2 Industrial Suppliers Share Advice On Using Amazon Business
Since we published our blog post about Amazon Business, Amazon; Friend, Foe or Frenemy to Industrial eCommerce?, some interesting advice on the use of Amazon Business has been revealed by two industrial suppliers, 'Sustainable Supply' and 'Premier Farnell' at IRCE. A few of their insights are repeating below, but please read the full stories here and here.
Brian Fricano, founder and CEO of Sustainable Supply, a distributor of building and maintenance products, described selling on Amazon as, "a delicate dance and your strategy needs to be iron clad before you list your first item on the marketplace.” Matt Clark, global head and vice president, e-commerce and digital marketing, at industrial electronics distributor Premier Farnell, said selling on Amazon, “can be great, with lots of sales and some profit and brand-building.”
Their Top Advice:
The Amazon Business marketplace already has 85,000 sellers serving a million customers - if you haven’t already begun selling on Amazon Business then check it out but tread carefully.
- Amazon is a great way to reach a huge audience, build brand image and sales but with a large volume of online orders expect a high volume of returns and a low rate of repeat orders.
- Expect transaction costs in the range from 12% to 15% plus the costs of meeting Amazon’s strict seller requirements such as a product in-stock rate of 99% or higher. As Fricano put it, “Amazon’s service expectations will most likely surpass your own.”
- Use your own eCommerce website as well as Amazon Business. Use Amazon for incremental sales and brand exposure but not as your sole channel - start small and learn from Amazon Business to ensure your own site competes effectively.
- Carefully select which products you sell on Amazon. Don’t give away your secret sauce — keep your top-selling and propriety products off of Amazon Business. Ideally sell products on Amazon that are not already widely available there. Monitor pricing of competitive products on Amazon and test price elasticity (is it worth sacrificing gross margins for higher order volume) or offer better delivery times/costs than competitors in order to win the Buy Box and get the sale. See if shipping via Fulfillment by Amazon (FBA) results in more orders.
- Determine the right pricing strategy for selling on Amazon but never offer your lowest price on Amazon. For government contracts that require “most favorable costs,” ensure that your Amazon pricing doesn’t fall below your contract pricing.
As usual in our blog posts we shared our recommendations for industrial suppliers.
- We agree that Industrial suppliers should have their own eCommerce website or sell through Amazon Business or preferably do both!. If you haven't started eCommerce yet, partnering with Amazon is an easy way to get started by leveraging Amazon’s large B2B eCommerce investment. You can do that in several ways, form a direct relationship with Amazon Business, enable one or more of your distributors or resellers to form a relationship with Amazon Business, appoint one or more partners to represent your products on Amazon Business. If you do your own eCommerce site too, note that Amazon’s one-click patent, an innovative advance that helped catalyze its growth, expired in September 2017. The one-click purchase option was not the only reason Amazon succeeded but it provided a significant edge. Now everyone can use that approach without paying license fees to Amazon.
- The quality and depth of your product data (including high grade reviews on Amazon) needs to differentiate you from competitors. For example, when applicable, industrial suppliers should add 3D CAD models and 2D CAD drawings to product descriptions, details and pictures on their own eCommerce sites. If you already have CAD content on your own website you can reuse them in your Amazon Business product listings by using Amazon's 'Enhanced Content'.
- Start with Amazon but note that there are other, smaller, marketplaces that you should check out too. For example: NeweggBusiness, for computers and other IT products; Direct Supply DSSI for healthcare products; eBay, for industrial and business categories; and SAP Ariba, a procurement network that integrates with SAP ERP software.
At CDS we continue to develop our technologies and help B2B industrial suppliers succeed with online marketing and industrial eCommerce. As always, please share your comments below or, if you'd like our opinion on your B2B eCommerce plans please call us or click either button below: