Marketing Tips Part 10: Selling on Amazon

If you have physical products, you may have considered selling on Amazon… Now this can be dangerous in the long-term for competitive reasons (see: Walmart replacing other brands with its generic version), but here’s an overview plus info on Amazon Ads…

Amazon FBA is a program where they take care of all the fulfillment for you, for a fee. You send them your inventory, they handle it. With FBA your products are eligible for Amazon Prime free Two-Day Shipping. Amazon provides customer service on your behalf and handles returns.

If you’re already an Amazon seller (and you’re handling fulfillment yourself), you can convert your existing inventory to FBA. Your FBA fees cover the cost of storing your products in Amazon’s fulfillment centers; picking, packing, and shipping orders; and customer service.

This is all very convenient (in the short-term) unless Amazon decides to start competing with you: they know your pricing, volume, customers, etc. Just look into all of the niches they’ve been moving into. Your brand could be next… Ok so about advertising on Amazon…

If you didn’t know, Amazon has been flooding Google with every kind of product ad imaginable. I’ve seen the reports. They also allow you to advertise on their site. Advertising with Amazon can help you grow awareness of your brand and reach shoppers searching for your products.

I remember when it used to be VERY expensive to run ads on Amazon (I declined), but now apparently there’s no up-front fee to advertise, and no monthly fee. When you create a sponsored ads campaign, you choose your own budget as well as the amount you want to bid for a click.

For more info:

All that being said you could potentially sell a lot more with your product on Amazon (vs. your own site) due to their global traffic, people’s familiarity with them, the habit of shopping there, and their trust. It takes work to make someone set up a new account just for you.

If you’re not looking at FBA or Amazon Ads, and you were thinking of just being a normal seller: Again, this could be a risky for highly profitable brand owners who dominate certain niches. You don’t want Amazon finding out about it and competing with you: Become an Amazon Seller

With the Individual plan, you’ll pay $0.99 every time you sell an item. The Professional plan costs $39.99 per month, no matter how many items you sell. For both plans, Amazon also collects a referral fee on each sale, which is a percentage of the total transaction and varies.

If you consistently sell more than 40 units a month, the Professional plan is the best choice. In addition to the cost of your selling plan, the referral fee for a lot of product categories is between 8% and 15% (with a minimum referral fee of $0.30 per sale):

The link above has a calculator to see how various fees might impact the cost of selling on Amazon plus tables of data on all the other fees they charge for.

Just remembering some old research I did on Amazon… back in 2018, you couldn’t run ads to sell on your own website unless your budget was $35,000! According to @SumoMe , 41% of people start their product search on Amazon and end up buying there: Amazon PPC Strategy Guide: How To Advertise On Amazon

According to Kleiner Perkins 85% of products are found via @amazon (49%) and @google (36%). —@kleinerperkins

My competitive predictions for Amazon:

Google Facebook Amazon looking solid for the foreseeable future to me. I don’t think you’ll begin to search anywhere else or buy anywhere else similar that will replace them any time soon.

These have been the most valuable platforms in my experience.

Facebook buys its competition. Amazon gotta deal with Alibaba. Google gotta fight off Amazon for product search…

And of course who knows what Apple will do.

Amazon has a moat with AWS and its logistics. And they helped put some bookstores out of business. FB has a crazy user base and personal data for ad targeting. Google has probably unmatched search algorithms and computing power. I think Amazon is the strongest here…

People forget that Amazon is a search engine too, like YouTube. Plus they have all that purchasing data. And reviews.

Lots of companies are terrified of Amazon taking their customers. The Rona might have made it worse.

In a world where Amazon dominates, what happens to Google and Facebook? I think they lose the bottom of the funnel and compete for the top. But Google isn’t really made for top of the funnel ads, too expensive. So FB wins: Google is facing competition from both sides. It can’t match Amazon in the cloud or with deliveries. It doesn’t keep you on the site as long as Facebook. It sells less and less product ads as Amazon gets stronger. It sells less and less other ads as Facebook gets more popular with marketers. What would you do?

Google already has ads all over YouTube. Hopefully as video grows, they’ll compensate. But FB is moving on them there too.

My answer? They gotta dominate ar/vr and gaming somehow. Plus blockchain involvement. It’ll still be a fight with Facebook. But they need the eyeballs of the future to see their ads. That’s the kids.

This is just my opinion as a long-time user of these platforms. We’ll see what happens. If Amazon dominates physical sales, Google will have to dominate virtual sales. Gonna be hard to compete with the everything store when you sell mostly just ads.

See more here:

If this works, it could ruin Elon’s chance to ever catch up with Amazon’s logistics using his Tesla data for self-driving tech:

Amazon In Advanced Talks To Buy Self-Driving-Car Tech Company Zoox

Self-driving tech removes lots of the cost of shipping…

This could’ve been Elon’s way in through the backdoor to compete with Amazon.

Imagine if Amazon reaches global free shipping for all customers. Nobody else can compete right now. I think Elon was trying…

Facebook’s latest launch lets business owners sell directly on Instagram, Messenger, Whatsapp, and Facebook. – @larrykim

Game on, Amazon.

Remember when I said FB and Google are fighting for ads at the top of the funnel? Well the game has just changed. FB is taking it to Amazon as a straight-up, full-blown e-commerce platform. Would you buy products directly off Facebook instead of Amazon?

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