Good luck to all of us. We are seriously considering establishing our own brands and trademarks. Very tough being resellers as we all know. You get competition from other resellers and you might also get squeezed out by Amazon. With your own brand name on the product, at least they cannot directly compete with you under your product listing.

Well, we’re learning the ropes.

Clare

I read other posts and agree we definitely want to avoid being “noticed” by Amazon for your best products. If they sell your products, you are dead. Period. So, we are actually trying to control our costs by limiting our inventory. Well,if we lose some sales because we happen to be out of stock for some days. Who cares? We save some money and reduce our risks. Now we’d sometimes spend less time on serving our most popular products. When we get many things to deal with, we first devote time and energy on our other products, before we handle requests for our top selling products. My partners precisely made the point of not giving Amazon more reason to jump in on our products. We may lose some sales on the popular products, but we get to develop our other products and save some money on costs. If we can sell those very profitable products for a longer period time, it is worth it. It takes so much time and effort to identify some good products to sell; we’re not going to let Amazon rob our profits away easy. So, better watch and manage your sales.

I mean, if you have a stream of profitable products coming in, maybe you don’t care too much. In that case, you just take all the profits you can quickly and move on. But for us, getting hold of some good profitable products is not easy. So, better watch out for Amazon.

And, if you can, never provide any hint whatsoever as to where you sourced your products. Don’t make it easy for them.

Thanks for the comment.

Good point, although I don’t think we’re necessarily overlooking that fact. We’ve definitely referenced the free shipping side of things in the posts/comments. And I think it’s generally assumed that buyers strongly prefer buying from Amazon. I know that as a seller we always knew that if Amazon was close to us in total cost (product + shipping), the customer would choose Amazon. It’s just one more thing that sellers have working against them.

That same brand loyalty to Amazon is probably the #1 reason that it’s impossible for sellers to ever convert customers over to their website from Amazon. Some people don’t even notice that they’re buying from a 3rd party. From their perspective, they’re buying from Amazon. Now, I know and you know that, but the average customer is buying from the Amazon brand and is very loyal to it.

I’m not angry about this – I do the same thing. I’ll buy from Amazon for the same reasons, both when they are the seller and when they aren’t. I certainly prefer when they are the seller, but I’d rather buy from a 3rd party on Amazon than some random website I’ve never heard of.

Adam

1 – Amazon has a good reputation for fulfillment.
2 – Amazon offers free shipping.

In my shopping I often see items where Amazon ISN’T the lowest price seller, and I buy the item from Amazon anyway anyway.

Most of our mark-ups are similar to that example I gave (around 100% – i.e. we pay $10, we sell it for $20), although some things can be much more and some things are much less. It depends a lot on the type of product. If we pick up and push a low margin product, it’s usually because the accessories that are often purchased with it are high margin. The more we buy from a company, the more we can negotiate down our cost on the product. Our margins keep getting better as we go along, and I think they’ll continue to do so for a long time. You’ll get there eventually once it makes sense to bypass the distributor.

Completely agree with your statement about Amazon. It’s a good way to turn over inventory. We still have our account for that reason – in case a new product comes along (or we catch word that a new product is coming along) and we need to blow out of the old version at a high discount fast. It’s also a good way to take sales directly from your competitors like I mentioned earlier, although that’s personally not really a reason I care much about.

My *guess* is that if most sellers reviewed their Amazon sales as in depth as we did, they’d find that it wasn’t worth their effort and Amazon might have to adjust their system a bit. As it stands though, I don’t think that will ever happen until there’s a competitor with equal reach and better terms. I know Walmart is trying…they’re probably the best bet (not that I love Walmart or anything, but I like good competition). I feel like eBay could have competed but it might be too late now. I think that platform is just a total mess to sell on.

I realise this is a rather blunt and open question, but I don’t know what regular markups are on products. I’m so used to selling a service where the vast majority of the costs are staffing and things other than inventory that I have very little idea. I’d assume it’s in the range of 5-500% depending on the market and product, does that seem reasonable? Obviously for some of these a 15% fee is going to be peanuts, but for others makes you totally unprofitable. What is the range of markups you’ve typically had on your products? Is that too intrusive? Feel free to not answer! Is the example you gave before (100% markup) typical? As we’re presently buying from a distributor rather than directly from manufacturer we’re not getting the best deal, but at 15% it’d be tight on a lot of products.

I think the bad seller review is a bit out of line – they’d purchased from you, amazon just facilitated the purchase, so I think it’s perfectly reasonable that they should get some of your literature. Amazon send me enough crap about virgin wines every time I order ffs.

Would I be right in saying that selling through amazon is a good way to turn over inventory faster but not necessarily profit or benefit a ton in the long run?

Yes, there are different referral fees (see: http://www.amazonservices.com/content/sell-on-amazon.htm?ld=SCSOAlogin although it might show differently in the UK), however all of our categories were a flat 15% I believe.

For shipping, we could either charge a set price per lb or a set price based upon the price of the item, neither of which are “real world”. FedEx charges us a flat rate plus an additional price per lb, which varies based upon location. It sucks that Amazon can’t simply use the FedEx/UPS/USPS APIs and program those into their system.

The question about our sales dropping off is a tough one to answer. In most cases, if someone can get something cheaper on Amazon they don’t seem very receptive to switching to your site, and understandably so. We even got a bad seller review because we included a coupon to our store in someone’s order – they called it “SPAM” in their package. With both TD and DI, I can’t say that we were better off for having done Amazon. There might be a few examples of people who found us that way, but it was very very minimal. We generally included a coupon with their order, and then sent an automated follow-up email asking them to rate us on Amazon and included a 10% off code to come shop with us. Those basically converted at 0%. A few conversions on thousands and thousands of transactions. Maybe there’s a better way. To us it didn’t seem like there was much to work with though.

Our Amazon business was profitable, just much less profitable than the rest of our business when you factor in the 15% (+ $39.99/mo), inaccurate shipping quotes, and lower prices in general because you’re competing with other sellers. There’s also the constant worry that someone is going to come in and undercut us and take away all of our sales. Just takes one crazy seller in your industry who is willing to take a loss to move products or gain supposed market share and you’re screwed.

Probably the best thing we got out of it was that we knew we were stealing sales directly from our competitors. Then again, that’s an increase in time spent packing orders, customer service, etc.

Finally, it wasn’t that we were getting a better price than Amazon on the one product, it was that we were getting the same price and undercutting them. The company was very small and only had 1 tier of pricing if you spent $1500+ on an order, which we always did. Roughly, we got the product for $15 and sold it for $30 on TD. Amazon had it listed at $34.99 plus their free super saver shipping. We listed it for something like $27.99 + $5.99 shipping to undercut Amazon and other competitors. After the 15% we still made ~$8/unit and sold ~3/day, which worked out to about $9k in profit per year. Unfortunately there were a ton of returns on the product, which, without getting too into it, were a total pain. And that was the only product like that. The rest we either broke even on or barely profited. It just made sense to focus our time on the other parts of our business that are actually very profitable.