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What You Need to Know About the Future of Selling on Amazon

Posted by Arianna Thayer on Aug 2, 2016

cars moving quickly on a highwayKeeping up with every present and future eCommerce trend is daunting and impossible for the average Amazon seller. Heck, keeping up with your own business is hard enough as it is, when it comes to managing a warehouse, materials, employees... your out of control Netflix instant queue at home.

But really, knowing the eCommerce trends associated with selling on Amazon sometimes requires more time than most business owners can afford. To make it simple, here are some trends on Amazon you should keep an  eye on and be aware of. Some may very well affect the way you organize your business.

Cross-Border Trading

Amazon trends towards growth, and currently reaches consumers across 10 countries, including: Japan, India, China, Brazil, and five European countries (UK, Germany, France, Italy, and Spain). Consumers and sellers on Amazon can buy and sell across language, economic, and political boundaries. As the future of eCommerce seems to trend towards the literal and metaphorical breaking of boundaries, we're going to see a greater increase in Cross-Border Trading (CBT).  Consequently, selling on Amazon provides growing and equitable opportunity to reach a broader audience. The downside is that businesses selling on Amazon will also experience more competition from India and China in categories like the textile and fashion industry in the European market. Cross-border trading is getting bigger and bigger, so you can expect it to be the future of eCommerce.

>>What You Need to Know:

Most businesses selling on Amazon have seen a considerable increase in sales volume since shifting their merchandise to the Fulfillment By Amazon (FBA) framework. If you haven't done so yet, it may be time to start thinking about it. Amazon wants its sellers to grow with them across its global markets. To encourage this, Amazon has sweetened the FBA deal by decreasing their fulfillment fees in the European marketplace. This reduces your cost and gives you the opportunity to expand into these markets. Under this structure, businesses can take advantage of Amazon's proven successful organizational skills and efficiency.

Obviously, CBT and FBA isn't for everyone. Like every business venture, you should evaluate your core competencies, risk and reward, and the cost of a new business venture. Make sure your product would be well-received, legal, and profitable in your market expansion venture.

The Buy Box

When a customer is ready to begin their purchasing process for their cart filled with Rosewell UFO Cash Site Soil and Unicorn Food, they find themselves in the Amazon "Buy Box". Of the billions of purchases made on Amazon every year, 82% of them are made through Buy Box winners. So what does this mean for sellers? Lots of business! However, the Buy Box can be a seller's path to prosperity or a iron box of fiery despair.

>>What You Need to Know:

How does one avoid the Iron Buying Box Of Despair? Well, first access to these Buy Boxes are given to FBA sellers, but because the market is so saturated with merchants, Amazon has been increasingly selective with the items they accept. Many sellers have encountered Amazon rejecting their under-performing Amazon Standard Identification Numbers, AKA ASIN's, which is basically Amazon-specific SKU (wow that's a lot of acronyms). To make the situation more confusing, even ASIN's that are high-volume and running low in inventory are being rejected. There is no transparency in Amazon's methodology or formula, which leads to much confusion and frustration in the seller community. Few options remain to sellers that use FBA exclusively:

  • Fully or partially return to a MFN (Merchant Fulfillment Network) framework (and suffer the pains of restructuring, made easier by a Warehouse Management System -ahem-)
    • This gives you the benefit of Buy Box and two-day Prime shipping, without the hassles of FBA
  • Use a 3rd party Warehouse Management System (WMS)
  • Wait... and try to send out those ASIN's again later

Merchant Fulfillment Network Prime

Recently Amazon began allowing some merchants to fulfill Prime orders. These sellers on Amazon have access to Prime members and subsequently increase their sales. This awards the sellers the opportunity to control their own warehouse operations without the hassle of FBA. This opportunity isn't open for all, however. To become a MFN Prime seller, you simply must apply for it. To be accepted, however, you can't just be anyone.

>>What You Need To Know

Amazon, obviously, is primarily concerned with customer satisfaction. Subsequently, they're only accepting businesses that they can trust to fulfill customer expectations.  This means you must demonstrate a:

  • High on-time delivery rate
  • Low order defect rate
  • Low order cancellation rate
  • High customer satisfaction rate
  • Valid tracking rate

To qualify to be become a MFN Prime seller on Amazon, you must have quality performance standards, and then maintain it to remain qualified. To be considered, you should be able to consistently and quickly locate stock, pack it, ship it, and provide subsequent customer service needs. If this is something you already do without the oversight of Amazon, you may want to consider applying. Keep in mind you can also use some combination of both MFN and FBA for your business, but like anything, you must carefully evaluate what is right for your individual needs.

Companies that have used warehouse management systems like SkuVault have benefited from as much as an 87% decrease in fulfillment time and a 6x fewer mis-ships. This is valuable to sellers interested in becoming an MFN Prime member.

Other Amazon Trends

Amazon has a large number of extensions its average user probably isn't even aware of (AmazonFresh, Handmade, Prime Now). Here's a few trends sellers and entrepreneurs should begin considering when expanding or starting their business.

Be a Contender

Amazon's primary concern is the customer (not you). In the future Amazon will likely begin fleshing out some of the weaker links in the marketplace chain by being more selective in Buy Box access and those given permission to join MFN Prime. Stay vigilant and focused when selling on Amazon. Most of all pay attention to what your customers are saying and make adjustments.

Honestly, Just Be Honest

Amazon is likely to focus more on fraudulent or misleading reviews and descriptions. Provide the best service possible and then encourage reviews from your customers. Fake reviews, misleading descriptions, and other bad business practices can get you flagged and ruin your business. Amazon is paying attention.

Kick the Metal Basket to the Curb

As eCommerce grows, so is online grocery shopping trend. According to a Cowen and Company survey, the first quarter of 2016 saw an 18% growth in consumable goods from Amazon compared to last year. Interestingly enough, over this same time period, brick-and-mortar stores saw decreases. According to this same survey, Walmart saw a 5% decrease in grocery shoppers and Target a 4% decrease in grocery sales. While Amazon still lags behind the competition, in the future Amazon will undoubtedly be a key player in the grocery business, and now is the time, as a seller, to act.

Be a Nietzsche of Your Niche

Be smart, innovative, and thoughtful. Amazon is becoming more and more flooded with tech, beauty products, and other consumer goods. Joining the competition doesn't make sense. Find an unsaturated niche you can corner the market in. Once you've found it, explore the idea of a private label for selling on Amazon. A brand is something they can't duplicate, and as a small business you can offer a personalized customer service experience Amazon can't match.

Conclusion

So what does it take to be an Amazon Mastermind? Sometimes to keep up with Amazon you need to think about self branding. Other times, it's about being on top of future of eCommerce and Amazon trends and diversifying when appropriate. Sometimes though, if you don't want to rely upon the whims of companies like Amazon for your warehousing, it may be time for you to look into building your own system that you can rely upon (with a little help from companies like SkuVault).

Optimize Your Supply Chain with SkuVault WMS. Request a demo.

Topics: Amazon, eCommerce, eCommerce Businesses, Marketplaces