Chapter 1

Why Choose Amazon Over the Competition?

“… And the reason I’m so obsessed with these drivers of the customer experience is that I believe that the success we have had over the past 12 years has been driven exclusively by that customer experience. We are not great advertisers. So we start with customers, figure out what they want, and figure out how to get it to them.”

—Jeff Bezos, The New York Times, January 5, 2008

Amazon may have started affiliate programs and provided a wide variety of options for sellers throughout its history, but it definitely is not the only game in town. Many online sellers, for example, have successfully built a business with a Yahoo! store. Other Internet entrepreneurs have developed their own Web sites without affiliation to any other online company. Why then, is this book being written specifically about selling with Amazon? Why should you decide to go with Amazon versus another company — or on your own?

Presently, there are approximately one million Amazon Associates or affiliates who are earning income by referring customers to www.Amazon.com. Over the years, Amazon has become one of the most trusted Internet brands, with an ever-increasing range of products being offered to 59 million customers worldwide. In fact, in 2007 alone, Amazon expanded into a dozen new product categories. There are thousands of affiliate programs online, but none allow sellers to easily provide links from their sites to such a wide variety of relevant subjects as the Amazon Associates. Associates can quickly add a link to their page and begin adding revenue.

The company also continues to launch new opportunities for sellers, including the WebStore® and aStore®, which is a professional-looking online shop complete with Amazon products that you can choose to be placed on your own Web site or on a site of its own. In fact, you can have as many as 100 aStores at a time. There are affiliates who are thus simultaneously running several related Web sites. These stores can be up-and-running in a day with one low flat fee. Amazon has also released an entire range of enhancements, such as their growing number of widgets and new fulfillment options. Imagine having the opportunity to easily reach Amazon’s huge customer base. In addition, Amazon’s free shipping option on many sales encourages increasingly frequent purchases.

Bezos would probably say that it is wise to become part of the Amazon team because the company is doing all that it possibly can to ensure excellent customer service. This means that the businesses that have the name “Amazon” attached to them must also keep high-quality standards. In other words, “the customer comes first” consideration logically extends to the vendors of these customers. In a 2008 Smart Money Q&A, Bezos emphasized his view on the subject of customers:

SM: Amazon has about 6 percent of all U.S. sales online. That’s huge. Why muck it up with all the other businesses you’ve added, like manufacturing [the Kindle] and your new customer service software?

Bezos: We are responding to customer needs.

SM: No one asked for the Kindle.

Bezos: True. It’s not the customers’ job to invent for themselves. Four years ago, we thought about extensions to our business. We took a look at what we’re good at. On Kindle, we had been selling e-books for years, but you needed an electron microscope to see the sales.

The development and marketing of the Kindle™ electronic reader provides an example of how Amazon is always on the lookout for ways to turn competitive challenges into greater strengths. As the sale of books, music, and movies decline, the company can grow the electronic delivery of that content. Presently, Amazon has three active business ventures. The first is the one that they have been building from the very beginning, which services its approximately 60 million active customers. The second is the seller business, or what Amazon considers its second set of customers, which includes all proprietors from the single book seller to the large organizations like Target. The third business, which is much younger than the other two, is for the 200,000-plus developers. Regardless of which of these three entities you belong to, the overriding philosophy is Bezos’ “customer-centricity.” Amazon sees these three units working closely together and helping each other. For example, if Amazon did not create a huge Web infrastructure, it could not support its massive retail business which, in turn, supports the sellers. The sellers provide unique products, such as out-of-print books, which adds to Amazon’s selection and continuously brings the shoppers back to the site.

Another primary strength of Amazon is what is called “the long tail,” or not only selling the most popular items, but also those that have less of a demand. Amazon sellers can make more money selling a larger combined volume of less popular items. It is important to have variety and a number of different options that differentiate one business from another. In other words, Amazon helps you sell the 80 percent of your products that have lower demand, or the tail end, as well as those top 20 percent hot-selling items. People know they can turn to Amazon for those older and still excellently rated models or the non-fad merchandise. Amazon buyers can choose from millions of items that may be “on the back shelves,” but still can be viewed and obtained in the virtual world.

Because Amazon is customer-centric, it keeps track of what its buyers want and will want in the future. Whenever a customer logs onto Amazon, he or she is greeted with notations such as “here are the products you last looked at,” “here are some products that may be of interest,” and “here are some similar products that others like yourself have viewed.” A great amount of resources are devoted to following the personal online shopping habits of customers, which are compiled for promotional and helpful consumer information, including “Top Sellers” and “Just Like You.”

Business Tracking System

Amazon’s expertise in data collection also provides the seller with extensive information. In Seller Central™, the online interface that is used to manage the Amazon stores, sellers have the ability to easily add inventory, update product information, and retrieve orders. Sellers can also track where sales originated.

With the reports generator, you can get information from sales two months previous to those that just came in, as well as orders, cancellations, or returns. The reports are easily generated and quickly help you keep up-to-date on sales. Data analysis, which is an essential aspect of online marketing and sales, can be extremely time consuming without the proper systems in place. Amazon has the support available to help you grow your business, giving you the time to spend on determining what your customers want and giving it to them. Amazon has put a great deal of resources into making your selling more efficient, so you can handle increasing orders and more inventory changes.

Amazon prides itself in having a thorough understanding of the way that customers interact with the Web sites they visit. When new features are added, for example, customers are tracked to see if and how their behavior is changed. How are customers using the new feature? Is it helping them save time in their buying? For example, Amazon’s search element called Statistically Improbable Phrases, or “SIPs,” allows readers to find the most noteworthy phrases in the text of books that are within the Search Inside!™ program. This feature allows customers to actually go “inside” a book and get an example of the work before purchasing it. To locate these SIPs, Amazon scans every Search Inside! for the desired text. When finding a phrase that occurs a large number of times in a particular book in comparison to all other Search Inside! books, it becomes a SIP. For fiction, SIPs are normally distinctive word combinations hinting at important plot elements.

The SIPs were introduced because Amazon was looking for ways to offer customers more relevant ways to view book details. When first announcing this feature, Amazon measured it in terms of customer satisfaction: Did consumers find what they needed more easily? If Amazon can improve shopping convenience, then it knows it has a success in the making. Similarly, if the company can help customers find things that they might not have thought of before, it is a hit. This is another way that the Amazon developers work closely with customer service and the sellers.

It is also very helpful that Amazon recognizes the wide diversity of its customers, from high-tech gurus to seniors who are surfing the Internet for the first time. Once again, this helps not only the customers, but the sellers as well, because they need to meet the needs of their wide variety of customers. Keeping such close track of customer numbers also helps Amazon and its sellers in preventative measures — knowing that they are doing something wrong before it becomes a major problem with customers. The online world changes amazingly fast, and customers do not only alter their buying habits on a regular basis, but they can be very fickle. Because Amazon can acquire so much data in such a short timeframe, sellers can keep in the race and win against the competition.

Which Amazon Vehicle is Best?

Selling your products on the Web allows you to reach millions of potential buyers in a cost-effective way. When the Web first was available, selling online was complex and difficult. This was especially true for small businesses that either had to hire a professional Web designer or try to personally handle the Web hosts, shopping cart providers, merchant services, marketers, and fulfillment houses.

Today, especially at Amazon, one only has to write a few words and push a few buttons, literally and figuratively. Whether you want to sell products online for the first time or enlarge your present sales, Amazon Services offers a solution. You have the opportunity to:

A Variable of Choices

Amazon provides sellers with several different choices that take advantage of its established sales channel, marketing vehicles, purchasing processes, search optimization, merchandising services, and payment-processing technologies. Depending on your e-commerce experience or present degree of Internet participation, you can start off slow and sell only a few items here and there, or take your present online business and expand it through Amazon’s extensive online channels — or anything in between. Here are your selling options:

The remainder of this book will review each of these alternatives more specifically. Give thought to each one and determine which is best for your needs. As you will see by the case studies, many of the people who are participating with Amazon are finding new and creative ways to make additional income.

The Marketplace (“Sell Your Stuff”) offers you a great way to jump into the online-selling business and reach millions of buyers with no investment. You can actually just advertise one product for sale at a time. Many people use Marketplace to sell used books in smaller quantities. Once you easily sign-up with Marketplace, you can readily price your items and get the word out to millions of Amazon’s customers. In addition to helping you try out what it is like selling online, the Marketplace can help you try out a new item to see how it will be received by customers. The cost and ease is hundreds of times better than doing a full marketing research campaign. The price: You do not pay a penny until you sell an item. Then, the buyer sends the item price and shipping costs to Amazon, which deducts 6 to 15 percent from the sales price for its commission, along with a fee of $0.99 for each sale, and a variable closing fee.

Pro-Merchant is your possible next step when you already have a strong Web presence — selling approximately 50 items a week or more — and are looking for ways to expand. With Pro-Merchant, you will have the opportunity to become an Associate, allowing you to bring in additional income. You now have a way to grow your business and a place to store your products. When you sell with Pro-Merchant, you can also take advantage of Amazon’s fulfillment center to store, pick, pack, and ship your products. You no longer pay the $0.99 per transaction, but do pay a monthly charge of $39.99, though you can cancel at any time. This allows you to create your own personalized storefront and items, product pages in the Amazon catalog, and listings that never expire.

Advantage is for those individuals who want to sell new books, movies, and music that they have written and/or produced, instead of promoting and selling other people’s works. This is not for used works. It gives you the opportunity to market your literary or musical pieces to a very large and broad audience and is an excellent solution for the publishing field to promote and sell their items. With Advantage, the yearly cost is $29.95. This allows you to sell as many titles as you wish and the ability to manage your account. In the normal split, Amazon gets 55 percent, and you receive 45 percent from the list price. You determine the list price, which is also called suggested retail price; all payments that you receive are calculated from the list price. If Amazon lowers the sale price below the list price, Amazon pays the difference.

WebStore is a relatively new program allowing customers to create e-commerce Web sites using Amazon technology. With WebStore, you can regularly update the site quickly and easily. A Web developer does not have to be called each time a change is needed. It allows you to maintain and build your personal product and offers a perfect alternative for e-businesses that want a comprehensive solution, but do not want to give up their brand. It also provides an alternative if you have your own Web site, but your shopping cart technology is not state-of-the-art, and you spend too much time conducting auditing for false orders. Through Amazon, you can get fraud detection and protection solutions, plus other helpful technologies to grow your business. The cost is $59.99 a month, with a 7 percent commission on each item sold. The WebStore features include Amazon’s “A-to-z Guarantee” on all purchases, product reviews, search engine support, and no setup/listing fee. You can earn additional revenue by selling Amazon products on multiple WebStores with one Associates account.

Associates are the largest number of Amazon sellers. This option is best if you have a lot of traffic coming to your Web site, but not enough people want the products you are selling. This lets you get a fee every time you send someone off to Amazon and purchase a product. Many Associates are also very customer-oriented and want to give their customers the best service possible. By becoming an Amazon Associate, you can leverage your Web site’s content, as well as choose from several formats for your site’s links to make them fit in with the rest of the design and theme and provide a connection to Amazon where users can buy a particular item to complement your information, services, or products.

One of the best things about the Amazon Associates program is that, while you are helping users get access to the items they want on your site, you can also get additional income from utilizing Amazon’s strengths. You can either receive your payment in direct cash into your bank account or, alternatively, as vouchers you can spend on Amazon. Whether you are just selling a used book twice a month or millions of dollars of products every year, Amazon can offer you the appropriate online vehicle.

Amazon strives to be the most customer-centric company, allowing users to locate nearly anything they could possibly like to purchase on the Internet. With low prices, a vast number of flexible selling options, and ease of use, Amazon maintains its growth pattern and its evolution as a top-rated e-commerce platform.

Table of Contents