Amazon offers a different number of ways through which online retailers can sell inventory. Amazon offers different options to make selling on Amazon easier, but choosing which program to use to sell on Amazon can be a challenge.

How Should I Sell on Amazon?

Below are the major ways you can sell on Amazon, and some qualifications to help you decide which selling option is best for your online store.

Sell TO Amazon

Selling to Amazon is an invite only program. Selling directly to Amazon grants Amazon ownership of your inventory, which they will market and sell to shoppers on Amazon.com.

How it works: Merchants or manufacturers sell their inventory (e.g. hats) to Amazon at wholesale rates. Once those items have been sent to Amazon, the seller is done with the products. Amazon pays for the inventory directly to the seller and maintains ownership of the products.

Amazon sells those product on the Marketplace (as Amazon) – choosing their own price and shipping options.

Selling on Amazon

Benefits of Selling to Amazon

Selling to Amazon is an available option for manufacturers and virtually eliminates direct seller work including  marketing,advertising and even pricing. Other benefits of Selling to Amazon include:

  • Avoid hassle of handling pricing, shipping and other logistics for product sales
  • Bulk purchases
  • Display and detail page functionality only available to Amazon (e.g.: subscribe n save)
  • Manufacturer Central inventory projection tools not available in Seller Central

 

Sell ON Amazon

A popular option for selling with Amazon is selling on Amazon.com.  Today more than half of total sales on Amazon come from third-party sellers.

 

How it Works: Sellers list their products on the Amazon Marketplace, and sell items as 3rd party sellers.

Sell on Amazon

Selling on Amazon is generally more work than selling to Amazon, but is also comes with greater levels of control and the potential for higher margins. Sellers on the Marketplace control shipping, prices and optionally fulfillment.

Selling on Amazon

Sellers who sell on the Amazon marketplace have different fulfillment options to choose from.Sellers can choose whether they want to handle fulfillment or let Amazon sort, package and ship products through their own fulfillment centers.

As a third party seller selling on the Amazon Marketplace you have the option to use Amazon’s fulfillment services:

  • Fulfillment by Amazon (FBA) – Sellers leverage Amazon’s fulfillment for products sold on the Amazon Marketplace
  • Or sell using your own fulfillment (MFN)- Sellers handle fulfillment for their products sold on the Amazon Marketplace

Sell on Amazon FBA
Amazon charges sellers to sell on the Amazon Marketplace based on what program they choose to sell through, and how much they sell. Learn more about how much Amazon charges for each program here.

Benefits of Selling on Amazon.com

  • Increase Exposure – Leverage 240 million unique monthly visitors to get more people to your online store.
  • Leverage Marketplace Benefits- Amazon’s Marketplace is a shopping destination that is known for reliability, ease of online shopping and selection. Listing on the Marketplace allows sellers to capitalize on that branding.
  • Find New Customers- The Amazon Marketplace is huge. Sellers gain exposure to new and varied shoppers through the Marketplace- many of which would never encounter your online store otherwise.
  • Increase Sales- Shoppers on Amazon have come to the Marketplace with the explicit intent to purchase, or at the very least are looking to browse. Online search, advertising and other forms of online exposure do not guarantee that same bottom of the funnel-audience. Bottom Line- people on Amazon are more likely to buy.

 

Here is an overview of some of the features for each way you can sell on Amazon:

Sell to AmazonSell on Amazon (FBA)Sell on Amazon (FBM)
Sell to AmazonSell on Amazon (FBA)Sell on Amazon (FBM)
Product PlacementAmazon MarketplaceAmazon MarketplaceAmazon Marketplace
Product SellerAmazonSellerSeller
Product Price controlled byAmazonSellerSeller
Product Shipping handled byAmazonAmazonSeller
Product Returns handled byAmazonAmazonSeller

There are other options for sellers to sell on Amazon such as Amazon Ads. Learn more about those here.

Sell ON Amazon vs. Sell TO Amazon?

Which program you choose to use to sell on Amazon depends on your store, fulfillment abilities, ROI goals, and many other variables.

Vendors who sell to Amazon avoid some headache with logistics, but are limited with their scope and ability to market products. Selling on Amazon is an option which is more suited to sellers who would sell to Amazon but want to take advantage of more exposure and other benefits of the Amazon Marketplace.

Switching from Selling to Amazon TO Selling ON Amazon

If you are already selling on Amazon and are considering selling to Amazon, consider some of the elements below:

  • Amazon FBA payments come in after 2 weeks, Amazon vendors often have to wait 90 days for payment
  • Selling to Amazon requires you set up an EDI
  • Vendors who sell to Amazon can sell in bulk (more revenue), but that often results in 20%-30% less revenue than your normal selling price
  • Vendors often lose the ability to control market price as Amazon will dictate price on the Marketplace and affect your MSRP.
  • Vendors run the risk of getting replaced by new ‘knock off’ vendors
  • Amazon dictates what they purchase from vendors, instead of FBA purchases driving shipments to Amazon

 

Here is a breakdown of some of the major considerations between selling to and on Amazon:

Benefits & DisadvantagesSell on AmazonSell to Amazon
Benefits & DisadvantagesSell on AmazonSell to Amazon
ExposureLeverage 85 million unique monthly visitors to get more people to your online store. NA
Amazon Brand Listing on the Marketplace allows sellers to capitalize on Amazon's branding.NA
Fulfillment Depending on whether you use FBA, you may need to handle fulfillment.Amazon handles all fulfillment, pricing and logistics for product sales.
OverstockNAAmazon can decide they overstocked and return items.
Shipping3rd Party sellers can choose to use Amazon fulfillment through FBA, or ship products using FBM. Vendor pays shipping and does not get the UPS rates that you can get through FBA shipping.
PaymentFBA payments take 2 weeks. Amazon doesn't pay vendors for items for 90 days.

 

For 2013 Cyber Monday Amazon reported it sold 426 items per second. How many sales of those sales will be yours this Q4?

 

 


Stay tuned for more tutorials on how to Sell on Amazon!

For more information on how to get started selling on Amazon, check out these upcoming posts:

 

 

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About the AuthorMary Weinstein is the Director of Content at CPC Strategy, and an expert in Retail Search, Google Shopping and Digital Marketing. A NY native, Mary spends her time educating online merchants, hiking and drinking copious amounts of coffee. You can also find her work on SEW, SEMRush, MOZ and Practical Ecommerce. See all posts by this author here.