Are You Buying or Selling on Amazon? Then You Must Read This!
As a Brazilian who has lived in 3 different countries and who has been living in the US for the past 6 years, I feel I can say this: America surely is a place of opportunities. It doesn’t matter your starting point, if you are big or small, educated or not, there is basically nothing here that is out of reach. Sure, those things can make your journey easier, but they are not determining of your outcome: your mindset is. And I can say this because I have lived in places where opportunity is something far removed from the everyday regular Joe. In Brazil and in Argentina, very little is about your talent or what you have to offer, and a lot is about who you know and what you can afford. Conversely, in the US, as long as you are offering something of value, basically anything is within reach, because people are open to watch, listen and read.
It was with that mindset that my husband and I decided to start an Amazon biz earlier this year. We were not too ambitious: we just wanted passive revenue with little risk and a decent margin. Being a huge Amazon consumer for years now and with the e-commerce market growing exponentially, it was a no-brainer. So off we went. We started small and humble, lightly treading the waters and trying to get acquainted with the landscape. And we haven't regretted our decision, especially because this has been a tremendously informative process to us, both as sellers and as customers. It is to share my experience on both sides of the equation that today I will start writing a series of articles on our experience as Amazon sellers, to help you make better-informed decisions when working with their marketplace regardless of the side of the equation you are in.
Let’s start by discussing one of their basic selling rules: anyone can sell any product in their marketplace, used or new. For that, you only have to search their database for the product you want to sell and, once you find it, you click on the button that says “sell yours”. By allowing that, Amazon is creating both an open marketplace for sellers, giving opportunity for companies big and small, as well as offering their customers more options at better prices, which will ensure they get the best possible deal on everything. But is that really? Let’s take a closer look on that.
So, let’s say that I am a seller with a bestselling list of wooden spoons: my product is sourced from high-end manufacturers and comes in a high-quality gift box. I use Amazon to fulfill my orders (and I pay them an extra fee for that), which ensures that my customers get faster and free shipping with professional packaging and customer service. Because I want my product to sell well and I want the quality of my product to be reflected all over my listing, I pay for professional pictures to be taken and I hire someone to create a quality product description. I also want to list on the first page of Amazon, so I invest in keyword research and advertisement (within Amazon and throughout the web). After putting in this much time and money, I list my product for $8 and, because my products are of high-quality, I have a lot of 5-star customer reviews, which increases my organic sales, because it indicates to new customers that the chances that they will be happy with their purchase if they buy that product from me are high. So, after a lot of investing on the listing, I am doing well and I am reaping the benefits of my investment, as is fair.
Then there is you. You are based in China and you want to sell your wooden spoons in America. Your product is of lower quality and is sent on a simple packaging box. You decide not to have Amazon fulfill your orders, as I do, because you don’t want to pay the extra bucks to have them take care of the process for you, so you are changed basically a small percentage of your selling price for using their platform to sell. You also ship the product yourself from China directly to the customer once they place the order, which means that your product will arrive to the buyer approximately 4 weeks after the purchase (versus 2 days, in my case). Because you are not fluent in English, you can’t create a quality listing yourself, but you don't want to invest money to have a third-party professionally create the listing for you, because you are based in a country which currency exchange rate is very expensive in comparison with the dollar. You also won’t invest in advertising, for the same reason. But you are sourcing your product in China, so you are probably buying it for cents of a dollar, and on Amazon they are sold for $8 or more, which means that you have ample margin to charge a lot less than I do and still make a lot of money. But Amazon is a jungle: you have to be big or growl loud to be heard. So what do you do? You go to Amazon, search their listing database, find a product like yours with beautiful pictures and an amazing product description that is selling well (you can ensure that by the number of reviews the product has) and you click on the “sell yours” button. You will fill out a few information specific to your product and bam!, you have your product listed with the same perks as mine.
And there is more: let's say that my listing has color variations. As some of you may have noticed, some products that are listed on Amazon show both the "add to cart" and the "buy now" buttons, while others show only the "add to cart". Whenever you are offering the lowest price on a listing, you will have the "buy now" button. Now, because I want my product to sell well, let's say I am paying to advertise the product. If any of my color variations has the lowest price and the "buy now" button, my ad will show. And whenever a potential customer clicks on my ad I am charged for that, regardless of whether it converts to sales or not. But, imagine that once the customer clicks on the ad, he notices another variation of my product selling at a much lower price (the variation that was hijacked by the Chinese seller) and decides to save some bucks on the purchase. If that happens, I will have paid to show my product to potential customers and the seller making the money on the ad will be the hijacker. In other words, when he hooks his product on my listing, I may also be paying for the advertising of his product!
Then you will say “ok, but while that may not be fair from a seller’s perspective, how is that not advantageous to the customer?”. Here is how: none of this process is transparent to you, the customer! So when the customer goes to Amazon and searches for wooden spoons, different options are listed, with the ones that are investing heavily in advertising, that have nice pictures, complete product descriptions and great product reviews being listed first. When you select the option you want and decided to click either on “add to cart” or “buy now”, the product that is being taken to your cart may or may not be the one that is being shown in the listing. Amazon's system defaults to the product at the lowest price, which would be perfect if it was the customer’s choice. But most times the customer is not even aware of that. Not only that, usually the lowest-priced products are also the ones of lower quality, poor packaging, much longer shipping times and poorer customer reviews. But none of that is taken into consideration when deciding which product goes into your cart. Therefore, you think that you are buying a product from Massachusetts when in truth your product is coming from China, is of lower quality than shown in the pictures and will take longer to arrive, but none of that is clear to you unless you are very attentive and check three information on the listing: the "sold from" and the "fulfilled by" information showing on the listing, as shown in the screenshots below.
When the "Sold by" (shown in the first screenshot) matches the name in blue above the title of the listing (shown in screenshot 2), then there are no doubts that you are buying from your seller of choice. But what happens when it doesn't? Then you have to click on the "sold by" name and check if the product you want to buy is listed among the products they sell. If not, it will be clear you are being misled.
Side note: listing hijacking doesn’t happen with trademarked products, of course, because the big players (such as Nike, Adidas, etc.) would certainly sue Amazon for millions if others were selling on their listing claiming to be offering the same product.
I have always been the happiest Amazon customer ever: I have always felt I purchased quality products at a fair price and received top-notch customer service. But there is a lot that is not clear to the customer throughout the buying process. Do your research. Amazon’s system defaults any purchase to the lowest priced offer, regardless of any other condition being equal, which does not necessarily meets the customer’s requirements for every purchase, and certainly is not fair to the sellers, who are putting in the work to sell well and get their sales ripped by what is called “listing hi-jackers”. But, if neither the seller or the customer is benefitting from this process, who is?
Next week I will discuss a little bit about the fake reviews. Can you trust the recommendations on the products that you buy?
Do you sell or buy using Amazon and have a different experience? Share it below. I would love to hear from you!