Competition among Amazon sellers may become more intense as Amazon escalates enforcement of their Marketplace Fair Pricing Policy. Where once sellers faced rolled Buy Boxes, they now risk seller account suspensions or even account shutdowns.
Pricing Flags Now Impact Seller Account Health
Amazon recently changed their system so that products flagged as being priced too high will now appear under “Account Health Issues” instead of “Pricing Alerts” within Seller Central. This change is noteworthy because seller accounts are much more readily suspended by Amazon for having account health issues than for pricing alerts. In other words, Amazon is becoming more stringent in their enforcement of products they deem overpriced.
Rolled Buy Boxes and Account Suspensions
Before this update, Amazon typically removed the Buy Box from the product detail page. Sometimes referred to as a “rolled” Buy Box, this practice replaces the “Add to Cart” and “Buy Now” buttons with a “See All Buying Options” button. Rolling the Buy Box effectively requires shoppers to click at least once more before they can buy. While small, this disruption in the typical Amazon shopping experience (and the plethora of similar competitor offerings) is enough that sales can take a significant hit when the Buy Box is rolled.
Amazon Recommends New Prices
Products flagged by Amazon as being priced too high will display a suggested minimum price and maximum price in Seller Central. These prices would effectively serve as the thresholds for any sellers using Amazon repricer tools. Amazon also suggests what price to set for the product currently, which in some cases undercuts the price currently featured in the Buy Box.
How Does Amazon Determine if Products are Overpriced?
Amazon’s Fair Pricing Policy states that they will penalize sellers for pricing practices that harm customer trust, which includes suspending or terminating selling privileges. Amazon states one such harmful practice is “setting a price on a product or service that is significantly higher than recent prices offered on or off Amazon.”
While this policy sounds reasonably straightforward, Kaspien has seen Amazon suppress listings offering a product for $31 when another seller in the listing offers it for $29. At this time, it is unclear if this degree of severity is widespread or limited.
Ultimately, this update in enforcement practices is a win for consumers, but a complication for Amazon sellers, especially for those with already tight margins.
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The Sports & Outdoors category experienced tremendous growth in 2020.As the pandemic forced gyms to close and social gatherings became smaller and less frequent, consumers invested in home gyms and outdoor recreation. Kaspien’s data shows Amazon sales in the Sports & Outdoors category grew 80% year-over-year!
While category sales are expected to grow at humbler rates in 2021, consumer buying behavior has permanently shifted. More consumers are comfortable exercising away from the gym, at-home equipment providers like Peloton are encouraging the shift, and outdoor enthusiasts new and old have taken advantage of Amazon to supply their adventure gear.
This shifting landscape presents immense opportunities for brands in the Sports & Outdoors category. Historically, many of these brands have treated Amazon as a secondary sales channel, and it’s under-optimized as a result. 2020 made ecommerce a more important sales channel, and those who optimize their Amazon channel and integrate it into their overall brand strategy firstwill be best positioned to increase their market share in the coming years.
The Sports & Outdoors category on Amazon saw significant sales growth year-on-year spurred by the global pandemic. When health clubs closed, consumers brought the gym home. When social gatherings became limited, more consumers spent their leisure time (and money) on outdoor recreation.
As demonstrated by the next three graphs, COVID-19 drove significant sales growth for multiple product types in this category, from sports to defense to survival gear.
Even outside of Amazon, we saw examples of at-home Sports & Fitness booming, with Peloton taking the spotlight. Peloton’s earnings show total revenue reach $1.8 billion in 2020, a 100% increase year-on-year, and their subscription revenue reached $121.2 million, a 99% increase year-on-year.
According to the International Health, Racquet & Sportsclub Association (IHRSA), the fitness industry lost $20 billionin 2020.At least 8 national gym networks filed for bankruptcy in 2020.
The Outdoor Recreation industry fared far better, with the NPD Group reporting strong growth in multiple outdoor activities:
Dollar sales of bicycles increased 63% in June 2020 versus the same time the previous year.
Dollar sales of paddle sports increased 56% in June 2020 versus the same time the previous year.
Dollar sales of golf equipment increased 51% in June 2020 versus the same time the previous year.
Dollar sales of camping equipment increased 31% in June 2020 versus the same time the previous year.
Products in the Sports & Outdoors category vary greatly in quality and price, which results in multiple, distinct audiences. As such, it’s helpful to think of Sports & Outdoors shoppers as three tiers: Entry level, middle, and luxury.
Entry level shoppers are those trying out a new activity for the first time and have not yet established brand loyalty. They seek the best deal, as they need to validate their interest before spending more dollars.
Middle level shoppers have an established interest in the Sports & Outdoors category. They’ve found brands and products they like, but balance that interest with a fixed budget. They are knowledgeable about some technical details for their given product interest.
Luxury level shoppers have a strong interest in the Sports & Outdoors category and demonstrate a mixture of brand loyalty and experimentation. They have preferred brands, but if an innovative new product is released, they may be willing to try it. These shoppers tend to be (or think they are) very knowledgeable about their area of interest and are willing to pay for premium products.
For brands selling in this space, it’s important to identify which tier your products aim to appease. These tiers are very basic and shoppers can fluctuate between them over time and for different products. However, they can be expanded upon to buildmarketing personas for your brand, making them even more actionable.
Improvement & Recreation
While shoppers in this category vary greatly in their product knowledge and budget, they do share an important commonality: an interest in competition, self-improvement, and recreation.
The products in this category, whether it’s dumbbells, basketballs, or tents, all relate to at least one of the three interests and oftentimes all three. Shoppers want to get better at something and enjoy that task (or the results of it!). The brands that speak to all three interests in their marketing and branding will be best positioned to engage their target audience.
Loyalty Increases with Technicality
Brand loyalty in this space will differ due to a number of factors, including the shopper tiers, but one of the most telling factors is product technicality. Shoppers are more likely to patronize the same brand for products that are complex or require compatibility. Simple, more generic products like elastic bands or weights, tend to have lower brand loyalty as the differentiating factors are more limited.
That said, shoppers will readily depart from a brand if an innovative new product breaks into the market or the brand has a limited product catalog.
Both Sports & Fitness brands and Outdoor Recreation brands have a history of cultivating engaged communities. In some aspects, this can be traced back to category shoppers’ interest in competition, self-improvement, and recreation.
Ambitions around sports, fitness, hiking, climbing, etc.arereadily fueled by a sense of community, motivating each other throughcamaraderie and rivalry. Many of these activities also require dedicated practice and skill, which leads to specialized knowledge that is shared through tips and training.
Brands in this space can and should actively contribute to community building to earn brand loyalty and support growth.
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Trust and reliability underpin the Baby category on Amazon. Shoppers buying items for children need to be able to depend on the product’s safety, and that’s non-negotiable. This fact permeates the category, shaping strategy for everything from brand protection to marketing.
Amazon Category Overview: Baby Products
A Secure Category
Amazon is frequently criticized for the prevalence of counterfeit products sold on its platform. Fortunately, the Baby category largely avoids this challenge. Because these products are intended for young children, brands must meet many legal and marketplace requirementsbefore they can sell baby products.
Likewise, this category also doesn’t see many counterfeit products. Because safety is a huge factor in the buying decision for baby products, shoppers are willing to pay more to get a higher quality product. As such, counterfeits struggle to gain a foothold.
The Baby category is dominated by large, established brands that have years of credibility in both physical and digital retailers. These brands often have a controlling presence across most subcategories in Baby, which is somewhat uncommon on Amazon. We can attribute this trait, at least in part, to brand loyalty.
Consumer behavior in this category is driven by trust and protectiveness. Once a shopper finds a brand they like, it makes sense that they would want to go to that brand for other baby products. This has enabled and incent baby brands to broaden their product catalogs.
This landscape may be daunting for new brands trying to break into the market, and rightfully so. One silver lining is that, because there are a few larger players rather than many smaller players, the cost-per-click for Amazon ads tends to be lower than in other categories.
Amazon’s First-Party Presence
Amazon has a strong first-party retailer presence in the Baby category, but this is starting to change. The pandemic placed an unprecedented strain on Amazon’s operations, exposing weaknesses in their logistics model. Many brands ran out of stock as consumer demand rose unexpectedly, manufacturing paused, and supply lines were restricted.We saw this result ina small exodus of baby brands seeking alternatives to their Amazon 1P relationship.
Nevertheless, many major brands in this category still retail through Amazon, including household names like Huggies, Pampers, and Aquaphor.
Rules & Regulations
Appropriately, the Baby category is one of the four most restricted categories on Amazon (followed by Beauty, Health & Personal Care, and Grocery). Before entering the Amazon marketplace, brands should collect their Child Product Certificates and safety testing certificates because Amazon will require copies.
Relevant Regulatory Bodies
The Baby category includes many types of products, including toys, apparel, food, cleaning supplies, car seats, and more. With this broad spectrum, the categoryis overseen primarily by three regulatory agencies:
Consumer Product Safety Commission (CPSC): The CPSC specifically regulates children’s products and consumer electronics safety.
Food & Drug Administration (FDA): The FDAoversees regulations for drugs, biological products, medical devices, cosmetics, and products that emit radiation.
National Highway Traffic Safety Administration (NHTSA): The NHTSA provides regulations for car seats.
Some products will fall into multiple categories and may be overseen by other regulatory agencies as a result. As such, it is imperative that brands identify which standards are mandatory for their product on Amazon.
Most products that are approved for sale in the US are also allowed on Amazon. However, some products are restricted onAmazon due to safety risks, such as:
Amber teething necklaces and other beaded teething necklaces
Homeopathic teething tablets
Certain infant sleep positioners and inclined sleep products, including hammocks
Before selling on Amazon, review Amazon’s list of restricted products to ensure that your product is permitted on the marketplace.
Determining Your Regulations
To determine the regulatory requirements for your product, you should research each federal agency’s purview and determine which your product falls under.
You should also have your product tested in a reputable lab. There are many domestic and foreign laboratories that are accredited with different federal agencies, so brands can shop around for the best prices and services. Accredited labs for baby products include CTT, BV Labs, and Intertek.
If you utilize a testing lab, they will often provide a regulatory analysis that can help determine all the compliance requirements for a certain product or category of products.
Shoppers in the Baby Category
Brands selling in the Baby category on Amazon are really selling to two audiences: an adult and a child. Both of their criteria must be met in order to capture a sale.
Selling to Adults
Adult shoppers in the Baby category, typically parents or family members of the recipient, are motivated by love, protectiveness, and pride; they want items that are safe, enjoyable, and demonstrate their care for the recipient. These desires are reflected in the importance of product quality to parents.
In an Attestsurvey of 1,000 parents called, “Consumer Trends: Children’s Products and How to Advertise to Parents,”highest quality was found to be the single most important factor in parents’ buying decision when shopping for children’s products. The survey also found that the number one reason parents would start buying from a new baby brand is if it offered better quality than their current brand.
Finding the highest quality item requires research, so adult shoppers in this category will likely review multiple listings before making their decision. As such, you should strive to make their research as easy as possible by speaking to the quality of your product in the text, images, and videos in your listings.
Selling to Children
Though it may seemobvious for this category, brands must also remember that they are selling tochildren.A child may have developed their own tastes, with preferences for particular colors, patterns, icons, etc.
If the child is old enough, they may actively help pick out the item with their parent. Even when the child is not actively selecting the item, shoppersbuying baby products often try to consider the child’s early preferences when making their buying decision.
How to account for this will vary by the product type. If selling a toy or game, include images (and ideally a video) showing children playing with it, which will help children and parents determine if it’s age appropriate. If selling clothing or bedding, include close upphotos of the pattern for the child to engage with.
Lasting Brand Loyalty
Shoppers seek out not just products they can trust, but also brands they can trust. Once they have found a brand that they like and trust, it makes sense to return to it for future purchases (assuming that the brand offers the product they need).
As such, baby brands must deal with two factors: They need to win the shopper first, and they need an expansive enough product catalog that the shopper can return to them for future needs. If the brand has a narrower catalog, shoppers are forced to return to the research phase. If they find a new brand that they can trust and it offers a larger catalog, the first brand just lost a repeat customer.
Learn More in Our Free eBook
This post is only scratching the surface. We wrote a complete eBook covering more requirements and a dozen marketing strategies specifically for the Baby category on Amazon.
The Pet Supplies category on Amazon saw tremendous growth in 2020. Weserve hundreds of pet brands, providing us a healthy data sample through which to assess category trends. The numbers we’re seeing: pet sales grow over 65% year over year!
With growth like that, it’s an exciting time to be selling pet products on Amazon. If you’re interested in joining the rat race (see what we did there?), keep on reading! We’ve put together a comprehensive overview of how the Pet Supplies category on Amazon is looking for 2021.
Pet Supplies Category: Defining Features
The Pet Supplies categorycan be understood as a few general subcategories: Toys, Wearables, Edibles, and Topicals. Each can be further broken down. For example, the Toys subcategory can be broken down into throwables, plushies, durables, and bones. Each of these subcategories has their own brand leaders, each of whom rank high organically with branded and non-branded keywords. When entering the Pet Supplies category on Amazon, it’s important to identify which subcategory or niche your products will fall into so you can research the most relevant competitors.
The Pet Supplies category is highly saturated. This saturation means that your marketing needs to be on its A-game if you want to gain a foothold. Success in the Pet Supplies category requires a sizable marketing budget, high–quality assets, and superb customer support.
Struggles with Counterfeits
The category also struggles disproportionately with counterfeit product. The low production and freight costs often associated with this category make it a prime hunting ground for counterfeiters. To defend against counterfeits, brands need to maintain high–quality listings, file for trademarks, utilize Amazon Brand Registry, and work closely with authorized sellers to offer exclusive perks that unauthorized sellers cannot match. By doing so, brands coach shoppers to buy from authorized sellers, helping them maintain channel control.
Issues with Price Parity
Another common issue when selling in the Pet Supplies category is rolled Buy Boxes. Amazon enforces price parity, which means that products sold on Amazon must be offered the lowest price available across all of ecommerce. If a product is offered for a lower price off Amazon, Amazon will take one of two actions:
If Amazon Retail is a seller in the listing, they will drop the product price to match. This can trigger a pricing race to zero.
If Amazon Retail is not a seller in the listing, they will roll the Buy Box, which means that the seller, fulfillment method, price, and Add to Cart button will be replaced by a button that says “See All Buying Options.”A rolled Buy Box prevents ads from running andlowers conversion rate, as the deviation from the normal listing page view can create confusion or hesitation in shoppers.A rolled Buy Box will result in a drastic decrease in sales, so it’s paramount to take the steps to avoid this.
Many pet products are also sold on Chewy.com, which has earned some notoriety among Amazon sellers for slashing prices and triggering rolled Buy Boxes on Amazon. If brands intend to sell product on both Chewy and Amazon, it’s important that they understand how the two channels will impact each other. Brands will need to communicate with Chewy and their Amazon sellers about how they wish to coordinate their overall ecommerce strategy.
COVID-19 Impact on the Pet Supplies Category
We’ve seen pet brands grow Amazon sales 65% YOY, which is fueled in part by pet parents spending more time at home with their furry friends.
As an example, our data on one pet life jacket product shows that sales have increased from 400 units last year to 9,000 units this year, a 2,000% increase YOY. Pet owners are keeping their pets safe as the pandemic prompts more getaway trips to the great outdoors.
Regulations in the Pet Supplies Category
Pet product regulations usually fall under one of two agencies: The Environmental Protection Agency (EPA) or the Food and Drug Administration(FDA). It’s important that sellers and brands know how their products are regulated, as Amazon closely follows federal regulations.
Generally, products that are ingested by animals and claim to treat, cure, or mitigate any diseases are regulated by the FDA. In this case, there are very specific regulatory paths and compliance requirements that must be met to sell on Amazon.
On the other hand, topicals, such as treatments for ticks or fleas, are pesticides and therefore regulated by the EPA. Specifically, any product that claims to repel pests (microbes included) must be registered with the EPA. Amazon will verify this, so brands should acquire their EPA registrations prior to creating listings on Amazon. If they don’t, their listings will likely be flagged by Amazon until Amazon receives the EPA registration information, resulting in unnecessary delays, suppressed listings, and possible account deactivation.
“Grooming Aids” are a bit of an exception in the Pet Supplies category. Pet soaps, shampoos, lotions, etc. are not regulated by the FDA or EPA, but sellers must be careful with marketing these products. Any pesticide or disease claim could risk getting the listing restricted, which would require going through a lengthy appeals process to address.
The Best Doggone Guide to Pet Supplies on Amazon
Like what you’re learning? This is only scratching the surface. Our Amazon marketing experts put together a comprehensive guide for selling pet products on Amazon. In addition to a category overview, it shares 10 actionable marketing strategies tailored specifically for the Pet Supplies category.
As a First-to-Market (FTM) brand, you carry the exciting burden of readying your products for a successful expansion onto the marketplace. Being the captain of your fate can be equal parts exciting and overwhelming, especially when breaking ground in a foreign market.
If we’ve learned anything from 2020, it’s that anything can happen. It’s important to understand that there’s no ‘silver bullet’ for launching a new product or brand, but there are proven tactics recounted here to help you successfully navigate the ecommerce seas.
Amazon is turning into a marketplace that is well positioned for brands, as having made strides to keep brands safe on the channel through programs like Brand Registry. Amazon seems to understand and hold stock in the fact that brands invest in research and development, advertise through other media outlets, engage with customers, and create a shopping experience that excites folks so they come back for more.
The Two Types of FTM Products
An FTM launch will look different for each brand, but we can divide the launch types into two very broad buckets: emerging products and established products.
Often, an Amazon launch consists of a manufacturer creating a product or products with specific intent to sell them on the Amazon channel only. We would call this an emerging product.
Established products, on the other hand, are products that have been selling for years in small brick and mortar stores, large box stores, Etsy, direct websites, and even farmer’s markets, and the brand now wants to transition their catalog to online marketplaces.
Brand genesis is an important factor that will play into a brand’s overall FTM strategy, so it’s an important distinction.
For those brands who do have some form of exposure already, be it online or in a physical store, step one will be determining which products from your catalog will be added to Amazon.
With the pandemic forcing many brands to look to online platforms to maintain profitability, there’s been a rapid and unique shift in the ecommerce landscape, so again, remember that the FTM strategy will look different for all brands.
For manufacturers that are looking to create a product line exclusively for Amazon or ecommerce marketplaces, there are fewer ‘keeping everyone happy’ hoops and more ‘what products can I rely on to sell’ hoops, which is just as tricky of a situation.
With roughly 12 million items on Amazon.com, you need to know who and what is out there before you drop your anchor. There is a range of free and paid options to help research product opportunities, which are highly recommended for existing brands and new products alike.
Company owners often turn to index & rank checkers and search volume tools to ascertain what products currently sell well on the channel, then further research whether the items are viable for production, and then finally, launch.
Getting That Paper. (Not the Green Kind. Yet).
We’ll be the first to admit that this isn’t the sexiest section of this guide, but it could be the most important. Having your general business in order is key to avoiding frustrating lag times during set up.
The enclosed checklist is a fantastic aid for maneuvering through this section, since the majority of the tasks discussed below will require you to work with government agencies and third parties to compile the necessary paperwork. We’ve included helpful links that will take you exactly where you need to go.
Secure your trademark with USPTO. In totality, this process can take 6 months, so the earlier you begin, the better. You will need to have a trademark in order to file for the Brand Registry program on Amazon.
Secure UPC codes (synonymous with barcodes and international EAN) for every unique product in your catalog. This includes product variations, like size or color.
Certain products require testing and material information in order to be approved for resale on Amazon.
Set up processes for tracking, storing, and filing sales and use tax. Once you are a registered business within that state, you will need to file a report annually with the Secretary of State and track the expiration date of your license so you can renew, as needed.
Pull together allcontact information, identification, and accounting paperwork necessary for opening an Amazon Seller Central account.
Determine your fulfillment strategy, as the route you take will determine whether you get the highly sought-after Prime delivery badge.
Next up, it’s time to plan how you’re going to get inventory from point A to point B in the most effective and secure way possible. This became quite a bit trickier in 2020, which strained supply chains at every juncture. As such, approaching these steps with care is even more important.
Plan Early with Your Manufacturer
Start planning with your manufacturer early to confirm availability of raw materials and start calculating cost of goods. Confirm lead-times with your manufacturer to assess timing for your initial shipments into Amazon, as well as align your future inventory planning ability for stock replenishment and gauging timing for any new product development.
Apply Amazon-Compliant Packaging during Production
For sake of efficiency, having your product packaging modified for Amazon compliance during production is highly recommended. Be sure to include expiration dates, shelf-life, age restrictions and UPC/barcode on the product packaging for Amazon.
If you plan to launch on Amazon Global marketplaces in the future, include multi-language packaging and product directions
If you sell temperature sensitive products, note that Amazon removes any meltable product from warehouses April-October
The actual product packaging (the box the product comes in), it doesn’t have to be pretty! Feel free to shave off some costs and use a plain brown box that has a scannable barcode on the outside. Or, if you choose to polybag the product, then you’ll need to make sure your warehouse can apply all product prep to be acceptable at FBA.
Secure Your Distribution Contracts
For brands that are established in the market already but looking to expandinto the Amazonmarketplace, you should notify your distributors and develop parameters to ensure other resellers do not become instant competition. Having iron clad online distribution policies and strict MSRP will be extraordinarily useful as your brand gains momentum on the channel and outside parties become interested in claiming a piece of the pie.
There are legal resources and consulting partners that specialize in strategy development to keep online channels clean, such asAmazon Sellers Lawyer, that can help you understand your legal options and reduce the chances of channel conflict or price degradation post-launch.
Create a Warehousing Plan
Begin building relationships with a warehouse solutions partner quickly. Many brands will use an independent warehouse solution to hold stock that has been manufactured domestically or imported to reduce monthly storage fees to Amazon. Most often, independent warehouse partners will have a competitive fee structure compared to Amazon FBA.
Product that sits at FBA longer than 12 months will be subject to increased fees under their Long-Term Storage policy. Other brands may lean on established supply chain partners like Deliverrto facilitate storage and shipping which guarantee Amazon compliance.
Send a Small Initial Shipment
Your initial shipment into Amazon should be small to help troubleshoot any unforeseen issues and reduce fees as you ramp up sales velocity. Roughly 20-50 units should suffice, with a secondary shipment sent 1-2 weeks after. Once product has been selling on Amazon for 30days, subsequent shipments should include roughly 4-6 weeks of coverage, increasing upwards of 8-12 weeks during relevant seasonality.
Time Your Launch Strategically
Having time is a luxury. But timing is a necessity. Do not rush a launch for sake of excitement. Examine your product and pick your launch timing with intent. Will your catalog align with the back to school season, Valentine’s Day, Father’s Day, etc.? Kick off the main event when the opportunity is greatest.
Amazon’s logistics network received quite a bit of attention in 2020. Quarantines led to surges in online buying, and Amazon’s fulfillment centers struggled to keep up (although Amazon grew 40% year-over-year in Q2). To cope, Amazontemporarily restricted which product categories it would accept into fulfillment centers, increased the minimum performance requirements for utilizing their systems, andlimited the maximum number of products that could be stored in their warehouses.
But even before COVID-19, Amazon logistics were a hot topic. In the great game of supply and demand, the question has always been how to provide enough inventory withoutoverstocking. Here at Kaspien, we live by the idiom “always buy enough, but never too much.” That, however, is much easier said than done.
Running out of stock can result in cascading repercussions that damage the velocity of a listing, so it’s imperative that we consistently strike a balance between having enough but not too much inventory. – Joy Kuykendall, Account Manager
There are many factors to consider when deciding how much inventory to ship and store at Amazon, several of which we’ll cover here. Your first step: determine your goals before assigning a strategy.
What are My Company Goals?
Is your strategy geared towards cash flow management? If so, you’ll more than likely consider a more conservative approach, what we call a “lean model” here at Kaspien. If your goals are focused more on revenue this year, you’d probably consider a more aggressive approach, pushing higher quantities to market and supporting sell-through with pricing and marketing strategies.
Inventory Management Strategies
Once you have goals in place, you can determine if you want a lean model or an aggressive model. Obviously, both come with their own set of considerations and risks. But what exactly are the consequences for stocking too much or too little inventory at Amazon?
Overstocking Results in Fees
Most Amazon sellers are aware that Amazon charges monthly storage fees per item (by cubic foot). If, for one reason or another, you wind up with too much inventory at Amazon, you’ll be subject to what are referred to as “Long-Term Storage Fees” in addition to monthly storage fees. Per Amazon, “Inventory that has been in a fulfillment center for more than 365 days will be charged a monthly long-term storage fee (LTSF) of $6.90 per cubic foot or $0.15 per unit, whichever is greater.” These fees compound the longer the inventory sits in the warehouse without selling, eroding your bottom line.
At Kaspien, we have a devoted team to monitor our inventory levels and ensure listing price supports a healthy sell-through rate.
“It’s important for sellers to find the optimal level of inventory. Overstocking inventory increases storage costs and can negatively impact a seller’s IPI [Inventory Performance Index] score.”said Autumn Roybal, Pricing and Inventory Manager.
The best way to avoid these fees would be to not overstock at the warehouse or to conduct a removal, which has its own set of associated fees.
Understocking Costs Sales & Impacts Marketing
Sellers also face repercussions when they run out of stock at Amazon. If you run out of stock, then competing sellers or competing brands will win the sale. But running out of stock has more than just an immediate impact. Once out of stock, your listing won’t hold its rank, and product rank ties directly to product searchability and discoverability. As a result, marketing and sales performance suffer even after you replenish inventory.
As Joy Kuykendall, Partner Optimization Account Manager, puts it,“We must closely monitor inventory cycles of each listing to ensure there is enough inventory to prevent stocking out, especially in listings for which we are the only Prime seller. Running out of stock can result in cascading repercussions that damage the velocity of a listing, so it’s imperative that we consistently strike a balance between having enough but not too much inventory.”
How Much Inventory Should I Buy?
As with most things, a balanced approach is generally the safest and most impactful route to managing inventory levels. One of the most valuable tools for determining your ideal inventory level is historical sales data, ideally for 30-60 days. You can also reference year-over-year trending, if you have the data available, to further help forecasts.
Using historical sales data, you can predict how the product will sell over multiple months, though it’s not quite linear. You must also account for seasonal trends and channel details, such as seller saturation, rank, and reviews. Third–party sales estimators can give you a good idea where to start if you don’t have access to historical sales data, such as when you’re launching a new product or product line.
Also, keep in mind product–specific nuances. Is the product at a high price point? Does Amazon consider it oversized? Is it meltable? Hazmat? Not only will these items have different sales velocity, they will also have different implications when it comes to fees associated with long–term storage at Amazon.
In addition to storage fees, you should also keep in mind other costs your inventory will accrue so you can factor it into your margin calculations. Amazon inventory carrying costs refers to the total expenses associated to managing, shipping, and storing inventory at Amazon. This includes the aforementioned storage fees, as well as general operational costs to your business in discovery and planning, manufacturing or acquiring, shipping and handling, and any insurance or taxes for the item.Lastly, FBAfees should be considered part of the Amazon inventory carrying cost:“The Fulfillment by Amazon (FBA) fee is a per-unit fee, based on the dimensions and weight of the item.”
How can I Prepare for Supply Chain Disruptions?
As we all learned in 2020, supply chain disruptions can be a very real threat to a seller’s ability to “always buy enough, but never too much.” Some of these disruptions can be accounted for, such as major holidays in the countries where you produce products (Chinese New Year is a great example). In these cases, you can plan ahead and prepare for these events. You can also extend forecasts and stock up more than normal to account for the months where the lead times won’t support timely inventory fulfillment.
For unexpected disruptions like we all experienced with COVID-19, it may behoove you to develop a “backup plan,” such as a dropship listing you can turn on in a pinch in the event that your FBA inventory runs out. Seller Fulfilled Prime (SFP) and Fulfilled by Merchant (FBM) are other worthwhile options to protect against out of stocksif you have the means to support them.
How Should I Plan for Peak Seasons?
Sellers generally see improved sales across the board during peak seasons. You can determine peak seasons for your specific product or brand based on historical sales, but generally, trends on the marketplace are common sense. Sunscreen sells well in the summer months;Toys sell well around the Christmas holidays.
Make sure you prepare early to ensure you have enough inventory allocated for the higher velocity season.You could consider negotiating discounts or improved payment terms to offset the larger cash investment for allocation. Obviously, be mindful of your normal best practices for ordering, and always expect Amazon to impart some sort of kink in the chain (see Amazon Inventory Restrictions at the top of thispost).
Peak seasons also tend to have longer lead times due to port delays and increased freight velocity/surcharges, so be sure to account for those during your planning.
There’s plenty to consider when determining how much inventory to ship into and store at Amazon, and when you’re first developing your strategy, it can take some trial and error. Remember that not all SKUs are created equal and tailoring your most effective strategy can take some time. Using the above tips and tricks will help you on your way!
Learn More about Inventory & Supply Chain Management
The Electronics category is one of the largest, most competitive, and most mature categories on Amazon. Amazon itself has a dominant presence, both as a first-party retailer (1P) and in a private labelcapacity, with Amazon Echo, Alexa, Kindle, and Fire TVs being just a few of their offerings in Electronics.
But,Amazon isn’t the only established player in this space. Major brands like Apple, Sony, and manyothershave large catalogs on Amazon.The Electronics category also sees a surplus of copycat and knockoff products, as there are plenty of factories that will happily produce the same product for two brands and apply a different sticker to each.
Even with these challenges, there have been tremendous success stories. Brands like Anker and 1More both established much of their initial business on Amazon and have grown into major players on and off the channel. But selling in this category is difficult; brands need to be ready to hit the ground running. It’s a marathon sprint, and the race has already started.
Amazon 1P Dominates Electronics Sales
Amazon has a strong first-party (1P) presence in the Electronics category, accounting for 43% of the total sales in Consumer Electronics, according to Amazon’s responses to the US House Committee on the Judiciary’s Questions for the Record.
Amazon’s dominance in this category is partly owed to Electronics brands themselves, many of whom choose to partner with Amazon 1P as their wholesale online retailer. We can see this played out on Prime Day in 2020. A Rolling Stones poll found that on Prime Day, the top selling products were:
Apple AirPods with Charging Case (sold by Amazon)
Bose Solo 5 TV Soundbar (sold by Amazon)
YI 1080p HD Wireless Home Security Camera
VANKYO LEISURE 3 Mini Projector
Echo Show 5 (sold by Amazon)
Amazon Smart Plug (sold by Amazon)
Back Bay Wireless Bluetooth Shower Speaker
23andMe Health + Ancestry Service
Pure Clean Automatic Vacuum Cleaner (sold by Amazon)
YOSUDA Indoor Cycling Bike
During Prime Day 2020, Amazon 1P accounted for half of the top ten selling products. Eight of the top ten selling products were from the Electronics category, including the top seven products. Digital Commerce 360 estimates that Amazon saw over $10.4 billion in sales on Prime Day 2020, and that Amazon claimed 65% of those sales.
Amazon’s Prime Day sales demonstrate Amazon’s control in the Electronics category, as well as the enormous interest in purchasing Electronics on Amazon. Shoppers have learned they can find nearly all their Electronic wants and needs on Amazon, making it a key market for Electronics brands and sellers.
The Electronics Category is Saturated
Of course, when there’s so much value up for grabs, everyone wants a piece. The Electronics category is not just saturated; it’samong the most saturated categories on Amazon. It is one of the most-purchased-from categories, one of the most competitive with ads and pricing, and rife with knockoffsand counterfeitproducts. There are literally tens of thousands of purchasing options for headphones alone, making it into its own sub-category.
Brands entering the Electronics category have a difficult road ahead. For new brands, rising about the clamoring crowd of lookalike products is incredibly challenging in most established sub-categories, such as headphones, speakers, and mics. However, there are strong opportunities in emerging technologies, such as “smart home” products.
The saturation of the Electronics category is, of course, a long time in the making. Electronics sellers have been on Amazon for many years, maturing into one of the most experienced categories on Amazon. Which brings us to our next point…
One of the Most Mature Categories
The Electronics category is one of the most mature categories on Amazon. What exactly does that mean?
By maturity, we mean that the sellers operating in this category tend to have an above-average understanding of what goes into selling on Amazon. They understand the competitive landscape, Amazon’s dialectic role friend and rival, the necessity and value of marketing, how to marry their brick and mortar and ecommerce strategies, etc. When the category is so saturated, sellers have had to learn to adapt or fail.
This maturation is leading the category into the next phase of its lifecycle, where major players are reclaiming the landscape. As mentioned, Amazon dominates much of the category by retailing products from leading brands and creating its own low-cost private label products.In 2020, Amazon’s retail sales account for 97% of their sales in the Electronics category, while private label accounts for just 3%.
Despite its small share, you shouldn’t write off Amazon’s private label. AmazonBasics is a growing threat in the landscape, as AmazonBasics often develops their own versions of successful items on the market at a much cheaper price.
This practice landed Amazon in hot water in 2020, when the Subcommittee on Antitrust, Commercial, and Administrative Law of the Committee of the Judiciary published a report that claims Amazon uses private third-party information to inform its private label decisions.
However, Amazon isn’t the only one taking a larger market share. Major brands like Bose, TLC, and Sony are taking more ownership of their Amazon channels as they realize the opportunities of this marketplace. If the trend continues, the Electronics category may shift to consist of several dominant brands in established sub-categories, while they and new brands continue to fight for market share in emerging sub-categories.
There are many challenges in the Electronics category: seller saturation, competitive ads and pricing, direct competition with Amazon 1P, knockoffs, counterfeits, quality control, safety testing and certifications, and more. It’s a lot for any brand to handle on their own.
In today’s global and fast-paced world, information flows at the speed of light. It’s also widely available, so new competitors appear very quickly. To survive in this landscape, companies must be able to react to new information quickly and strategically. In short, they need to be “agile.”
Agility is a social process. It comes from how individual employees and teams operate on a day-to-day basis. However, fast responses put a company at risk of internal teams becoming siloed and falling out of alignment. When teams fall out of alignment, the company loses its agility.
In the tech industry, one of the most critical yet common disconnects in alignment is between developers and external-facing teams. In this article, I’d like to share five steps that company leaders can take to keep their teams aligned and company agile.
1. Regularly Remind Employees About Your Value Chain
Creating and maintaining clarity on the value chain is the first step toward alignment. The value chain is how a company delivers products and services to customers. Each employee should understand, at a basic level, the components, how the company delivers value and their role in that.
For example, a software company may break the value chain into four main components: build, sell, onboard and operate. Of course, this is a simplified view, but what matters is that each employee understands the overarching premise of the company’s value chain because they can then think about how others affect their work and how their work affects others.
2. Structure Your Company To Support Alignment
The next key to alignment is organizational structure. The divisions, departments and teams within a company should be arranged vertically and horizontally in a way that promotes strong communication between employees who should be influencing each other.
This may not map one-to-one to the value chain — and in many cases, it shouldn’t. Take our previous example of four components. If one division is mapped directly to one component in the value chain, it becomes siloed, and that can impede alignment and agility.
Instead, I recommend companies map out their organization in a matrix, placing the teams in charge of creating products or services on the y-axis and the teams in charge of delivering value to customers on the x-axis. Place teams with intention so that each intersection identifies two units that should be regularly communicating. This structure can enable economies of scale and scope.
3. Promote Consistent And Predictable Company-Wide Operations
Creating a matrix also helps visualize and facilitate the third step: predictable company-wide operations that balance between strategy and operations horizontally and constant communication vertically. Divisions, departments and teams should work collaboratively and in unison. Employees, managers, directors and executives should communicate frequently both up and down the chain. That could mean anything from daily standups to monthly business reviews to biannual planning sessions. Keeping teams aligned and productive is a balancing act between too few and too many meetings, so workshop it until you find what works for each team.
By keeping operations predictable and consistent, the company can maintain alignment and confidently plan its future strategy, progressing toward even greater achievements.
4. Everyone Operates In Teams
So far, I’ve discussed from a top-down perspective how to assemble a value chain, organization structure and operating procedures with the aim of aligning back to a company’s mission and objectives. While a top-down perspective is useful for discussion, at the end of the day, it’s the employees who execute and make the vision into reality. How does one ensure that every person in the organization stays aligned as they perform their day-to-day job, make decisions and so on?
That’s where the team framework comes in. Teams are the foundational unit of how companies operate, not individuals. Everyone operates as part of one or multiple teams, no matter their seniority or role. They may work largely independently, but their work still contributes to a larger vision and is therefore part of the team. Effective teams communicate openly and regularly about objectives, plans to reach them, obstacles and timelines.
For example, you may have a team focused on delivering a software product. Members of that team would include representatives from the development, product, marketing and sales teams all coming together with the common goal of producing, optimizing and selling the product. Where there was once misalignment between siloed teams, there is now a unified team aligned in its understanding of what’s needed to drive success.
5. Teams Have Communication Networks
As I touched on in my last Forbes article, working well together within a team is not enough. Leaders should guide their companies a step further and ensure that teams are also working in unison with other teams.
Teams have stakeholders that care very deeply about the outcome of the team (because their goals could be dependent on the team’s results), even if the stakeholders aren’t part of the daily execution. It’s critical that teams maintain a constant two-way flow of information with their stakeholders so they avoid siloes or bottlenecks.
It sounds great in theory, but the reality is never so simple. To accelerate the adoption of this framework, each team should:
Identify stakeholders. Which other teams depend on them? Which other teams do they rely on?
Identify the best way to communicate consistently and predictably with those teams.
In short, go deep with your team and wide with other teams.
Live It Every Day
Creating an aligned organization is a daily effort. When you work on a project, ask yourself: Are you part of a team? Are you following the team framework? Who are your stakeholders? Are you communicating with them and how? Adopting these five frameworks can be key to creating and maintaining alignment throughout your company. Their success starts with you.
One of the most important topics in ecommerce is channel control. In ecommerce, channel control means a brand has complete control of their representation across all marketplaces (Amazon, Walmart, eBay, Target, Google Shopping, their website etc.). This includes consistent appearance and voice, consistent pricing, and a consistent product experience for all consumers.
Brands have struggled with channel control for years, and 2020 has made accomplishing that mission even more difficult. As the number of online sellers increases at an overwhelming rate, so too does the number of rogue sellers and Minimum Advertising Price (MAP) violators.
Why is Channel Control Important?
Channel control is essential for protecting a brand’s bottom line, and perhaps even more importantly, their reputation. Everyday, we hear from brands that arestruggling to enforce their reseller policies and are seeking assistance. They frequently findrogue sellers in their listing violating MAP and it can be extremely difficult to identify the source of the rogue seller’s product.
Such situations are frustrating and time-consuming, but they must be addressed because channel control is fundamental for a brand’s success.
It Affects Shopper Confidence
When brands lack channel control, it results in inconsistent branding, inconsistent pricing, inconsistent customer service, etc., all of which can put shoppers on guard. Is the product a fake? Is the atypically low price a deal or a scam? Are they receiving reliable answers to questions about product use, appearance, and safety?
To maintain channel control, brands must have an enforceableselling strategy. Many brands have MAP policies,and somehave Authorized Reseller Agreements or Exclusive Agreements. However, even among these brands, many still lack a plan for how to enforce their policies, and a policy that can’t be enforced isn’t worth anything.
How to Remove Rogue Sellers and Counterfeits
So, how can you enact and enforcea strategy to safeguard your brand’s channel control? Monitoring and managing thousands of sellers is certainly no small effort. At Kaspien, we recommend utilizing software and/orpartnerships to make this enormous task more manageable.
Price & Seller Tracking Software – Perispect
If your strategy requires enforcing a MAP policy tracked across multiple listings and sellers, Perispectwill save you valuable time.
Perispectis Kaspien’s proprietary brand protection software. It empowers brands to track sellers and their pricing across 6 marketplaces and 9 countries, all in one platform. Why is that helpful?
Marketplaces Do Not Enforce MAP or MSRP
Well, twenty-five years in,it’s no secret that Amazon takes a hands–off approach toenforcing MAP or MSRP. Amazon’s mission to have the lowest pricesavailable with the quickest delivery. When sellers price down, even if it’s just a few cents, they make the marketplace more attractive to shoppers. Other marketplaces, such as Walmart, eBay, Wish, etc. are following Amazon’s lead as well. As a result, brands cannot rely on the marketplace to help them enforce their pricing policy; they must do that themselves.
Perispect Empowers Sellers with Actionable Insights
That’s where Perispect comes in. Perispectscans each marketplace, identifies the sellers in your listings as well as their listed price, and stores this information in a centralized, easy-to-read dashboard! If a rogue seller appears or a seller drops below MAP, Perispect immediately notifies you.
As a result, you don’t have to manually monitor your brand’s listings and sellers. Even if a seller changes their name, Perispect’s seller tracking capabilities will record the name change and associate it with the previous record, so you can track a seller’s actions regardless of whether they rename themselves.
The software also provides brands with the seller’s contact information, including email, phone number, address, Merchant ID, and their seller rating, along with their total number of ratings. This enables brands to quickly assess the seller and send violation notices. These notices are then tracked in a case management dashboard, making it easy to follow up.
Gain Evidence to Enable Enforcement
In Perispect, brands can easily see their channel from a brand level or by seller. At a brand level, brands will see all their listings, MAP price, number of offerings, and the lowest price. A dropdown on each listing shows the sellers, their pricing, and a screenshot of their pricing to use as evidence in the event of a pricing violation. The screenshots are stored for 2 weeks.
How Much Does Perispect Cost?
Perispect starts at $99/month.
Unauthorized Seller Removal with VantageBP
While Amazon plays a hands-off role with MAP policies, Amazon does take product infringement very seriously. As your channel grows, so too does the likelihood of counterfeit products and rogue sellers enteringyour listings. VantageBP can help brand’s remove these sellers.
VantageBP Removes Counterfeits and Unauthorized Sellers
VantageBPis a proven ecommerce monitoring and enforcement agency that specializes in identifying rogue sellers and eliminating counterfeit products from the marketplaces. VantageBP’s rapid scanning technology quickly identifies unauthorized resellers and new products listings.
When VantageBPdiscovers a violation, they send an automated seller notification requesting the seller’s information and where they obtained your products. If no response is received after 48hours, they send a second notice. If the seller provides an invoice, receipt, or supplier information, they will be marked as “verified” in VantageBP’s system. If they do not respond with adequate information, the seller is flagged as “unauthorized.”VantageBP then generates and files an enforcement action request with the given marketplace to expedite removal.
What Happens if Sellers Cannot be Removed?
If the seller provides asupplier invoice or supplier information, VantageBP cannot remove the seller from the listing, as they are following Amazon’s reseller policies. However, VantageBP will still pass along any information they gathered to you so you can inform the supplier of your reseller policies.
Track Progress in Real-Time
VantageBP shares a real-time dashboard with their clients showing their finding. Brands can review information by listing or by seller. By receiving the information updates in real-time, brands can have immediate conversations with suppliers, instead of waiting for weekly or monthly updates. The information gathered from the sellers is saved within the dashboard, giving you access to the evidence you need for relaying requests to suppliers.
Why Doesn’t Kaspien Remove Rogue Sellers?
Kaspien partners with brands in one of three ways – as their wholesale retailer, as their ecommerce agency, or as their software provider. Because Kaspien is a third-party seller, there’s a conflict of interest if we try to remove other third-party sellers. However, many of our partners request assistance in removing unauthorized sellers from their listings. That’s why we partner with VantageBP to provide this important service.
How Much does VantageBP Cost?
Kaspien’s partners receive a referral discount when working with VantageBP. VantageBP customizes their monthly fee based on your brand’s needs, and there are no contracts locking you in. After working with VantageBP for just 4 months, one of our partners saw a 62% increase in listing control!
Other Ways to Protect Your Brand on Amazon
While achieving and maintaining channel control may be difficult, it’s well worth the effort. In addition to Perispect and VantageBP, here are some free resources on other ways brands can safeguard their online brand integrity.
Amazon has long dominated online marketplaces in the US. However, in 2020, Walmart launched a series of initiatives that would borrow from Amazon’s learnings to bring Walmart into a competitive position, such as Walmart Fulfillment Services and a subscription service, Walmart+ (Walmart Plus).
The success of these initiatives immediately underwent a trial by fire as the coronavirus pandemic swept the US. Amidst quarantines and dramatic swings in consumer buying behaviors, Walmart’s online segment has conducted itself admirably.
So, in this post, we’re taking a closer look at how Walmart Marketplace compares to the great leviathan of US ecommerce.
Walmart vs Amazon – History
Amazon was founded as an online book selleron July 5, 1994. The company went public just under three years later in 1997, then expanded into music and DVDs in 1998.
Amazon as we know it today, with millions of third-party sellers selling alongside Amazon on its platform, began in 1999, when Amazon launched its third-party seller marketplace.Amazon Web Services, or AWS, joined the fray in 2003.
2005 brought the introduction of Amazon Prime. From there on out, Amazon continued to grow into the behemoth we know today. The last 15 years have been filled with acquisitions and ventures into all types of industries, including mobile phones, robotics systems,the Washington Post, Twitch video game streaming service, Whole Foods, the creation of Echo and Alexa, prescription medication, and more.
This article contains a thorough summary of Amazon’s major milestones over the years.
Walmart is far older than Amazon, founded in 1962. The company went public in 1970.
The next 30 years saw rapid growth in physical store locations, but it wasn’t until 2000, just five years after Amazon launched, that Walmart launched online stores. Likewise, it wasn’t until 2009 that Walmart launched a third-party seller marketplace, 10 years after Amazon.
However, Walmart beat Amazon to the online grocery game, starting online grocery pickup in 2015.
Walmart acquired Jet.com in 2016, a move that would ultimately teach Walmart many lessons about ecommerce, but not drive any immediate, significant growth.
Walmart launched TwoDay Delivery in 2017 to compete with Amazon’s 2-day shipping, then NextDay Delivery in 2019.
Though Walmart had been making progress in developing its online marketplace, it wasn’t until 2020 that their online marketplace really began to capture brands’ attention as a high-opportunity ecommerce marketplace.
In February 2020, Walmart launched Walmart Fulfillment Services. In September 2020, they launched Walmart+, a subscriptions service with exclusive benefits, similar in theory to Amazon Prime, but each offering a different set of perks enabled by their unique positions.
Walmart vs Amazon – Size
Amazon currently controls roughly 38% of the United States ecommerce retail market, according to eMarketer. On the other hand, Walmart only controls approximately 8% of the ecommerce retail market.
It should come as little surprise that Walmart’s physical locations vastly outnumber Amazon’s, given each company’s history. Walmart has 5,353 US stores as of July 2020, while Amazon had 589 physical stores as of August 2020.
How do Walmart shoppers differ from Amazon shoppers?
The answer? Not a whole lot. According to Walmart, Walmart’s and Amazon’s customer demographics are nearly identical when viewed bygenerationsor by income levels.
Walmart’s VP of Walmart Fulfillment Services delved into more Walmart vs Amazon myth busting in our co-hosted webinar. You can watch it for free on-demand.
Walmart Fulfillment Services (WFS) vs Fulfillment by Amazon (FBA)
Speaking of Walmart Fulfillment Services (WFS), let’s take a look at how it compares to Fulfillment by Amazon (FBA).
For the moment, WFS and FBAshare many similarities. Both services allow third-party vendors to ship their product at a fulfillment center, where the product is stored until purchased, then fulfilled. Both will:
Pick, sort, pack, ship, and track products
Handle shipping, returns, and refunds
Provide 2-day shipping
Provide same-day shipping in select areas
One big difference is that Walmart.com allows for item pickup at any of its stores, while Amazon only has a few stores that do online pickup.
WFS vs FBA eBook & Webinar
We offer a comprehensive breakdown of WFS vs FBA in our free eBook. If you’re interested in learning more about WFS, watch our on-demand WFS webinar that we co-hosted with Walmart’s VP of WFS.
Walmartvs Amazon – Marketing Services
In terms of marketing, Amazon and Walmart.com are very similar, but Amazon has many more options to choose from.
Amazon Marketing Services
Amazon marketing products available to sellers include:
This difference in selection is not surprising though. Amazon has been focused on ecommerce for 25 years, while Walmart has only really made ecommerce a heavy focus in the last five years. Over time, Walmart Marketplace will develop new marketing services to match Amazon’s list.
For the time being, online sellers will see far greater returns from marketing dollars invested into Amazon marketing than in Walmart marketing. Amazon’s services offer greater control over audience targeting and more data insights, which, in turn, yield higher profitability.
Walmart Plus vs Amazon Prime
Until recently, Walmart did not have a competitor to Amazon Prime, Amazon’s premium paid subscription service. In July 2020, Walmart announced Walmart+, its own premium paid subscription service. These subscriptions are very similar as both give you access to perks and benefits like two-day shipping and one-day shipping on a host of products.
Walmart Plus Member Benefits
Free 2-day shipping
Early access to deals
Express delivery for groceries and select goods
Fuel discounts at Walmart gas stations
Scan & Go service in Walmart stores
Walmart dropped its minimum $35 purchase requirement for 2-day shipping in December 2020
Planned Walmart Plus credit card
Planned Walmart Plus entertainment package
Amazon Prime Member Benefits
Free 2-day shipping
Early access to deals
Express delivery for groceries and select goods
Free video games
Free access to Amazon library
Ad-free Amazon Music
Amazon Prime costs $119/year, while Walmart Plus costs $98/year. Amazon Prime has 126 million members in the US as of October 2020, so Walmart has a lot of catching up to do.
Walmart vs Amazon – Challenges
Counterfeit Products Plague Amazon
Amazon has the ignominious reputation of being rife with counterfeits and unauthorized sellers. In January 2020, the United States Department of Homeland Security released a report detailing counterfeiting on the Amazon marketplace platform. The company has been slow to face the issues but has been making some strides.
Unlike Amazon, Walmart.com is a gated marketplace, which has helped mitigate the risk of counterfeits and unauthorized sellers.
Walmart Marketplace’s greatest hurdle is that it is starting so far behind Amazon in the ecommerce game. However, Walmart has an extensive infrastructure, capital, and the benefits of learning from Amazon’s successes and failures. As we touched on regarding marketing, Walmart is still well behind Amazon, but they have made admirable progress this year with the launch of Walmart Fulfillment Services and Walmart Plus.
Walmart vs Amazon – Ecommerce Growth
As anyone can see, there are pros and cons for both Amazon and Walmart. Amazon may be the giant in the ecommerce space, but that means they have a large target on their back. Both Amazon and Walmarthave seen tremendous growth in 2020:
Walmart Ecommerce Quarterly Net Sales Growth
Q1 2020: 74% year-over-year
Q2 2020: 97% year-over-year
Q3 2020: 79%year-over-year
Amazon Quarterly Net Sales Growth
Q1 2020: 26% year-over-year
Q2 2020: 40% year-over-year
Q3 2020: 37% year-over-year
Clearly, both companies’ offer huge growth potential. In general, we recommend prioritizing Amazon over Walmart because the sales potential is, currently, so much greater on Amazon. However, Walmart is growing rapidly, and you would be wise to try to get on Walmart sooner rather than laterso you can grow with it.
Want to learn about selling on Walmart.com? Check out our free eBook!
Download the eBook
WFS: Walmart’s Gamble to Challenge Amazon FBA
Selling on Amazon offers many opportunities and is an excellent way to grow your brand. One of the most helpful tools that Amazon offers sellers is Fulfillment by Amazon (FBA), which boasts a sprawling network of Amazon-owned warehouses across the country. Sellers ship inventory to these Amazon fulfillment centers for storage and eventual fulfillment to the end consumer. Amazon’s fulfillment services are a foundational component of Amazon’s success.
However, these fulfillment centers aren’t perfect. They regularly make mistakes that cost sellers money, and sellers must petition Amazon for reimbursement if they don’t want to eat the costs. With many sellers unaware that they need to take action, we often see significant amounts of money left on the table.
Why Does Amazon Owe FBA Sellers Money?
Amazon’s fulfillment centers regularly lose or damage inventory, overcharge fulfillment and storage fees, or under-reimburse sellers. To get fully reimbursed, FBA sellers have to cross reference up to 17 reports to identify and submit cases.
Most Common Types of Mistakes in Fulfillment Centers
There are quite a fewmistakes for which Amazon may owe an FBA seller reimbursement, but two case types in particular account for the vast majority of inventory reconciliation cases:
Inbound shipments with items that have a discrepancy between shipped and received after 15 days.
Inventory lost minus inventory found and reimbursed.
At Kaspien, we see these two case types account for 95% of all FBA seller reimbursement cases. Below are other types of cases that account for the minority of reimbursement cases.
Amazon Inventory Reconciliation Case Types
Carrier Damaged Return
Customer returns that were damaged by Amazon-partnered carrier minus reimbursed.
Orders with SKUs where the charged referral fee (commission) exceeds Amazon’s estimated referral fee for the order date.
Inventory damaged in the warehouse.
Destroyed Without Permission
ASINs with either dimensions or weight that have significantly increased compared to previous values, affecting fulfillment fee and/or monthly storage fee.
A refund was issued to a customer for a return, but the items returned were fewer than the number that was refunded.
Fulfillment Center Damaged Return
Customer returns that were damaged in an Amazon fulfillment center.
Fulfillment Fee Discrepancy
Orders with SKUs where the charged fulfillment fee exceeds Amazon’s estimated fulfillment fee for the order date.
Customer return flagged as ‘reimbursed’ but the seller doesn’t see the reimbursement come through.
Missing Return Unit
Customer return was flagged as ‘Unit returned to inventory’ but the unit was not actually returned to inventory.
Refund issued to customer exceeded the actual order total.
Returned Inventory Discrepancy
Customer returns with units returned to inventory under a different SKU than that which was purchased.
Under Reimbursed Failed Return
A refund was issued to a customer for a return, then the customer failed to return the item, and the reimbursement was issued but the reimbursement amount is less than the refunded amount.
Under Reimbursed Return
A refund was issued to a customer for a return, the customer returned the item, and the reimbursement was issued but the reimbursement amount is less than the refunded amount.
Unfulfillable Damaged Inventory
Damaged inventory that has been damaged for more than 20 days and is therefore unfulfillable.
How to Get an FBA Reimbursement
Manual Amazon FBA Reimbursement
Due to the ambiguity of Amazon case management, managing inventory reconciliation manually is laborious and inefficient. Here’s the general process for manual case management:
Download separate business reports (in some cases, this may add up to 12 separate reports).
Cross-reference reports to identify reconciliations.
File and manage separate Amazon cases for each instance where Amazon owes you money while complying with each case’s unique allowance window.
Manual case management can take up to a month to actualize, which requires careful tracking and frequent follow-up on all submitted cases.
Review your Amazon statements to ensure you were reimbursed for the correct amount, even after the case is closed.
As you can see, the FBA reimbursement process is arduous. In the long-term, few brands can afford to spend the time managing the manual process, but neither can they allow cash to bleed from FBA errors.
Automated Amazon FBA Reimbursement
Luckily, there are plenty of software solutions for this problem, including our own proprietary seller reimbursement software,Channel Auditor.
What is Channel Auditor?
Channel Auditor is a software that helps FBA sellers mitigate fees and recover lost funds. It does so by automatically identifying cases that are eligible for reimbursement and expediting case creation. It’s your Amazon auditor that never sleeps.
Does Channel Auditor Automate Case Creation?
Amazon’s policies expressly forbid automating case creation in Seller Central. Those violating this policy can be fined, suspended, or banned.
Channel Auditor does not automate case creation, but it does the next best thing. It automatically identifies cases that are eligible for reimbursement, then provides the exact text and evidence needed to petition for reimbursements. All you have to do is copy and paste, click submit, and Channel Auditor does the rest.
How Channel Auditor Automates Amazon FBA Reimbursements
Automatic Case Identification
First, sellers connect Channel Auditor to their Seller Central account, allowing it to pull inventory reports for their channel. Channel Auditor immediately and automatically starts cross-referencing multiple reports to identify Amazon reimbursement cases. Using this information, Channel Auditor can forecast how much money a seller can be reimbursed.
Expedited Case Creation
After inventory reconciliation cases are identified, sellers select the cases they want to create from within Channel Auditor. Channel Auditor provides the exact text needed, including links to evidence that supports the claim.
Easy Case Management
From there, Channel Auditor automatically tracks case progress and notifies the seller of their results.
Channel Auditor Case Study
A brand in the Health & Personal Care category started using Channel Auditor in June 2020. In a single month, they were reimbursed over $7,000! In less than five months, they recovered over $13,000 in Amazon seller reimbursements!
See How Much You’re Owed
If you’re curious how much Amazon owes you but aren’t ready to start a subscription, that’s alright. Request a quote from Channel Auditor – for free – and we can tell you exactly how much money Channel Auditor could recover for you if you used it.
One of the most frustrating experiences as a brand owner is seeing copycat competitors undercut your pricing. In retail, competition is healthy because it forces businesses to innovate, resulting in better deals and products for consumers. However, sometimes it’s not a matter of two quality products vying for patronage. In some cases, it’s a high-quality product being undercut by a low-quality product.
There’s not much that brands can do about competitors’ prices, but there’s plenty they can do to convince shoppers that the higher cost of their product is well worth it.
How to Defend Against Competitors Undercutting Pricing
#1 – Highlight What Makes Your Product Better
OnAmazon, customers have many choices when looking at products. A simple and free way to help your products stand outis topromoteyourdifferential features in the copy, images, and A+ Content. Differentiators are features that make your product different from your competition, such as location of production, quality of materials, performance, additional features or capabilities, aesthetics, or warranties. These factors can help convince customers that your product is worth paying a little more.
#2 – Use Amazon Live
Amazon Live is an Amazon service that allows sellers to broadcast livestreams in which they demonstrate product usage, features, and benefits. Featured products appear directly below the live broadcast window. Brands can use Amazon Live to share their story, live events, educational content, and so much more. Customers on Amazon Live can ask questions and receive answers in real time. Amazon Live allows customers and brands to connect on a more intimate level compared to a video or listing and is an excellent (and free) way to increase visibility.
#3 – Engage with Your Audience on Social Media
Social media is one of the most powerful tools that brands can leverage to grow their audience. When we talk about social media, we’re meaning Facebook, Instagram, Twitter, LinkedIn, Snapchat, TikTok, YouTube, and so many more platforms.
Brands can use social media in many ways, but one of the most important uses is actively engaging with your customer base. This means responding to comments in a timely manner, creating social posts that invite your audience to actively participate in a discussion, and responding to all direct messages. Audiences want to feel a connection to a brand, and engagement on social media is one of the top ways to do so.
Most importantly, a strong social media presence builds brand trust. Consumers are more educated than ever, and social media is a big part of that education. They’ll initially turn to your social channels to ensure your brand is legitimate but they’ll stay to engage with your brand on a personal level.
#4 – Respond to Reviews, Comments, and Questionson Listings
When managing many listings,responding to each and every review and comment can seem daunting. However, responding to your customers, regardless of whether their feedback is positive or negative, is critical to differentiate your brand from competitors. Responding to questions, praise, and criticism takes time and energy, and not everyone is willing to do it. By taking time to respond to customers in a timely manner, you demonstrate that your brand cares about your customers, and shoppers will favor you for that.
#5 –Represent Your Brand Consistently Across All Sales Channels
Consistent representation across all sales channels is often overlooked, but it’s incredibly important for maintaining brand integrity and strong customer relations. Inconsistent representation can lead shoppers to question quality and product authenticity.
Brands should seek to maintain a consistent brand name, brand voice, high quality copy and images, and prices across online marketplaces. This ensures you provide a fantastic customer experience with your brand, no matter where shoppers find your products. By doing so, you cultivate a reputation as a reliable brand that cares about your brand, products, and customers.
#6 – Be WhereYour Customers Are
The ecommerce landscape is constantly changing. In order to stay ahead of your competitors, you need to meet shoppers where they’re at. In today’s age, that means listing your products online, such as on Amazon, Walmart, and Google Shopping. As mentioned above, that likely also means curating an active presence on social media. In addition to posting and responding regularly, consider running social media ads and leveraging influencer marketing. You competitors may simply wait for shoppers to find them, so you can get a leg up by getting directly in front of shoppers, no matter where they’re at.