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With more than half of Amazon's product sales occurring via independent third-party sellers, a slew of software solutions are making things easier for retailers.
7 min read
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Ask anyone, “Who is the biggest ecommerce retailer on earth?” and the answer is likely to be Amazon. With online marketplaces in 11 countries and buyers in 180, Amazon’s reach is truly global; indeed, DigitalCommerce360 (DC360) reports that the retailer generated product sales of $118.57 billion in 2017.
Related: Amazon Marketplace: It's Bigger Than It Looks
What many people don’t realize, though, is that, according to Statista, more than half of Amazon’s product sales come via independent third-party sellers. Third-party sellers receive more orders through Amazon’s marketplace than: 1) either fulfill the orders themselves (via the Merchant Fulfillment Network, or MFN) or, 2) have Amazon handle logistics and fulfillment on their behalf (via Fulfillment by Amazon, or FBA).
Much debate exists as to which fulfillment option most benefits sellers. But whatever the answer, Amazon is hardly hurting: With either model, it takes a percentage of sales and other fees in exchange for allowing merchants to sell on its marketplace.
With close to $60 million worth of products sold by third-party sellers last year (as reported by DC360 above), a thriving software ecosystem has sprung up, dedicated to optimizing third-party sales through Amazon and maximizing efficiency and profits.
And, Amazon certainly recognizes the importance of its third-party marketplace. Currently, it is in the early stages of launching the Marketplace Developer Council (MDC), bringing the best marketplace app developers together in an effort to better serve its third-party seller community.
Here are seven such top marketplace apps third-party merchants should consider using to grow their bottom line.
Advertising
Ignite by SellerLabs: A charter member of the MDC council, SellerLabs was born like many great startups when its founder Brandon Checketts had a pain point he needed to eliminate in his marketplace business.
This resulted in the first Seller Labs product, Feedback Genius, which automates buyer-seller communication in product reviews. SellerLabs now offers a suite of marketplace apps, including Ignite.
Like Google, Amazon has its own version of paid and organic search. Amazon’s Pay-Per-Click (PPC) option is named Sponsored Products. As with Google Adwords, a business owner bids on keywords and pays a fee when a user is directed to his or her product through Sponsored Products.
Related: The DNA of the Successful Amazon Seller
The primary metric for measuring the success of a Sponsored Product campaign is Advertising Cost of Sale (ACOS). Ignite’s seamless integration with Amazon’s advertising API enables greatly enhanced analytics and reporting capabilities, and it retains all historical data, whereas Seller Central retains data for 60 days. Ignite helps automate businesses' campaigns by offering decisions based on historical data.
Ignite can schedule ads to run at specific times of day and provides keyword suggestions and competitor analysis. Here is a case study on how Ignite dramatically reduced Quiverrjavascript:void(0)’s ACoS.
Automated pricing
Feedvisor. If you’re a regular Amazon shopper, you’ve undoubtedly noticed that prices for specific products fluctuate often -- sometimes even multiple times in a day. With such intense competition, often for identical products, sellers are always looking for a competitive edge. Feedvisor harnesses the power of machine learning, crunching millions of data points to automatically adjust your pricing, optimizing it for competitiveness and profitability. A New York Times article noted that Feedvisor increased sales by 15 to 40 percent.
Feedvisor’s Revenue Intelligence component harnesses similar technology to help businesses make informed, up-to-the-minute inventory decisions, helping to ensure they're not losing sales due to items being out of stock.
Accounting and taxes
TaxJar. In the early days of ecommerce, U.S. merchants were spared the burden of collecting sales tax on orders shipped outside the state where they were located. For Amazon, this acted as an additional selling point, particularly on high-ticket items in states with high sales taxes, like New York.
Customers there would essentially receive a discount in excess of 8 percent by purchasing from Amazon rather than a local store. Before long, state governments began to protest this loss of tax revenue vociferously; accordingly, Amazon began to collect state sales tax in all states that levy one.
While it is still a gray area whether third-party marketplace sellers are obligated to collect sales tax in states where they don’t have a sales tax nexus, they are under increasing pressure to do so in the future. This is particularly true for Fulfillment by Amazon sellers, who may not be aware where Amazon is fulfilling their orders from, potentially making them liable to collect sales tax. With this in mind, many third-party sellers are proactively opting to collect sales tax across the board.
Arguably more detrimental than increased prices for consumers to third-party sellers is the potentially tremendous burden of collecting taxes of varying rates and filing returns in over 40 states in order to achieve full compliance. That’s where TaxJar comes in.
TaxJar automates the process of collecting the appropriate taxes when orders are placed, and even files all of the necessary paperwork and returns automatically. The amount of administrative headaches this saves, coupled with the assurance that a business is living up to its tax obligations, makes TaxJar a must-have app for marketplace sellers.
Ecommerce solutions
BigCommerce. Like Shopify or Magento, BigCommerce is a fully fledged ecommerce platform in its own right. One of BigCommerce’s primary selling points is its seamless ecommerce integration with not only Amazon marketplace but Facebook, Google Shopping, Instagram and eBay. If a business is looking for a dedicated ecommerce store that gives it the freedom to sell on a variety of platforms with ease, BigCommerce is worth a look.
Full-service solutions
180Commerce. Another MDC member, 180Commerce is aimed primarily at established brands that have been successful on other platforms but have yet to launch, or maximize their potential, on Amazon.
Comprised of industry veterans, 180Commerce is a one-stop shop, handling everything from branding and advertising to inventory, customer service and more. Businesses can sign up for its free marketplace review and see what 180Commerce can do for them.
Product research
ProfitBandit. Ever been out shopping and come across a product you love? Then, did you wonder if anyone was selling it online? Wonder no more. With ProfitBandit, available for iOS and Android, a business can scan the barcode and instantly find out if Amazon is selling it and for how much.
It can also find who has the buy box, and even calculate the profit it could realize selling the product, themselves, on Amazon. In short, a business owner can quickly conduct product research wherever he or she takes a smartphone.
Shipping solutions
SolidCommerce. If a business handles order fulfillment rather than going the FBA route, a robust shipping solution is an absolute necessity. SolidCommerce seamlessly synchronizes orders, inventory and shipping, and supports all major carriers. SolidCommerce also boasts features like inventory management, repricing, and more.
Related: Amazon Rolls Out New Marketplace for Startups
Final thoughts
If you already have an ecommerce storefront, the expansive infrastructure available to help expand into Amazon marketplace is compelling. If you’re an existing Amazon merchant or considering becoming one, these seven apps can help maximize your profits.
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