Learning Styles | Homeschool101.org

Small Home Businesses on Amazon

posted in: Home Business | 0

Over the past decade there have been dramatic changes in how small home businesses are run. It used to be you could sell tangible goods on eBay. But the catastrophic changes in PayPal’s payment policies have done away with that. All of eBay’s money goes through PayPal, sometimes behind the scenes and sometimes not.

Etsy came along as the craftier version of eBay (owned by eBay) for small home businesses specializing in handcrafted items to sell their products. They had the same problems as eBay–namely PayPal handling all the money.

Amazon came in next with a way for small home business owners to sell on their marketplace. They have their own payment processing service which completely bypasses PayPal. However, they charge a hefty 30% from each sale.

So now where does the average small home business owner sell his/her products? The answer is nowhere.

Below is a short preview of what to expect selling on any of these three platforms.

To read the first article in the series, Small Home Businesses on EBay, click here.

Selling on Amazon

Listings Being Taken Over

Amazon has problems that are unique to Amazon.  They fall under the category of Listings Being Taken Over.

The first is when you finally get your account approved, list your product, and get some sales.  You will find that other sellers are suddenly selling your product.  Or not.  They’ll list on your same listing that they are selling your product, but when they ship it will be something different or they will order directly from you and have it drop-shipped to their customer.  This is a way of taking over a competitor’s listing.  What happens is that they will eventually get negative reviews for their “different” product and then will stop selling it.  But the damage is already done.  No one will want your product anymore.  This is the most serious problem that sellers on Amazon face.  Competitors taking over their listings.

The second is when your product is so popular that Amazon decides to get in on the action.  Keep in mind that they are taking 30% of ALL your sales.  So they can afford to sell the same product, a product they either start selling themselves or order from you and have drop-shipped to the customer, at at least 30% cheaper prices.  This happens every time a product becomes successful.  If the seller complains or refuses to sell their products directly to Amazon then Amazon closes their seller account.

Listing Fees

There are no listing fees on Amazon.  However they do require that each item you list have a unique identifiable UPC code that’s registered.  This can be extremely expensive, as much as $125 for each product

UPC Codes

Amazon requires all sellers to have a unique UPC code for each product they sell.  If you make handmade or handcrafted items you will have to purchase the UPC codes and have them registered.  It costs $125 per UPC code.  Some sellers in China have reacted to this requirement by reusing the same UPC code over and over again.  That’s why you will find so many product pages on Amazon that have reviews for multiple products.  The UPC code for that listing is being reused over and over again for different products.

Selling Fees

Amazon charges 30% selling fees on every product sold on Amazon.  That’s almost one-third of the price and most, if not all, of your profit.

Listing Limits

Amazon starts sellers off with 10 listings.  If you buy a “store” for $39.95 a month, you get 100 listings, but you must provide unique, valid UPC codes for each and every product.

Listing Tool

Amazon’s listing tool is one of the worst in the industry.  At last count it was six pages long and included every detail that would be included in an industrial product requirement.  Unless you have the exact weight, dimensions, materials list, and other manufacturing specifications on a product you will not be able to list it.

Getting Authenticated

Amazon authenticates sellers in every single category they sell in.  This process can take 30 days up to a year or longer.  Some sellers have been trying for years to get authenticated so they can sell in the nutritional supplements category.  They are still waiting.  Be prepared to provide photos, manufacturing specifications, and proof you have these products before you can get authorized to sell in that category.  In many instances you must also provide proof that you are authorized to sell that brand.

Attracting Customers

Approximately four years ago, Amazon changed their search engine.  What resulted was millions of listings disappearing from search results.  This is much worse than eBay’s debacle.  You can list an item on eBay, go through all of the authentication and verification processes, and still be unable to find your product in the search engine.

Amazon’s search engine defaults to “featured” products.  These are usually sellers who have paid for premium placement in searches.  There are only 7 pages of search results and the search engine limits itself to 2,000 results.  If you’re new to selling your products will not show up.

 

Amazon's search engine defaults to "featured" products

Getting Paid

Amazon has a minimum 90 day delay of payments.  That means 90 days after your product has been delivered to the buyer, they can still try to return it or file a claim with Amazon to get their money back.  You will not get paid.

Getting Verified

Verification process for the seller has been pretty straightforward on Amazon.  It’s verification of products that’s extremely difficult.  That requires UPC codes and being authenticated in every category you list products in.

Why Bother?

Compared to eBay and Etsy (which are both the same parent company), Amazon is much easier to sell on.  It used to be the reverse.  It’s also going to cost you a lot more to sell there.

To read the third article in the series, Small Home Businesses on Etsy, click here.