Today I attended an Amazon.com-sponsored seminar held at the Pacific Market Center (I found street parking, and got free coffee). The session was led by a VP of Amazon’s Home & Garden store. I walked in a little late, and as I entered the room the speaker was reviewing the first slide: Amazon’s mission statement overview. I was surprised by his “death by powerpoint” approach, but I looked around the room and noticed several older ladies nodding their heads as he spoke. They were nodding along, not nodding off. Either they were faking it, or they were really into corporate-sounding things like mission statements and customer-centric marketing.
I hadn’t done too much research about Amazon’s merchant opportunities, so this session was great for someone like me who was starting up a new business and was researching distribution channels.
He explained there were 2 main things that companies should look into when considering a partnership with amazon.com. I had to dig around their website to get the pricing specifics:
1) Becoming an Amazon merchant: for a monthly fee of $39.99, you can use Amazon as a sales channel. In addition to the monthly subscription fee, however, when Amazon collects your sales price and shipping costs from the buyer, they deduct a commission of 6 to 15 percent of the sales price (for most products it is 15%), a per-transaction fee of $0.99, and a variable closing fee.
There does seem to be a cheaper option for someone who isn’t expecting to sell high volumes on the site: If you are forecasting less than 40 orders a month, you can sign up as an Individual seller with Amazon which has no monthly fee but instead a per product sold fee of $0.99. I couldn’t tell (without fully signing up first) whether there were any hidden costs.
2) Using Amazon as a fulfillment center: they can pick, pack and ship for you, whether someone orders your product via amazon, or whether he/she orders your goods from another distribution channel. I downloaded their rates to review another time, so I am not sure how their prices compare to other fulfillment centers. One huge advantage for orders placed through Amazon.com that they fulfill: Amazon will manage all customer service associated with fulfillment of those products, and handle returns and complaints.
I had a chance to speak with the VP after the session, and I explained that I was planning to launch a line of ecofriendly laptop bags in the spring, and let him know that I was looking into various distribution channels. He strongly recommended that I sign up as a 3rd-party merchant, but he suggested that I skip using Amazon as a fulfillment house if there was a chance that I’d have a hybrid selling model (via Amazon, my own website, and maybe in stores). I was impressed that he wasn’t doing a hard sell on their fulfillment. I got his business card and I definitely plan to follow up with him later.
Today I received another set of fabric swatches. So far I have 3 out of the 4 that I will be choosing from, so I am close to finishing this fabric design process! The bad news is that I like all of them so far and I can’t afford to launch with all 4 patterns. I guess having too many good options is a good problem to have. No complaints here.
Well, that’s all for today. Bye!