Amazon marketplace

The Amazon Marketplace is Amazon’s own ecommerce platform that lets third-party sellers list products for purchase. New or used products appear along with Amazon’s product offerings at a fixed price. Sellers can also use the platform’s advertising functionality to feature their product listings at the top of product search results pages.

Sellers on the platform either use Amazon Vendor Central - for businesses selling their products in bulk to Amazon – or Amazon Seller Central – for businesses selling their products by themselves on the platform.

What makes the Amazon Marketplace unique?

Amazon is the world’s leading marketplace and simultaneously the largest product search engine, and its algorithms more or less work the same way as those of Google and Bing. In other words, the platform contains immense amounts of structured product data. It has systems in place by which it sorts product search results by relevance, rewarding brands that put the most effort in research and product content management.

Due to its popularity and reach, the Amazon Marketplace is a very competitive environment where brands, retailers, small and mid-sized businesses, and even private sellers all compete in the same arena. Essentially anyone with a physical product can sell on the marketplace as long as certain requirements are met.

How should businesses manage their products on the Amazon Marketplace?

To gain an edge over the competition, businesses with a large number of products need smart solutions to integrate their product data onto the platform. Product-to-consumer (P2C) management software with a dedicated Marketplace Integration feature ensures that product feeds are uploaded onto the Amazon Marketplace channel with all the product information matching Amazon’s data requirements. This way, products are displayed in the search results pages and on their individual product detail pages exactly as they are supposed to.

Without such a solution, the product data can be inaccurate, leading to revenue losses through brand damage. In the worst case, consumers cannot find a certain product because of incorrect data misleading Amazon’s search algorithm. To avoid this common symptom of commerce anarchy, businesses should adopt P2C strategies for marketplaces, especially in the highly competitive environment of the Amazon Marketplace.

What are the main strategies to sell on Amazon Marketplace?

A business starting to sell products on the Amazon Marketplace has three basic business models/strategies to choose from

  • Wholesaling: A seller purchases large quantities of a certain product from a retailer and then sells them on the Amazon Marketplace.
  • Private label/selling: A private label seller on the Amazon Marketplace sells products with their own branding and/or label, often manufactured by a third party.
  • Online/Retail arbitrage: A seller purchases products (that are on sale or at a reduced price) either online or in brick-and-mortar stores and attempts to sell them on the Amazon Marketplace for profit.

These strategies each come with their own set of pros and cons, but ultimately the decision for a model is dependent on a business’s goal, competition, and target audience.

What is the difference between Amazon FBM and FBA products?

Products sold via Amazon Marketplace through the Seller Central are either classified as “fulfilled by the merchant” (FBM) or as “fulfilled by Amazon” (FBA), with the former meaning that the third-party seller has to manage the product’s storage and shipping, and has to provide proper customer service. If a product is classified as FBA, it is stored in an Amazon fulfillment center, and Amazon handles shipping and customer service.

Amazon charges higher fees for FBA products, so businesses need to gauge which of the two listing types makes the most sense to them.

Refer to these resources for further learning:

Category: Marketplaces