Selling on Amazon: Fact vs. Fiction
It’s official: Amazon.com.au is live and trading. With thousands of Australian businesses already selling on the platform, now is the time to decide whether you will compete on or compete with Amazon—ignoring the marketplace is not an option.
There is a wealth of knowledge available to help you make this decision, but the sheer amount of information can be overwhelming. To clear things up, our, CEO, Ryan Murtagh separates the fact from fiction when it comes to selling on Amazon.
Amazon Australia is live and now delivering millions of products.
It can’t hurt to wait and see: FICTION
Although you may be tempted to wait and see the impact of Amazon before signing up, the best strategy is to get started straight away.
“Waiting is the worst thing you can do with a marketplace like Amazon - If you’re not in it you can’t win it. There’s no risk in trying and if it doesn’t work you haven’t lost anything. With platforms like Neto the cost to try is significantly reduced and the market opportunity is huge.”
Amazon represents a great opportunity: FACT
In a recent Neto survey of online shoppers, two thirds of respondents indicated they would shop on Amazon Australia. This presents a massive opportunity for small and medium businesses (SMBs) to access this vast, inbuilt customer base.
“I think there will be a new generation of SMBs that get their start and will catapult to success via Amazon, it’s going to be a really great opportunity to use the Amazon Marketplace to leverage the Amazon brand and customers.”
| Related Reading: How this Aussie retailer will use US success to nail Amazon Australia
The marketplace is already too crowded: FICTION
Although Amazon is known for selling hundreds of millions of products in overseas markets, it has launched a brand new catalogue in Australia. This means that rather than entering an extremely crowded marketplace, local retailers have the chance to gain first mover advantage.
“I think a lot of retailers assume Amazon will have every product that’s available in the States on the Australian platform, but they won’t, Amazon has decided to start a fresh catalogue so there’s not going to be as big a selection from day one.”
It’s too hard to get started: FICTION
Getting started on Amazon will be difficult if you don’t have a service that automates your listings, stock control and pricing across all marketplaces. “Ultimately you’re not going to be a profitable retailer because you’ll be spending all your time managing stock and customer complaints instead of delivering a good customer experience.”
It was running a retail business ten years ago that led to the creation of Neto. Ryan was selling through an online store, bricks-and-mortar and eBay, with no system to manage them all. “For every 100 new orders I would get a day, I had to hire another member of staff because of all the manual data entry—it was a nightmare.” Ryan then went on to build the system he needed, and continues to innovate based on what his customers require.
For example, Neto has started using machine learning to automate the otherwise manual process of listing on a new platform. If you already sell on eBay and want to start on Amazon, with Neto's Amazon Intergration you simply signup through Amazon Seller Central and enter your Amazon account credentials into the Neto system, which will then automatically map your inventory to existing Amazon categories and products.
Neto allows you to seamlessy manage listings, customers and sales all from the one platform.
If you have systems like this in place, there’s no reason to be intimidated about getting started on Amazon.
| Related Reading: Amazon Australia officially launches (and Neto integrates)
The numbers surrounding Amazon are staggering. In the US, the ecommerce giant has about 43 per cent market share of total online retail, and this is growing. Retailers should prepare to see a similar phenomenon here and need to decide whether they will compete on or compete with Amazon. Amazon has also overtaken Google as the first place someone looks for a product in the US, which means it’s important to list your products. “The future of retail is not necessarily a consumer going to a small business website, searching for a product, taking that to the cart and checking out”.
In the US, 55% of online customers begin their search on Amazon.
Amazon is growing rapidly: FACT
The numbers surrounding Amazon are staggering. In the US, the ecommerce giant has about 43 per cent market share of total online retail, and this is growing. Retailers should prepare to see a similar phenomenon here and need to decide whether they will compete on or compete with Amazon.
Amazon has also overtaken Google as the first place someone looks for a product in the US, which means it’s important to list your products. “The future of retail is not necessarily a consumer going to a small business website, searching for a product, taking that to the cart and checking out”.
In the US, 55% of online customers begin their search on Amazon.
Lowest prices are always best: FICTION
While many believe Amazon is purely price driven and a race to the bottom, this isn’t true. Instead, success often depends on the customer experience you offer.
“We have very successful customers selling a SKU on Amazon US that other retailers are selling; they’re not the cheapest but their customer experience rating is the best, their fulfilment offering is the best and therefore they’re wining the Buy Box.”
The buy box doesn't always come down to the cheapest product, customer experience ratings and fulfilment offerings are also taken into account.
For example, a Neto customer who sells around 20,000 units of a particular SKU on the Amazon US platform. “He’s not the cheapest for that particular product but the second best retailer, who is cheaper for the same product, is selling fewer than 1,000 units.”
Because selling on Amazon doesn’t have to be about price, there is an opportunity for Australian retailers to focus on delivering great customer service rather than driving prices down.
“Retailers should put their heads together and focus on experience and value over price, because that will ultimately benefit everyone at the end of the day.”
All you have to do is list your product: FICTION
There’s a fine art to being successful on Amazon; it’s not just a matter of listing your products and hoping they sell.
“A really important part is getting that first mover advantage and getting a sales history on a particular SKU so you rank better than your competitors if you are selling in a competitive category."
Amazon is also review driven, which means it’s important to have your back office in shape so you can offer an exceptional customer experience. Without a competitive returns policy and on time delivery, you won’t last long.
“More than ever the impact of bad customer experience is going to be felt by retailers. That’s why I’m excited about Amazon for consumers—it’s going to raise the bar and everyone’s going to have to step up."
Bonus Myths - BustedAs Amazon grows, so do the questions around what you can and what you can't do, so we’ve added a couple of extras in here to help you get your Amazon plan straight.
Amazon Australia will connect local sellers to the US market: FICTION
First, let’s get one thing straight. Amazon Australia and Amazon US have different platforms and are entirely separate marketplaces. This means those who list their products on Amazon Australia will not have access to the Amazon US customer base, as some hopeful sellers may believe. Amazon Australia product listings will only be available and accessible for purchase within the domestic market.
Although this doesn’t prevent you from selling on both platforms (you can sell on Amazon Europe and UK too if you please), you will still need to sign up and comply with each platform’s set of guidelines.
Amazon Australia will build a supplier network for its own direct sales: FACT
There is a huge misconception that Amazon functions only as a logistics platform for sellers. Amazon actually has its own direct retail business, and part of the reason the company is expanding into Australia is to sell and market its own products.
Amazon has already built a warehouse in Melbourne and is looking to build more. All support for third-party selling is still there, but sellers will still need to step their online marketing game for when the time comes to go head to head with Amazon’s own product offering.
Find out more about how Neto can help you sell on Amazon Australia and other online marketplaces.Start a free trial or download our free Amazon Guide.