With over 310 million active customer accounts worldwide, Amazon has become the largest e-commerce platform globally. Investing in an Amazon ecommerce store provides access to Amazon’s unparalleled scale and reach. By leveraging Amazon’s marketplace, fulfillment and logistics capabilities, third-party sellers can tap into new customer segments and accelerate growth. However, simply creating an Amazon store is not enough – sellers need optimized listings, competitive pricing, high-quality products and excellent customer service to thrive. This article provides tips on how to successfully invest in an Amazon ecommerce business and maximize returns.
Understand Amazon’s third-party marketplace opportunity
Amazon’s third-party marketplace accounted for over 50% of Amazon’s total unit sales in 2020. The number of active third-party sellers on Amazon grew by 55% from 2019 to 2020. This massive scale presents a huge opportunity for sellers. By investing in building a store on Amazon’s marketplace, sellers get instant access to hundreds of millions of existing Amazon customers. Amazon also provides the fulfillment infrastructure to enable sellers to scale efficiently.
Leverage Amazon’s logistics and fulfillment capabilities
A key benefit of selling on Amazon is Fulfillment by Amazon (FBA). With FBA, sellers send their inventory to Amazon’s fulfillment centers and Amazon handles storage, packing and shipping when an order is placed. This saves sellers from having to invest in their own warehousing and logistics operations. Amazon can also ship products faster and cheaper compared to individual sellers. FBA costs do need to be factored in but the benefits often outweigh the fees involved.
Optimize listings for discoverability
Merely creating a product listing is not enough. Invest time in optimizing titles, descriptions, images and back-end search keywords. This helps listings stand out in search results and improves sales conversion. A/B test different elements to determine which listings perform best. Also monitor your listings regularly for buy box percentage and review competitor listings for inspiration.
Analyze competitor pricing and inventory levels
It is essential to research competitor pricing, discounts and availability for your product categories. Being amongst the lowest-priced sellers for a given search term can help drive traffic. Also keep close tabs on inventory levels – running out of stock leads to lost sales. Use repricing software and tools like Keepa to stay competitive on price and inventory.
Focus on building a positive brand image
Customer reviews and ratings directly impact sales on Amazon. Go above and beyond to provide exceptional customer service and product quality. Engage proactively with negative reviews and feedback. Aim to cultivate a reputation as a premium, customer-focused brand to stand out from lower-quality sellers.
Diversify sales channels beyond just Amazon
While Amazon provides reach, it comes with risks like account suspensions and platform dependency. Mitigate risks by also selling via your own website, social channels, retailers and other marketplaces. But start with Amazon as it offers the fastest path to scale before investing heavily in other channels.
Investing in an Amazon ecommerce store provides access to an expansive customer base. But winning on Amazon requires much more than just creating a basic product listing. Optimize your listings, provide competitive prices and inventory, build your brand reputation and diversify sales channels beyond just Amazon to maximize your ROI.