Introduction

Amazon, a colossal online shopping platform, needs no introduction. It provides sellers with unmatched visibility in the global virtual market, connecting them with millions of potential buyers. In this article, we will delve into the Amazon Marketplace, exploring its advantages and the two distinct approaches to selling on the platform.

What is Amazon Marketplace?

Amazon Marketplace serves as an exclusive platform for ecommerce sellers to showcase and sell their products online. Essentially, it acts as the seller interface for the renowned online shopping portal, Amazon.com. While shoppers cannot differentiate between Amazon’s products and those of third-party sellers on the same domain, the payment for purchases made through Amazon Marketplace is directed to the respective third-party sellers. Amazon retains a commission from the sales revenue as the cost of using its platform.

In summary, Amazon Marketplace offers business owners an opportunity to promote and sell their products on one of the most popular ecommerce platforms in the world – Amazon.

How Does Amazon Marketplace Work?

Here is a simplified 4-step process that outlines how Amazon Marketplace operates:

1. Register on Amazon Seller Central: Begin by creating an account on Amazon Seller Central, which serves as the portal or dashboard for managing your professional Amazon retailer account. It allows you to list an unlimited number of products for users to discover. There is a monthly subscription fee as well as a commission for each sale.

2. Add Product Sheets: Once your account is registered, you can add product sheets to your retailer menu in the Amazon Marketplace.

3. Manage Orders: Utilize your Amazon Seller Central portal to efficiently handle orders, optimize marketing strategies, and customize product showcases.

4. Dispatch Orders for Delivery: You can either manage order fulfillment yourself or opt for Amazon’s Fulfillment By Amazon (FBA) service. By choosing FBA, Amazon handles storage, packaging, and delivery, reducing the need for on-site warehouses in exchange for a percentage of sales.

Selling on Amazon: Two Approaches

There are two ways you can sell on Amazon:

Amazon Vendor Central

This option enables you to directly sell your products to Amazon, which then offers them for sale on Amazon.com. Amazon buys the products from you at wholesale rates. The program is by invitation only and primarily caters to wholesalers and producers rather than retailers.

Amazon Seller Central

Ideal for retailers, this approach allows you to sell your products directly to customers through the Amazon platform. As mentioned earlier, Amazon charges a portion of the profits on each sale as compensation for enabling ecommerce sellers to list, promote, manage, and sell products on their site.

The Vendor Central option is better suited for producers and wholesalers, as it handles marketing and delivery logistics for them. On the other hand, sellers who opt for Amazon Seller Central retain ownership of their products.

Inventory and Delivery Management Options

As an ecommerce seller joining the Amazon Marketplace, you can choose from two methods to manage inventory and delivery:

FBM (Fulfillment By Merchant)

This is the default status, allowing sellers to handle inventory management, storage, shipping, delivery, and customer care themselves. FBM provides greater control over your business, utilizing the platform primarily to attract customers, showcase products, and generate sales.

Benefits of FBM include:

• Inventory Access and Ownership: Retain complete control over your products, handling any concerns directly at the source.
• Lower Fees: By managing your own inventory traditionally, you can save on storage and fulfillment charges associated with FBA services.
• Higher Margins: FBM allows you to retain a higher percentage of profits while utilizing the platform to reach customers.

FBA (Fulfilled by Amazon)

Alternatively, you can choose to utilize the FBA option, where Amazon-owned fulfillment centers handle the shipping and delivery of your goods. This includes customer confirmation, product packaging, and the entire delivery process.

Benefits of choosing FBA:

• Time-Saving: FBA significantly reduces the workload for third-party ecommerce sellers, streamlining the process of reaching customers without excessive capital investment.
• Attracts Prime Members: Prime customers, who are willing to pay more for faster shipping, can access free shipping through the FBA program.
• Boost in Sales: FBA products receive preference in Amazon’s algorithm, elevating their visibility and increasing sales.
• Improved Customer Service: FBA takes care of customer queries and confirmation, addressing a significant challenge facing start-up ecommerce sellers.

Amazon Media Program

Apart from the aforementioned options, Amazon Marketplace also accommodates a consignment program exclusively for media products such as books, music, and DVDs. Through this program, ecommerce sellers can promote and sell their media inventory by directly shipping products to Amazon.

Understanding the Difference: Amazon vs Amazon Marketplace

It is crucial to differentiate between Amazon and Amazon Marketplace to avoid any confusion:

Platform Users

Amazon.com functions as the ecommerce platform accessible as a website and an application on smart devices. On the other hand, Amazon Marketplace serves as the interface that allows third-party ecommerce sellers to list, promote, and sell products on the Amazon website. Products sold through Amazon Marketplace are owned by independent third-party sellers.

Products

Amazon-owned products are always new, while third-party ecommerce sellers can offer both new and pre-owned items through Amazon Marketplace.

Pricing

When shopping on Amazon, customers browse through both Amazon’s product inventory and the inventory of individual third-party sellers. However, the integration of both markets makes it difficult to distinguish between them. This extensive selection of products keeps prices competitive, with multiple sellers, including Amazon itself, vying for customers’ attention.

Profits

When you sell a product as a third-party retailer on Amazon Marketplace, you retain most of the profits, with Amazon receiving a service charge for platform usage. Conversely, Amazon exclusively benefits from the sales of its own products on the site.

Popularity

Third-party sellers on Amazon Marketplace can leverage its widespread popularity and extensive customer base to expand their business. Regardless of their size or industry, any business owner can join the Amazon Marketplace by creating an Amazon Seller Central or Amazon Vendor Central account.

Product Listings on Amazon Marketplace

Amazon Marketplace offers two types of information in product listings:

Product Information

This section provides generic details about common brands listed on the platform. For example, product information for a specific brand of mobile phone case remains consistent, even if multiple sellers offer it.

Listing Information

Listing information includes seller-specific data such as item numbers, prices, shipping methods, and more.

The Advantages of Selling on Amazon Marketplace

Let’s examine the reasons why you should consider becoming a member of the Amazon Marketplace:

• Easy Setup: Creating a seller account on Amazon Marketplace is straightforward since the website, infrastructure, and customer base already exist on a global scale. By joining, you tap into this established platform with your own ecommerce offerings.
• Boost for Unique Products: Amazon Marketplace’s handling of complex logistics enables small businesses with unique offerings to focus on product improvement and customer engagement. This leads to increased demand for high-quality goods.
• Incentive for Better Products: With Amazon taking care of infrastructure and delivery, sellers can allocate more investment into creating superior products. This incentivizes brands to offer higher quality and, in turn, higher-profit-margin items.
• Imperative for Growth: Amazon has cemented itself as the go-to online service for ecommerce shopping. Small businesses must carefully consider the benefits of building their own consumer base versus leveraging an established, globally recognized ecommerce platform like Amazon.

Conclusion

Undeniably, Amazon Marketplace has become a powerful force in the world of ecommerce. For small-to-medium businesses seeking online growth opportunities, the platform offers immense potential. Consider joining Amazon Marketplace and weigh the pros and cons of collaborating with Amazon for future growth or sustaining your independent business model.

Remember, with Amazon Marketplace, you can unlock incredible opportunities and tap into a colossal customer base, so explore the possibilities today!