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Dropshipping Markets Part 2: Amazon

Dropshipping on Amazon

In our last post we looked at dropshipping on eBay in this post we’re going to look at another major dropshipping sales channel for online retailers, Amazon.

Many people actually think that Amazon only sells its own range of products. In fact, Amazon also sells products for third-party retailers and even members of the general public who want to sell their used goods. In this sense, Amazon has two branches of its core business: one is as a retailer and the other is as a version of eBay, with the exception that it doesn’t auction, it only lets you sell at a fixed price. Just like eBay, Amazon helps you carry out the sale and resolve problems with customers. In this sense, it’s an ideal place for online retailers to show case their products.

The Advantages of selling on Amazon

Easy to set up your selling account

Just as with eBay, it’s very easy to set up an account and start selling on Amazon. However, careful thought needs to be put into selling the products in the best way. If you are selling log cabins on Amazon, take time to research and see which other sellers are doing well. Analyse their sales, read their product descriptions, look at how they present their log cabins and themselves to the readers. Check your prices in comparison to theirs. What things do the reviewers say about them? By using your competitors as a guide you’ll quickly become aware of the best practice to put into place when selling your products on Amazon too.

Gigantic UK market

One of the main advantages of selling on Amazon is that your products are immediately accessible to a large and growing market. Although Amazon has been overtaken by eBay in the UK over the last few years, it is still, by a considerable margin, the second biggest online market in Britain and only slightly behind eBay in terms of visitors. It has almost 27 million visitors per month which is more than the next three biggest online stores, Argos, Tesco and Asda, put together. Just like eBay, your products will be presented in search results directly to those people searching for them, so you do not have to spend large amounts marketing your own products to drive sales.

Limited competition for log cabin sellers

For those selling niche products like log cabins and garden buildings this is an ideal way to make sure that your products get seen by those people looking for them. Amazon’s ability to put the right products in their customers search results is one way to guarantee your products will be put in front of the customer. At the time of publication there were less than 100 log cabins on Amazon UK and many of these were just summer houses or decorative sheds. There is very little competition and so the opportunities are there to those who want to launch a log cabin store on Amazon.

A name customers trust

Where Amazon wins over eBay is with customer trust. Some people are still quite wary of buying on eBay whereas Amazon seems to have more credibility when it comes to resolving issues with returning products or getting your money back. This is more perception than reality as eBay has made great strides in improving the protection for customers. However, that perception exists and can affect buying choices, especially with high value products like log cabins. If a customer saw the same product for the same price on both Amazon and eBay, the likelihood is that they would feel more secure in their purchase if they bought it from Amazon.

The disadvantages of selling on Amazon

Paying fees

Just as with eBay it costs to sell your products on Amazon. The fees vary depending on what type of product you are selling but for log cabins and garden buildings there is a referral fee of 15% for every product sold. For log cabins, this can be a sizeable amount. You will also need to pay other small fees to list your products. Either 75p per product or £25 a month is you sign up for a professional plan (over 33 products a month).

At first glance it looks like selling on Amazon is more expensive than eBay. Final sales figures for eBay are 10% whereas they are 15% on Amazon. However, on eBay you have to sell through PayPal and they also charge you either 3.4% (if you sell up to £1500 per month) or 2.9% (if you sell over £1500 per month) and on top of that there is a 20p fee on every payment you receive. With these figures added on, the difference between the two is very little. What it does mean is that you have to work these figures very carefully into you pricing structure to make sure you end up with a profit.

At Timber World, we do not limit the price you can charge for our log cabins so you will not be restricted by Amazon fees. Every other retailer will have the same fees to pay, so in essence no-one is put at a disadvantage. Even better, we do restrict how cheaply you can sell our products so that no retailer can undercut another and force them out of the market place.

Getting the product spec right

It’s important when selling on Amazon that the information you give about the products you sell is detailed and accurate. Timber World provides online retailers with a web pack containing all the product descriptions and detailed specifications as well as images you can use. This will assist you in selling our products on Amazon as it will let customers know exactly what they are getting and make your business look much more professional.

Customer feedback

Just like eBay, Amazon customers are used to leaving feedback for their purchases and are able to sort their search results by both product review score and popularity. On top of this, third-party retailers are given a feedback score which looks at their customer feedback over the previous 12 months. Both the feedback on the retailer and the product will affect sales, especially if negative. Having no feedback can also cause some customers to think twice. To stop fake reviews being put on, Amazon now tells its readers if the customer actually bought the product they reviewed.

The difference between eBay and Amazon is that it is harder to get good reviews on Amazon. With eBay all you have to do is buy 10 small things and pay for them immediately and you’ll get 10 positive feed backs from the people you buy from and a score of 100% – even if you’ve never sold anything. With Amazon you have to sell and there’s much less pushiness from Amazon to make you give feedback than there is on eBay.

Getting started

If you are thinking of selling on Amazon you can begin by viewing their ‘Sell on Amazon’ page. If you are considering selling our log cabins on Amazon, or anywhere else, take a look at how our dropshipping service can help you boost your online business.