Amazon’s scale is staggering. In 2018, the company’s valuation surpassed $1 trillion. At the start of 2021, the company’s valuation hovered around $1.6 trillion and Amazon employs over 1.1 million workers.
One of the most important factors in Amazon’s astounding success is its operations. Specifically, its fulfillment network, which now enables customers to receive goods within hours of placing an order on Amazon. This fulfillment network is called Fulfillment by Amazon.
What is Fulfillment by Amazon?
Fulfillment by Amazon (FBA) is a global network of warehouses owned and operated by Amazon. These warehouses are used to store products and fulfill orders made on the Amazon marketplace. FBA offloads the burden of shipping goods to end consumers from sellers on its platform. There are over 110 Amazon fulfillment centers throughout the continental United States, mostly in medium and large cities, and Amazon continues to announce new fulfillment centers regularly. In just December 2020, they announced 7 new fulfillment centers.
FBA enables sellers to offer rapid shipping, including same-day delivery in eligible cases, and it simplifies customer returns. Sellers get storage, fulfillment, and returns processing in one convenient package. Amazon sellers do not have to use FBA to sell in the Amazon ecosystem, but Amazon has certainly tried to make FBA the most appealing option for end consumers.
How Does Fulfillment by Amazon Work?
In practice, FBA looks something like this:
Manufacturer ships product from factory to Amazon fulfillment center
The shipment may need to go through several regulatory checkpoints along the way
Goods are received and logged at the FBA center
Amazon’s systems update the product listing to show that inventory is in stock
Shoppers order product from Amazon.com
FBA center ships the product to the customer, with expedited delivery options available
The FBA center will process any product returns, when/if they occur
When inventory levels are low, the manufacturer ships more product to the FBA center
In many cases, brands partner with third-party sellers to retail their product on Amazon. In these cases, the third-party seller places a purchase order (PO) for a certain number of units. The manufacturer is responsible for shipping the products to the designated Amazon fulfillment center(s).
Fulfillment by Amazon Product Preparation Requirements
Amazon has strict product preparation requirements that continue to evolve, and Amazon refuses to accept shipments that fail to comply with these requirements. These include:
Do not ship any boxes over 50 lbs. unless your products are considered oversized and packed one unit/box
Do not ship any boxes with a side over 25″ unless your products are considered oversize and packed one ASIN/box
Do not shrink wrap, strap, tape, or bind boxes together.
Outer shipping cartons cannot contain a scannable manufacturer bar code (other than the bar code on the FBA box label or shipping label)
For pallets, boxes cannot overhang by more than one inch. All pallets must be shrink wrapped. Pallets must be standard size (48″ x 40″) unless a single box will not physically fit on a standard-size pallet
Always apply FBA labels on outer carton
Pros and Cons of Fulfillment by Amazon
Benefits of Fulfillment by Amazon
For most brands selling on Amazon, FBA is one of the best ways to grow. Here are a few benefits of FBA:
FBA handles all shipping logistics once they receive your inventory
Amazon has major discounts with the largest United States carriers, such as the United Postal Service (UPS), so fulfilling through FBA is often the most cost-effective option
FBA centers handle product returns
FBA often provides the fastest delivery option for Amazon customers
Amazon’s Multi-Channel Fulfillment (MCF) service allows brands to store and fulfill inventory via FBA even for items that are sold through non-Amazon sales channels
Disadvantages of Fulfillment by Amazon
Like any service, there are drawbacks. Here are a few disadvantages of FBA:
Storage fees and fulfillment fees add up, making accurate demand planning a necessity if you wish to optimize your bottom line
Manufacturers must prepare products correctly or the FBA receiving team may reject them
Fulfillment by Amazon Product Preparation Services
Not all manufacturers have the time, personnel, or resources available to satisfy FBA product preparation requirements. If the manufacturer cannot prepare products themselves, they can send inventory to FBA product preparation facilities. These facilities are operated by third-parties who specialize in prepping products for Amazon.
Kaspien has FBA product preparation facilities across the United States. Having numerous locations means that we can reduce shipping time and costs to get inventory to these facilities and then to Amazon fulfillment centers.
If there’s one thing people will always have an appetite for, it’s entertainment. 2020 saw that appetite grow even stronger as COVID-19 forced millions to adapt to virtual learning, remote work, and social distancing.
Whether it was to alleviate boredom, reduce anxiety, or just have fun, the Toys & Games category on Amazon boomed in the historic year. Nearly every major Toys & Games brand also experienced notable growth in 2020, including Lego, Hasbro, and Mattel. In 2021, the global Toys & Games industry is expected to surpass $330 billion in revenue.
It wasn’t just multibillion-dollar brands that grew either. Kaspien partners with hundreds of Toys & Games brands of all sizes. In 2020, we saw Amazon sales increase 30% year-over-year. Ad costs were also down, with our advertising cost of sale (ACOS) decreasing 29% year-over-year.
As we move through 2021, the Toys & Games category continues to enjoy strong performance. Comparing January through April 2021 to 2020, Kaspien’s partners in the Toys & Games have grown Amazon sales by 18%, on average. Even with Amazon’s strong category presence and the ubiquity of the top toy brands, the constant desire for fresh entertainment means new opportunities for growth continue to emerge for brands of all sizes.
One of the Largest Categories
Amazon has one of the largest selections of toys in the world, making it a popular destination for shoppers and sellers alike. As a result, brands operating in the Toys & Games category face tough competition, including household name brands like Lego, Hasbro, and Mattel. To succeed in this space, brands need dedicated Amazon expertise, whether they hire for that internally or acquire it through a partnership.
High Competition, but Niches Create Opportunity
While Toys & Games as a whole is a saturated category, there are dozens of subcategories and niches that offer ample opportunity. Toys & Games can differ immensely by factors such as price, complexity, target age range, target gender, genre, trends, type, and more. Products and marketing aren’t competing with each other at a category level, but on a niche level.
Amazon Retail (1P) has a Strong Presence
Speaking of larger brands, Amazon Retail (Amazon first party or 1P) partners with many of the biggest players in this space. According to documents provided by Amazon to the U.S. Congress, Amazon Retail holds 9% of toy listings on Amazon while capturing 42% of toy sales on the marketplace. Over 99% of Amazon Retail’s toy sales come from brands sold through Amazon Retail, rather than Amazon’s private label brands.
Toys represents Amazon’s second largest category presence by share of listings, coming in after books. Toys also represent Amazon’s third largest category presence by share of sales, coming in after books and consumer electronics.
Amazon’s large presence in this space can make it challenging to capture top placements when selling in the same subcategory. If you are considering launching a new product in the Toys & Games category, it’s worth researching if you’ll be competing with Amazon Retail.
An Abundance of Digitally Native Brands
The Toys & Games category is also home to many digitally native brands. Over 26,000 games have been funded through Kickstarter, raising over $233.8 million. The success of digitally native brands in this space can be at least partially attributed to shoppers’ hunger for new experiences. While some games endure literal centuries, such as the Game of Life (whose origins date back to 1860) or Monopoly (tracing back to 1903), they are the exceptions to the norm, especially in an age of near instantaneous global communication.
For brands in this industry, this reality is both a blessing and a curse. New opportunities constantly present themselves, but so too do new competitors.
Copycats & Counterfeits Abound
Just as the hunger for something new makes Toys & Games fertile ground for digitally native brands, it also makes it prime hunting territory for copycats. It’s easy to metaphorically (or literally) slap a new coat of paint on a toy or game, then market it as something new. This also makes the category vulnerable to counterfeits. The Department of Homeland Security’s 2020 report on counterfeits listed Toys as the 9th most common counterfeit product seized in 2018.
COVID-19 Impact on Toys & Games
On the consumer side, COVID-19 led more shoppers to invest in at-home entertainment. Many children shifted to online school while some parents also shifted to working remotely. Having both child and parent at home during the work week quickly highlighted the need for having entertainment options that didn’t require adult assistance.
On the seller side, nearly every brand faced delays in manufacturing and supply shortages, especially those dependent on supplies and production from overseas. In the Toys & Games industry, that represents a significant portion of the field, as China dominates production for this industry. In 2019, China led global toy exports, exporting nearly $63 billion worth of toys, including 80% of US imports.
Rules & Regulations
Along with the Baby and Health & Personal Care categories, Toys & Games is one of the most regulated categories on Amazon. At Kaspien, we highly recommend working with a specialist to help when launching new products in this space, as failing to prepare the required documents in advance or submitting information incorrectly can delay or interrupt sales for weeks to months.
Download the eBook to Read this Section
Shoppers Search by Many Variables
Toys & Games is an incredibly diverse product category. To make it easier to find the products for the end user, shoppers often narrow their search by multiple factors, including but not limited to:
Material quality / durability
Number of players
Low Brand Loyalty
When it comes to games, shoppers demonstrate little brand loyalty. By the time they go to Amazon, they are interested in buying either a particular game or a particular type of game. Who the creator is matters less than finding something with the right combination of age range, gender, duration, genre, number of players, and price. The exception to this rule is when shoppers seek expansion packs to games they already own.
For example, one of our partners runs Sponsored Brand Ads. Over the ads’ lifetime, 86.5% of attributable orders have been new-to-brand. Now, Sponsored Brand Ads are known to attract new-to-brand customers, but even so, the metric is indicative of the low brand loyalty seen among board game shoppers.
Toys, on the other hand, are a mixed bag. Many toy brands create product lines of complimentary toys to boost brand loyalty. For example, a line of superhero toys is incomplete without buying each hero. The same is true of any movie, show, or comic that features multiple characters. In this case, shoppers care less about the brand selling the toy and more about the product line the toy is part of. For sellers, this affects their marketing strategies.
The general exception to the rule of low brand loyalty is when safety or education is involved. Since children (and adults, for that matter) learn in different ways, parents may be more apt to buy from the same game company if they find an educational game that works well for their child. Likewise, in the case of outdoors toys that could risk a serious injury if misused or broken, parents may pay more mind to the brands they patronize.
Gifts for Friends and Family
Many shoppers in this category are purchasing gifts for their children, their children’s friends, family members, and so on. The gift should demonstrate their care for the recipient, so these shoppers care greatly about the product’s safety and quality. This assessment is most often made by reading other customer reviews. If the product has few reviews or low ratings, shoppers are far less likely to take the risk of getting an unsafe or low-quality product.
Children Make Wish Lists Too
Adults aren’t the only ones adding products to Amazon wish lists. It is becoming increasingly common for children to browse Amazon and add products to their Amazon list, especially in preparation for birthdays and holidays. When optimizing listing content, sellers should keep in mind that they are marketing to two audiences.
Online & In Store are Equally Important
According to Statista, 29% of consumers state they prefer to buy toys entirely or mainly online. Another 40% of consumers stated they are equally willing to buy toys online as they are in stores. That puts the percentage of shoppers who prefer to buy online at roughly the same size as those who prefer to buy in stores, meaning that Toys & Games brands cannot afford to ignore either sales channel.
This is only a small taste of what our eBook has to offer. Download the free eBook to learn how to actionize this information about the category landscape and shopper psychographics.
Kaspien is a proven expert in this field. Since 2008, we ‘ve served over 400 Toys & Games brands. In 2020, we delivered the following results for our partners in this category:
42% avg. increase in orders YOY
4.5% avg. ACOS
29% avg. decrease in ACOS YOY
50% increase in ad sales YOY
Download the eBook
On May 24th, Amazon once again imposed new inventory restrictions for FBA sellers. This new round of restrictions is the latest in a series of inventory limits dating back to March 2020, and comes as a result of FBA centers reaching capacity ahead of Prime Day.
While Amazon’s response is wholly understandable – they only have so much space at their fulfillment centers – their inventory restrictions still hurt FBA sellers. If sellers cannot stock enough inventory to meet consumer demand, they are actively bleeding sales.
So, what can sellers do to capture these sales that they will otherwise miss? Enterprise-level dropshipping. And as it so happens, we’re hosting a webinarabout exactly that on June 29th.
Whom is this Webinar For?
This webinar is made for both small & medium businesses and enterprise brands that sell on Amazon. If your online sales rely on FBA, you should strongly consider leveraging dropship as a supplementary solution.
Just take a look at how we used dropship to support MyMedic, a brand in the First Aid category, overcome FBA volatility:
Mini Case Study
In 2020, quantity restrictions at Amazon FBA put MyMedic at risk. Their product was in high demand, but they did not have enough FBA inventory space to meet that demand. We partnered with them to fulfill orders through dropship, enabling MyMedic to continue capturing sales even if FBA ran out of stock.
The results? In a 3-month period, MyMedic sold an additional 2,100 units through dropship – that’s on top of their FBA sales! Without dropship, those are sales they would have simply lost.
How Else is Amazon Dropshipping Useful?
Historically, dropship has been seen as a less ideal option than FBA for Amazon sellers, and that’s still more or less true. Generally, FBA will be the preferred option. However, there are certain times when dropship may be preferable to FBA. Here are just a few examples:
Dropship Is Better For Amazon B2B
Generating over $25 billion in annual sales, Amazon Business offers rich potential. However, large volume orders, combined with FBA quantity limits, often makes dropship a better match for B2B orders.
Dropship Is Superior For Some Products
Not all products are suited for FBA. Plenty of types of products can be fulfilled more cost-effectively through dropship than FBA. This can include:
Oversized products, such as instruments, sports equipment, or furniture
Newer products that do not yet have the sales velocity to meet our PO thresholds
Clothing and other products subject to rapidly changing trends
Gather Purchasing Data
Dropship can serve as a testing ground for FBA, allowing us to learn how products perform in the Amazon marketplace. We apply those learnings to successfully transition products to FBA.
We took this approach with PlexiDor Performance Pet Doors. After a poor experience with a third-party seller, PlexiDor was hesitant to entrust inventory with another FBA seller. They asked Kaspien to start with selling via Amazon dropship instead of FBA to prove we could drive sales and uphold their brand integrity.
We used dropship as a testing ground, building our understanding of PlexiDor’s products within the context of the Amazon marketplace. As we drove sales and earned PlexiDor’s trust, we transitioned products from dropship to FBA. We retained dropship capabilities for all FBA listings, which allowed PlexiDor to capture additional sales when Amazon reduced FBA storage limits.
100% of product catalog represented on Amazon
30 SKUs transitioned from dropship to FBA
75% sales growth year-over-year
$185K Amazon ad sales at 6% ACOS
Attend our Dropship Webinar to Learn More
These are just a few examples of how dropship can be used effectively to grow your Amazon business. Attendees to our June 29thdropship webinar will learn even more about:
Why you should set up dropshipping capabilities as a supplement to Amazon FBA.
How to run Amazon dropship at scale effectively to capture additional sales and validate new products for FBA.
Ideal use cases for dropship, including oversized products, slow sales velocity, Amazon Business, and more
Back-to-school sales have long been established in brick-and-mortar stores, and they’ve bled over into ecommerce. Consumers expect to see exciting deals on Amazon, just like they do when they walk through a physical store.
Of course, preparing for seasonal events on Amazon is a little different than preparing for the same event at brick-and-mortars. To help you prepare for the Back-to-School season on Amazon, we’ve compiled a list of best practices.
Amazon Categories Supported by Back-to-School Sales
Let’s start with which product categories benefit the most from this period.
The end of summer brings much with it for Amazon sellers, including Back to School sales, Labor Day weekend trips, and the first whispers of the holiday season. During this period, we see several product categories enjoy a sales boost driven by the seasons of life.
Back to school shopping often includes new clothes. Children have outgrown their old clothes, literally and figuratively, by the time the next school year rolls around.
AKA school supplies. Kids need new binders, paper, pens and pencils. And when the kids restock, parents and teachers do too.
Amazon Business also provides opportunities here, as schools may also place bulk orders for supplies. In Amazon’s 2021 B2B conference, re:Shape, they even included a university’s use of Amazon Business as a case study.
Arts & Crafts
Who doesn’t love an old fashion school project? Well, like them or not, they’re quite common, and so parents and teachers alike are buying students all sorts of art supplies.
Sports & Outdoors
By August and September, Sports & Outdoors sales are past their peak, which typically hits in June and July. However, with summer coming to a close and a three-day weekend afforded by Labor Day, some shoppers make a last hurrah, buying items for one more summer adventure before transitioning to fall and winter sports.
Toys & Games
As Sports & Outdoors exits the spotlight, Toys & Games is preparing to enter. Truthfully, Toys & Games sales don’t start to soar until November, but the end of summer marks the period when brands should be finalizing marketing plans for the holidays.
Amazon Inventory Management & Fulfillment for Back-to-School
Of course, to capture seasonal sales on Amazon, you must have inventory. Surprisingly, that has become a point of uncertainty as Amazon continues to impose stricter inventory quantity limits for FBA. Shoppers expect brands to be on Amazon, so you need to be there to meet that expectation, with or without FBA.
To that end, here are a few tactics we’re recommending to our partners.
Establish Dropship as a Backup Plan
Dropship proved itself to be invaluable in 2020 as Amazon’s fulfillment network struggled to handle the sudden surge in customer orders and seller shipments. When Amazon blocked entire product categories from shipping inventory into FBA, brands that could dropship were able to continue fulfilling orders.
In a three-month period, one of our partners sold an additional 2,134 units through dropship on top of their FBA orders! Without dropship, they would have simply lost those sales because their FBA inventory cap was too low.
As FBA volatility continues, Kaspien is encouraging all our partners to establish dropship capabilities. By setting up Amazon dropshipping, our partners are able to continue satisfying their customers, regardless of any FBA curveballs.
Leverage Seller Fulfilled Prime (SFP)
While dropshipping is an invaluable safety net, it doesn’t automatically guarantee the same shipping speed as FBA. This can be a significant issue for shoppers who procrastinate and find themselves scrambling to get their school and office supplies in time.
Fulfilling orders through FBA negates this issue, but it’s currently volatile. On the dropshipping side, brands can explore Seller Fulfilled Prime (SFP). SFP is an Amazon program where the brand fulfills the order while providing a Prime-equivalent experience. Products fulfilled through SFP feature the Prime badge on the search results page and product listing.
Amazon verifies every SFP seller to ensure quality control. In February 2021, Amazon withdrew SFP credentials from some sellers after an internal audit found that many SFP sellers were not consistently meeting the requirements (largely due to being closed on weekends).
Given the strict criteria and indefinitely closed application process, getting SFP authorized is almost impossible. To gain SFP capabilities, you’ll need to work with a third-party seller or third-party logistics provider who is already authorized.
Enroll in Amazon Small & Light
Moving away from FBA issues and dropshipping, there’s another Amazon program that deserves our attention: Small & Light.
School supplies, arts and crafts, and apparel can be quite light and inexpensive. To make products like this still viable to sell on its marketplace, Amazon created the Small & Light program, which reduces fulfillment fees for products that are sold via FBA, priced under $7, and sell at least 25 units per month.
Moving on, let’s delve into Amazon marketing tips and tricks you can use to increase traffic and conversions. We’ll start with free marketing tools and practices.
Review Listing Content
Periodic content audits are always a good idea, and doubly so for seasonal products. Conduct keyword research again to see what new keywords should be incorporated into the frontend and backend of your listing, and which terms might be worth cutting.
Read customer reviews to see if there is a common question or misunderstanding about the product. If so, update the copy and/or add an image or video to provide clarity.
Finally, review your images. Are they still up-to-snuff and relevant, or have they become outdated?
Use Brand Store Versions
Amazon added a feature for Brand Stores that allows you to create multiple versions of a given page. This tool can be used to create holiday or event themed pages, which you can schedule to run during a specific date range before automatically reverting to the default page version.
If applicable to your product catalog, create a Back-to-School version of your Brand Store’s home page. You can also create a dedicated Back-to-School page and include it in your Brand Store nav bar if you have a large enough catalog to warrant it. And of course, this practice works great for any holiday that’s relevant to your offerings.
Create Variation Listings
Any time that you offer multiple sizes, quantities, colors, or patterns of a product, it’s worth checking if you can create a variation listing. Variation listings provide an intuitive and convenient shopping experience for your customers, helping them identify the right version of your product for their needs and eliminating the guess work. Variation listings are a great option for many product types, but are especially useful for office supplies, apparel, and arts & crafts.
Use A+ Content Comparison Modules
If you are unable to create variation listings, another way you can showcase more of your product line is through the comparison module for A+ Content. There are no limitations for which types of products you showcase in this section, so the products can be complementary, substitutes, or completely separate from the product of the given listing (Although we do recommend showing substitutions or complementary products since it’s a nice shopping experience).
For example, if the listing is for a backpack, the comparison module could show other school supplies. If the listing is for a bike, the comparison module could show helmets and bike lights.
Amazon Advertising for Back-to-School
Review Last Year’s Data
Just as with organic marketing, your paid marketing efforts should start with a review of what worked and what didn’t in the past.
If products performed worst than expected, review the metrics. If click-through-rate (CTR) is high but conversion rate is low, it indicates that shoppers were interested in the ad, but weren’t persuaded by the listing content. In that case, you may need to update the listing images, text, and A+ Content.
If the number of clicks are low but conversions are high, you may need to increase your ad budget.
If all metrics performed well, double down this year and allocate an aggressive marketing budget for those products’ ad campaigns.
Create and Launch Ads Early
Amazon ads take time to build relevancy, which is why we almost never recommend turning off your Amazon ads, even during slower seasons. Reducing an ad budget as demand and competition wanes is one thing, but turning off your ads for months at a time means you’re sliding back down a hill that you’ll have to climb again when the sales season returns.
Generally, we recommend launching ads or increasing ad budget about one month prior to your sales season, giving you time to build momentum and refine search term optimizationso you can hit the ground running.
Of the four main Amazon ad types, we recommend focusing on Sponsored Product Ads, which have the highest conversion rate of any Amazon ad type. These are the best known ads on Amazon, appearing alongside organic results on the search results page.
Sponsored Brand Adsand Sponsored Brand Videos are great options for products with high sales velocity (the single placement per page means these ad types are highly competitive, so the odds of winning the placement for a product with low sales velocity isn’t great).
Last but not least, Sponsored Display Ads appear on related product listings, including yours and competitors’. While the concept of capturing sales from competitors at the last minute sounds exciting, many shoppers have already made a decision by that point. Instead, Sponsored Display Ads are best used to target complementary and substitute products, similar to the comparison module for A+ Content.
Use Amazon Deals if You Have Strong Performers
Shoppers are looking for back-to-school deals, right? Well, Amazon happens to allow sellers to run three types of deals: Deal of the Day, Lightning Deals, and 7-day Deals. Each of these are short-term promotions that can be used to accelerate sales velocity. Deals can be especially effective during major holiday events, Prime Day, and your peak seasons.
Of course, there’s a “but.” While deals can deliver fantastic results, you should know that Amazon will determine the deal price, the minimum inventory order quantity, the duration of the deal, and deal fees. As such, Amazon deals tend to work best for products with a strong performance record.
Pair Ads with Amazon Coupons
If you don’t qualify to run an Amazon, you can still achieve the effect of a deal through Amazon coupons. coupons also indirectly support product rank improvement. Like any type of paid marketing on Amazon, higher sales indicate to Amazon’s algorithm that shoppers like the product. Since Amazon is a customer-centric platform, the algorithm will rank the product better. This increases the product’s visibility and organic sales, creating a cyclical effect. According to Amazon, coupons increase sales by 12% on average!
If you run an Amazon ad for a product that also has a coupon, the coupon tag will appear in the ad. This has a one-two punch effect: the ad means more shoppers will see the product, and the coupon incentivizes shoppers to click into the ad and convert.
Is Amazon DSP Right for Back-to-School?
Last but not least, there is Amazon Demand Side Platform, better known as DSP. Amazon DSP allows brands to use Amazon’s first-party data to target shoppers with ads on Amazon.com, Amazon devices and applications such as Fire TV or tablet, Amazon-owned sites like IMDB.com, or affiliate websites and apps in Amazon’s network.
These ads extend your reach, re-engage shoppers, and support new customer acquisition. In 2020, we ran a two-month DSP campaign for Strider, a leading kids’ toy company known for their revolutionary bikes. That campaign generated over $250,000 in sales, 5.9 million impressions, reached nearly 200,000 unique shoppers, and boasted a 4.9 return on ad spend (ROAS). 84% of orders also came from shoppers who had not previously purchased Strider products on Amazon.
Clearly, DSP offers huge potential. It also has a high cost, with Amazon requiring a minimum budget of $35,000. As such, you’ll need to consider which season you want to make that investment. If back-to-school sales are not your peak sales season and you have a limited budget, you should reserve DSP for your peak season.
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May 24th was a normal Monday morning like any other for FBA sellers, until they saw their storage limits had been slashed in half. While the inventory restrictions are an immediate pain point, the news may also be a canary in a coalmine:
If Amazon is tightening inventory restrictions ahead of Prime Day, we can expect that inventory restrictions will impact Q4 as well. Brands that are overly dependent on FBA will be poorly positioned to capitalize on Amazon sales opportunities. Investing in diversified fulfillment solutions, such as dropship, will be critical for overcoming the volatility in the marketplace.
Why did Amazon Restrict Inventory Limits?
An Amazon representative told Kaspien this move was in response to limited fulfillment center capacity. There is simply more inventory being sent to Amazon FBA centers than Amazon can handle.
Amazon quantity limits are affected by past and future sales, current inventory levels, new selection, and FBA capacity. Quantity limits are also affected by sellers’ IPI scores. IPI is impacted primarily by inventory movement. The faster inventory cycles through FBA, the better, so long as you never stock out. If inventory sits stagnant in FBA centers, a seller’s IPI score will suffer. Likewise, if a seller runs out of inventory, their IPI score can take a hit.
In 2020, Amazon temporarily restricted which product categories could send shipments into Amazon fulfillment centers. Amazon also increased the inventory performance index (IPI) threshold several times. Sellers who failed to meet the new score thresholds were subject to more severe inventory limits.
There was hope that Amazon would lift the restrictions in 2021. However, earlier in the year, Amazon transitioned from Amazon Quantity Limits to storage utilization quotas. Many brands saw even stricter limits with this transition, and the recent reductions only made it worse.
Fool me Once….
Amazon’s repeated inventory restrictions brings to mind an old axiom: Fool me once, shame on you. Fool me twice, shame on me.
At this point, it’s clear that brands need to be ready to pivot their Amazon strategy at the drop of a hat. Amazon makes unilateral decisions that negatively affect your Amazon business and without warning far too often to sit idly by. Your customers expect your products to be available on Amazon, and you need to take steps to meet that expectation, whether it’s through FBA or not.
So, what alternatives and supplements can brands use for FBA?
Dropship Directly to Consumers
Many people know of dropshipping as something a high-energy “entrepreneur” on social media talks about as a great side hustle for easy money. It can be that. But dropshipping can also be much more than that when applied at a larger scale.
This was seen clearly in early 2020 when Amazon imposed category restrictions for inbound shipments. Affected brands turned to Amazon dropshipping to continue selling even after FBA inventory ran out. There was even a period where Amazon prioritized FBM and dropship orders over FBA orders!
Dropship was crucial during this time. For example, in a three-month period, one of our partners sold an additional 2,134 units through dropship on top of their FBA orders! Without dropship, they would have simply lost those sales because their FBA inventory cap was too low.
Since 2020, dropship has consistently proved to be an invaluable safety net against volatile supply chains. And as this latest update shows, Amazon is still experiencing the aftershocks of that volatility.
Types of Amazon Dropshipping
Dropshipping, in its simplest terms, is when the manufacturer ships product directly from their warehouse to the end-consumer, instead of sending it to a fulfillment center.
For Amazon dropshipping, that translates to using Fulfilled by Merchant, or FBM, instead of FBA. An even better version of FBM is Seller Fulfilled Prime, or SFP. Let’s explore each of these a bit further.
FBM from Your Warehouse
FBM is exactly what it sounds like. Rather than an Amazon warehouse shipping orders to consumers, the merchant’s warehouse does. FBM requires the seller to have a warehouse in which they can store and fulfill inventory. It also does not come with guaranteed 2-day shipping. As such, Amazon favors FBA listings over FBM listings.
FBM from a 3P Warehouse
If you don’t own a warehouse, there are third-party logistics providers who provide similar services to FBA (including yours truly). You can partner with one of these providers to create FBM offerings, but they too will be treated as lesser options to FBA by Amazon’s algorithm.
SFP from a 3P warehouse
If the idea of Amazon favoring FBA over FBM irks you, you’ll likely be interested in SFP. SFP functions practically identically to the FBM model, except that the provider has been certified by Amazon as being able to consistently provide a Prime-equivalent shipping experience for Amazon shoppers.
The SFP program has been closed to new applicants for well over a year, so if you are not enrolled in SFP already, you’ll need to seek a third-party seller or third-party logistics provider who is.
The Benefits of Amazon Dropshipping with Kaspien
One downside to dropshipping on your own is that you are responsible for tax logistics and customer service. If you partner with Kaspien to dropship on Amazon, the sales pass through our Seller Account instead of yours, which means we’ll handle the taxes and customer service for you. We’ll also pay you on a weekly basis, unlike Amazon, which pays dropshippers twice per month.
Above and beyond that, we take a brand-centric approach to our partnerships. We’ll use dropship in whatever way serves your brand best. That could involve using dropship as a safety net, using dropship as a testing ground for new products to prove that we can drive success for them, and adding your full product catalog to the marketplace.
Co-sell with Another FBA Seller
Dropshipping is a great solution, and more brands are recognizing its value after the turbulence of 2020. However, it’s not the only solution for those impacted by Amazon’s inventory restrictions. In addition or alternatively to dropship (though it really should be in addition), you could authorize another FBA seller.
By adding another FBA seller, you effectively increase the storage space allocated to your products at FBA. From your customers’ perspective, there’s little in their shopping experience. They see the same the same listing, they get the same shipping speed regardless of FBA seller, etc.
From your perspective, you’re receiving another purchase order, which is always lovely. You’re also allowing another seller to access to your listing content and impact how your brand is presented to shoppers. That’s a big deal, so you should only partner with a seller you can trust.
Kaspien has been serving as brands’ trusted Amazon partner since 2008. Our commitment to true, mutually beneficial partnerships earns feedback like this, shared by SRAM:
Kaspien has been instrumental in our success on the Amazon platform with their commitment to SRAM. The time and energy the Kaspien team puts towards our brand’s needs extend beyond the SEO, marketing, and sales aspect of the business; they also ensure that we are communicating constantly and remain aligned and informed on our position on the Amazon Marketplace. We are proud to partner with Kaspien.
Sell on Amazon with Kaspien
If you’d like to explore Amazon dropshipping or FBA with Kaspien, reach out. For more Amazon news and strategy, subscribe to our weekly blog newsletter!
Amazon fees have steadily climbed over the years, eating into profit margins. Many of these costs rose even higher in 2020 as the pandemic triggered supply shortages and shipping delays across industries.
If you’re finding that your profit margins are narrowing, you’re not alone. But while misery loves company, we’d rather leave that particular crowd behind. So, in this post, we’re reviewing which factors drive up costs the most, then we’ll delve into several tools and tricks you can use to minimize your costs and Amazon seller fees.
What Factors Affect Amazon Net Profit Margins the Most?
Material costs have risen dramatically across industries since the start of 2020.The global pandemic resulted in lay offs and furloughs, so sourcing and production slowed or even stopped. When production resumed, fewer workers were able to return working due to companies’ financial uncertainty, health and safety regulations, fear, or a number of other factors. Meanwhile, demand rebounded relatively quickly or even increased. With limited supply and high demand, prices have gone up.
Amazon has steadily increased its requirements for safety testing, sometimes asking brands to go above and beyond government requirements. At Kaspien, we’ve seen numerous cases of brands being asked to conduct safety tests that aren’t legally required for their product. If brands don’t comply, Amazon can suspend their listing, cutting off Amazon sales for that product. As such, most brands find it easier in the end to pay for the additional testing, although it remains an intensely frustrating experience that chips away at the brand’s revenue.
Supply Chain Costs
Once a product is manufactured and has passed all the required certifications, there’s still the matter of transporting the product from the factory to the end consumer. That may involve freight, shipping, and storage fees.Supply chain management is complex and dynamic, so much so that it deserves an entire blog post. And, oh, would you look at that! Here it is.
Amazon FBA Fees
Over 85% of top Amazon sellers use Fulfillment by Amazon, and with good reason. It’s simple, convenient, and provides increasingly faster delivery times. Of course, it’s not free. Sellers must pay fulfillment fees for product that pass through their centers. The fee is based on product size and shipping location.
Small Standard (10 oz or less)
Small Standard (10 to 16 oz)
Large Standard (10 oz or less)
Large Standard (10 to 16 oz)
Large Standard (1 to 2 lb)
Large Standard (2 to 3 lb)
Large Standard (3 to 20 lb)
Amazon Storage Fees
Amazon also charges monthly storage fees for products as well as long-term storage fees. Like fulfillment fees, storage fees also change periodically, typically once per year. Before are the fees per cubic foot.
January – September
October – December
January – September
October – December
Amazon Referral Fees
Amazon’s not done yet! They also charge Amazon sellers referral fees – essentially, a commission for transactions that occur on the Amazon marketplace. Amazon referral fees are based on MSRP and product category.
Arts, Crafts, & Sewing
If total sales price is under $10, referral is 8%
Base Equipment Power Tools
If total sales price is under $10, referral is 8%
Camera & Photo
Cell Phone Device
Clothing & Accessories
For any portion of the total sales price that exceeds $100, referral is 8%
Furniture & Decor
For any portion of the total sales price that exceeds $200, referral is 10%
Grocery & Gourmet Food
If total sales price is under $15, referral is 8%
Health & Personal Care
If total sales price is under $10, referral is 8%
Home & Garden
Industrial & Scientific
For any portion of the total sales price that exceeds $250, referral is 5%
For any portion of the total sales price that exceeds $300, referral is 8%
Patio, Lawn, & Garden
Shoes, Handbags, Sunglasses
Sports & Outdoors
Tires & Wheels
Tools & Home Improvement
Toys & Games
Video & DVD
For any portion of the total sales price that exceeds $1,500, referral is 3%
Amazon is known for offering the lowest prices available online. One way that it enforces that reality is by requiring pricing parity. Pricing parity means that any product sold on Amazon must be offered for the same or lower price as products offered elsewhere online. If the product price on Amazon is higher, Amazon will roll up the Buy Box.
When the Buy Box is rolled, shoppers have to click several more times to see prices and sellers for the given product. The abnormal experience is enough to make shoppers bounce from the listing, costing you sales. This penalty is simple but effective.
Pricing parity can affect net profit margin because it forces brands to price products the same across online marketplaces (or suffer the consequences), regardless of each ecommerce platform’s unique fees. While not always the case, this can impact a brand’s wholesale costs or retail price.
Amazon Retail (1P) Fees
If your brand sells through Vendor Central and Amazon Retailserves as your online reseller, you’ll pay percentage-based fees for services such as marketing co-op, damage allowance, early payment, chargebacks, and shipping. If you use optional services like marketing, you’ll also be responsible for the bill. These fees are typically dependent on how vendors negotiate their contracts with Amazon, and larger vendors have greater negotiation power.
Many brands choose to sell on Amazon through third-party sellers like Kaspien. In these cases, the third-party seller pays Amazon’s fees instead of the brand. However, these fees do affect the seller’s margins, which can lead to negotiations about wholesale cost, but not always. Besides possible discussions about wholesale costs, most third-party sellers don’t charge any type of fee since they are buying product from the brand.
Instead of selling their product wholesale to Amazon Retail or third-party sellers, some brands prefer to sell their product on Amazon themselves with the assistance of an Amazon agency. In this situation, a brand hires an agency to manage the day-to-day of running their Amazon seller account, and the agency charges either a percentage-based commission or a flat monthly fee. If you’re curious about this model, check out our post, “How to Decide If You Should Work with an Amazon Agency.”
Finally, we come to Amazon marketing. With millions of sellers and tens of millions of products on the Amazon marketplace, marketing has truly become a requirement for Amazon success. And, marketing requires a budget.
Now, that said, Amazon marketing should NOT affect your net profit margins. Marketing is meant to increase sales, and if isn’t generating a profitable return on investment, then whoever is running your marketing is not doing a great job. Marketing is a cost, certainly, but it is one that should pay for itself and more.
Discover the Costs of Selling on Amazon
In this free eBook, we explore the costs associated to selling on Amazon through Amazon Retail (1P), third-party sellers (3P), and direct-to-consumer (DTC). Download now to learn which option makes the most sense for your business needs!
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How to Minimize Costs & Amazon Seller Fees
Now that we’ve covered what factors can decrease your net profit margins for Amazon, let’s delve into how you can minimize any of those expenses to maximize your profitability. You’ll note that most of the below tips are based around supply chain management.
If we’re trying to minimize costs, let’s start at the beginning. Our GM of Private Label, Denise Abraham, wrote a fantastic blog post about international product sourcing, including how to do so cost-effectively. She goes more in depth about the process, so we’ll just summarize a few key points here:
Get multiple quotes and samples. You need to find the right balance of costs and quality.
Know your product specs intimately. When sourcing internationally, it’s easy for vendors to take advantage of you and use cheaper materials or skip testing. Those issues will bleed into sales to consumers and future fees, so don’t let yourself fall into that position. By knowing your product front, back, and center, you’re able to spot potential issues earlier.
Research and understand your purchasing options, including ex-works (EXW), freight on board (FOB), and landed duty paid (LDP) / delivery duty paid (DDP). Each purchasing option has significant implications that can effect your costs.
To avoid long-term storage fees at FBA centers, you must strike a balance between sending in enough inventory, but never too much. To do so effectively, you need to understand how long each piece of the supply chain takes, which as we all know, has changed quite dramatically since COVID-19. Our Purchase Order Manager, Emily Spokas, wrote a handy blog post about inventory forecasting, which you can read here.
You can break your forecasted lead time into smaller pieces, including how long it takes you to prepare a shipping order after receiving a purchase order from a retailer and how long it takes to then ship that order from your factory to the fulfillment center. If you sell your products yourself, you could even factor production time into the calculation.
The marketplace is dynamic, so your inventory forecasting model should be too. Your lead times will likely fluctuate with seasonality, environmental factors, inventory quantity limits, and other external factors, so carefully monitor and update your forecasts accordingly.
Efficient Product Packaging
Amazon FBA has specific criteria for product packaging requirements. If products do not have the required labels and compliant packaging, Amazon may refuse, return, or repackage the inventory. In each of these cases, the seller is losing money, either in processing returns or paying fees for repackaging. To minimize these fees, make sure that your products are prepped in accordance with Amazon’s policies.
As for storage fees at FBA, Amazon charged fees based on cubic feet or number units. This issue is partially mitigated through inventory forecasting, but it can be further mitigated by using the most space-efficient packaging for your product. Going down a box size or using an envelope can help reduce volume and thereby fees. Of course, do not reduce packaging size at the expense of product survival. If product is damaged during transit or storage because of smaller packaging, the savings of the packaging won’t justify the loss of the product.
Amazon Small and Light Program
Speaking of optimized product packaging, we’d be remiss if we didn’t talk about Amazon’s Small and Light program. Small and Light is an FBA that reduces fulfillment costs for products under a certain size or weight threshold. To enroll in the program, products must be sold via FBA, be priced under $7, and sell at least 25 units per month. If your products are eligible, Small and Light is a no brainer.
One of our partners met every eligibility requirement for Small and Light except for product price. Due to margin considerations, their product was priced just over $7. We found that if we lowered the priceso that the product could enroll in Small and Light, the savings from the lower fulfillment fee actually increased the product’s net profit margin. Thanks to Small and Light, the product was more affordable for consumers (which boosted sales) and margins were greater.
FBA Seller Reimbursements
FBA centers make mistakes, and Amazon doesn’t always fully reimburse sellers for inventory that is lost, damaged, or otherwise mishandled. Over time, these un-reimbursed or under-reimbursed inventory errorsadd up, eroding your bottom line.
That’s neither tolerable nor necessary. To correct this issue and get back what you’re owed, you’ll need to file FBA reimbursement cases with Amazon. This process can be done manually or partially automated through software (Amazon policies forbid fully automating the process).
At Kaspien, we’ve successfully reimbursed over $5 million to FBA sellers that they would have otherwise lost. On average, we see FBA sellers recover the equivalent of 2% of topline sales when they use ourFBA reimbursement software. That adds up, especially as your sales volume climbs.
Dropship Products Not Suited for FBA
Let’s say you’re selling oversized products or your sales velocity is still low. In such cases, using FBA may not be the most cost-effective choice. Instead, you may consider usingdropship to fulfill orders yourself instead of relying on Amazon.
By dropshipping, you avoid Amazon’s storage fees, packaging requirements, IPI threshold requirements, and inventory quantity limits. The downside is that you may not be able to providefast shipping, which is now a key component of a good customer experience.
Amazon’s algorithm also tends to favor sellers who fulfill products via FBA, so if you’re in a listing with multiple FBA sellers, your chance at winning the Buy Box goes down. If you are the only seller in the listing, this issue matters a bit less, though you are still contending with competitor products.
Amazon Global Logistics
Amazon Global Logistics (AGL) is an Amazon program that allows sellers to direct-import from China into different markets. Typically, importing from overseas requires multiple checkpoints and multiple service providers, creating a lengthy and costly supply chain. Amazon Global Logistics streamlines the process, reducing touch points and costs for sellers.
At Kaspien, we’ve seen Amazon Global Logistics reduce lead times by 20 days! By its nature, Amazon Global Logistics is most cost effective when transporting large volume, which is one of the perks of working with a large third-party seller like Kaspien. Because we have hundreds of partners that import from overseas, we can combine orders under a single account, thereby reducing costs and lead times for each involved brand.
To learn more about Amazon Global Logistics, check out ourpodcast episode with our Chief Operating Officer, Director of Retail Operations, and Director of Purchase Order Management. They discuss best practices for Amazon Global Logistics, including which product types benefit the most from the service, how to leverage economies of scale, and how to navigate Amazon’s quantity limits.
Find the Right Partner
Last but not least, finding the right partner for your Amazon business can play a huge role in your profitability. Amazon is a massive market in and of itself, creating a whole industry of third-party sellers, Amazon agencies, third-party logistics providers, software providers, and more. As a result, you have plenty of options in finding the right partner and/or tools to grow your Amazon business.
Do your research. Find the partner or tool that will give you the capabilities, attention, resources, and expertise you deserve. Their efficacy (or lack of) can have a major impact on your brand integrity, stability, and profitability.
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Amazon Business hit $25 billion annual sales in 2020, just 5 years after its inception. To put things into perspective, it took Amazon’s B2C marketplace twice as long to hit the $25 billion milestone, although Amazon B2B certainly has the advantage of building off Amazon’s existing brand and infrastructure. This incredible growth isn’t enjoyed by only Amazon either: More than half of these sales came from third-party sellers.
Suffice it to say that Amazon Business is considered very high potential right now, with lower competition than Amazon’s B2C marketplace. Given this opportunity, it’s starting to draw more attention.
Just What Is Amazon Business?
Amazon Business is Amazon’s marketplace intended for business-to-business transactions, as opposed to business-to-consumer transactions. Businesses tend to buy in much larger quantities than individual consumers, so the separate marketplace provides a platform for those types of transactions. Listings on marketplace can offer bulk quantities, tiered discounts, flexible payment terms, and other perks not seen on the B2C marketplace.
Amazon Business was founded in 2015, 20 years after Amazon’s inception, and its rise to success has been nothing short of meteoric:
2015: Amazon Business launches
2016: The marketplace posts $1 billion in global annual sales
2018: The marketplace posts $10 billion in global annual sales
2020: The marketplace posts $25 billion in global annual sales
In a blog post, Amazon wrote that Amazon Business now serves nine countries, 45 U.S. states, and 80 of the Fortune 100 companies. Baird Equity Research predicts it will surpass $80 billion in annual sales by 2025, just 10 years after its founding.
Amazon is Drawing More Attention to Its B2B Marketplace
If you haven’t heard much about Amazon Business before 2021, you’re not alone. Amazon Business has garnered far less media attention than Amazon’s B2C marketplace, in part because Amazon itself has historically put less emphasis on promoting B2B.
That seems to be changing, however. In March 2021, Amazon hosted a free virtual event all about Amazon B2B called re:Shape. The event featured speakers from Uber, Citi, Him & Hers, and other major brands. Representatives from schools and hospitals also spoke, sharing how they leverage Amazon B2B to supply their needs. The event focused heavily on the logistical benefits of B2B, citing examples of bulk orders for school supplies that could be syndicated to students as schools adapted to virtual classrooms due to COVID-19 and hospitals receiving much needed medical supplies.
How to Sell B2B on Amazon
Amazon built their empire by making the customer experience as seamless as possible, and that holds true with Amazon Business. To create an Amazon account for B2B selling, simply create a Seller Central account.
Whenever Amazon sellers create their account or add new products, those products are automatically added to both the consumer and the business marketplace. Where things get a little more complex is in supply chain management, including warehousing and fulfillment.
Dropshipping for Amazon Business
Amazon FBA is often seen as the gold standard for fulfillment, and not without reason. Amazon FBA set the standard for 2-day shipping, and now 1-day shipping and same-day shipping are becoming increasingly available. From an end-consumer’s perspective, FBA is pretty grand.
The Limits of FBA
However, from a seller’s perspective, FBA can sometimes be constraining. When it works, it works great. But Amazon has also earned a reputation for making unilateral decisions that significantly impact sellers on its platform without offering alternatives. This was painfully obvious at the onset of the COVID-19 pandemic in the U.S., whenAmazon restricted inbound shipments.
Amazon FBA also doesn’t permit certain products or charges higher fees, including hazmat, meltables (during certain times of year), and oversized products. Some of these prohibited products are the same type of products that businesses might buy in bulk.
Perhaps more importantly, FBA charges long-term storage fees and has quantity restrictions, so storing sufficient inventory at Amazon for large volume business orders isn’t always possible or financially sound.
Dropship Products That Aren’t Ideal for FBA
That’s wheredropship comes into play. Dropshipping is the practice of listing a product online without storing inventory at a fulfillment center. When an order is placed, the seller passes the order back to the manufacturer’s warehouse, which then ships the product directly to the customer. In this way, dropship products skip the middleman. There are some serious pros and cons to dropshipping, but that deserves its own blog post.
How Amazon Dropshipping Works
Given the storage fees, quantity limits, and product restrictions at FBA, dropship makes a ton of sense for Amazon Business. As just one of many examples, in late 2020, Kaspien fulfilled a large Amazon Business order worth over $120,000 through dropship! Such an order would not have been nearly as viable on the consumer marketplace or with FBA.
Amazon Business Account Benefits
Conveniently enough, Amazon published a comprehensiveblog postreviewing how Amazon Business works and some of the key benefits. According to Amazon, the top five benefits of Amazon Business are:
Business pricing: The ability to offer prices only available to customers on Amazon Business.
Quantity Discounts: Access to pricing features that make it easier for customers to buy in quantities starting at tiers of just two items, and to request special pricing on even larger purchases.
Certifications: Claim quality, diversity, and ownership certifications that help companies stand out to business customers who wish to learn more about their suppliers.
Tax exemption: Extend tax exemption on qualified purchases to customers that participate in the Amazon Tax Exemption Program, such as nonprofit organizations.
Enhanced seller profile: Showcase your logo, tell buyers more about your company, and display your quality and diversity certifications.
Amazon Business Prime
The last notable piece of Amazon’s B2B marketplace is Amazon Business Prime, which is a separate membership from Amazon Prime. Business Prime comes with its own set of perks, according to Amazon: “Business Prime offers unlimited, FREE shipping on eligible orders and more business purchasing benefits, like Spend Visibility, which lets you create custom visual dashboards powered by AWS cloud computing technology.”
Business Prime members also gain access to Guided Buying, which helps direct a company’s purchasing team to the products and sellers that comply with their purchasing goals, as well as the ability to get extended terms for Pay by Invoice.
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Are you ready to improve search rankings and increase sales for your Amazon products? Getting more reviews is an important piece of any Amazon growth strategy.
After all, the recency and relevancy of your reviews impact your Amazon rankings. Shoppers look to reviews for social proof. Reviews also let you know exactly how your products are perceived, helping you make sure your items are delighting customers.
Verified purchase reviews, which are reviews left by customers who purchased your product from Amazon, carry the most weight in the search algorithm. Reviews are not shared across child ASINs within a product set. If you create a bundle or use Amazon’s virtual bundling program, the bundle has a separate ASIN from the products that make up the bundle. If you’re selling internationally, reviews are not shared globally, but may be highlighted as ratings from other countries.
In other words, you need reviews, and ideally you want those reviews to come from shoppers who bought your products on Amazon. In this article, we’ll explain where to find Amazon review policies and share five ways to get reviews on Amazon.
Amazon Review Guidelines
Getting reviews on Amazon doesn’t have to be complicated, but you do need to understand Amazon’s guidelines. Amazon takes customer reviews very seriously and has many rules in place to prevent abuse of the review system.
You should get familiar with all Amazon review policies, but here is a brief overview of what you need to know about requesting reviews:
You cannot offer any type of compensation in exchange for a review. This includes free products, coupons, and discounts. Do not participate in social media review groups.
You should only send one request for a review or seller feedback per order.
Never ask for a positive review. Your request should use neutral language. Avoid if/then statements that divert buyers with a negative experience to contact customer service instead of leaving a review.
You, your family, and your employees are not allowed to review your own products or your competitor’s products.
Do not include marketing messages, promotions, or links to sites other than Amazon in your review request.
Here are the Seller Central pages you should be familiar with:
Feeling overwhelmed? Don’t worry, requesting reviews is easy when you know what not to do. Keep reading to learn about five ways to ask for reviews while operating within Amazon’s review policies.
5 Ways to Ask for Reviews on Amazon
Request a Review
Amazon introduced the Request a Review messaging system in late 2019. This message is sent to the buyer on your behalf, directly from Amazon. Since Amazon controls the messaging, this is a foolproof way to request reviews without violating any of the policies mentioned above.
The message is instantly translated into the buyer’s preferred language. It includes a seller feedback request in addition to a product review request, along with an image of your product. You can send this message manually by clicking the “Request a Review” button on the order details page in your Seller Central account. You can also schedule automation for this message with Amazon review software such asFeedbackFive, which we’ll explore later in this article.
You can send review requests through Buyer-Seller Messaging in Seller Central. You’ll need to create your own message, so this is where you need to make sure you are following all of Amazon’s guidelines related to reviews and communicating with buyers.
Sending messages directly from Seller Central requires you to go to each order you’d like to send a request for and click on the buyer’s name to compose your message. You can also create a message template to automate with software, saving you time so you can focus on other tasks.
Automated Review Requests
eComEngine’s FeedbackFive software makes it easy to send review requests, whether you want to send Request a Review messages or customized requests via Buyer-Seller Messaging. Either way, you simply set up the message you’d like to send, choose your preferred message timing, and enjoy the results! You can exclude orders (such as refunded orders), send requests that are specific to each of your products, control the timing of your messages, and much more.
You can also see the impact of your review requests with detailed campaign analytics. This graph shows your order volume, emails sent, and reviews received so you have a clear understanding of how your requests impact your reviews.
You can also see how many written product reviews you receive compared to the number of one-tap ratings received along with your positive feedback percentage, average review rating, and other details.
The Amazon Vine program is another way to request reviews. You’ll need to enroll in the program and provide free products for review. (This is the only exception to Amazon’s incentivized review policy; you can feel confident about participating because this program is managed by Amazon.)
Amazon Vine Voices are among the most trusted reviewers on Amazon. Participating in Vine can be a great way to jumpstart reviews for a new product.
Some sellers and vendors report great results with the Amazon Vine program, while others are not impressed. It might work well for your product, but there are no guarantees that your products will be reviewed. Participating in the program can be costly, so you’ll definitely want to do your research to get an idea of whether this makes sense for your business.
As with any communication with buyers, you’ll need to follow Amazon’s Communication Guidelines if you plan to include a product insert in your packaging. Some sellers have seen good results from including a review request in this format.
If you regularly shop on Amazon, you’ve almost certainly received at least one product review request that blatantly violates Amazon policies. Don’t risk it! If you plan to include a review request with your product, check outthis guide to see what not to do.
Getting Reviews the Right Way
Amazon reviews are integral to the continued growth and success of your business. Although there are many social media groups and “gurus” who may tempt you with black hat tactics, you’re now armed with knowledge and resources to get reviews without risking your seller account.
As with everything associated with your Amazon business, you’ll want to exercise caution and do your own research to make sure that any action you are considering won’t lead to account suspension or other issues. Automating review requests is a smart way to save time while continuing to build your Amazon reputation. Working with unverified software could put your account at risk. Be sure to look for software that is in the Amazon Appstore, like FeedbackFive!
If you found this helpful, subscribe to Kaspien’s weekly blog newsletter to learn about Amazon strategies from other ecommerce experts, like eComEngine!
Marketplace Pulse reported that Amazon has suspended over a dozen Chinese sellers for using banned review generation tactics. The act is particularly notable due to the brands’ size: Together, their annual sales on Amazon exceed $1 billion.
These brands operated in multiple Amazon marketplaces and were sold by multiple sellers. Marketplace Pulse reports that some sellers were authorized third-parties, some were owned by the brands themselves, and others had unknown connections to the brands.
Amazon banned all the sellers, making this crack down much more serious for the affected brands. If a single seller were banned, others could take their place. By banning all sellers from selling the above brands, Amazon has effectively dammed their revenue source.
This news comes around the same time as Amazon’s first ever Brand Protection Report, which states that last year, Amazon blocked over 10 billion product listings suspected of being counterfeit.
Amazon Banned Brands for Fake Reviews
Some of the above brands had tens of thousands of customer reviews. At the end of April, Mpow had nearly 70,000 customer reviews for one of their headphones. As of May 11th, Amazon had removed nearly 60,000 of those reviews for being fraudulent.
Amazon has extended this practice to all the banned brands. If these brands are ever permitted to return to the marketplace, they will likely struggle to achieve the same sales velocity that they left off on.
This act may be intended to signal that Amazon will no longer tolerate fake review schemes. Amazon chose to act against large brands, some of whom are Amazon-native brands.
Megan Lauterbach, Kaspien’s General Manager of Retail, sees it as a pointed message: “This tells me that, regardless of how big you are on Amazon, if you violate their terms and manipulate ranks or reviews (which hurts the customer experience), Amazon is willing to remove you from the marketplace.”
How Prevalent is Review Manipulation on Amazon?
Unfortunately, fake customer reviews pervade Amazon, and have seemed to grow only more rampant as the years go on.
“Review manipulation is one of the most common black hat tactics on Amazon,” said Lauterbach. “It is a key way to gain more traction on the SERP. The amount and rating of the reviews gives customers confidence to purchase, even if your product is actually not great.”
Amazon also recently retired the Amazon Early Reviewer Program, one of its few approved programs for review generation. When the news was announced, there was widespread speculation it would only lead more brands to engage in black hat tactics.
This crack down by Amazon will hopefully deter other brands from engaging in unscrupulous practices, but given the importance of customer reviews for discoverability and conversions, brands are desperate for ways to wrack them up.
If you’re interested in learning how to spot fake Amazon reviews, check outthis blog post.
How Does this Ban Help Stop Fake Customer Reviews?
For one, the impacted brands are losing sales every hour that they are unavailable on Amazon. Some of them have been banned since late April.
This suspension is also potentially disastrous from a cashflow perspective, as Kaspien’s General Manager of Dropship, Evan Durrant, points out: “If the account is banned/remains suspended, Amazon will hold funds for at least 90 days to recoup any returned product or claims made against the previous sales. In some cases (usually with IP issues), funds have been held indefinitely. All of these larger players are likely floating containers upon containers full of goods over the ocean right now, which means they now have cash tied up in inventory that they’ll additionally have to offload at-or-below cost if their suspension sticks.”
Additionally these brands may struggle to reach the same sales velocity that they enjoyed before the ban (assuming Amazon un-bans them). If the majority of the removed reviews were 5 stars, then the products may suddenly find themselves with a much lower star rating, making it harder to compete in an already intensely competitive space.
Of course, as the image above shows, that won’t always be the case. Mpow’s headphones still have favorable ratings, despite tens of thousands of customer reviews being removed.
What Does This Crack Down Indicate?
“Amazon will continue to ratchet up enforcement,” said Jed Nelsen, Kaspien’s Director of Compliance.
Nelsen also believes that this enforcement will extend to Amazon brand aggregators, which has raised over $4 billion for acquiring Amazon-focused brands since the start of 2020. “I wouldn’t be surprised if some of the brand aggregators who are violating Amazon rules – like operating the accounts of thebrands they bought – will face some consequences this year.”
As for Kaspien’s partner brands, Lauterbach said, “This may benefit our partners if Amazon continues to take action. Many legitimate brands are getting beaten by competitors that are playing unfairly.”
And there’s the crux of it: Is this Amazon grand standing after facing a 16-month congressional reviewover the last two years, or does it truly signal a change in Amazon’s policy enforcement?
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What are Amazon Brand Stores?
Amazon Brand Stores are a digital storefront native to the Amazon marketplace. These stores are made by Amazon sellersusing templates provided by Amazon, which can be customized to use a brand’s colors, images, and copy.
Brand Stores provide many benefits, not the least of which is they feature a brand’s products in a centralized location largely removed from the competition. Once a shopper is in a Brand Store, they are browsing only your products. Brand Stores can also be used in conjunction with Amazon advertising and social media marketing, but more on that later.
For their first few years, Amazon Brand Stores were hard to find organically. There was not a “shop by Brand Store” option, nor were links to Brand Stores easily identified. Amazon seems to have recognized that this experience was ideal for neither shoppers nor sellers, and has taken steps to make Brand Stores easier to discover. Such efforts include:
Links to Brand Stores within listings now say “Shop [Brand]” instead of simply stating the brand name. Thissets clearer expectations for what will happen when a shopper clicks the link.
Sponsored Brand Ads can direct shoppers to Brand Stores.
Amazon has stated that Sponsored Brand Videos will be able to direct to Brand Stores in the near future.
Amazon Brand Store Guidelines & Requirements
To be eligible to create a Brand Store, the brand must be enrolled in Amazon Brand Registry. If you need help enrolling in the program, check out thishandy guide. If you want to learn more about Brand Registry benefits, check out thisblog post.
In addition to Brand Registry, brands will also need an abundance of images and perhaps a few videos. Brand Stores are designed to be highly visual and engaging experiences for shoppers. If you do not have many original images for your products and brands, you can use stock photos, but that’s a very lackluster customer experience.
Alternatively, you can hire someone to create custom visuals for your brand, such as an Amazon agency, Creative Services studio, a local photographer, or even influencers. The most cost-effective options will either be influencers or a local photographer, depending on their rates, though you may find higher quality going through an agency or studio.
Getting into the grittier details, here are some requirements for each section of the Brand Store:
Header image – can vary or be consistent across different pages
3,000 x 600 Pixels
Meta Description – should target a single keyword for the page
2-3 sentences describing what can be found on the page
How to Create an Amazon Brand Store
Brand Stores are fairly straightforward. Brand Stores are made up of pages and subpages. Each page is made of multiple sections, and each section is made of multiple tiles. You can think of it nested like such:
Page or Subpage
Manual Tile Types for Amazon Brand Stores
There are many types of tiles, each with their own set of uses and requirements.Manual tiles are those that are created manually; any text or images for the given tile are uploaded on a case-by-case basis. The following requirements are for tiles that fill the width of the page (the entire section).
Display title and bullets from product detail page
Or, write custom title and description
3,000 pixels wide, 16 – 2,400 pixels in height
Optional title (1 line)
Optional link to product detail page or Brand Store Page
Image with Text
3,000 pixels wide, 16-2,400 pixels in height
Optional prefix (1 line)
Header required (1 line)
Optional body (7 lines)
Optional link to product detail page or Brand Store page
Optional link to product detail page or Brand Store page
Video must be at least 1,280 x 640 pixels and less than 100MB
Automatic tiles are tiles that pull in information from elsewhere on Amazon, so they don’t have to updated manually. Below are some automatic tile types.
Best Selling Products
Title automatically updates to reflect best-selling products
Automatically generated for each visitor of your store
When there are active promotions, they will automatically display here
Using these pages, sections, and tiles, you construct each page of your Brand Store. The best Brand Stores look like a well-crafted professional website.
Amazon Brand Store Templates
If creating a Brand Store from scratch sounds a little intimidating and you’d like to just find a design template, you have a couple options.
Use Amazon’s Brand Store Templates
Amazon provides three generic templates for Brand Stores. These make creating a Brand Store much easier, but you may find the templates don’t work well with your catalog’s organization or art assets. In that case, you can look to the other two options.
Hire an Amazon Agency to Create Your Brand Store
Experienced Amazon agencies are likely to have created dozens or hundreds of Brand Stores. If you already work with an Amazon agency, ask if they can create a Brand Store for you. If you work independently on Amazon, you may be able to find an agency that is willing to create a Brand Store for you for an hourly rate or a set fee, though this will vary by agency.
If you work with a third-party seller on Amazon, ask them if they can create a Brand Store for your brand. Some third-party sellers will create Brand Stores for free.
Take Inspiration from an Existing Brand Store
If you want to create the Brand Store yourself, there’s no reason you can’t look up other brands on Amazon and review their Brand Stores. Find page layouts that you like, potentially taking inspiration from multiple sources. This can be a great jumping off point for creating a new design, and you can modify it as you get more comfortable with the page.
Amazon Brand Store Best Practices
What are the do’s and don’ts of Brand Stores? Why, thank you for asking! At Kaspien, we’ve made dozens of Brand Stores for our partners. In each case, we strive to learn from previous efforts so we continually improve. Here are some of our recommended best practices:
Use Many High-Quality Visuals
As mentioned earlier, Brand Stores are designed to be highly visual experiences. When a shopper lands on your Brand Store page, they should be immediately excited by what they see. That means not only professional quality product images, but also images for your brand. This is YOUR Brand Store. Shoppers should know your story and what your brand is all about, and images and videos play a key role in telling that story.
Create an “About Us” Page
Keeping with that train of thought, your Brand Store should include an “About Us” section or page. What’s your story? What sets your brand apart? Why should shoppers trust you and give you their business? The most successful brands are those that delight their customers, and establishing a rapport with them is a key part of that.
Create an Intuitive Navigation Menu
Organize your pages and subpages by age, category, product line, or interest. For example, Toys & Games and Baby brands may organize their Brand Store by age since that’s how shoppers often search for products in those categories. A Sports company might organize their story by product type – apparel, supplements, accessories – or by sport – running, climbing, baseball, football.
Ultimately, organize your Brand Store in whatever way will make it easiest for your customers to navigate. Amazon’s success is rooted in being “customer obsessed.” Take a lesson from their book.
Feature Your Full Catalog
Surprisingly, some brands fail to connect all of their product listings to their Brand Store even after they have created it. This is a poor customer experience, as clicking “Shop [Brand]” on one listing will take you to the Brand Store while clicking the same link on another listing will take you to a search results page.
Consistency is key to creating a positive customer experience, so make sure your Brand Store is connected to all of your listings. The only exceptions to this practice is if you have one listing that performs exceptionally poor, in which case you may not wish to showcase it next to the rest of your catalog that performs well.
Because examples are always helpful, we’ve included a handful of Brand Stores that are structured for different product categories.
Amazon Brand Store Example for Pet Brands
Amazon Brand Store for Electronics Brand
Amazon Brand Store Example for Baby Brands
Amazon Brand Store Example for Outdoors Brand
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On May 6th, Amazon emailed sellers in Canada announcing that Amazon is pausing its plans for Prime Day 2021 due to concerns about the impact of COVID-19 in Canada. The email specifies that this disruption applies to Amazon Canada only and does not affect plans for Prime Day 2021 in the U.S.
Bloomberg reports that Amazon has also confirmed Prime Day plans will be paused for India as well, also due to surges in COVID-19.
Why did Amazon Pause Prime Day 2021 in Canada?
Amazon’s announcement states that they are pausing Prime Day, “Based on the increasing impact of COVID-19 in Canada, and the importance we place on protecting the health and safety of our employees and customers, we will pause plans for Prime Day 2021 in Canada.”
Why would Amazon Pause Prime Day 2021 in India?
India is currently experiencing a massive surge in COVID-19 cases and deaths. On May 5, 2021, India reported a record high daily death toll, according to CNN. Needless to say, Indian consumers’ interest in shopping daily deals, as well as the logistic infrastructure needed to facilitate Prime Day, are questionable at best with far more pressing matters to attend to.
Will Amazon Reschedule Prime Day 2021 in Canada or India?
Amazon chose to use the word “pause” instead of “cancel,” leaving the door open for another delayed Prime Day. In 2020, Prime Day was delayed untilAugust for India and until October for another 19 countriesdue to COVID-19. As such, it’s still entirely possible that Amazon could reschedule Prime Day for Canada.
Without seeing the wording of the notification about India, it is unclear if Amazon would postpone or wholly cancel Prime Day 2021 in India.
How Will the Delay or Cancellation Affect Amazon and Sellers?
2020 was the first year that Amazon held Prime Day on different dates for different countries, althoughmost countries participated on October 13-14. Prime Day 2020 far exceeded sales from previous years, despite (or more than likely, because of) COVID-19, reaching an estimated $10.4 billion in sales.
As such, if Amazon does have to reschedule Prime Day to vary by market, there’s little reason to think it will substantially harm their sales.
Amazon’s announcement has come early, but perhaps not early enough. FBA inventory for Prime Day was due by May 30th in India and by May 31st in Canada. Due to supply chain delays, some Amazon sellers may have already placed larger orders in order to have inventory arrive to Amazon by the end of May. Now that Prime Day is at least delayed, sellers may find themselves with too much inventory for current sales velocity, which ties up their cash flow and could put them at risk of storage fees.
That said, Amazon has limited seller warehouse space in Canada (and elsewhere) so drastically over the last 12 months that it may have actually saved sellers from sending in too much inventory. A small instance of silver linings, as it were.
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There are certain milestones in an Amazon business’s lifecycle, one of the most thrilling of which is breaking $1 million in annual Amazon sales for the first time. However, that milestone can also become a plateau. Doing the basics well has brought you here, but to climb further, the basics will no longer suffice.
What does it take to grow an Amazon business from $1 million in annual sales to $5 million, or even $50 million? In short, what does it take toscale to the next level?
Kaspien has served over 4,000 brands in our lifetime and generated over $ 1 billion in retail sales. Along the way, we’ve learned a thing or two about successfully scaling brands on Amazon. In this post, we’ll highlight some of the most common obstacles to overcoming a sales plateau on Amazon.
Common Causes of an Amazon Sales Plateau
One of the most common reasons we see a brand’s sales plateau after a certain point is that they’ve spread themselves too thin. They work with too many tools and partners, each of which works in siloes. They may work with a Creative Services agency for photography and video, an advertising agency to run their Amazon marketing, a freelancer to write copy for their website, and a software company for their inventory forecasting.
As is often the case, brands reach this point gradually and over a long period. They hired specialist agencies and freelancers as individual needs came up. This strategy was cost-effective and practical, but only to a certain point. There comes a time in a brand’s lifecycle where having many small partners becomes a constraint instead of a boon.
Here are just a few of the issues that can be created by this model:
Communication Gaps and Delays
Multiple agencies or freelancers aren’t communicating, and instead projects are relayed by internal stakeholders. As a result, too much time is wasted on bringing new stakeholders up-to-speed, clarifying misunderstandings, and passing messages back and forth.
Growth Slows or Stagnates
Because there are communication issues and teams are siloed, your business units will not be able to coordinate to the degree needed to improve efficiencies. Inventory forecasting relies on accurate sales prediction from marketing. Amazon advertising is harmed by stock-outs. Website content and voice may differ from branding on other sales channels.
These issues impede growth. Imagine a rowing team where each member works without consideration of the rower in front or behind them. They quickly fall out of sync, slowing the boat and falling behind the competition. By consolidating supportive services under one unified partner, you position your team to work in synchronization, maximizing sales velocity.
Being Spread Thin Impedes Automation
Not only do siloed freelancers and agencies slow progress on initiatives, they also make it more difficult to automate different facets of the business. Automating processes effectively across a growing organization means having a shared source of truth and interconnected systems. When each partner has their own data and processes, effectively automating your operations, which is an essential part of scaling a business, is quite challenging.
The Costs Exceed Those of a Holistic Agency
One reason that brands typically hire specialists instead of a full-service partner as they grow is because of cost. However, there comes a time when you end up paying for the sum of specialists than you would for a single partner. This time comes earlier than one might expect by simply summing the numbers.
If you consider the fact that a single partner eliminates the issue of communication gaps, siloes, and automation obstacles, the single partner can actually accelerate growth even faster, further increasing the return-on-investment to the point that working with a single partner becomes more profitable than working with many specialists earlier than expected.
Case Study: Growing Lorex’s Amazon Sales by 521%
Let’s take a look at one of our partners who chose to work with Kaspien as their full-service Amazon agency. Lorex is an electronics brand known for their high-quality security systems. They partnered with Kaspien to transition their business away from Amazon Retail and start selling their products on Amazon themselves.
As their agency, we built new listings and enhanced existing listings, created A+ Content, an Amazon Store, and launched sponsored ads on Amazon. In the years since, we’ve grown their annual Amazon sales from thousands to millions.
521% increase in total sales
13% average ACOS
$4MM+ lifetime Amazon ad sales
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