Amazon has been revolutionary for small and medium businesses. For the first time, independent brands have an equal chance at competing with the big guys by harnessing the powerful e-commerce and marketing tools Amazon offers. Yet, mastering the comprehensive platform can be time-consuming and there are many pitfalls budding brands risk to face on Amazon.
From understanding and implementing the platform’s complex rules and restrictions to selling and marketing, this article will explore real-life challenges Amazon sellers often encounter and how they can best overcome them.
Challenge 1: Product-Market Fit and Branding
If you’re ready to take the plunge and start selling on Amazon, the first thing you should know about are the restrictions that may apply to your brand and product. There are several ways sellers acquire products to sell: some manufacture their own unique product, some buy existing wholesale products from other brands, or some might private-label products from manufacturers or purchase leftover inventory from other companies.
You have to be aware of copyright and trademark laws as well as what is considered counterfeit goods, especially if you’re a re-seller. Amazon complies with federal as well as state/ local laws - go through their guide on proper brand representation as well as their anti-counterfeiting policy.
Why is it important to comb through the fine print of copyright? According to Amazon, you are liable even if your mishap is involuntary:
“Even if a seller is infringing on someone’s intellectual property without knowledge, we will still take action and the seller’s account might receive a warning or be suspended.”
Just like in business overall, you need to be sure that there is a product-market fit, that you’re not plagiarizing other existing brands by selling knock-offs. In extreme cases, you can risk trademark infringement or policy violation, resulting in Amazon destroying the counterfeit merchandise and billing the seller for doing so.
Case Example: Plagiarizing a Brand and Selling with the Wrong Price
A newly minted seller was complaining that they were not moving product despite marketing their product on multiple channels online. The other sellers were quick to point out that the seller was using the name of a famous toy brand their product listings and descriptions - which is certainly not allowed. Secondly, the other sellers were quick to note that this brand in question was selling the offering at a higher price than competitors which also is likely to hinder their sales.
Steps for Ensuring Product-Market Fit and Unique Brand
- Demand analysis: search Amazon for similar products to understand if there is demand for your product or if it is a highly-saturated market.
- Price analysis: see what the price for similar/ comparable items are and compare it against your ideal price: will you still make a high enough profit to be able to sell it at a better price than what others are?
- Brand analysis: see that your desired brand name is not already taken and that is unique enough not to be confused with existing ones. Don’t try to mimic a trademarked brand either visually or verbally as that may get you punished.
- Brand consistency: note that your brand doesn’t just live in a vacuum - once you’ve established it, make sure you invest in a strong digital footprint outside Amazon. Social media accounts and a professionally designed website are must-haves for building trust with your audience.
Challenge 2: Setting the Operations Up for Success
Once your branding and product competitiveness are in order, it’s time to get the set up just right - starting with the basics. Let’s look at the platform options and requirements related to getting started:
- Type of account. Choose if you want to be an individual or professional seller: the former costs 99 cents per sale while the latter is $39,99 a month. What you pick depends on how much product you’re likely to move and also on your profit margins. Do your math!
- Account settings - Here’s what Amazon requires: a credit card accepted internationally, a local bank that takes electronic transfer payments, home address, local phone, and a US EIN number which anyone can attain from IRS - even if you don’t have a corporation in the US.
- Understand what you can sell. Amazon has a long list of restricted products (such as alcohol, tobacco, food, organic products) which require pre-approval before you can list them. Get acquainted with the list so no surprises arise when you do start listing.
Case Example: A Denial in Selling Restricted Products
A seller in the medical supplies space ran into a serious issue when trying to set up its products for sale: they had purchased the inventory before getting their product into the review process. As it was a restricted category, it did not meet the criteria and got a final denial from Amazon. The seller was now stuck with an inventory of product sitting in the storage that they were not able to list on Amazon. To avoid this, always get your product approved before you stock your inventory.
- List so you can ship. Before you can ship your products to FBA (fulfillment by Amazon, simply put their warehouse), you’ll need to have your listing up but not active. You’ll want to have FBA because then it qualifies for Prime 2-day shipping which customers love.
- Taxation. Since sales tax varies per state, you’ll need to check with your local regulations. What’s even more confusing is that different states have different rules for product taxability. Also, you will need to register for a sales tax permit.
- Hone in on your listing. Once FBA is waiting for your order, you can focus on refining your listing with the right keywords: optimize your title, brand, manufacturer (this can simply be your company name), and double-check your price is competitive for the market.
- Acquire a UPC Code. Universal Product Code is essentially a barcode in layman’s terms and you will need to buy a UPC code so it can be added into the listing and printed on your labels.
- Create an FBA shipping plan. Now you’ll walk through the steps on the platform to fill out the shipping plan to send your product to the warehouse, fill a Hazmat (hazardous materials) form if applicable and are free to choose whichever courier/ postal service you or any third-party contractor prefers. One of the most common mistakes in the shipping plan is to fail to provide correct information, eg. on your product dimensions or weight so make sure you pay attention to the details.
- Make returns simple for the customer. Make sure you answer complaints and returns or exchanges promptly and communicate with your customer. Amazon’s return best practices are a must-read for any new seller.
Challenge 3: Mastering Marketing
On Amazon, it’s crucial to create a loop where your brand drives sales, sales drive positive reviews, which in turn strengthen your brand which again, drives sales. How to get to that virtuous loop? Let’s take a look at a case example and the steps you need to take to achieve a great brand, compelling listings, and successful marketing campaigns. Remember, if you’re a marketing and design rookie, this is one of the easiest parts to outsource to freelancers. Look into platforms like Fiverr or Upwork to get the help you need.
Case Example: Vita Coco’s Branding Success
Vita Coco, the seller of coconut products saw a 20-fold increase in coconut oil sales after launching advertising campaigns on Amazon. Let’s break down how they did it: first, they invested in high-quality images, optimized product titles with relevant keywords. They also created actionable and inspiring content for the product detail page, sharing popular use cases. Lastly, the combined this approach with Amazon’s sponsored ads for maximum impact. Vita Coco is a great example of cohesive branding: their storefront is beautifully designed to convey trust and professionalism - qualities shoppers tend to gravitate towards.
Steps for Successful Marketing
- Keywords: research is the key to keyword success. Look at similar listings that have good reviews, sales, and the ads associated with those products. Never mislead in the hopes of driving traffic as this will quickly backfire as people are more likely to bounce which can hurt your SEO. For your title, think of what consumers would want to see. For example, if you sell pool floats, your title description could say: “Giant novelty pool floats, multiple options, kids and adults” to keep it on-point yet informative.
- Images: the fastest way to repel a consumer is to show poor-quality images or too few images of your products. Never include illustrations or animations but represent an actual product in the photos. Don’t stuff multiple color variations of a product into a single image - add them as separate options. The requirements all images must meet: 1000px by 1000px square images, Use 85% of the frame, Save it as a JPEG, TIFF, or GIF, Save it as RGB color space. There are quite a few more rules that relate even to image naming conventions, so we do recommend going those over in detail.
- Campaigns: first, think of what you want to promote and what your goals are. Typically, products that sell well and are priced competitively will also perform in campaigns. Amazon Sponsored Product Ads are banner ads that are targeted based on keywords. They appear either on search results or product detail pages. Pro-tip: there is a free keyword tool you can use to plan both your listings and the keywords you target for. There are several other ad types ranging from video ads to even recommendation ads you can include on your website. Read through the options and decide what works best for you.
Author: Christine Goos
Christine Goos is an award-winning tech marketer and writer with over eight years of experience in creative and integrated advertising.