Selling on Amazon - a short guide for manufacturers and distributors

Are you a manufacturer wondering how to enter Amazon? Or maybe you want to start selling in e-commerce as a distributor? The platform of the American giant offers enormous opportunities for growth regardless of whether you produce products yourself or are just a reseller. Our knowledge compendium on the world's largest marketplace will help you choose the right products and prepare them for market entry. From our article, you will also learn how to avoid the most common mistakes and conduct effective competitive fighting. Are you ready to conquer the world? Then let's get started! Here are 10 things to consider to successfully launch on Amazon.

Basic sales models on Amazon

On the world's largest shopping platform for manufacturers and distributors, there are essentially 2 sales models available: FBM (Fulfillment By Merchant) and FBA (Fulfillment By Amazon). The Amazon Vendor program is addressed to selected suppliers who receive a special invitation from Amazon. What distinguishes FBM from FBA? Which of them is more beneficial for your business? The answers to these questions depend on several factors, including:

Product size

Seasonality of the assortment

Logistical capabilities.

If you want to sell luxury products, start with FBM. This way, you can assess interest in your own offer without incurring storage costs in the logistics centers of this giant, Amazon. This version is also recommended for entrepreneurs selling oversized and seasonal items. In the FBA version, sales look a bit different. Shipping is carried out from one of the central warehouses. The shipment is packed and handed over for transport by the staff of the respective center. While the FBM model requires you to store and ship the goods to the buyer yourself, with FBA you outsource these tasks. It’s a convenient solution for manufacturers and distributors, including:

Clothing

Household appliances

Sports equipment

Food

Books.

This model is less profitable, for example, for furniture, fences, or building materials that take up a lot of space in the warehouse. If they do not rotate quickly enough, they can generate unnecessary storage costs.

Manufacturer or distributor? 5 paths to enter Amazon

Before starting specific actions aimed at launching sales, it is necessary to analyse the business activity and define the goals to be achieved by entering the marketplace. Sales on Amazon are designed depending on whether you are:

A manufacturer with your own brand

A manufacturer without a registered brand

A distributor of foreign brands

An importer

A craftsman.

Sales on Amazon as a manufacturer with a brand

Depending on the size of your business and the industry you operate in, you can set sales and strategic goals, such as increasing annual turnover by x% or enhancing brand awareness by y%. As a manufacturer with your own brand, first check how strong the competition is in your industry and consider whether your pricing strategy will allow you to effectively compete with, among others, cheap goods from Asia. You have a great chance of success if you offer a high-quality product that significantly stands out from similar products already sold online. Selling on Amazon as a manufacturer will help build brand awareness and scale your business.

Sales on Amazon as a manufacturer without a brand

Can you enter Amazon without a brand? Of course, it's possible. In this case, you have several options. Specifically, you can:

Create a brand specifically for this marketplace before starting sales

Sell without a brand

Register a brand after a certain period from the start if your products show great potential.

Remember that by registering a brand, you gain protection against dishonest sellers who impersonate the manufacturer's trademark. As the owner of a trademark, you can report competitors who unlawfully use your intellectual property and demand the removal of false listings. It’s worth considering joining the Amazon Brand Registry. We have described more benefits of this program for you in the article about the benefits of brand registration.

Sales on Amazon as a distributor

How to start selling on Amazon as a distributor? It’s simpler than for a manufacturer. If the product is already offered on the platform, you just need to connect to the existing product pages. You thus save time and resources on creating descriptions, photos, infographics, and other materials needed to launch the offer. You also do not have to worry about brand registration. This way, you can count on orders right from day one. However, remember to negotiate appropriate contract terms before deciding to enter the marketplace. Some manufacturers do not allow sales in e-commerce channels or exports. Also, keep an eye on costs, as this form of activity involves low margins.

Sales on Amazon as an importer

Importers have a bit tougher tasks as they must optimize purchase, transportation, and storage costs for products. Designing a smoothly functioning supply chain, shortening the time it takes to bring a product to market, and having the right pricing policy will allow you to take a quick start on Amazon. In the initial period of operation, the most important thing is to gather feedback from the market. Find out:

How customers evaluate the offer

Whether the price-to-quality ratio is appropriate in their opinion

How fast inventory turnover is.

Thanks to this, you can plan cyclic deliveries and fully adapt the offer to market expectations.

Selling handicrafts on Amazon

As a craftsman, you can offer products on Amazon in the Handicrafts and handmade categories. Is it worth it? Over 30% of sellers in 2021 had margins exceeding 20%, so if you promote your products well, you will have a satisfying return. Handicrafts have been experiencing a real boom in recent years. The boho style has taken over the world, and customers are looking for decorations and accessories inspired by nature made from natural materials. However, remember that mainstream sales involve quite different product categories, so you can treat Amazon as one of the channels that allows you to reach millions of customers.

How to choose the best products for sale?

At the very beginning, sales on Amazon should be based on certain proven products. If you have an online store or use other e-commerce platforms, choose several models that have had stable sales for some time and a few that you see potential for development. You can also start with a seasonal offer, for example, swimwear in April or May. However, you must remember that these are accessories that mainly sell in summer. What to do to have income all year round? Diversify the assortment, i.e., introduce, among others, skates, gloves, ski pants, and other products that customers will seek in autumn and winter. Choose those that have the best quality. They will help you build a strong market position and ensure good reviews. Consider whether starting with the clothing of a specific brand is a good idea if there are already several sellers offering it on Amazon. It's better to carve out a market niche than to frustrate yourself with an uneven competitive struggle. Lastly, the most important note - ensure that the margin buffer after deducting Amazon costs is about 50%. If it is lower than 10%, you are likely to fail.

Proven Amazon agency to start

Do you have time to learn from your own mistakes? You can start on the marketplace independently and gradually familiarize yourself with the handling of the panel, regulations, and Amazon's guidelines. However, it is worthwhile to request an offer from a specialized agency that handles accounts on this platform. Such cooperation pays off for several reasons. You hire an experienced team of specialists who:

Will prepare listings according to Amazon's guidelines

Will help you with planning shipments

Will take care of customer service in all the languages your customers communicate in

Will advise you on choosing the most beneficial tax and accounting solutions.

Such support at the initial stage of sales is invaluable. It helps you avoid many basic mistakes made by novice sellers. Amazon is different from other e-commerce platforms, so even if you have experience selling on marketplaces, you’re starting completely anew. The agency will guide you through the account registration process, launch offers, and continuously monitor all important quality indicators affecting your turnover.

Formalities before starting sales on Amazon - checklist

Before registering on Amazon, you need to prepare all the documents required to launch a seller account. Check our checklist and ensure you have them handy:

Company data, e.g. current extract from CEIDG or KRS

Data of individuals who are owners or legally represent the company (scans of identification documents)

Data of the main contact person managing the account (scan of identification document)

Data of individuals you wish to grant user rights to the account

Data regarding the company bank account

Credit or debit card

Email address for account registration

2 mobile phone numbers required for account verification.

If you want to operate on the platform as a company, you must provide:

Data of individuals who represent the company or all co-owners (first name, last name, address, date of birth, ID number or passport number)

Scans of identification documents of co-owners or board members

Letter of Authorisation in case the person managing the sales account is not a co-owner or board member.

Prepare this information to avoid delays and prevent problems during the account registration process on Amazon.

How to prepare product descriptions on Amazon?

An interesting and comprehensive description is the foundation for successful online sales. When entering the marketplace, you should consider additional factors affecting whether customers will find your product and finalize the purchase. Adapting product titles and descriptions to Amazon's algorithms is necessary for your offers to appear in search results. At the same time, they need to be edited in a way that is understandable to customers and answers the most frequently asked questions regarding a given product. The texts, just like photos and infographics, are the most important elements of the product page. Why are the descriptions and graphics so essential? This is due to the 3-second rule, according to which a user quickly scans a website in the first 3 seconds and assesses whether it is worth staying on. The photos placed in the top left corner and the accompanying title determine whether the offer seems attractive. In the mobile app, these two elements are even more significant, as they appear first and take up the entire screen.

Fig. 1 View of the product page in the mobile app

Therefore, creating a listing that ensures conversion should be your primary priority. If you are looking for inspiration, check out our blog on how to prepare descriptions for Amazon’s search engine.

Shipping organization and inventory

If you plan to sell in FBM model, the matter is simple. After setting up your account and adding descriptions and photos, you wait for the first order. When you receive information that a customer has bought your product, you must confirm the order in the seller panel, pack it, and arrange transportation to deliver the package to the specified address, as well as issue a sales document. In the case of FBA - it doesn’t matter whether you are selling on Amazon as a distributor or manufacturer - first, you must send the goods to the logistics centre. Preparing the first shipment can be a challenge, so we have prepared a short guide for you on how to make an FBA shipment step by step.

Remember that at the beginning, you should gradually introduce new products into the offer. Start with those that have sold best in other distribution channels or those you selected based on market analysis. By limiting your choice in FBA, you avoid risks and reduce storage costs. Start by testing individual marketplaces before sending a larger batch of goods. This will allow you to check what consumers' needs are in a given country and which products are in the highest demand.

Advertising

Marketing campaigns and other promotional tools influence sales growth because they allow:

A new brand to establish itself in the minds of consumers

Maintain interest in the offer

Build a connection with customers.

On the Amazon platform, you can promote specific offers and brands: Sponsored Products and Sponsored Brands, which may appear in selected places on search pages and product pages. With ads, you can redirect traffic to your brand's store on this platform (Brand Store) or a chosen listing. If you are a manufacturer and are creating a new product card, launching advertising campaigns is an essential element of competitive fighting. If your rivals are visible in many places on Amazon and you rely solely on organic traffic, you will be at a disadvantage. Be sure to invest in advertising as well as in sales events, such as Prime Day or Black Friday.

Buy Box

Are you wondering what the Buy Box on Amazon is? It’s the box with the price and the “Add product to cart” button, and obtaining it should become your primary goal! When you have the buy box, and a customer adds the product to the cart, this means they will buy from you and not from a competitor. If your rival is highlighted as the seller of choice, they will take most of the orders. What decides about obtaining the buy box? Price and delivery time (availability in FBA and Prime option). Amazon promotes sellers who store goods in its logistics centres and offer the lowest prices. The price competition on this platform is fierce, so be prepared for systematic analysis of your competitors' actions. 9 out of 10 transactions are made through the