How to work with Amazon Marketplace

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

How to work with Amazon Marketplace

In November 2021, Amazon Marketplace turns 21. It’s a measure of just how much the e-commerce 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”.[1]

Fast forward to the present day and it’s not uncommon to see Amazon, the behemoth of global e-commerce, referred to primarily as a marketplace rather than as a retailer. In itself, this is a reflection of the extraordinary growth in the wider marketplace sector, especially over the past decade. In 2020, the world’s leading online marketplaces generated sales of $2.67 trillion, equivalent to 62% of global web sales, according to an analysis by Digital Commerce 360.[2]

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 5.2 billion visits from consumers every month.[3]

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 involve getting involved in newer forms of e-commerce, 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 use in specific ways, for example, in clearing excess stock.

When it comes to Amazon specifically, there’s a huge opportunity because of its sheer size. In 2019, it accounted for 52.4% of online retail sales in the USA and 13.7% of online retail sales worldwide.[4] According to a 2020 survey, 63% of online shoppers went to Amazon to begin searching for products.[5]

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.

How do brands engage with selling on Amazon?

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 [6] 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 “enables manufacturers to launch brands and innovative products exclusively on Amazon”.

It’s important to recognize there’s a trade-off in these closer relationships. The Our Brands program, for example, potentially opens up the techniques used by manufacturing brands to Amazon’s scrutiny. Join Amazon Accelerator and Amazon gains exclusive rights to the new brand and to products.

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 bumped from Amazon Marketplace.

For those using Vendor Central, Amazon has recently stipulated that suppliers need to send data through the Global Data Synchronization Network (GDSN) – something of a bolt from the blue. Early in 2021, Amazon made changes to its requirements when using Vendor Central send and label pallets.[7] Get this wrong and there are chargebacks.

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 goodwill.

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, it follows they will be able to make the most of these other opportunities too.