Vanessa Nguyen, partner marketing manager, TradeGecko
Ecommerce store owners face incredible opportunities and a series of challenges when they decide to expand operations to Amazon Marketplace.
Amazon Marketplace exists alongside the core Amazon storefront, allowing third-party sellers to offer goods through Amazon’s website and use its technical infrastructure. Adding these sellers enables Amazon to provide more products which customers are searching for and need.
A growing number of ecommerce businesses are migrating to Amazon Marketplace from other platforms. That includes wholesale and business-to-business companies. It’s crucial, then, to understand what kind of challenges will be faced when those businesses seek to reach a broader, Amazon-based audience.
Managing Inventory Between Your Store and Amazon
As a seller, it’s crucial to know available inventory at hand, to display ‘out of stock’ messages to visitors on a website, and to have seamless communication with other ecommerce platforms you sell on. Adding a second storefront adds a whole new level of complexity to that responsibility.
What often happens: You forget to update inventory levels on both platforms, leaving one with an incorrect amount of product listed as available. That can leave customers frustrated as they find their order is unavailable.
There’s also the potential for a simple typo or technical error to cause problems. Sellers need to be careful they’re using the correct product category, name, and other details demanded by Amazon or inventory problems could impact the ability to display the product and complete the sale.
Problems may also arise when the seller runs a sale on one platform but not the other or does not consider the differences in the supply chain behind the two sites. Both of these can cause inventory discrepancies that are harmful to your business.
Best case scenario: At the very least, it’s roughly twice as much work to manage both an Amazon Marketplace presence and a separate storefront. Two different buyer experiences need to be accounted for, including differences in shipping times, order fulfillment and other elements of the purchase and fulfillment process.
You will need to make sure both are up to date so buyers can successfully place their order wherever they find you. Amazon Marketplace Pro sellers can upload Excel spreadsheets with updated inventory numbers or manually adjust through Seller Central.
Handling Fulfillment and Product Returns
You’ve worked hard to set-up relationships with warehouse, transportation, and shipping companies to ensure your products were delivered promptly. You were also free to set your own return policy and work out every logistical detail.
Amazon sellers can continue to manage their fulfillment and leverage Fulfillment By Amazon (FBA), which involves keeping inventory in Amazon’s fulfillment centers and shipping with their logistics.
What often happens: There are long-standing issues with Amazon Marketplace Fulfillment, which co-mingles (or pools) identical items together from third-party merchants with those supplied directly to Amazon by the brands themselves. This system allows Amazon to make better use of its warehouse space and give the company flexibility to ship products based on its proximity to customers. Third-party sellers save time and the trouble of labeling individual items sent to the Amazon warehouse.
However, Amazon’s system can automatically cancel an order placed with one seller when an identical one is found closer to the buyer. Large brands can also choose to restrict third-party sellers of their products at any moment.
Amazon’s control of the online retail industry means that product reviews can be problematic and difficult, if not impossible, to appeal. In 2018 Amazon introduced a new policy penalizing sellers who keep too much product on its warehouse shelves for too long, forcing FBA users to keep tight controls on inventory levels.
While operating an independent storefront allows sellers to set their own return policy, using Amazon Marketplace means accepting returns is required.
Best case scenario: It may be best to require buyers to pay for the shipping fees on returns (that are not defective). Some have even introduced ‘restocking’ fees and other subjective fees to make up some of the lost revenue.
Concerning fulfillment, the ideal situation is to have a smooth running operations. Even so, Amazon’s fees make it difficult to make as much profit as you would on another platform. Avoiding penalties requires constantly tweaking inventory levels and fulfillment logistics, as if you were managing the supply chain yourself.
Managing Positive Customer Reviews and Customer Satisfaction
Customer reviews are essential marketing tools available to online retailers. Many customers put the same level of trust in these reviews that they do in recommendations from family and friends.
It’s the goal of all ecommerce sellers to elicit positive reviews in response to all sales. More broadly, it’s important to create moments of customer satisfaction throughout the process, from product discovery through shipment and delivery.
What often happens: Retailers often regard positive reviews as personal and fulfilling but do little or nothing to encourage or solicit them. They forget to remind customers to leave a review on the product they just bought, including the service they received from the retailer.
In other cases, a seller will go too far in trying to boost the number of positive reviews and either pay people to post or create fake profiles to do so. Both practices not only violate general industry best practices but are also explicitly forbidden by Amazon and other sites.
Customer satisfaction also sometimes gets ignored by retailers as they focus exclusively on making the sale. They forget that making every brand interaction unique and memorable is key to creating repeat business and subsequent customer loyalty.
Best case scenario: Ideally, all your customers are so happy with the product and process that they’re moved to leave a glowing review. In reality, people get busy and forget to do so after the transaction is complete and item delivered.
That’s why follow-up communications are so essential. Additional emails can prompt customers to leave a review and comment, which can be critical information for the next browser or buyer.
Even negative reviews should get a response from the customer service team. Such responses shouldn’t ask for the comment to be removed, but should show a willingness to understand the problem and commit to making things right now or in the future.
Maintaining Accurate Data Between Platforms
Selling items across multiple storefronts, including Amazon Marketplace, is a decision made out of desire or necessity. Sellers are either looking to boost their sales or find themselves needing to do so for technical or logistical reasons.
Operating multiple platforms requires ensuring that data and information are consistent, accurate, and updated on both sites. Or else it will create confusion and frustration among potential customers, who will take their business elsewhere.
What often happens: One platform takes operational precedence over others, and receives more attention and updates while other platforms become outdated and inaccurate.
Even if the products are the same and the inventory is consistent, other information – such as categories, descriptions, and photos – may be different between the two platforms. That can impact sales and other metrics as customers have wildly different experiences.
Best case scenario: The key to overcoming the hassle of maintaining data across two platforms is creating centralized tools. That includes inventory management, order processing, and more.
Attempting to manage multiple online storefronts from different locations is a recipe for frustration, even if the products sold are different between stores. Having one platform, or one single source of truth, is crucial and will make operations more efficient because people won’t need to learn different tools to do one job.
Forecasting Demand
Your success depends on managing today but also accurately planning for tomorrow. That’s why demand forecasting is something ecommerce site owners need to do on a regular basis and a feature that should be required from the platform they choose.
What often happens: When a seller is operating multiple storefronts, they’re usually using the tools native to each platform. Assuming each platform offers a demand forecasting tool, it means those sellers are using two different systems to plan to forecast.
The problems are two-fold:
- Each platform will likely have different ways of forecasting future demand. Even if the input data – past sales – is the same, they may arrive at divergent conclusions for what lies ahead.
- Each platform is only looking at its own data. The forecast from Platform 1 isn’t taking into account sales from Platform 2 and vice versa.
The numbers will be inconsistent, making it a challenging task to forecast for the future.
Best case scenario: By using a single interface to manage inventory and track sales, ecommerce retailers can access accurate numbers and make informed decisions. Such a single interface can help businesses also streamline their decision-making processes, enabling them to respond quickly to shifts in consumer behaviors and preferences.
By having access to accurate data and the ability to forecast demand, companies can remain efficient and profitable without falling out of fashion.
Expanding ecommerce operations from an owned online storefront to Amazon Marketplace means putting at least some portion of your business’s future in another party’s hands. You are then relying on Amazon to:
- Maintain uptime: There’s nothing you can do when Amazon’s systems go down, unlike the active troubleshooting you can do on your own website.
- Not change the rules: You are subject to Amazon’s rules, restrictions, and other terms of service. They can change those at any time, which have the potential to lift or hurt your business.
- Fulfill their end of the bargain: If their supply chain fails, the customer is likely to blame you, not them. That can be a problem and create frustrations that could hurt your brand’s reputation.
When it comes to expanding your operations to Amazon Marketplace, the opportunities are boundless but so are the operational challenges.
Work with your team to get a handle on your inventory, fulfillment and system to process returns. Take note of details among your disparate systems—from inventory management, accounting to shipping and delivery.
- Will you be able to fulfill your brand’s promises and keep up with Amazon’s requirements?
- Do you have a diverse set of products, knowing that not everything sells at the same speed?
- Can you track and update stock levels in-store and online?
- Will you have access to real-time and accurate product data across all your sales platforms?
- Do you understand Amazon’s demanding performance metrics?
Before jumping head first into Amazon, every aspect of your operations must be optimized and streamlined. It will require time, thought, your team’s energy and company resources. But the effort may be worth it to access Amazon’s 310+ million active customers.
TradeGecko is a provider of inventory management software.
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