Thanks to the success of their 3rd party (3P) marketplace, Amazon has become an unavoidable presence in retail. As a result of Walmart’s acquisition of Jet.com, and eBay’s increasing desire to become more like Amazon, these marketplaces will continue to grow in significance as well.

The days of simply ignoring these 3P marketplaces are long gone.

Consumers actively use Amazon and other marketplaces to find products they want, and sellers on 3P marketplaces will continue to find ways to meet their demand.

Unless your brand is content letting the wild wild west determine your eCommerce strategy, you must create a plan for selling their products on these marketplaces.

Avoiding the Wild Wild West

If brands don’t take an active role in managing their presence on 3P marketplaces, the inevitable outcome is that sellers will aggressively compete for the largest share of the buy box possible, and to do so, they will “race to the bottom” on price and negatively impact brand equity in the process.

In light of this inevitable outcome, we are seeing brands take aggressive actions to attempt to regain control; either by setting up their own 3P seller accounts, or working with a 3P seller specialist who will manage their product feeds – while adhering to MAP policies and ensuring products are kept in stock.

In this article, we examine the key issues, risks, and trade-offs of managing 3rd party sales internally vs selling through a dedicated 3P marketplace specialist.

Managing Multiple Marketplaces

As mentioned previously, Walmart, Jet, and eBay are all gunning for Amazon and looking to increase their market share.  As a result of Walmart’s recent acquisition of Jet, we expect Jet to continue to capture share of the growing eCommerce pie.  eBay, which originally started as an auction site, now sells over 80% of its items in a non-auction format, and we expect them to continue to use their 150 million active buyers to gain marketshare.

The presence of all these major marketplaces complicates things immensely for 3rd party sellers, simply because each market is different and requires a specialized approach in order to achieve maximum performance.

To succeed on these marketplaces, 3P sellers should expect to:

• Invest in expensive software that will allow them to manage product feeds, fulfill orders, handle returns, and sync inventory
• Regularly attend conferences for each of these marketplaces to stay abreast of the latest developments
• Have staff dedicated to understanding and studying evolving changes on each marketplace

Brands that handle 3P sales themselves should expect to invest in software and staff to manage multiple marketplaces. If they choose to sell via a dedicated 3P specialist, these expenses will be paid by the 3P marketplace specialist.  Therefore, it is a significant advantage for brands to sell via 3P specialist because they don’t need to invest in and manage the necessary software and staff.

Significant Advantage: Selling via 3P Specialist

Control Pricing

By far the #1 complaint we hear from brands about 3P marketplaces is that competing sellers erode prices in their inevitable race to the bottom.

When prices drop, brand equity is damaged, and brick & mortar retail partners become extremely upset.

Controlling pricing by creating and enforcing MAP policies is a huge challenge for brands unless they take steps to make it illegal for unauthorized sellers to sell their products while simultaneously reducing the number of sellers to just a few, or ideally, just one professional 3P specialist.

If a brand’s products are sold through distributors, controlling pricing is incredibly difficult and time consuming. If products aren’t in distribution, the battle is less complex.

Brands that handle 3P sales themselves should expect to invest in software and staff to handle pricing control, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Significant Advantage: Selling via 3P Specialist

Monitor Listings for Unauthorized Sellers

If a brand’s products are sold through distributors, it’s inevitable that their products will eventually make their way into the hands of 3P sellers who don’t have a relationship with the brand, and don’t care about any MAP policies that exist.

Instead, these sellers either generally operate using a business model that relies on massive volume and razor thin margins, or they are a tiny one-man shop operating out of a garage with little to no overhead to factor into their pricing.

Monitoring product listings and removing unauthorized sellers is a never ending game of “Whack-a-Mole”, and if prices are to be controlled, brands who handle 3P sales themselves should expect to invest in staffing and software tools that will allow them to continually monitor product listings for the presence of unauthorized sellers.

Brands that handle 3P sales themselves should expect to invest in software and staffing to monitor listings for unauthorized sellers, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Significant Advantage: Selling via 3P Specialist

Manage Product Reviews

Generating and managing product reviews is absolutely critical to maximizing revenue on 3P marketplaces, and this is especially true with Amazon.

To generate reviews, 3P sellers must invest in software tools that will automatically send emails to buyers to ask them to leave reviews. This is the easy part.

The more time consuming part is managing negative reviews. To do so requires software to monitor reviews, and then labor to take the time to respond publicly to each negative review.

Brands that handle 3P sales themselves should expect to invest in software and staff to handle product review management, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Significant Advantage: Selling via 3P Specialist

Manage Customer Service

Effectively managing customer service is key to preserving brand equity.

Failure to consistently respond in a timely fashion to these inquiries can result in a decreasing share of the buy box, or suspension of your 3P seller account entirely.

When selling on Amazon and using FBA, Amazon will help with many of the customer service issues. However, the 3P seller should expect to deal with customers (or competitors posting as customers) making false claims – for example, claiming to have received a fake product.

Brands that handle 3P sales themselves should expect to invest in software and staff to handle customer service, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Moderate Advantage: Selling via 3P Specialist

Optimize Product Listings

Optimizing product listings across multiple 3P marketplaces is a significant drain on resources for brands with multiple products.

For every product listing, research should be performed to determine which search terms consumers use to find that product, as well as how best to describe the product in a way that will result in maximum conversions.

High quality images should also be created and included with each product listing.

Once listings are optimized, ideally key attributes would be A/B tested to further improve performance.

Listing optimization requires expertise and/or software investments for:

• Photography
• Copywriting
• Keyword research
• Split testing

Brands that handle 3P sales themselves should expect to invest in software and staff to handle listing optimization, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Significant Advantage: Selling via 3P Specialist

Create and Manage Advertising Campaigns

Unless your brand is already incredibly well known or you face little to no competition, creating and managing advertising campaigns is likely to be a key component of your eCommerce strategy.

Sure, existing customers will just search for your brand name and make a purchase, but what if you would like to increase your market share? Listing optimization will help, but without effective advertising, you will only see a slow increase in market share.

Creating and managing profitable advertising campaigns across multiple channels requires a very high level of expertise, as well as powerful software. In the absense of either, your advertising campaigns are highly likely to fall far short of your expectations.

Companies who are dedicated 3P sellers invest significant time, energy, and resources into improving their ability to create and manage profitable advertising campaigns. Brands can save significant amounts of time and money by working with 3P partners who already posses these skills vs attempting to hire staff to develop those capabilities internally.

Brands that handle 3P sales themselves should expect to invest in software and staff to manage advertising campaigns, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Significant Advantage: Selling via 3P Specialist

Create and Manage Product Promotions

Promotions are another powerful tool for increasing sales on 3P marketplaces. Promotions can be used for:

1. Launching new products
2. Holiday specials (Black Friday, Prime Day, etc…)
3. Quantity discounts

Of the many types of promotional tools offered by Amazon, Lightning Deals are among the most powerful because, unlike with regular promotions where your special offer might not be seen without a corresponding advertising campaign, a Lightning Deal simultaneously offers the promotion a very high level of visibility that will translate into significantly more sales.

Brands that handle 3P sales themselves should expect to invest in software and staff to manage product promotions, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Moderate Advantage: Selling via 3P Specialist

Multi-Channel Fulfillment

Thanks to Amazon’s FBA program, fulfillment for orders placed on Amazon is handled by Amazon; however, if you sell your products on Walmart, Jet, and eBay, a fulfillment solution is required as none of these other 3P marketplaces offer fulfillment as a service.

Fufillment is a very complex business than requires extremely high level of expertise to manage at scale. To succeed, brands should expect to invest significant resources in software and staffing in order to succeed. Alternatively, brands could choose to outsource fullfilment to a 3P fulfillment partner. If outsourcing is the preferred method, brands should still expect to devote a portion of someone’s time to manage that relationship.

Professional 3P sellers who already sell on mutliple 3P marketplaces will already have systems and/or a partner in place to effectively manage multi-channel fulfillment. Brands that choose to partner with 3P sellers can avoid the time consuming process of either selecting a 3P fulfillment partner, or of handling marketplace fulfillment internally.

Brands that handle 3P sales themselves should expect to invest in software and staff to handle multi-channel fulfillment, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Moderate Advantage: Selling via 3P Specialist

Keep Inventory in Sync

When selling across multiple 3P marketplaces, inventory management can become a significant issue because your inventory is going to be located in numerous warehouses. In most cases, this will boil down to inventory in Amazon’s warehouse, inventory in your warehouse(s), and if you use a 3P fulfillment partner, inventory in their warehouse as well.

With products spread across multiple warehouses, keeping inventory in sync is critical and will require investments in software and staff in order to succeed.

Brands that handle 3P sales themselves should expect to invest in software and staffing to handle keeping inventory in sync, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Moderate Advantage: Selling via 3P Specialist

Reporting & Analytics

Amazon Seller Central provides a large number of reports, though the presentation of the data is not overly user-friendly.

To make reporting more user-friendly generally requires an investment in additional software to parse and present the data in a way that makes it much easier to analyze.

Brands that handle 3P sales themselves should expect to invest in software and staff to handle reporting and analytics, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Moderate Advantage: Selling via 3P Specialist

Managing Shipments to Amazon

Of all of today’s 3P marketplaces, Amazon is by far the largest and brands should expect the lion’s share of revenue to come from sales on Amazon. As a result, ensuring that products are in stock in Amazon’s warehouse(s) is critical.

Keeping stock in Amazon’s warehouses requires the 3P seller to invest in staff to monitor inventory levels and regularly create shipments to be sent to Amazon.

Depending on the number of SKUs in a brand’s product line, the demands for managing shipments to Amazon can vary from relatively little, to significant. For example, if a brand is going to handle 3P selling internally, they should expect to have to ship every order to at least three of Amazon’s warehouses. If products are sold in multipacks, brands should aslo expect to create any product bundles that are needed.

Alternatively, if brands elect to work with a 3P marketplace specialist, all they need to do is send pallets to the warehouse operated by their 3P partner.

Brands that handle 3P sales themselves should expect to invest in software and staff to handle product bundles and shipments to Amazon, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Significant Advantage: Selling via 3P Specialist

Tracking Down Lost Items

Amazon is notorious for losing inventory that is shipped to their warehouses, and whenever inventory is lost, you need to provide Amazon with an invoice from your supplier to even open a support case.

But what if you are the supplier? To be honest, we have no idea if Amazon will accept an invoice from yourself, to yourself. Given how particular Amazon is about documentation that is submitted, this could be a very significant issue for brands that elect to manage their own 3P selling.

Assuming Amazon will accept your brand’s invoice-to-self, there is still the ongoing time-suck that will inevitably result from having to communicate with Amazon to chase down lost inventory and get a reimbursement.

Brands that handle 3P sales themselves should expect to invest in software and staff to handle recovering lost shipments to Amazon, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Significant Advantage: Selling via 3P Specialist

Accounting

If a brand decides to handle 3P sales internally, they should expect a significant increase on the burden placed on their accounting department because, instead of only having to deal with a smaller number of large orders as they do now, they are going to have to accurately account for thousands of small orders every month.

Brands that handle 3P sales themselves should expect a significant increase in accounting burden in order to properly record thousands of individual transactions every month, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Significant Advantage: Selling via 3P Specialist

Tax Nexus

Selling on 3P marketplaces may create tax nexus, especially if the brand is storing inventory in Amazon’s (or other’s) warehouses.

Additional tax nexus requires additional tax collection and remittance, which in turn requires an investment in software and staffing to manage the process.

Brands that handle 3P sales themselves should expect to invest in software and staff to handle additional taxes, whereas if they choose to sell via a dedicated 3P specialist, this expense will be paid by the 3P marketplace specialist.

Moderate Advantage: Selling via 3P Specialist

Day to Day Involvement

Brands that are handling their own 3P marketplace sales should expect to manage a LOT more moving parts than they might think. To succeed, will require investing in software and staffing to manage the following:

1. Product feeds on multiple eCommerce marketplaces
2. Controlling pricing
3. Monitoring listing for unauthorized sellers
4. Generating product reviews and responding to negative ones
5. Customer service
6. Product listing optimization
7. Advertising campaigns
8. Product promotions
9. Multi-channel fulfillment
10. Inventory sync
11. Shipments to Amazon
12. Reporting & analytics
13. Tax nexus
14. Accounting

Significant Advantage: Selling via 3P Specialist

Financial Comparison

Hopefully this post has covered every aspect of handling your 3P sales internally that you’d already thought about, plus a few that you hadn’t, and now you are now asking yourself about the economic side of the equation.

After all, would insourcing make economic sense for some brands?

The answer is, “it depends”.

To help you think through the math, let’s consider a few assumptions and examine a few different scenarios for sales on Amazon. Other marketplaces will have similar expenses.

Scenario #1: Brand with $30,000/mo in Amazon sales

If your total sales on Amazon are $30,000 per month, the “additional” gross profit you could hope to earn by handling 3P sales internally would be approximately $3,000/mo; not nearly enough to cover all the software expenses and payroll needed.

Scenario #2: Brand with $80,000/mo in Amazon sales

If your total sales on Amazon are $80,000 per month, the “additional” gross profit you could hope to earn by handling 3P sales internally would be approximately $8,000/mo; just barely enough to cover all the software expenses and payroll needed – especially when you factor in the costs for recruitment, training, and traveling to conferences.

Scenario #2: Brand with $150,000/mo in Amazon sales

If your total sales on Amazon are $150,000 per month, the “additional” gross profit you could hope to earn by handling 3P sales internally would be approximately $15,000/mo; enough to cover all the software expenses, payroll, recruitment, training, and travel expenses needed for one employee – assuming you can get by with just one person handling it all.

Advantage: Varies on Sales Volume and Headcount

Conclusion

As you can see, for a brand that wishes to manage their 3P marketplace sales internally, there are a lot of moving parts to manage.

For brands that are considering going the internal route, our hope is that this article has brought some additional insight to your decision making process.

With respect to hiring a dedicated employee, some additional questions you should ask yourself include:

1. How will we find someone for this?
2. As we aren’t eCommerce experts, how will we know if the person we find is any good until many months have passed?
3. What is the cost of a bad hire?
4. Are we willing to accept the risk that the person we hire could leave at any time?
5. Have we adequately considered the costs associated with payroll burden (20-30% of salary) and the expenses associated with traveling to all the conferences that they will need to attend to keep abreast of changes to any of the major 3P marketplaces?

If after reading this article, you feel that the better choice for your company is to partner with a 3P marketplace specialist, please give us a call.

About Inovtech Services

Inovtech Services is a digital retail agency with significant expertise in the Amazon marketplace and unlike typical marketing agencies who will charge you thousands of dollars in fees, we earn our income by purchasing your products wholesale and then reselling them – thereby ensuring that our interests are 100% aligned with yours.

All day, every day, I look at brands on Amazon and all too often I see the same thing over and over; the current Amazon sellers aren’t doing a damn thing to add any value to the brand whose products they are selling.

In fact, in many cases, these sellers are nothing more than parasites that are collectively sucking value from your brand, and slowing destroying the equity that you (the brand owner) have worked so hard to create.

It’s no wonder that may brands today don’t want to increase the number of people selling their products on Amazon.

How to Increase Your Revenue on Amazon

When it comes to maximizing conversions and sales, there are 3 parts of your product listing that you absolutely must get right:

• Pictures
• Bullet points
• Product reviews

In addition to the 3 points above, there are also a number of other ways that professional 3rd party sellers can add value to your brand.

Turn Your Images Into Sell Sheets

When it comes to maximizing a products listing’s conversion ratio and increasing sales, there is nothing more powerful than having high-quality pictures that provide buyers with all the relevant information they need to make a purchase decision.

Here is an example of a product that has very high quality images – images which provide value with key pieces of information.

In other words, instead of just showing the product, these images have become sell sheets for this particular product.

Now take a look at your brand’s product listings and ask yourself if there are key pieces of information that your potential customers would want to know, and if there is, why haven’t the Amazon sellers you are currently working with added it?

Bullet Points to Sell Benefits

Most often when I am looking at a product listing, the bullet points are far too short and talk only about a product features. This is the wrong way to create bullet points.

As you can see in the example below, there is a fair amount of available real estate in this area, and the bullet points should be focused not on features, but instead on the benefits that the product will give a customer.

Automatically Generate More Product Reviews

Product reviews have a dramatic impact on how well, or how poorly, a product sells. According to Amazon’s data, 2 to 3% of customers that purchase a product will take the time to leave a product review.

If you look at the number of reviews that you have and they are less than 2 to 3% of the sales volume for this product, the sellers on this product listing have not bothered to implement an automatic review gathering system.

Generating organic reviews automatically is very easy to do. Ideally, every one of your sellers will set up an email autoresponder system to ask all buyers for a product review. However, in all likelihood, few – if any – of the sellers on your product listing will have taking the time to do this, because they aren’t interested in investing the resources needed. Instead, they are only interested in helping themselves and to win the sale, they often resort to the easiest option available to them; and that is to cut the price.

As a result, the total number of product reviews (and your sales volume) will be far lower than it otherwise would be if such a review generation system were put in place.

Respond to Negative Reviews

Removing a negative product review is nearly impossible to do, so instead of ignoring them, professional 3rd party sellers like TLK will publicly respond to each review and in doing so, demonstrate to other potential customers that customer service is a priority for your brand!

If your current crop of 3rd party sellers aren’t responding to negative reviews, your brand is suffering as a result.

Other Benefits a 3rd Party Seller Can Offer

If you have a relationship with a 3rd party seller, you should expect them to add additional value beyond optimizing product listings. Here are a few more things you can expect from your 3rd party seller.

Report & Identify MAP Violators

If your company has a MAP policy, chances are you are already familiar with the frustration that comes from seeing your product selling on Amazon below MAP because every time this happens all your other retail partners are quick to (loudly) voice their complaints.

Controlling MAP on Amazon is not easy. One of the major challenges in controlling MAP on Amazon is simply identifying who all the unauthorized sellers are.

If you are working with a professional 3rd party seller, this is one area where you should expect them to add a great deal of value to your relationship because it is in that 3rd party seller’s best interest to do their utmost to help you to identify all of the sellers who are selling your product below MAP.

Increase Visibility Using Keyword Research

Today 40% of product research on the Internet starts on Amazon. As a result, one of the major keys to maximizing product visibility on Amazon lies in having a thorough understanding of all of the search terms the buyers might use to find your product and then optimizing your listing to show up for as many of these search terms as possible.

When I am looking at products on Amazon, time and time again it is painfully obvious that none of the current sellers for a given product have put any serious effort into keyword research and optimization.

For example, if your product title doesn’t contain the main keyword people would use to find that product, you are definitely not going to rank very well in the Amazons search results – and sales will suffer significantly as a result.

This is yet another area where a professional 3rd party seller can add a great deal of value to their relationship with you, and when they do, you should immediately see a lift in organic sales.

Drive Revenue with PPC Advertising Campaigns

If the products you sell face a high level of competition for exposure in the Amazon search results, creating and managing effective PPC advertising campaigns is a very powerful tool for increasing the exposure, discovering profitable long-tail keywords, and increasing long term sales.

When you have multiple sellers on each one of your product listings, it is unlikely that any of them is putting the effort necessary into these types of promotional campaigns – and your sales are suffering as a result.

On Amazon, SEO & PPC work hand in hand to achieve greater product exposure, and they are a powerful combination if used correctly.

Once again this is an area where a professional 3rd party seller with PPC campaign management experience can add significant value to their relationship with you.

Inventory Management

If your products are in a competitive niche, running out of inventory is the kiss of death in terms of sales velocity, sales rank, and product visibility.

When you have multiple sellers on each one of your product listings, it’s highly unlikely that they are providing you with a coordinated sales forecast, and as a result, you have to cross your fingers that they’ll all do a good job of inventory management to keep all your products in stock at all times.

This is yet another area where a professional 3rd party seller can add significant value to your brand; especially if you are considering reducing the number of unauthorized sellers or eliminating them all together to go with a single exclusive 3rd party seller so you can control MAP pricing.

Going with an Exclusive 3rd Party Seller

Deciding to give a single seller exclusivity for one (or all) of your products is a decision that can solve a great deal of the problems that most brands face on Amazon.

With a single seller representing your brand, you can expect them to help you to:

• Control MAP pricing & eliminate the race to the bottom
• Help to identify and eliminate unauthorized sellers
• Get more product reviews
• Ensure your listings are fully optimized (pictures, sales copy, keyword targeting) for maximum product visibility
• Provide you with detailed reports on the performance of the Amazon channel
• Ensure consistent customer service levels
• Work closely with you as your partner and add as much of the value described in this post as possible

Conclusion

If you haven’t had much in the way of an Amazon eCommerce strategy up to this point, you are probably leaving a great deal of money on the table.

Rather than ignoring requests from new sellers to sell your products on Amazon, perhaps a more effective strategy involves investing the time to better understand how a professional 3rd party seller can add value to their relationship with your brand in ways that your current crop of 3rd party sellers aren’t doing – or don’t know how to do.

About Inovtech Services

Inovtech Services is a digital retail agency with significant expertise in the Amazon marketplace and unlike typical marketing agencies who will charge you thousands of dollars in fees, we earn our income by purchasing your products wholesale and then reselling them – thereby ensuring that our interests are 100% aligned with yours.

I have yet to meet with a brand owner that didn’t want to increase their sales on the Amazon marketplace. However, most often, there are two main challenges that stand between them and their goals:

1. A lack of the specialized knowledge required to effectively leverage Amazon’s marketing tools
2. It can be very difficult to identify and remove the unauthorized grey-market sellers that are causing MAP violations and a myriad of other problems for the brand

In today’s post, I’m going to start by walking you through some specific strategies that have been proven to work to increase sales on Amazon.

Then at the end, I want to finish off by ensuring that you have a clear understanding of just how dominant the Amazon marketplace has become in terms of consumer search patterns, and the impact of Amazon on your offline channels.

6 Tips for Increasing Sales on Amazon

1. Study Your Competition

Amazon is an extremely competitive marketplace. If your goal is to increase Amazon sales, the first step of the process is knowing what you are up against. With that, you’ll also want to consider the size of the opportunity (i.e., how many sales are there to be had?).

For example, if you sell horny goat weed, you would want to know the answers to the following questions:

1. Does my product have a unique ingredient or feature that sets it apart?
2. How many more reviews do the products in the organic search results have than mine?
3. How does the average product feedback rating of the competition compare to mine?
4. Are there a lot of ads from the competition?
5. How does my price (and value) compare to the competition?
6. What is the size of the market opportunity for the keywords that consumers would use to find my product?

As you can see below, I have done a search on Amazon for “horny goat weed.” In the red section, there is a headline search ad, in the blue section, there are a few sponsored product listings, and in the green section are the start of the organic search results.

In looking at this data, I can draw the following two conclusions:

1. My competitors are indeed running ads (though I don’t yet know the cost of these ads)
2. The top 2 organic search results have a very large number of reviews with an average of 4.5 stars

So, assuming you have a comparable product, you are going to need to either spend heavily on Amazon ads (possibly at a loss) or find another way to gain visibility on this channel.

Would it be worth the ad spend investment, considering the outcome is not guaranteed?

To find that out, I want to gain a better understanding of how much the phrase “horny goat weed” is worth in terms of sales.

As you can see below, the top 2 sellers combined generate approximately $244,000/mo in revenue. The aggregate revenue estimation from the remaining products on the first page of the search results is another $300,000/mo.

Armed with this data, you are now in a better position to determine if this is a battle you want to fight.

2. Optimize & Protect Your Content

Assuming this is a battle that you deem worthwhile, the first step should be to optimize your product listing content. Optimizing content involves making sure you have:

• A product title that targets the correct keywords
• Product images that are more than just basic product shots
• Bullets that include features as well as benefits (see image below for example)
• A product description that makes use of Enhanced Brand Content

Once you have optimized your content, you also need to protect it to ensure that some other seller doesn’t decide to change it.Key Take Away

PROPERLY OPTIMIZED PRODUCT LISTINGS CAN HAVE A PROFOUND EFFECT ON THE PRODUCT DETAIL PAGE CONVERSION RATE, WHICH IN TURN WILL HAVE A PROFOUND EFFECT ON HOW WELL THAT PRODUCT RANKS IN THE AMAZON ORGANIC SEARCH RESULTS.

3. Manage Your Product Reviews

If you want to succeed at increasing your sales on Amazon, pay close attention to your product reviews. When you do, you will find a few interesting things:

• Some of your positive reviews will provide you with valuable customer feedback that you can use to improve the way your products are marketed, the keywords you should target, etc.
• Some of your negative product reviews will actually violate Amazon’s Terms of Service and could be easily removed

4. Advertise Your Products on Amazon

Over the years, Amazon has become an increasingly pay-to-play marketplace. Gone are the days when you could just list your product and watch the sales come in.

To be successful today, you need to take advantage all of the advertising tools that Amazon provides to sellers. These tools include:

1. Headline search ads
2. Product placement ads
3. Sponsored product ads
4. Amazon Demand Side Platform

The above tools each have their pros and cons and if you want to increase your sales on Amazon profitably, you are going to need to make use of every tool in the toolbox. Expect to do plenty of testing with Amazon’s various advertising tools to get this right.

5. Drive Traffic To Your Products From Outside of Amazon

Amazon’s marketplace tools provide sellers with plenty of ways to buy additional exposure for their products; however, Amazon’s tools are far from the only tools available to sellers.

As you might imagine, the number of ways you can drive traffic to your Amazon product listings from external sources is virtually limitless – and well beyond the scope of this post.

What I will say is this: while Amazon doesn’t share the specifics of their search ranking algorithm, one thing that has been readily proven is that one of the greatest factors in organic search rank is sales velocity. Key Take Away

SELLERS THAT HAVE ACCESS TO EXTERNAL TRAFFIC SOURCES WOULD BE WISE TO CONSIDER SENDING THAT TRAFFIC TO THEIR AMAZON PRODUCT LISTS SO THAT THEY CAN TAKE ADVANTAGE OF THE ‘FLYWHEEL EFFECT’ THAT AMAZON OFFERS.

In other words, more transactions = higher ranking in the organic search results, which in turn = more exposure for your products, which in turn = more sales.

In other words, the flywheel effect.Key Take Away

MORE SALES = IMPROVED BEST SELLER RANK = IMPROVED POSITIONING IN AMAZON’S ORGANIC SEARCH RESULTS = MORE PRODUCT EXPOSURE TO AMAZON’S HUGE POOL OF BUYERS = MORE SALES

Amazon is an extremely popular marketplace with millions of eager buyers, so it behooves the smart brand owner to do everything they can to put their products in front of those buyers. Driving external traffic to Amazon with the sole purpose of improving BSR can yield substantial results in this regard.

6. Reduce the Number of Sellers to Just Two

Whenever I talk to brands that sell their products on the Amazon marketplace, they are often surprised to learn that having more sellers on each product listing is a bad thing. Many mistakenly assume that having more sellers will somehow increase exposure – and therefore increase sales.

Nothing could be further from the truth.

When you have one or two sellers on your product listings – assuming of course these sellers are working closely with you – your brand will experience the following benefits:

• A larger percentage of the seller’s profits can be invested in ad campaigns
• MAP violations will be eliminated entirely
• Your listings will be fully optimized
• Content will remain locked down
• All negative reviews in violation of Amazon TOS will be removed

So, now that you understand how to improve your product’s Amazon organic search rank (and sales), let me close out by ensuring you understand just how important Amazon has become for product research.

How Consumers Research Products Today

Check out the image below. This is data direct from Amazon.

As you can see, 59% of consumer research now starts on Amazon. But you probably knew that already.

What might be new to you is just how profound an impact Amazon is having on your offline sales.

Consider the following:

• 37% of searches start on Amazon and finish offline
• 22% of searches start in the aisle at a store where the buyer visits Amazon on their phone before completing the checkout in-store.
• 35% of searches start elsewhere and finish on Amazon
• Just 6% of searches start and finish on Amazon

Amazon Has a Greater Impact on Offline Sales Than You Might Think

The image above clearly tells us that Amazon has a much larger impact on offline sales than most brands think.

How do I know? I give presentations about Amazon to brands on a regular basis (every week) and whenever this slide comes up, the people I’m presenting to are very surprised by the data.

So, now that we know how much of impact Amazon is having on your total sales (not just online sales), what conclusions can we draw?

MAP Violations are a HUGE Deal: if keeping your offline retail partners happy is important to your business, you have to get online pricing under control (yes, this is possible). If you don’t, those offline retail partners are likely to remove your products from their shelves.

Controlling Product Content is Critical: Amazon product listings are much like a wiki. Unless you lock them down with Amazon’s Brand Registry, anyone can make any change at any time – which makes keeping your content under control virtually impossible. If you have products with FDA compliance issues, unauthorized content can even bring your listings down and wreak havoc on your revenue.

Responding to Negative Reviews is Critical:  As I mentioned above, consumers today actively use Amazon for product research. Product reviews, in particular, play a huge role in their purchase decisions. If you (or your authorized 3rd party sellers) aren’t actively monitoring and responding to critical product reviews, you are definitely leaving money on the table.

Actions You Can Take Today

Whenever I give a presentation to a brand’s leadership team, at the end, I’m always asked something along the lines of, “What steps can we take today to solve our problems on Amazon?”

My answer is this:

1. Reduce the number of sellers on your products listings to a chosen few, as doing so will have numerous benefits
2. Choose to work with 3rd party sellers that do more than just sell your products
3. If you are selling directly to Amazon, consider working with a 3rd party seller instead as you will have far more control

About Inovtech Services

Inovtech Services a digital retail agency with significant expertise in the Amazon marketplace and unlike typical marketing agencies who will charge you thousands of dollars in fees, we earn our income by purchasing your products wholesale and then reselling them – thereby ensuring that our interests are 100% aligned with yours.

Amazon makes up a massive portion of online sales. Bloomreach reports that 50% of United States shoppers start their online product search on the Amazon platform. With that volume of shoppers, there is obviously fierce competition on Amazon.

One way you can make your products stand out is through paid advertising. Amazon offers advertising through two different merchant channels:

• Sponsored Products, available through Seller Central, and
• Amazon Marketing Services (AMS), available through Vendor Central and Vendor Express.

As shown on the image to the right, shoppers actually tend to click on sponsored ads even more than they click on organic search results.

Here’s an overview of how to best advertise on the Amazon marketplace.

An Overview of PPC

The primary way to advertise on Amazon is using Pay Per Click (PPC). With a PPC advertising campaign, your products are shown to shoppers who enter specified keywords, and you pay each time one of your product ads is clicked.

PPC campaigns provide metrics to show how well your advertising campaigns are working and allow you to find your high performing keywords.

To help you get the most from your advertising budget, you will want to adjust your campaigns as they are running. If you run PPC ads incorrectly you can pay for a lot of clicks and make very few sales.

Organic Sales Increase Due to PPC

When you use PPC advertising you’ll start to see sales increase in two ways – direct and indirect.

You’ll immediately see sales that result directly from someone who clicks on your ad.

However, a significant factor in Amazon’s algorithm for organic search results is sales volume. So if your products begin to sell more (even if those sales are happening through paid advertising), they’ll begin to show up higher in the organic search results. In some instances, it is possible to use PPC to get your product to rank organically on page one, and organic sales may be enough to keep it there.

A successful PPC campaign should spend as much as possible on advertising that offers a positive ROI. You may also decide to sell at a loss in order to move your product up higher in the organic search results.

So let’s look at how to make all of this happen.

Phase 1: Optimize Your Detail Page

In order to set up a Sponsored Products ad in Amazon, you must make sure your detail page is fully optimized. This means that every part of your product detail page must be effective and relevant, including the back-end of your listing.

On your detail page:

• include relevant keywords
• enter your target audience
• select intended use for your product
• enter subject matter

Keywords are a critical part of your optimization. Throughout the process of running your Amazon PPC campaign, you will determine which keywords are the most effective. Properly selected keywords will help make your advertising profitable.

Phase 2: Let Amazon Do the Work

Start your PPC endeavors with an automatic “broad match” campaign. These campaigns allow Amazon to select keywords and bid for you.

After a grace period to get some data (usually around 3 weeks) Amazon then allows you to download the search term report to show you which keywords were profitable and which were unprofitable.

At this point, you can begin to tweak your auto campaign to exclude unprofitable keywords. Amazon’s auto campaign will be forced to look for new keywords that are not included in your list of negative keywords.

Depending on search volume for your product, you can add negative keywords approximately every 10 days for the first month, and then less frequently. This will take longer if your product has a low search volume.

Phase 3: Bid on Popular Keywords

In order to determine how much you’ll need to pay for highly competitive keywords, we recommend you start with a $10 bid and let the campaign run for two days.

The goal of this approach is to rapidly uncover ALL the potential keywords that consumers are using to find your product. Keep in mind that just because you set your bid maximum at $10/click doesn’t mean you are going to pay $10 for every click. The goal is simply to ensure that you don’t miss out on any potential keywords because your bid was too low to get impressions for that keyword.

Phase 4: Leverage Profitable Keywords

After 3 – 4 weeks, you will hopefully have a handful of profitable keywords. Now it is time to set up manual campaigns using “exact match” keywords.

You will create these using:

• any profitable keywords uncovered from your auto campaign
• keywords you suspect will work that Amazon’s algorithm didn’t uncover

At the same time, you still want to run your auto campaign. However, you should remove any keywords that were profitable and you have added to a manual campaign.

Again, depending on product search volume, you might do this every month (more often for very high volume products).

The longtail keywords you uncover in your product research will be lower volume searches, but will be less competitive and therefore a lower bid.

The goal of this ‘long tail’ approach is to find as many low-competition keywords as possible that, in aggregate, generate a large number of sales.

Phase 5: Update Product Detail Keywords

You should use the results of your auto campaign not only to create and modify your manual campaign but also to modify the keywords on your product’s detail page.

Sellers should target different types of keywords in order to have success. This idea goes past the typical broad, phrase, and exact keyword types for your listing (see image below).

You must also focus on competitor branded keywords, branded product keywords, and negative keywords. Each type of keyword has their own benefits and will either boost or restrict the amount your ad is shown and for which search terms it is shown for.

Phase 6: Using Amazon Marketing Services

Up to this point, we have been talking about advertising that is available through Sponsored Products and a Seller Central account. PPC advertising is also available with Vendor Express’ Amazon Marketing Services (AMS) in addition to Sponsored Products.

Vendor accounts are free, but typically more difficult to get – which is why the cost per click with AMS is generally lower than with Sponsored Products.

In addition to potentially lower cost advertising, AMS allows for additional advertising opportunities, some of which offer significant advantages.

Headline Search Ads

Headline Search Ads (or banner ads) show up in the top banner & link directly to your chosen URL. This can be your Amazon-branded page, or it can be an off-Amazon URL. Either way, you won’t have competitors shown on this page, which is a huge advantage.

Product Placement

Amazon Product Display Ads allow you to advertise individual products and drive traffic to the product’s detail page. With AMS, your options for placement of your product ads include the slot right below the Add to Cart button, meaning that shoppers will see your product at the moment they are making their buying decision.

This type of ad also allows you to target a specific competitor.

What Results Should I Expect?

The results you’ll see from your Amazon advertising campaigns will vary widely depending on the search volume and level of competition.

About Inovtech Services

Inovtech Services a digital retail agency with significant expertise in the Amazon marketplace and unlike typical marketing agencies who will charge you thousands of dollars in fees, we earn our income by purchasing your products wholesale and then reselling them – thereby ensuring that our interests are 100% aligned with yours.

As eCommerce continue to grow it share of retail sales, many brands are realizing that now is the time to re-visit their eCommerce strategy, and, in particular, how Amazon plays a role in that strategy.

In my talks with brands, I’m regularly asked whether it is better to become a vendor to Amazon (called First Party Selling, or 1P), or to simply sell on Amazon as a 3rd party (3P). Here I’ll share the differences, based on my own experience, research, and in talking with dozens of brands.

Becoming an Amazon Vendor (1P)

If you have popular products that sell well, at some point you will likely receive a call from the Amazon to ask you to become a vendor.

For many brands, receiving this call can be quite exciting; particularly because Amazon is going to tell you that they are going to place large orders, promote your products on the market place, etc…

While selling 1P may seem like a no brainer, for those that have gone down that road, the reality is that it is filled with potholes, curves, and various other surprises.

Before we get into the surprises, let’s take a quick look at what becoming a vendor to Amazon entails.

1. Amazon will buy directly from you
2. Amazon will tell you they want a large discount (15-25%)
3. Amazon will not sign a MAP agreement
4. Amazon’s payment terms are typically 60-90 days
5. Amazon will handle promotion, sales, and fulfillment

Here’s Amazon’s Vendor Express explainer video:

In this video, Amazon states that when you become a vendor you benefit from the following:

• You’ll get your product in front of customers in just a few days
• Amazon takes care of promoting, selling, and shipping your product
• Fulfillment will be handled by Amazon’s world-class fulfillment centers
• Amazon will introduce your product to hundreds of millions of customers already shopping on Amazon
• Your products will become eligible for free 2-day shipping for Prime members
• Amazon will handle customer service and returns
• Amazon will handle pricing and sales forecasting
• Amazon will handle inventory management

All the points made in the video are true when you become a vendor to Amazon…but what they fail to mention is that when you choose to work with a third party seller like INOVTECH SERVICES, you will receive all of the same benefits, and you will avoid the downsides of becoming an Amazon vendor.

The Downsides of Becoming an Amazon Vendor

In my discussions with dozens of brands who’ve sold to Amazon as a vendor, I’ve learned that most regret the decision – generally for the same few reasons.

Less Profit

Amazon talks a good talk about providing you with reasonable pricing, all the while negotiating you to provide excessive discounts. Then (even if they’ve mentioned no extra fees), you find that between chargebacks, marketing co-op dollars, early pay discounts, etc., you’re getting hit with 15-20+% additional off invoice charges.

Ouch.

Lack of Pricing Control (The Race to the Bottom)

The first (and generally biggest) reason most regret becoming a vendor is that when they agreed to do so, they didn’t realize that they were going to lose control of product pricing, and this turned out to be, in some cases, catastrophic for their business.

Here’s what you need to be aware of…if you have a Minimum Advertised Price (MAP) policy that you enforce with your brick & mortar customers, Amazon will invariably end up violating that MAP price.

When they do, your offline customers are not going to hesitate to tell you how much that is hurting their business…and, as was the case with one brand I spoke with, these offline retailers simply stopped buying products.

Depending on how much of your total volume is offline, this can be a pretty big deal with dramatic cash flow implications.

So how and why does Amazon ignore your MAP policy? Because they didn’t sign your MAP agreement (they won’t) – and they don’t really care about your company.

Amazon only cares about the consumer experience, and having low prices is a huge part of ensuring that consumers get the best experience possible.

Below is an example of this. As you can see, Amazon wants to own the buy box, so they ensure their price is always the lowest.

Now here’s an even better example of Amazon’s aggressive pricing strategies. Take a look at Amazon’s price of just $15.98. No other seller’s price is anywhere close to $15.98 (the one seller priced at $15.99 charges $6.93 for shipping), so why does Amazon need to go that low?

If Jack Links wants to be considered a premium brand among sellers of beef jerky, how is such a low price, relative to the other sellers, helping Jack Links to accomplish this goal?

It’s not.

Worse yet, if there were brick and mortar retailers selling this product at a MAP of $19.99, how do you think they would react?

Here’s one final example of how aggressive Amazon can be with the “race to the bottom”. Notice that on June 16th, the retail price for this bag of chips was $25. Just 3 months later, Amazon has driven the price down to $14.99. That is a 40% decrease in price!

When you sell to Amazon as a vendor, you have zero control over pricing.

Communication

Amazon is a very large company, and as a result, people are always moving around within the organization.

What this means for you is that you should expect a revolving door of account managers, or worse yet, you may go without an account manager for periods of time.

This can make communicating with Amazon very challenging….and lest you think that this poor communication would be the exception, I can assure you that it was very much the reality for quite a number of brands that I spoke with.

For example, one coffee brand that I’m in talks with right now is having a hell of a time just getting Amazon to update the images on their product listing to images consistent with their new branding.

Payment Terms

Amazon’s terms are most often 90 days. Depending on the size of your company, this can be a large problem. As I’ll explain later, when you sell to a third party partner, you can often expect to be paid in advance.

Chargebacks

Amazon vendors are subject to a wide variety of chargebacks. Some are related to customer payment disputes, while others are related to damaged goods, and a variety of other things.

While I have not been an Amazon vendor, two brands I spoke with at a recent trade show told me that chargebacks (as well as Amazon’s co-op & MDF fees, as well as seemingly endless other small fees) were so significant for them that it was pretty much killing any benefits of being a vendor to Amazon and they were planning to switch back to the the third party selling approach instead.

The Upsides of Becoming an Amazon Vendor

For the brands I spoke with, the reasons above were their major pain points to being an Amazon Vendor.

However, there are some advantages to selling directly to Amazon. Webretailer.com published an excellent article weighing the two options. Here are the highlights (their words, except where italicized):

• Control over brand. Advantage: EVEN
  (I would disagree with this, per my conversation with the coffee company who were struggling to update brand imaging. Amazon is also at liberty to rewrite your listings if they see fit.)
• Control over pricing. Advantage: 3P
• Sales velocity. Advantage: 3P
• Support from Amazon. Advantage: 3P
• Costs. Advantage: 3P
• Tax Nexus. Advantage: Varies (leans 1P)
• Margins. Advantage: 3P
• Promotions. Advantage: 1P
  (Disclaimer: As Webretailer notes, a solid 3P marketing strategy has been shown to beat out Amazon’s promotional programs – such as Amazon Vine, which helps build initial reviews. There are additional 3P tools that can provide many of the promotional advantages that Amazon 1P can offer. In addition, Amazon’s promotional programs can come with additional – and sometimes hefty – fees.
  Also, with Amazon’s hundreds of millions of product listings, you can expect that if you are not one of the top 10 or so “strategic brands within a major category,” Amazon is unlikely to pay much attention to you unless you spend significant amounts on promotions.)
• Staying in Stock. Advantage: 3P
• Day to Day Involvement. Advantage: Depends on Control Being Sought
• Getting Paid. Advantage: Clearly 3P
• Shipping and Accounting. Advantage: EVEN
• Reporting & Analytics. Advantage: EVEN
• Customer Service. Advantage: 1P
  (If selling 3P, you will want to be sure your partner has solid customer service systems in place. If selling 1P, Amazon will provide solid, standardized customer service. You will not be able to customize your service, or surprise and delight your customers. Also, Amazon ‘owns’ your customer, and it is definitely more difficult to get feedback from your customers if you are selling 1P.)
• Multi-Channel Fulfillment. Advantage: 3P
• Selling into Canada, Mexico, and EU Markets. Advantage: 3P
• Pay-Per-Click (PPC). Advantage: EVEN
  (I would qualify that this assumes you are using a single dedicated 3P seller, as it can be rather difficult to coordinate a PPC program with multiple sellers.)
• Cannibalization of Sales from Own Domain. Advantage: EVEN

While some of the 1P benefits may carry enough weight for a given brand to choose to sell direct to Amazon, the overall advantage is clear.

OVERALL ADVANTAGE: 3P

Third Party Selling on Amazon (3P)

As I mentioned earlier in the post, the second way to sell your products to Amazon’s customer base is using the 3rd party (3P) approach.

With 3P, the first thing you have to do is decide whether your want work with a dedicated partner like Inovtech Services, or simply let the forces of capitalism form your 3P strategy (or more accurately, lack a strategy).

Let me start by saying that if you have a MAP policy and keeping control of retail pricing is important to you, simply letting anyone and everyone sell your products on Amazon will definitely contribute to the pricing problems that I described in the section above and I do not recommend it!

Keep Control Of your Pricing

When it comes to 3P selling on Amazon, the best way to control pricing is to reduce the number of sellers on your product listings. As a matter of fact, I’ve previously written about how having fewer sellers can actually help you to increase sales.

3P vs 1P Benefits

Now let’s revisit the list of benefits that Amazon says are a part of becoming a vendor and see which ones apply if you prefer to go the 3P approach instead.

• You’ll get your product in front of customers in just a few days: This holds true for 3P sellers as well.
• Amazon takes care of promoting, selling, and shipping your product: Your 3P seller(s) will handle the promoting, and the Amazon backend will still handle the transaction of shipping.
• Fulfillment will be handled by Amazon’s world-class fulfillment centers: Same for 3P sellers.
• Amazon will introduce your product to hundreds of millions of customers already shopping on Amazon: Same for 3P sellers.
• Your products will become eligible for free 2-day shipping for Prime members: Same for 3P sellers.
• Amazon will handle customer service and returns: Your dedicated 3P partner will handle this. If you don’t have a dedicated partner, the 3P seller that received the order will have to handle customer service.
• Amazon will handle pricing and sales forecasting: Your dedicated 3P partner will handle this. If you don’t have a dedicated partner, no one will handle this.
• Amazon will handle inventory management: Your dedicated 3P partner will handle this. If you don’t have a dedicated partner, each of the 3P sellers will handle inventory management for their own account.

Disadvantages of Having Multiple Sellers

As I’ve written about here, there are a number of negatives that go hand in hand with letting anyone and everyone become a 3P seller for your products.

In a nutshell, the downside of this approach includes:

• These sellers will all use price as their primary lever to increase their share of the buy box, and this creates a ‘Race to the Bottom’
• Listings optimization will suffer from the lack of ‘listing ownership’ that having multiple sellers creates
• With multiple sellers, you will have zero control of you promotions
• With multiple sellers, you will have zero control of your customer service (brand experience)

Advantages of Working With a Dedicated Partner for 3P Sales

There are numerous advantages to working with a dedicated 3P partner and these advantages include:

• Your partner will sign a MAP agreement, and with just one seller on your product listings, there is no race to the bottom on price
• Your partner will help you combat un-authorized sellers
• Your partner will ensure your product listings are fully optimized
• Your partner will collaborate with you on the planning and execution of product promotions, new product launches, and PPC campaigns to help you significantly increase sales
• Your partner will handle customer service on your behalf in accordance with your jointly developed SOPs
• Your partner will handle inventory management
• Your partner will probably pay faster than Amazon does (TLK pays up front)
• Your partner will be easier to communicate with

Conclusion

Developing an effective Amazon strategy is a critical part of any brand’s eCommerce strategy. While long, this post was by no means exhaustive in its coverage of the facts.

Instead, my goal was to provide you with enough insight to allow you to ask meaningful questions in your conversations with Amazon and whichever 3P partner you talk to while you are determining the eCommerce strategy most suitable for your organization.

If you have questions about this post, please get in touch with us directly.

About Inovtech Services

Inovtech Services a digital retail agency with significant expertise in the Amazon marketplace and unlike typical marketing agencies who will charge you thousands of dollars in fees, we earn our income by purchasing your products wholesale and then reselling them – thereby ensuring that our interests are 100% aligned with yours.