Over the years, Amazon has emerged as a dominant avenue for brands looking to expand their reach and maximise sales, however understanding the intricacies of Amazon marketplaces is crucial. In this episode of Functional and Fabulous, Gordon and Ger chat with Jamie Roller, Marketplaces Director at Dr. Squatch. They delve into the key aspects of selling on Amazon, including the different selling models, the importance of the Buy Box, and the challenges and opportunities presented by this platform.
Understanding Amazon Selling Models
The episode dives straight into a discussion about the various selling models offered by Amazon. There are primarily two models:
- 1P (First Party): Your company sells your products directly to Amazon, who then control when they stock your products, how they price your products, where they sell your products. However, your company still has control over product merchandising and advertising.
- 3P (Third Party): As a 3P seller, you choose your listings, inventory and manage your pricing. You can then decide if you want Amazon to provide fulfilment services (FBA) or handle fulfilment yourself (FBM).
Each model has its advantages and disadvantages, and the best choice depends on your brand's specific needs and goals for example, how quickly customers expect delivery of product.
The Buy Box
The Buy Box is the most visible position on Amazon. When a customer views a product listing, they will see the “Add to Cart” and “Buy Now” section of the product listing. Typically, the seller who wins the Buy Box position is the one who makes the sale. Because of this, there is immense competition to maintain the Buy Box seller position. Jamie shared that the most significant factor is price. The seller with the lowest price usually wins the Buy Box.
It's important to note that other resellers can leverage other people's product listings to compete for the Buy Box. This means they can sell your products on Amazon, potentially undercutting prices and gaining control of the Buy Box.
Regaining the Buy Box after it's been taken by a reseller can be challenging, but there are a few strategies that can help regain control:
- Price Reduction: The simplest and quickest way to win back the Buy Box is to lower your price.
- Waiting it Out: Sometimes, waiting for the competitor to sell out of stock can allow you to reclaim the Buy Box.
- Regional Variations: The Buy Box isn't always the same for every customer. It can vary based on location and available inventory, so always check around various locations.
The Amazon Halo Effect
Advertising on other platforms can drive customers to search for your brand on Amazon, creating a “halo effect.” This can lead to significant organic growth even without targeted Amazon ads.
Expanding Beyond Amazon
While Amazon is a powerful platform, it's essential to consider other marketplaces for a balanced distribution strategy. Walmart, Target, TikTok Shop, and other retailers offer unique opportunities to reach different customer segments.
Conclusion
Selling on Amazon requires a strategic approach and a deep understanding of its complexities. By effectively navigating the selling models, managing the Buy Box, and exploring other marketplaces, brands can maximise their potential and achieve long-term success on the ecommerce giant.
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