligning your offerings with customer demand and current market trends. So before diving headfirst into third-party selling on Amazon, remember – good preparation breeds confidence and control.
Next up, we'll delve into how to set up your seller account so that your business will take off smoothly on this e-commerce giant's platform.
Setting Up Seller Account
Before you can kickstart your journey as a successful online merchant, it's essential to set up your seller account correctly. This is a crucial step in establishing your business on Amazon, because one of the departments that can kill you account automatically is the Amazon complicance dept. So you need to have your papers in order.
To create an Amazon seller account, you'll need to provide accurate information about your business. This includes details like your official business name, address, and contact information.
You will also be asked for credit card details, a government-issued ID, tax information, phone number, and bank account details. Remember that accuracy is key; any discrepancies could lead to delays or even denial of your application.
Remember also that every Amazon US Seller needs an Amazon Seller insurance.
Dealing with Orders and Customers
Once you've got your seller account all set up, it's time to dive into the “exciting” world of handling orders and interacting with customers. I mean “exciting” because it can be a pain in the ass if you fail to meet Amazon performance's metrics, that's why most 3P sellers rely on Amazon FBA to fulfill their orders.
Order Processing
If you're selling using your own logistics (Fulfillment By Merchant or FBM), you'll receive notifications for every order placed through Amazon. Rapid response times can impress buyers and build a strong rapport right off the bat.
If you are using Amazon FBA or Seller Fulfilled Prime (kind of FBA, but you storage your products, not Amazon), you don't need to worry much about fulfillment, just to have the stock loaded so Amazon can dispatch your orders. FBA logistic services include:
- FBA Small and Light
- FBA Subscribe & Save
- FBA Pan-EU
- FBA Export
- Multi-Channel Fulfillment
- Amazon Global Logistics
- Remote fulfillment with FBA
Customer Service
You're in charge of managing customer inquiries and complaints. Displaying professionalism and empathy in your interactions can turn a dissatisfied buyer into a loyal repeat customer.
A-to-z Guarantee Claims
If you're using FBM and there are issues with an order, shoppers may file claims under Amazon's A-to-z Guarantee. It's crucial to handle these situations promptly and fairly to maintain shopper trust. AZ Claims can kill your account's performance and get it suspended for good.
Finally, the last challenge awaits: strategies to increase sales without compromising profitability or customer satisfaction
Increasing Sales Strategies
As an Amazon third-party seller, you wield power in driving sales through strategic decisions and leveraging the platform's features wether that's inside or outside Amazon. You must remember: always be working on creating a brand. That's what matters the most, not just the numbers. Especially if what you're looking for is to sell your Amazon business.
Product content
Start by revising your product content aka Amazon SEO. Descriptions should be compelling, packed with relevant keywords to increase visibility on search results. High-quality images and videos are non-negotiables. They can dramatically sway buyers' decisions in your favor.
Marketing
Secondly: marketing strategy. Consider Amazon Advertising to make your products stand out from the crowd. Sponsored Products, Brands and Display will help you increase sales (read more: How to Create Profitable Amazon PPC Campaigns).
Other Amazon programs like Vine will help you create your first reviews too. Yes, don't underestimate the weight of customer reviews either. They're not a ranking factor, but a potent social proof that builds trust among potential customers.
Pricing & inventory
Pricing and inventory analysis is crucial too. Price competitively but don't forget about maintaining healthy profit margins. Keep track of inventory levels to avoid running out of stock – a cardinal sin in e-commerce that you must avoid at all costs.
Pricing and inventory are key to win Amazon's Buy Box.
Keep an eye on your metrics
Lastly, analyze your business metrics regularly using professional Amazon tools like Amazon dropshipping suppliers and best Amazon seller scanner app for invaluable insights on performance trends and areas for improvement.
Final thoughts
You've now got the lowdown on becoming a successful 3P seller on Amazon. As I always tell my clients: it's not just about setting up an account and listing products. You'll need to put effort into product research, customer service, effective sales strategies and, most of all, create a brand.
So now you got the bases, go for it!
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About the author
Jordi Ordonez
I work as an independent eCommerce and Amazon consultant.
Clients
Estrella Damm, Intersport, Bella Aurora, Lladró, Textura Interiors, Nice Things Palomas, Castañer, Due-Home and many other clients.
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I teach and have been a speaker at: Meet Magento, Prestashop, Prestashop Day, SEMRush, Cambra de Comerç Barcelona, ​​ClinicSEO, Ecommbeers, Ecommbrunch, Ecommercetour.com, Ecommfest, EOI, ESIC-ICEMD, Foxize, Generalitat de Catalunya, Inesdi, Quondos and The Valley. In addition, I have done in-company trainings for brands such as Orange and Adidas.
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