5 ways to effortlessly scale your business on Amazon
Our world is more online and connected than ever before. Therefore, it isn’t a surprise that eCommerce has become a crucial part of consumer behaviour. As the world’s largest eCommerce platform, Amazon is at the forefront of this global transformation.
Needless to say, eCommerce businesses that can leverage Amazon’s scale will enjoy a much higher chance of success. Let’s explore how you can make the best use of the platform and its tools, which is essential for any serious contender in the eCommerce industry.
The current state of Amazon: a global eCommerce giant
An analysis from Quartz revealed that Amazon’s international sales surged by 60% in 2021 compared to 2020, and outpaced its already-stellar 40% growth in North America. The eCommerce giant’s total sales jumped by 44% over last year to USD 108.5 billion as sales outside North America began to gain momentum since the pandemic started.
The COVID-19 pandemic partially fuelled this growth since more shoppers shifted their behaviour online for essential goods. Overall, Amazon’s grocery sales in the US could grow by 12.9% this year to USD 29.1 billion and take up 23.8% of the country’s national online market share.
With the world gradually recovering from the devastating effects of the pandemic and slowly gaining some semblance of normality, the demand for apparel, accessories and beauty products is also on the rise. Customers are also expected to shift towards buying health and hygienic products online as purchasing essential goods has become the norm for many, especially for Amazon Prime members. This sector could grow by up to 24.4% this year.
The migration toward online sales doesn’t stop at the everyday customer. B2B businesses are also making the jump, with online sales expected to reach USD 1.77 trillion by the end of 2022 in the US alone. In fact, Insider Intelligence predicts B2B eCommerce site sales could hit USD 2.44 trillion by 2025.
With the pandemic acting as the main catalyst for this shift, most businesses surveyed in Amazon’s first B2B eCommerce report stated that they’d prefer to conduct their business online, with small-and-medium enterprising driving the decision.
Amazon as your eCommerce cornerstone
Choosing a robust and reputable online marketplace is the first step toward becoming a key part of the global retail evolution - and partnering with one of the biggest players will give you an edge. Here’s why:
Amazon is currently the world’s third-largest eCommerce platform with a total consolidated net sales revenue of USD 469.8 billion worldwide. USD 127.8 billion came from sales outside North America as Amazon is also picking up significant traction in India.
It scored USD 14 billion in sales in 2020, marking an increase from USD 11.5 billion in 2019. Though trailing Walmart, operated as FlipKart in the country, at USD 16.8 billion amid intensifying competition, Amazon is set to secure a dominant position in this highly promising market.
Besides enabling you to sell your products worldwide, Amazon can help you take care of the logistics that come with being an eSeller, such as warehousing and returns. All you would need to do is sign up to run your eCommerce business on Amazon and let their fulfilment centres around the world work their magic.
However, keep in mind that using Amazon’s fulfilment services comes at a cost. Each shipment ranges from USD 2.92 to USD 150.94 depending on the size and type, on top of a storage fee. There are also other additional fees on subscriptions, referrals, inventory, refunds and so on.
Head here for a comprehensive guide on Amazon’s various fees and charges.
The global pandemic prompted customers to stay home and refrain from large shopping malls and gatherings. Even as the world opens up gradually and physical retail rebounds, changes in consumer behaviour are here to stay as speed and convenience have become just as important as saving costs.
As a result, Amazon has seen a boom in apparel and accessories sales last year as customers started emerging from their homes while these categories have become more eCommerce-based.
Moreover, Amazon is known for its comprehensive assortments and after-sales services. Over 80% of respondents in a 2020 survey shared that they enjoy fast and free shipping on Amazon Prime, Amazon’s premium subscription tier that gives members access to preferential services like two-day deliveries, entertainment streaming and grocery shopping services. Up to 69% indicated they could find almost everything they need on Amazon and 66% were already Amazon Prime subscribers.
Gift of the future
Amazon’s online marketplace is full of young, tech-savvy shoppers. While expecting a convenient shopping experience with competitive pricing, they spend a considerable time surfing different marketplaces for the right product – whether it’s on their computers or on their mobile devices.
In fact, even seasonal shopping sprees are moving from brick-and-mortar malls to becoming multi-channel. Over 64% of US consumers and 65% of UK consumers reported that they plan to do 40% of their holiday shopping online. Independent businesses on Amazon surpassed USD 4.8 billion in sales between Black Friday and Cyber Money in 2020 globally, marking a significant 60% increase from 2019.
Tips for scaling your Amazon business globally
If you want to be a serious eCommerce player, scaling your business on Amazon might be your best bet. Here are some of the best practices you should follow:
1. Pricing and quality matter
Selling high-quality products to the right customer at the right price is the foundation of scaling your Amazon business worldwide. To achieve this and turn your customers into loyal advocates, your products need to be distinct and of high quality.
Make your product mix unique and relevant to the customer, so they will remember you and be happy to return to your eStore for more. Instead of jumping right into launching your products, spend some time researching your customers, understand what they need and determine how much they’re willing to spend. Then, take some time to test your products and put yourself in your customers’ shoes: are you willing to pay for what you want to sell?
2. Fine-tune your cash model
Bear in mind that revenue is different from cash income. So while you may be earning a great amount of revenue, it’s the cash flow that keeps your business ticking.
There are a few ways to keep a healthy cash balance. First, understand when your inventory comes in and when you receive payments. Then, see when your various payments are due. For example, if you’re paying for inventory upfront, there may be some lead time before you can receive your shipment. Or, if you’re adopting the “buy now, pay later” model, make sure you have enough cash for the future payment date. This way, you can work out when money is coming in and going out, and work out how much cash you need from time to time.
Read more about maintaining a healthy cash flow for your Amazon store here.
3. Get your products ready
Did you know out-of-stocks incur USD 22 billion in losses every year? Since 35% of customers will visit another brand if the product they’re after is sold out, it’s important your business doesn’t overlook supply chain and stock issues. Left unchecked, you’ll likely miss sales opportunities when you don’t need to.
The same goes for unclear product pages. If customers can’t grasp the products’ selling points, or can’t find your shop in the first place, you’re losing out on easy sales opportunities and letting potential customers slip away.
Luckily, you can solve these problems easily. To start, take a look at your past sales figures, which should give you a rough idea about how much inventory you need going forward. If you expect a demand surge for specific products, it would be good to stock up enough inventory beforehand.
Then, enhance what’s known as “retail readiness” to help your customers understand how your products could benefit their lives. Start by building a content-rich product description with the right keywords and benefits explicitly listed in bullet points. Then, fill up the visual carousels with product shots, videos and infographics. Afterwards, create a great customer experience and aim to score at least 15-20 quality reviews.
4. Get onto Amazon Prime
Onboarding to Amazon Prime can do your business a huge favour. With Amazon Prime, you can get preferential access to special discount programmes and free shipping while making your business more appealing and trustworthy.
Amazon Prime is also a universally-trusted eCommerce label. A 2020 survey revealed that 81% of US internet users aged 18-34 are Amazon Prime subscribers, and recent statistics show there are 81.4 million US households with Amazon Prime memberships.
You can become eligible for Amazon Prime by adopting either the Fulfilment by Amazon (FBA) or the Seller Fulfilled Prime (SFP) as your logistics model. FBA outsources your entire logistics arrangement to Amazon, and SFP lets you handle your fulfilment and shopping. No matter which method you choose, you need to maintain your inventory and logistical capabilities to a certain level, such as avoiding missed or late shipments.
5. Be your own ad man
Any advertiser will tell you that your story is as important as the product. This also applies in the eCommerce world, since your customers — and your competitors — are only one Google search away.
When carving your branded messaging, consider the consumer journey and have something specific for each stage. For example, placing sponsored display ads would be great for raising awareness. And for driving consideration and purchases, you can consider placing sponsored brand and product ads.
Besides placing ads, getting your brand message across organically is vital for your success. If you can get 20-30% of your sales through organic search traffic, you’re signalling to Amazon’s algorithm that your products are competitive and relevant to customers. You can achieve this by using the right keywords in your product descriptions, fine-tuning your SEO strategy and providing a remarkable experience for your customers.
What about payment accounts?
If you want to be a world-class Amazon merchant, you need a payment platform that is as global as your ambitions. Since suppliers and customers can be based anywhere across the globe, some are likely to pay in currencies other than USD.
While traditional banks may be able to handle cross-border payments in different currencies, it might take days for the payments to go through and the exchange rate may fluctuate. All of these translate to extra costs and unwanted uncertainty.
That’s why being flexible with cash flows and currencies will help you capture additional opportunities and prevent liquidity issues. At Currenxie, we support rapid or real-time transfers for over 18 currencies. We also have the world’s biggest global business banking network that lets you manage cross-border transactions with multiple currencies with real bank account numbers.
Our Amazon Web Services Cloud-based Global Account is compatible with different retail platforms, and we’re also part of Amazon’s officially-trusted Payment Service Provider Program (PSPP). You can count on us to comply with financial regulations and data security standards while integrating with the payment gateway you have.
Sign up for your Currenxie Global Account and automatically receive payments from Amazon.