In this webinar, CITC ecommerce marketing expert Perry Goldstein will provide an overview of the Amazon ecosystem and touch upon three basic topics related to selling on Amazon including ales models and options, content, and fulfillment.

Webinar Transcription

I’m going to get started with our webinar called Going Global with Amazon. This is everything that you would basically need to know to get started working with Amazon, both domestically and internationally. If there are any questions, please send them in real-time as we’re progressing through the conference.

So my name is Perry Goldstein. I am an industry expert that works with the California International Trade Center centered here in Long Beach, California. I’ve spent all my life in the electronics industry and started in the eCommerce business in the very beginning when they first started selling products on this new invention called the dotcom. So I’ve seen this grow up literally from the beginning. It’s been an amazing experience to watch this go from its infancy to the most important retail development in the history of the world.

So we’re going to go over a number of different agenda items this morning. I’m gonna start with a little general information about Amazon itself. We’re gonna talk about the different sales options. There’s a number of different sales options for you, fulfillment options, the marketing tools and the data analytics. And then we’ll finish with a quick review of where Amazon is worldwide and where you can start selling your products on Amazon worldwide.

So first, I want to start with a disclaimer saying this is really mostly centered on selling hard goods, although publishing, services, and other things that Amazon does carry could pertain to this. But I’m really a box guy and that’s kind of where I’ll be directing this conversation. Services and publishing will not be directly addressed, although there are a lot of cross-points where it pertains to everything. 

History of Amazon

So let’s talk about a brief history of Amazon. Of course, everybody knows Jeff Bezos, one of the most famous men in the world, started in 1994 out of his garage as an online bookseller. He expanded outside of books in 1997. Had his first international site in 1998. They added the Marketplace – and we will talk about Marketplace, and what that is, and why it’s different than selling directly to Amazon – in 2003. Currently, they’re in 11 different countries and they added Prime Video streaming in 2006.

So I call them a full-service e-tailer more, so I think, than anybody else on the market because they do everything for you. They handle the sales, they handle fulfillment, and they have advanced marketing tools. The detailed analytics they offer, which we’ll get to go through a little bit later, are nothing short of stunning.  

And then they have a global reach, of course, as I said, operating in 11 countries. 

Challenges of Amazon

So first, I want to talk about the challenges of Amazon. It’s a gigantic store with, I think at this point, a countless number of products. There’s extreme competition. You have a lot of clutter and noise that you have to breakthrough in order to get your product noticed, the competition of your own product from other resellers as well. In other words, if you’re a manufacturer and you’re selling direct to the end-user on Amazon, either direct or from Marketplace, and you’re selling to other retailers that are then selling your product on Amazon, they may have different prices, they may have different packages, they’ll have different ASINs. So in some cases, you’re really just competing with your own dealer base if you’re a manufacturer and you have to be aware of that.

Keeping control of your brand is really a full-time job with Amazon. You have to monitor it to make sure your content is correct, that there have been no typos on your content. They do control retail pricing and they make it very clear that if someone is selling your product on their website at a certain price, they will meet that retail price. So you have to be aware of that going in. Some manufacturers have policies where they don’t allow their resellers to sell on any ecommerce site so they don’t compete with them. That’s, you know, personal choice of each individual retailer.

And then there are some pretty interesting inventory demands. They order on a weekly basis, they will give you a projection, sometimes they meet the projection, sometimes they order more than what you have in stock, and then you end up in a back-order situation. Sometimes it’s not selling through, your product is not selling through as well as you’d like, and you’re then building inventory in your own warehouse because they stopped ordering. That’s just the nature of retail in itself. It’s a little pronounced with Amazon because they can do so much volume.

Sales Options

So let’s talk about the two sales options. There’s really basically two sales options, and there’s a sub that I’m gonna go into, selling direct to end-user through Marketplace and then selling direct to Amazon. When you sell to Marketplace, you’re not selling to Amazon, you’re using their platform.

So there’s two different…when you do business with Amazon, there’s a self-service set-up site and as a Marketplace seller, it’s called Seller Central. When you sell direct to Amazon, it’s called Vendor Central. So there’s a big difference there and those have become standard vernacular in the industry. If you’re a Marketplace seller, you are Seller Central. If you’re selling direct to them, you are Vendor Central. And I’m gonna go into those models right now.

Seller Central

So Marketplace is selling like you have your own store in a shopping mall. You’re inside Amazon, but you’re not sending to them based on their PO. You’re placing your product on their site just like every other eCommerce platform when you do Marketplace, but you’re not dealing directly with them. All your content and your pricing is handled by you. Well, you can handle all the fulfillment, although Amazon offers the opportunity to do your fulfillment for you, but you also can handle your fulfillment to the end-user. When you sell direct to Amazon, you don’t do that. And I’ll talk a little bit about that in a minute or two.

Payment comes directly from end-user as the product is purchased. So as the product is purchased, Amazon collects the payment and that goes into your account. In this particular case, Marketplace can be an audition for direct relationship. Not everybody wants to sell direct to Amazon, some manufacturers really like just being Marketplace.

But if your product is doing very well, the merchants at Amazon will be monitoring it and they may contact you and say, “Would you like to go direct with us because we’re interested?” And you can see on my graphic here where it says, “Ships and sold by Dainzuy.” That is an indication, as a buyer, that you’re not dealing with Amazon, you’re dealing with a Marketplace seller, and that particular seller may have different return policies and may have different shipping policies. So that’s an important indicator there of the fact that you are a Marketplace seller.

Vendor Central

When you sell direct, it’s like selling to a department store. You’re calling on a buyer. The buyers, virtually, at this point because I don’t think you really see anybody very often depending on how much business you’re doing with them, but you are dealing directly with an individual or merchant. You’re still doing, setting everything up on Vendor Central but you have somebody that’s managing your brand. You sell to them. They send you a PO, you ship the product, you bill them, they pay for the product, or a master distributor will go through. Again, that’s a sub that I was talking about.

And Amazon handles all the transactions to the end-user, fulfillment of the shipping information, returns, customer service, everything. They are essentially your agent. Content and payment is handled by Amazon. And you can see on the graphic, on the bottom there, on the left side of my screen, it says, “Ships from and sold by Amazon.com.” To the buyer, that tells them that, “Oh, I’m dealing directly with Amazon.” And it could say, “This is a prime product, you get one-day free shipping,” whatever that may be. But that is an indication that you are now direct.

Third-Party Options

Alliance Experts

So here are some two third-party options. They’re still direct to Amazon, but they’re a little bit different. And sales and marketing agency, and there’s a number of them… The one that I engage for this particular presentation was Alliance experts, they’re in Europe and they handle lots of different things. They’re experts in eCommerce platforms. They’re experts in Amazon. They’ll handle all the content formatting and distribution. So you send them all of your marketing information: your photos, your specs, your marketing presentations, product descriptions. They handle all the customer-service activities for you as well, so they’re gonna monitor the shipping and the returns.

They will handle all the marketing activities. They translate into the appropriate language for you since they are handling Europe for you. They design and execute marketing campaigns. Of course, they do that in concert with the manufacturer, but they really know all the marketing campaigns Amazon has to offer, and they will devise a campaign for you based on your budget and execute it. They will monitor and answer your user reviews. That’s a really important thing. We’re going to talk about user reviews. User reviews should be monitored and answered on a regular basis.

This is a really important point right here. The agency has the capability of warehousing and fulfilling orders for you instead of you doing it through Amazon, especially if you’re on Marketplace, but the inventory is not owned by the agency. It’s on consignment to them from you. It is secured but you still own that product until it’s paid for and out the door.

Master Distributor

There’s a different third-party model that I’m gonna talk about next. It’s similar but it takes it to the next step, a master distributor. So the sale is made and product shipped to an in-country master distributor. In-country, meaning the country that you’re selling it to. The master distributor is built for the product and they actually own the inventory. So if you’re based in the U.S. and you have a master distributor in the UK for instance, you will deliver that product to a bonded warehouse, net FOB pricing. They own it as soon as it gets to the warehouse, and they will pay you, and you are completely secured and off the hook.

This distributor sells directly to Amazon and then they will fulfill the order to the end-user or to the Amazon warehouses, whichever everybody decides is the best to do. The master distributor acts as your foreign agent. They handle all the shipping and billing to Amazon, returns, everything. So this is really what I would call a turnkey situation where the seller is completely off the hook once that product is in the warehouse. Now you want to stay involved for marketing and things like that, but you really…once you’ve been paid, they own the product and it’s all done.

So let’s talk just for a second about a master distributor because I always have to clarify this with people, if you’re not inside the industry and aware of this term. We always hear the term distributor and a lot of times it’s a retail-marketing device in that a seller will say, “We get distributor pricing directly to the end-users.” Well, that’s not really then a distributor, a master distributor will never ever sell to the end-users. There are distributors that will sell to other resellers and to end-users, and they may have two different prices. But once a distributor sells to an end-user, they no longer qualify as a master distributor. They only sell to a reseller with a resale license.

For foreign sales, a master distributor will take care of all in-countries duties, value-added taxes, warehouses, and shipping. Again, what you do is you ship to the master distributor at your net, net, net, just the lowest price. You take everything you can, they bring it into the country, and then they start to mark it up from there. They take their profit margin, they add the VATs, shipping costs, anything else that may pertain to that. So it is a truly a turnkey solution.

So those are I would call them two-and-a-half sales options. When you deal with an agency or you deal with the master distributor, you’re still selling direct on Amazon. However, you have that third party in between there that manages it for you. So there’s a number of different fulfillment options that are open to you when you do business with Amazon.

Fulfillment Options

First of all, Amazon, as the vendor, they have an all fulfillment for you. You ship the product to them, they pay you for it, and you’re off the hook on any sort of fulfillment. On Marketplace, they will fulfill a product for you. You could sell direct through Amazon through your Marketplace account. But warehouse the product inside Amazon, they take care of what we call the pick, pack and ship for you. Or there’s the master distributor, which is what I was just talking about,

and then the third party, which is a third-party logistics service.

As a Vendor

So as a vendor, when you sell direct to Amazon, they handle all the fulfillment. It’s in their warehouses. You ship to their warehouses and they take care of everything from there. The vendor ships direct to the Amazon warehouses across the country and the world. So now, you can ship to any warehouse, I think pretty much around the world where you don’t even need a distributor to get it into the Amazon warehouse. I believe that, I know in Europe at least for sure, what they’re doing is Amazon UK will send a company in the U.S. a PO and you ship it right to their warehouse, you skip the master distributor.

Vendors can now ship directly to Amazon warehouses all over the world and returns can be avoided by a returns allowance in lieu of returning the products. I believe Amazon is still doing that. So that’s a very important point, that if you have a product, like electronics quite often has returned issues, you can deal with the merchant and there’s an allowance that they will create that then you don’t get any of these returns back. As you can see on the left side of the screen, you could see it’s, “FREE Shipping by Amazon” so Amazon is handling that as a vendor.

As a Marketplace Seller

As a Marketplace seller, the product is warehoused in Amazon warehouses. The product is still technically owned by the vendor or the manufacturer until the order is bought by an end-user. Amazon handles all the pick, pack, and ship as well as the returns. Storage and fulfillment fees are charged to the owner. And then slow-moving products are charged, can be, I say, can be, an additional fee. Here’s an interesting quote, “These are desirable services for any business and using a well-known name like Amazon.” For this means that the company will benefit from economies of scale. They, in many cases, can warehouse, pick, pack and ship less expensive than you can do yourself depending on the size of your organization.

Plus when Amazon fulfills for you, you get that stellar customer service where you get the texts, you get the emails, all the followup is there. So if you can see on the left side here, “Sold by LarmTek and Fulfilled by Amazon.” So again, this indicates it’s a Marketplace seller but Amazon is doing the fulfillment for you.

Master Distributor Fulfillment

So I want to talk a little bit about the master distributor model which we call virtual feed, direct fulfillment. This is really important because this is how a lot of the internet works these days. This is kind of a little detour into the presentation but it pertains a lot to Amazon as well.

So the master distributor owns and warehouses the products. There’s an EDI connection between Amazon, or any other platform for that matter, and the distributor. So once the platform gets the order, they send that order electronically, directly to the distributor. The distributor then picks, packs and ships the product to the end-user, but the distributor has a printing…a label and a packing slip that comes directly from the reseller. So it looks like it’s coming from a reseller but it’s coming from a third-party warehouse. This allows e-tailers to offer products on their eCommerce platform without having to inventory products themselves. So very often, you’ll see in a store, we have more products in our online than we do in the store. They’re not really stocking those products in their warehouse, they’re utilizing third party.

Fulfillment by a Third-Party

Independent logistics company warehouses, so fulfillment by a third party. And here’s a really good article I wanted to give you about the third-party logistics. So let’s say you don’t want to use Amazon, you don’t want to use yourself, there are companies that very specifically handle logistics for you for e-commerce, the pick, pack, and ship. Logistics handles all the pick, pack, and ship, associated costs can be less than an in house staff. This is where accounting really needs to get involved where they analyze costs of warehouse space, personnel and all the associated costs that go with personnel.

Article link: https://www.shopify.com/blog/60645957-everything-you-ever-wanted-to-know-about-third-party-warehousing-and-fulfillment

Amazon as a Marketing Tool

So Amazon as a marketing tool. Amazon’s got very sophisticated marketing. This is an interesting comment I found here, “It may be hard to fathom, but over 50% of all online shoppers now use Amazon as their first website when they’re doing their research.” So it’s become more important than Google. So if somebody is researching a product to buy, if you’re researching information, you probably would go to Google. But if you’re interested in researching a product to buy, more often they go to Amazon because there’s so much information about those products, user reviews, specs, things like that, pricing that may not be on Google.

So at this point, I have to say, you have to think past Amazon as just a sales site. You can also use it as a powerful marketing tool, and we’re gonna talk about those marketing tools.

So AMS is what they call it, Amazon Marketing Services, and they have a number of different things you can do so you can drive traffic to your product using some of their tools and then you can actually use their sales driving tools. There are different levels of content, user reviews, and a Brand Store.

Traffic Driving

So let’s talk about traffic driving. Traffic driving, we always have to remember what drives the internet is words. People use words to find things on the internet. So using the correct words will drive traffic to your product using what we’d call A+ Content, which is extended content with all of the keyword searches, SEO keyword searches, pay-per-click keyword searches. And you can see that on this example on the left side of my screen, it’s sponsored. So they’ve already got sponsored. They’re paying extra to raise above the search engines to get you to their product.

Sales Driving

These are also sales-driving. You can see here lightning deals, today’s deals. Lightning deals are just one of many different types of discounts that you can offer through Amazon that will drive your sales. So you drive them to your site using all those keywords and all those different tools that get them to your page, and then you can close them on a sale by offering them a special discount.

So here are some of the discounts, coupons, close-outs, lightning deals, and you can schedule these yourself or you can schedule them with your merchant if you do have a merchant. Promotion can use suggested words and phrases as well as custom words. You have the ability to purchase competitors’ names. So if they’re looking for your competitor, your product might come up. And there’s no subscription cost to AMS. AMS is a pay as you go, you sign up and you basically determine, just like any other SEO keyword search campaign, decide how much you want to spend and then stay within that range.

Standard Content

So here’s what standard content looks like. I said to use the word A+ Content. And A+ Content has become industry vernacular for expanded content.

With the standard content, it tells you … so this is what I call above the fold. And in case you’re not sure of what above the fold is, above the fold is everything you see without scrolling past your opening screen. So standard content is whatever you think is really important that’s gonna get someone’s attention and some photos and some basic specifications.

A+ Content

A+ Content is generally below the fold, you have to scroll down to get it. However, you have a great deal of space and freedom to give advanced information, more detailed information. You can see, and this is content that I personally wrote for a company that I’ve done some work for, you can see that we gave a lot more information. Information…we always hear the word content is king, in my mind, information is king. And information gives you the kind of details that people need to make a buying decision.

So A+ Content generally costs extra per ASIN, I think it’s a really good investment. The more information you can give your potential customer, the better off you are, the better chance you have of making that sale.

User Reviews

User reviews are gold. I don’t think people pay enough attention to user reviews myself. And there are two types of user reviews. This is an organic user review. Now Amazon’s very careful to make sure that nobody’s gaming the system, either putting a lot of good or a lot of bad reviews. So when you review a product, they will verify that you made that purchase, they’ll look at your purchase to make sure that the person rating it actually bought that product.

User reviews need to be screened regularly and in detail for a couple of reasons. First of all, they’re giving you valuable product insight as to what they’re doing, what they like, what they don’t like. And user reviews are just past the product. They will be about your packaging, “I’ve got this product and the packaging was destroyed.” And you go, “Oh my gosh, I need to improve my packaging.” Or they will talk about use cases that you may not even know about it, “Oh, I never thought my product would be used like that. That’s really good information.” That’s what user reviews do. If you get a bad user review, and it’s virtually impossible not to because not everybody has a great day every day, not every customer loves everything they bought about your product, you need to answer those. That’s a really good idea because people use these user reviews to buy their product and they want to know the manufacturer’s listening.

Now there’s a program called the Vine Program, as in “I Heard it Through the Grapevine” that was Marvin Gaye, I believe. So the Vine Program, Amazon chooses people that do a lot of really good reviews. So there are people that review every single product they buy from Amazon, they’re very active in the review community, and Amazon looks at their reviews and they consider them very good resources. So they will give a manufacturer the opportunity to send these users products to test, then their obligation is to post a review. Now you have to be careful, their obligation is to post a review, not a good review. They may not like your product.

So this example is a product that I designed for the company I was working for a number of years ago, and what happened was a brand new product…and I really consider user reviews amongst the most important sales and marketing tools. So I wanted to get some user reviews as quickly as I could. So we sent out 25 of this particular microphone to 25 reviewers and they reviewed it. You can see I didn’t get five stars, I got four, which was pretty good. But Amazon is very clear also in transparency about saying this was not a purchased product, this was a free product, this reviewer got this for free. That doesn’t necessarily mean that they were paid off to give a really good review but they didn’t buy it. And again, Amazon likes to let people know that these reviews are authentic.

Brand Store

So Amazon offers the ability to do a Brand Store. And there are different manufacturers that I’ve seen that don’t even have their own website. They may be just importing a number of different products, so from different manufacturers. So they set up their own, what they called Brand Store, and this is essentially their website. You can see you have a really nice header, you design the header the way you want, you put all your product categories as you choose to have them, and then you have all of your products there. So I think the Brand Store is a really good opportunity for a reseller to create a destination on Amazon. So what you can do in your marketing efforts, if you buy Google pay per click, you can drive them to your Brand Store at Amazon and then you can be sure that they’re going right to your store and they’re not looking at your competitors.

Marketing Tips

So here’s a couple of marketing tips. Create your free store page. I’m sorry I didn’t check recently, but the store is usually free to brands. Use social media to drive traffic to your product page. And this is a real philosophy here, a lot of people like to drive traffic to their own website because they want that traffic going to their website. The more traffic that goes to your website, the more important you become to the SEOs. However, if you’re just trying to sell product, it may be better putting your deal on your Facebook page and driving that directly to your Amazon page. That’s a very personal choice, it worked for me when I did it, so it’s just one option. And you should coordinate all your marketing tools.

See, a lot of times, I find that novices, especially in the eCommerce world, don’t coordinate the words that they use everywhere in their creative assets. All your pictures should be the same so wherever they see your product, it’s the same picture, it’s the same words. So they’re getting the same message regardless of where they’re going. And in a pay-per-click, you can use the Amazon-pay-per click. I like to use the Google pay-per-click and drive the traffic right to Amazon because they’re ready to buy right there. But the company that I worked for, we didn’t sell direct to the end-user off of our website, so we liked people to buy. We weren’t that interested in getting them to our website, we really wanted them to get to someplace where they could buy right away.

And here’s something interesting that I discovered. A lot of time as a vendor, as a manufacturer, if you make a change in the design of your product, it’s a different color, you’re using different components, you now have to change the model number, so 6524 could be a 6524A, and in that case, sometimes you have to change the UPC. Amazon sales are driven by UPC. So if you change UPCs, you lose all the old traction, all the old user reviews, it’s essentially like starting over. So try not to change or UPC.

The most important point I’m gonna make here, and I’m gonna make this a couple of times, be patient, create a five-year plan. You’re probably not going to make a whole lot of money or sales off of Amazon to begin with. It takes time to get traction and it takes times to get noticed and to learn their system.

But as I said earlier in my presentation, think of Amazon past being just a sales medium, it is also a marketing medium and a very strong marketing medium.

Amazon Big Data

So this section I call Amazon Big Data. This is their data and analytics, it’s called ARA, Amazon Retail Analytics. They have a basic and then a premium. The premium obviously has a charge associated with it. The analytics are just phenomenal: customer behavior, sales history and sales projections, geographic performance, operations, market trends, customer reviews. You can see how you’re performing versus your competition. There’s so much information available in detail. You could never really get anyplace else.

Here’s just a sample dashboard. You can see the seasonality is right on the top so you can see literally almost day by day, I think for sure, week by week, month by month, year by year how your product is selling. So you can use this as a judge as to when you need to ramp up your inventory and when you need to run it down. So when it’s talking about the number of views you’ve gotten versus the number of sales. So you can see in this particular case, the first line, 81 page views in 19 orders. So you can really get a good idea of how your product is performing.

I’ve got two suggested readings on Amazon on ARA, I don’t want to go into detail just because I could do an entire webinar just on ARA, there’s that much information. But here Tara Johnson wrote on tinuiti about Amazon ARA and what you get in premium versus your standard.

And then this was an interesting development I just found out about. This is an article that was just written and that is that if you’re a brand that was selling through Marketplace, was paying $30,000 a year for their analytics, and according to this article it’s free. So you can take a screencap of this.

This presentation again will be available for replay later. You can go get this information on this article and read it. Amazon releases free analytics of brands previously paid for. Now I say the word brand. So if you’re a reseller that’s selling multiple brands, you’re really just another retailer that’s using Amazon as your medium. This is for brands only.

Link: https://www.forbes.com/sites/kirimasters/2019/02/12/amazon-releases-free-analytics-that-brands-previously-paid-30000-per-year-for/#5ce3dcc044b4

Amazon Worldwide

Locations

So Amazon worldwide. That’s the meat of the presentation today, I think there’s a lot of information there that would help people get started. So Amazon worldwide, this is where Amazon is currently worldwide: U.S, Mexico, and then all the different European countries. And again, Alliance experts, the guys that I had referred to you to before, they handle Europe. There is other people that will handle Europe, Japan, Australia, and India. They did have China, I think they changed some of the products you can sell into China. But for now, these are the countries that you can do business with on Amazon.

Shipping

Foreign shipping. So through the U.S. site, Amazon will ship to foreign countries, the VATs, all get added on, all of the shipping charges. But if somebody in Europe wants to buy off of U.S. websites because maybe of product available in the U.S. you don’t have in Europe, they will handle that and it will say right in the product. Did you see that little screencap I added? International Shipping – so with certain products, they will ship internationally. Also, and they will ship directly to the end-user. But also, again, you can ship internationally direct to some of the Amazon countries these days without a third-party middleman.

Reviews

So I’m gonna go through review. In our sales models, you can either sell direct or Marketplace. Fulfillment options is direct from Amazon or using their fulfillment services or a third party. Marketing, you can use Amazon Marketing Services, data analytics at Amazon Retail Analytics. Marketing services help select keywords. Look past the numbers, take advantage of Amazon Marketing Services, Amazon Retail Analytics. Pay close attention to your user reviews. And be patient, create your five-year plan.

So here we have some educational resources. This is our website, https://cainternationaltrade.org/, that’s where this webinar and all our other webinars are being held. You can go there anytime and get them. We have blogs, we’re creating a glossary, and FAQs.

And here’s my upcoming webinars. This series is called eCommerce Basics. We have many different types of webinars. This is really the basics of everything you need to know to get started. March 25th at 10:00 AM, same time, same place, we’re gonna do a webinar called Feeding The Content Monster, which is my favorite topic, talking about good quality content, what your message is and what types of content you need. We’ll be talking about Fulfillment & Logistics, Beyond Amazon, and VATs. And hopefully, we’re coming back in the second half with deep dives on some of these topics that we glossed over today.

So with that, we say, are you ready to go? And there’s our website one more time. And with that, I’d like to say thank you very much. And I think that is the end of our webinar for the day.