1. Dropship Vendor (DSV): A business model where sellers list their products on Walmart.com, but hold the products in their own warehouse or a third-party logistics provider’s warehouse. Walmart appears as the seller in the listing. When a customer orders a seller’s product from Walmart.com, the seller ships it to the buyer. Walmart requires the merchandise to be shipped with a Walmart packing slip. If the customer chooses the “pick up in store” option, the seller must send the product to that Walmart retail location. As a plus, Walmart will cover the shipping cost.  
Learn More >

2. Everyday Low Price (EDLP): A pricing strategy by Walmart that promises customers that Walmart will have consistently lower prices than their competitors. Customers can access these prices without coupons, promotions, or special discounts. Everyday Low Price (EDLP) is one of Walmart’s key customer retention strategies. For sellers, this methodology ties into Walmart’s pricing parity requirement, which says that sellers must ensure that their price is the lowest price on the market or else they risk Buy Box suppression.  
Learn More > 

3. Free & Easy Returns: Walmart allows customers to exchange or return an item within 90 days after purchase. Customers can return their items in-store, by mail, or by pickup at their home. All the customer needs is a receipt. There are some, but not many, expectations to this rule. 
Learn More > 

4. NextDayDelivery: If a customer purchases a product with the NextDay delivery designation, the seller must deliver it by the end of the following day. For the customer, orders over $35 are free. Most products sold on Walmart.com are eligible for the program, but products sold by Walmart Sellers are not.  
Learn More > 

 

5. Order Defect Rate (ODR): The number of orders with a minimum one defect divided by the total number of orders (both within the same period). Defects include cancellations, returns, delivery defects, and customer complaints. Sellers must maintain an ODR of 2% or lower to meet Walmart’s performance standards. 
Learn More > 

6. Pricing Parity/Reasonable Price Not Satisfied: To ensure a great customer experience, Walmart set automated rules that eliminate non-competitive priced items from the Walmart.com marketplace. Walmart enforces this by identifying identical products on other platforms, such as Amazon, and seeing if they are listed at a lower price than listed on Walmart. The Price Parity rules unpublishes products when the offer price is higher than a competing website. The Price Parity rules are slightly different from the Reasonable Price Not Satisfied rule, which unpublishes products if the offer price is drastically higher than competing websites.   

Amazon enforces a similar price parity policy, which is one reason it’s so important to maintain consistent strategy, marketing, promotions, and pricing across all online sales channels. 

7. Referral Fees: Walmart charges a category-based referral fee ranging between 6%-20% (most common is 15%) for selling on their marketplace. 

8. Seller Center/Seller Portal: A Walmart platform,similar to Amazon’s Seller Central, used by Walmart sellers to market and sell products to Walmart customers. 

9. Seller Scorecard: The Seller Scorecard,found in Walmart Seller Center,provides an overview of how well your products are performing under the Walmart Seller Performance Standards.  

10. TwoDay Delivery: If a customer purchases an item with TwoDay delivery designation, then the seller must deliver the product by the end of the following day. For the customer, orders over $35 are free. Most products sold on Walmart.com are eligible for the program, but products sold by Walmart Sellers are not.  
Learn More > 


11. Walmart 3P Merchant: An independent company that sells products on Walmart’s online marketplace.This can be a brand selling its own products directly or a dedicated wholesale retailer selling products to consumers on a manufacturer’s behalf.  

12. Walmart Buy Box: A section on the product page near the “Add to Cart” button that shows from which seller shoppers will be buying. A seller earns sales only when they win the Buy Box. When multiple sellers are in the same listing, each will win the Buy Box for a certain percentage of time. Walmart awards the Buy Box to sellers based on product price, availability, and seller performance.  

 

13. Walmart Enhanced Content: This Walmart.com feature allows sellers to create listings with additional media, such as more images, banners, comparison charts, descriptions, interactive product tours, and videos. These features help capture shopper interest and can lead to higher conversion rates.  
Learn More >

14. Walmart Fulfillment Center: A physical location to which Walmart sellers ship inventory. Inventory is stored in and fulfilled from the fulfillment center.   

15. Walmart Fulfillment Services (WFS): A Walmart service in which third-party vendors keep their product at Walmart’s warehouses. Walmart will pick, sort, pack, ship, track, and handle product returns and refunds for a fee. 
Learn More > 

16. Walmart Marketplace: The official name of Walmart’s online platform.The Walmart Marketplace allows Walmart and approved third parties to sell goods online to Walmart customers. 
Learn More > 

17. Walmart Media Group (WMG): Walmart’s first-party media branch. Brands who sell on Walmart can work with WMG to promote their products rather than hiring a third-party seller, marketing agency, or an internal marketing team to do it for them. 
Learn More > 

18. Walmart Plus: A Walmart subscription-based service similar to Amazon Prime that gives members access to unlimited same-day delivery for eligible items, discounts at Walmart gas stations, and early access to Walmart deals. The current cost is $98/year, which is roughly $20 less than Amazon Prime.  Walmart Plus is expected to officially launch in August 2020. 
Learn More > 

19. Walmart Solution Providers: Third-party providers who offer a wide range of ecommerce services for the Walmart Marketplace. Services can include item setup, inventory, order fulfillment, pricing, marketing, and more. Walmart categorizes Walmart Solution Providers into three categories: Full-Service Solution Providers, Specialty Solution Providers, and Content Solution Providers. Kaspien is a Specialty Solution Provider. 
Learn More > 

20. Walmart Sponsored Products: Similar to Amazon Sponsored Product Ads, these cost-per-click (CPC) ads are used to promote products on com website, mobile platform, and app. 
Learn More > 

Also check out our list of 100 Terms Every Amazon Seller Should Know.

 

On August 4th, Amazon published a press release announcing the impending launch of Amazon Sweden. On August 11th, Amazon sent an email to sellers with more details about what to expect with the new marketplace.  

In this email to sellers, Amazon stated that Amazon Sweden will be available within EU Seller Central accounts as Seller Central Sweden. All Professional Selling fees and referrals fees will stay the same with this expansion.  

The email also outlined how products currently in Amazon’s European Seller Central will synchronize to Seller Central Sweden. Amazon has created the Build International Listings (BIL) tool to automate and accelerate this process. If a seller does not wish to have his or her listings synchronized, they must override it manually. Amazon notes that products subject to the Swedish Chemical Tax will be excluded. 

It is uncertain when Amazon Sweden will launch. In January of this year, Amazon sent a similar announcement for Amazon Netherlands, which was publicly launched in March. If Amazon maintains a similar timeline for Sweden, we could see the marketplace publicly launch in October, though an official date has not yet been released. In the meantime, Amazon asks sellers to go into their EU Seller Central account and check to ensure all of their product listings are synchronized accurately. 

If you’re interested in expanding your brand to Sweden, we can provide a full suite of Amazon services for marketing, brand protection, logistics, and more. 

Amazon’s Email Announcement to Sellers 

“Dear Selling Partner, 
 
We are pleased to announce that we have started the work to launch the Swedish Amazon.se Store, to delight local customers and give Selling Partners the opportunity to expand their European business even further.

Seller Central Sweden will soon be available to you as a seventh country option in your EU Seller account. With the same monthly Professional Selling fees and referral fees, you can access all seven European Amazon Stores.

To support you with the expansion of your business, we will synchronize your eligible product selection with your Seller Central account for Amazon.se. You will be notified via email once Seller Central Sweden is available and the synchronization is complete. You can then revise your synchronized selection.

How will we synchronize the existing product selection: 

  • We will enable the Build International Listings (BIL) tool in Seller Central, which allows us to list your eligible existing products from your Home Marketplace on Amazon.se on your behalf, to save you valuable time. You can edit the BIL connection between the Seller Central accounts of your choice afterwards at any time here by clicking “remove connection”. 
  • Please note: When the BIL tool is active, it will regularly synchronize your existing listings and prices for all linked Seller Central accounts. Please check your preferred tool settings here after the synchronization is complete.  
  • The product descriptions will automatically be translated to Swedish, using BIL’s Machine Translation functionality. 

Learn more about BIL and its functionalities here 

What product selection will be synchronized? 

  • We will synchronize your eligible selection which is currently exportable to Sweden and prices that are active on Amazon.co.uk and Amazon.de. For your self-fulfilled listings, we will synchronize your prices from your BIL source marketplace, adjusted for exchange rate* to Swedish Krona. 
  • For your Fulfilment by Amazon (FBA) Pan-European FBA (Pan-EU) listings, we will take into account:  
  • VAT differences between BIL source marketplace and Sweden. Example: If you are selling a product on Amazon.de for 10.00€, we will synchronize the product price on Amazon.se as SEK 114.5, taking the VAT differences in Germany (16%) and Sweden (25%) into account. 
  • Fulfilment fee differences between your BIL source marketplace and Sweden. 
  • You will be able to benefit from the Fulfilment by Amazon (FBA) and Pan-European FBA (Pan-EU) programs with domestic fees and offer your products to local customers. You can find the promotional fees that are valid until June 31st, 2021 here. 
     
    *The BIL tool adjusts prices periodically to reflect currency conversion fluctuations in the target marketplaces’ currencies. The frequency of these updates might vary from daily to weekly. These updates will not show changes of less than 1%.

Please note: If you are selling Consumer Electronics, we will not synchronize products that will become subject to the Swedish Chemical Tax that is expected to become effective in Sweden from 1st of October, 2020. We will provide you with more information in the upcoming weeks. Please reach out to your tax adviser for additional information.

What you need to do: 

  • In the next few weeks, we will notify you via email once the product synchronization is complete. Check here under Account Notifications, if your email address for important Technical Notifications and Business Updates is still up to date. 
  • Check your synchronized listings and prices under Manage Inventory in Seller Central.  
  • If you are already using the Build International Listings (BIL) tool, you can edit the connection between the Amazon Stores of your choice and prevent product listings from synchronizing here at any time. If you wish to opt-out from selling on Amazon.se, click here to “remove connection”. 
  • If you are not using the BIL tool yet, we will activate it on your behalf to synchronize your selection to Amazon.se. You can edit and remove the BIL connection here afterwards. 
  • Once Amazon.se launches, your listings will become available to our local customers from the start of the new Amazon Store.”

Walmart Fulfillment Services vs Amazon FBA

In the world of ecommerce, FBA (Fulfilled by Amazon) is one of the most used phrases. Now, get ready to use WFS (Walmart Fulfillment Services) just as frequently. Walmart Fulfillment Services launched in February 2020, putting Walmart in better position to compete with Amazon. Walmart Fulfillment Services is a fulfillment network owned and operated by Walmart. It allows brands who sell on Walmart to ship inventory directly to Walmart’s fulfillment centers for storage and order fulfillment for goods purchased on Walmart.com. 

Before Walmart Fulfillment Services, brands who sold on Walmart.com had to fulfill orders through a dropship model or through a third-party logistics (3PL) provider. The dropship model placed all order fulfillment and customer service responsibilities onto sellers, and the 3PL model could be cost-prohibitive for certain items 

This fulfillment situation made selling on Walmart difficult for some sellers and brands. Walmart Fulfillment Services improves the selling experience for Walmart’s Marketplace by providing sellers a solution for storage, 2-day fulfillment, customer service, and return management, all competitive with Amazon’s FBA capabilities. 

Download our Walmart Fulfillment Services vs. Fulfilled by Amazon eBook 

The Advantages of Using Walmart Fulfillment Services 

The Walmart Marketplace is quickly growing, and now is the time for brands to position their products on the marketplace. Marketplace Pulse reported that in June 2020, over 3,500 sellers joined the Walmart Marketplace, bringing the total number of sellers to 48,332, with most being dropship sellers.  

Fast Shipping & Greater Buy Box Share 

Amazon’s FBA program set the bar exceptionally high for online shopping convenience, and consumers now expect fast shipping for their online purchases. According to Walmart, consumers are less likely to convert on offers with a 5day shipping window, whereas items with a 2-day offer can see a 30% conversion lift. Brands and sellers who can offer nationwide 2-day shipping on their products can enroll in Walmart’s TwoDay Program, resulting in improved searchability and Buy Box percentage 

Logistically, fulfilling nationwide orders in 2-days can be challenging for sellers and brands. Such capabilities require a vast infrastructure – an infrastructure that Walmart already has thanks to its thousands of physical store locations across the US.  

Items fulfilled through Walmart Fulfillment Services are guaranteed nationwide 2-day shipping. On top of that, products in Walmart Fulfillment Services also capture a larger share of the Buy Box over all other offers, including non-WFS 2-day offers. Products sold through Walmart Fulfillment Services will display “fulfilled by Walmart” on the products, which Walmart hopes will increase consumer trust in product authenticity. 

Walmart Marketplace Listing

During the onset of the coronavirus pandemic in the US, Amazon’s fulfillment network struggled under the strain, and they were unable to maintain 2-day shipping. Walmart, on the other hand, was. Products fulfilled through Walmart Fulfillment Services maintained the 2-day shipping guarantee throughout the pandemic. While Walmart handles far less volume than Amazon currently, the difference is a promising indicator that Walmart is building a robust infrastructure. 

Affordable Storage Fees 

Walmart Fulfillment Services offers consistent storage fees that are comparable to FBA, with monthly storage fees starting at $3.45/unit. Walmart also states there are no long-term storage (LTS) fees, a stark contrast with Amazon’s FBAHowever, if inventory stagnates in Walmart Fulfillment Service, it seems likely that Walmart would implement LTS fees to incentive liquidation and better inventory forecasting.  

This simple fee structure help sellers forecast the profitability of each shipment going into the Walmart Fulfillment Service network. Amazon’s storage fees are more complex, with monthly storage fees increasing in Q4 and LTS being applied monthly to items that have been housed for over a year. For most of the year, Amazon’s monthly storage fees are $0.48-.75 per cubic foot (depending on size) and from October to December, these fees increase to $1.20-$2.40 per cubic foot. 

Another notable difference between Walmart Fulfillment Services and FBA is that, for the moment, brands only have to ship to one Walmart fulfillment center. The single ship-to location provides a much simpler process for brands than Amazon FBA, which requires brands to ship inventory to multiple fulfillment centers. This situation will likely change in the future as Walmart’s online operations continue to expand, but for the time being, it’s a pleasant perk of Walmart’s system. 

Key Differences Between WFS and FBA 

We’ve mentioned differences in pricing models and ship-to locations, but how else does Walmart Fulfillment Services differ from FBA?  

Read about Walmart’s new subscription service that will rival Amazon Prime, Walmart Plus. 

Reporting 

While FBA does offer deeper reporting to sellers and the extra service of fulfilling orders for select websites off Amazon, Walmart is quickly enhancing their reporting. Walmart has made impressive improvements to their reporting over the last three months, including working closely with their approved sellers on creating dashboards. These dashboards will help sellers understand product performance, as well as identify which products not yet sold on Walmart have the highest opportunity to perform well on the platform 

Product Preparation 

Unlike Amazon’s Seller Central, Walmart’s Seller Portal currently does not offer the ability to create box labels or shipping labels required for shipping to Walmart’s fulfillment centerAs a result, prepping shipments can be a manual process.  

Product Requirements for Walmart Fulfillment Services 

Walmart Fulfillment Services’ product requirements are a bit stricter than FBA requirements. Learning from some of Amazon’s missteps, Walmart is working hard to prevent counterfeit items from polluting its platform and keep warehousing to a minimum. Below are a few Walmart Fulfillment Services product requirements and how they differ from FBA. 

  • WFS – Products must ship to Walmart fulfillment centers from within the United States. 
    FBA – Amazon FBA centers will accept international shipments if the correct labeling if applied, including box labels and pallet labels if shipping LTL. 
  • WFS – Country of Origin must be on the retail packaging.  
    FBA – This is not required at FBA.   
  • WFS – Products must have UPCs on the product packaging. 
    FBA – Amazon’s ASIN labels can be printed and applied to products when needed. WFS does not offer labeling options or services.  
  • WFS – Maximum product weight is 30 lbs 
    FBA – Will accept shipping cases up to 50 lbs., along with single products weighing over 150 lbs. (with additional fees applied). 
  • WFS – Maximum product dimensions: 25″ x 20″ x 14″. 
    FBA – Dimensions up to 25” on any sideFBA also accepts oversized single items that are over 108” on its longest side and over 165” in length + girth.  

Sell on Walmart.com 

Selling on Amazon has taught brands the importance of keeping channel control. If brands do not sell their products on a marketplace, someone else will, and unfortunately, rogue sellers are not known for providing the best representation for brands.  

Walmart is growing quickly, which means that now is the time to position your brand on the platform before someone else does. The Walmart Marketplace is the second largest marketplace in the US, with over 400 million website visits per month. In the second quarter of 2020, Walmart reported that their ecommerce sales grew 97%. By being an early adopter, brands can position themselves in front of a larger audience and ahead of competitors.  

Accessing Walmart Fulfillment Services 

Walmart Fulfillment Services is currently open only to select sellers, and so far, the number of sellers approved to sell is low. Walmart wants to limit the risk of counterfeit sellers entering the marketplace, which is easier to do with a smaller number of trusted sellers. As such, it is unclear if Walmart will move to a less strict approval process for Walmart Fulfillment Services 

We were among the first group of sellers personally invited to sell Walmart.com in 2016, and we are an approved WFS seller. We’ve had an excellent experience with the program. Our account manager is easy to contact, and the Walmart team has provided reporting to help grow our product selection. By partnering with Kaspien for Walmart, brands can draw from our Amazon expertise and leverage our proven marketing strategies and software services to help their brand grow on the Walmart Marketplace. 

How to Create Amazon Listings in Seller Central

Setting up listings in Seller Central can be intimidating. Here’s what we’ve learned from creating thousands of Amazon listings over the years.  

When it comes time to creating listings on Amazon, it’s best practice is to have keyword-rich product listing copy already written and optimized. Creating a fully-optimized listing from the start will set you up for success, as it can be difficult to edit your listing post-creation.  

Prior to creating the listing, you should have the following content pieces prepared: product title, key features or bullet points, images, and a standard product description. If you need help writing those, check out our blog post on Amazon listing requirements and best practices. Other content areas in the “backend” of product listings can be more easily modified post-creation, but it doesn’t hurt to have those ready to go from the beginning as well.  

Other details that are required in order to create a new product listing include: a product number (UPC, EAN, etc.), a SKU for internal use, product specifications like dimensions and weight, and pricing information.  

Amazon Listing Content Check List 

The following is a high-level overview of fields you will need to or should fill out when creating an Amazon listing. They are broken out by detail tab in the listing creation page. If you want to make your Amazon listing process as easy as possible, gather these items before you create your listing. 

Amazon Listing Creation Content Checklist

Now let’s walk through the main way to make listings on Amazon. 

Amazon Listing Creation Process 

The process to create a single listing on Amazon is a rather simple and an intuitive one; it’s just a matter of knowing where to go to get started and what fields to fill out. When signed into your Amazon Seller Central, travel to Catalog > Add Products.  

Add a product to Amazon Catalog

On this page, find the “List a new product” box and enter your product name, UPC, EAN, or ISBN to search. If Amazon doesn’t find an existing listing related to your query, you can then click Create a new product listing to start the creation process.  

Add a product to Amazon catalog

The first thing you must determine is the category your product fits into. You can either utilize the search feature to help you narrow down categories, or you can manually click through the product categories to drill down to an appropriate sub-category. Once you find your category, click on that hyperlink to bring you to your listing creation page. This page will display multiple tabs grouping together similar listing fields together, and this is where our content creation process begins. 

 

Create a new product in Amazon

Vital Info 

On the first Vital Info tab, you will need to fill out the Product ID with your UPC, EAN, or ISBN, the product name with your optimized title, your manufacturer, and your brand name. Often times, manufacturer and brand name are the same, but please note that the brand name is what displays just below the title on a product detail page. It is very important the spelling is correct in these two fields from the beginning, as it is one of the harder fields to update post-creation. If you are ever unsure what to input into a field, Amazon provides small information icons next to the fields that can help guide you in the right direction.  

Input vital info into Amazon

 

Offer 

Next, let’s move to the Offer tab. This is where you’ll notate your selling price, create your custom SKU, provide a Condition, and note how this listing’s inventory will be fulfilled. If you do not create a SKU yourself, Amazon will create one for you that is a long alpha-numeric string. If your brand doesn’t already have a SKU naming system, we highly recommend you create a system now before you create any listings. 

Input offer details into Amazon

Compliance 

The Compliance tab is the area where you can provide any battery information (if relevant) to your product, note warnings like Prop 65, and a Safety Data Sheet if that pertains to your product type.  

Add Amazon compliance info

Images 

In the “Images tab, you can submit up to nine images. This is a rather intuitive tab where all you have to do is click “Choose File, navigate to where your images are located on your computer and select to upload. Most categories permit you to upload up to ten images. If you are uploading images to a product that is a variant of a Parent-Child relationship, look for the image slot that is labeled “SWATCH. This will be the image that displays in the variation preview on your listing. Amazon accepts JPEGs, TIFFs, and non-animation GIFs. 

Add images when creating Amazon listing

Description 

The Description tab is what contains the “meat” of your listing; this is where most of your optimized product copy should live. The product description field permits up to 2,000 characters to be submitted. Initiallyyou will only see one Key Product Features field, so you must click the link “Add More” to provide more fields, to a maximum of five. The character permitted in the Key Product Features fields fluctuate between categories, so it is best to hover over the information “i” badge to see what your current category permits. This tab also provides you the opportunity to attach any small parts or choking warnings. 

Add description to Amazon listing

Keywords 

The Keywords tab is full of fields that help improve the discoverability of your product listings, but do not display on your listing anywhere. Similar to the Key Product Features, you can have up to five fields on most of these, but you must click the “Add More” link to make them all appear. Focus on the Search Terms field, as it allows you to add up to 500 characters of keywords you might not have published on the frontend of the listing. 

How to add keywords to an Amazon listing

More Details 

The More Details tab is where all of your nitty-gritty product specifications live. This is a relatively self-explanatory tab, but you will see there could be a lot of fields that do not relate to your product. Amazon generalizes what fields might be needed based on your category, so do not feel pressure to fill out all fields. We recommend screening through all fields and filling out the relatable ones, but below are the minimum requirement fields to create your listing for Fulfillment by Amazon: 

  • Weight 
  • Item Dimensions – Length, Width, Height 
  • Unit Count 
  • Unit Count Type 

Create an Amazon listing with more details

Once you have input all of the above suggested fields, you are now ready to “Save and finish” your new product listing. Once you click this button, Amazon will assign an Amazon Standard Identification Number (ASIN) and you can almost immediately see what your new listing looks like. You can either click on the title in your Amazon catalog, or you can navigate to the following URL with your ASIN replacing the tale end, https://www.amazon.com/dp/*ASIN*. 

Learn More About Amazon Listings 

This blog post is just scratching the tip of the iceberg. Download our in-depth whitepaper, The Ultimate Guide to Creating Amazon Listings, to learn even more about creating optimized listings on Amazon 

Common Mistakes Brands Make on Amazon

This article was originally published on Forbes on June 22, 2020.

Selling on Amazon is full of challenges, but some of those challenges are unnecessary. I lead a company that’s helped over 4,000 brands sell on Amazon over the last 12 years, and during that time, we’ve seen a lot of mistakes, some of which are shockingly common. To help remedy this problem, I’ve put together the seven most common mistakes we see brands make on Amazon and how to fix them. 

7 Common Mistakes When Selling on Amazon

1. More Sellers Does Not Equal More Revenue 

When brands first embark on Amazon, many have the belief that having more sellers equates to more sales, which in turn equates to more purchase orders. While brands may receive more purchase orders, we’ve seen this approach lead to unforeseen problems hundreds of times.  

Having too many sellers, especially if you’re not collaborating closely with each, creates the “too many cooks” problem. Since any seller in the listing can edit listing content and set their own price, inconsistencies and inaccuracies can quickly appear. Low-quality images and poor wording misrepresent your brand, and fluctuating prices can make shoppers question product authenticity. Sellers are likely to compete on pricing, risking a race to zero, which hinders their ability to place future purchase orders.

There are also problems for marketing: When multiple sellers run marketing for the same listing, their ads compete, driving up costs without generating more sales.  

To fix this issue, we advise two steps: 1) Work with one or only a few sellers so you maintain control over your brand’s online representation, and 2) ensure that your contracts limit to whom buyers can sell your product, helping mitigate the risk of unauthorized sellers. 

2. Running Marketing Only On Amazon

Running marketing only on Amazon is a tactical error because it leaves opportunities on the table. Running off-Amazon marketing — such as paid search, paid social, and influencer marketing — increases the number of shoppers you can reach and the number of touchpoints guiding them to purchase. By leveraging both on- and off-platform marketing, brands create a feedback loop of more visibility, which leads to more traffic, which leads to more sales, which improves organic product placement, which leads to more visibility…and the cycle continues. 

3. Running Marketing Only During Peak Seasons

This is a much more grievous sin. Halting marketing during the off-season is a serious mistake because Amazon marketing takes months to gain good traction. By turning off marketing during slow sales seasons, brands are essentially surrendering ground to competitors. When their sales season comes back around, they have to claw their way back to where they left off instead of being positioned to capture new market share.

To fix this issue, don’t ever turn off marketing completely. It makes sense to reduce marketing spend during slow seasons when competition isn’t as fierce, but you should never completely fall off the radar. 

4. Not Aligning Amazon Strategy With Brand Strategy

Another common error is failing to align your Amazon strategy with your overall brand strategy. For example, a brand may run promotions off Amazon that are not carried through to Amazon or produce new stunning images and brilliant copy for their website but don’t update their Amazon listings with them. Amazon is a growing marketplace and needs to align and complement your overall strategy if you want to maximize your online sales. 

5. Noncompliant Claims In Listings

It’s never been a good idea to make misleading or inaccurate claims in product listings. Such claims result in suppressed listings and account shutdowns, which can cost a brand thousands in sales. 

This mistake is likely to become an even bigger issue, as Amazon faces increased scrutiny. Before the coronavirus captured our attention, congress was considering the Shop Safe Act, which would hold Amazon responsible for counterfeit or noncompliant products sold on its platform. Based on our own data, we saw the early indications of how Amazon would respond in February when it tripled their requests for proof of product testing.  

If your listings contain unsubstantiated claims or have not passed U.S. safety testing, then you need to fix that.  

6. Not Understanding Amazon Profit Margins 

Selling on Amazon is not like traditional retail, and neither are the profit margins. These three factors are commonly overlooked or misunderstood:  

1. Amazon fees: Amazon collects a sales commission as well as shipping, storage and fulfillment fees. These fees take a large chunk out of profit margins. 

2. Inventory errors: Sometimes, Amazon’s fulfillment centers lose or damage inventory, overcharge fees or underreimburse. While its automatic systems catch most of these errors, it misses some. Those errors add up, eating into profit margin. 

3. Marketing: Marketing costs money. Some brands see that and stop there. But if your marketing is effective, the profits exceed the costs, sometimes dramatically so. If your profit margins are narrow, you should consider investing in marketing to widen them.  

Addressing these issues starts with gathering data. You don’t know what you don’t know, so start by pulling reports and analyzing data. If you discover a red flag, you can seek help. There are many agencies, consultants, and software applications available that help optimize shipments to Amazon, identify reimbursement cases and improve marketing efficiency.

7. Poor Inventory Management

All too often, we see brands sending way too much inventory into Amazon warehouses without realizing that Amazon will charge long-term storage (LTS) fees, especially around peak seasons. On the other side, we also see brands sending in too few units, resulting in out-of-stocks. Running out of stock harms marketing performance and organic product placement, creating a domino effect that can be tough to bounce back from even when stock is replenished. 

To fix these errors, you or your seller needs accurate sales forecasting, which is typically obtained through software. 

Amazon truly is like navigating a jungle, but there are many experts who can help. Alternatively, you can push up your sleeves yourself and dig into the many resources about selling on Amazon. The Amazon opportunity is too great to ignore.

One should be able to infer the mission of a company based on their data infrastructure. By reviewing the data infrastructure, you can see what inputs and outputs matter to a company, who is using the data, and how it’s used.  

At Kaspien, we use data-centric processes to inform our business strategies. These processes, such as ideation, hypotheses testing, or refining operation, all depend on a data platform that is both deep and wide. The depth of our data enables more nuanced and precise insights, while the breadth enables us to understand the big picture and identify trends and anomalies.  

Together, a deep and broad data platform maximizes our insights, empowering us and our partners to grow smart. Leveraging data, we can identify the biggest opportunities and gravest threats early, allowing all our business segments to successfully adapt to ever-changing marketplaces. As a result, we empower our partners and drive success on Amazon, Walmart, and beyond. 

Why do we need a data platform? 

Our teams make decisions based on the best available data. We rely on hourly updates of our data for three things: 

  1. Monitor performance 
  2. Adjust strategies 
  3. Discover new opportunities 

 

To achieve these essential functions, our data infrastructure must be able to collect, transform, and load data into systems where the data can be further tailored to the specific needs of each team.  

For example, our Finance, Data, and Marketing teams all utilize similar data, but each team needs the data structured in very different ways. Our Finance teams ingest 10 million rows of data each day to enable precise capital allocation. Our Data team processes 600 million rows of data to build and refine internal software and algorithms. Our Marketing team pours over 2 million rows of data each day to assess campaign performance and make strategic adjustments. To meet the needs of each team, we pump billions of data points through our platform every day.  

Creating a Data Platform Takes Time

Our data platform has seen meteoric growth over the past few years. Currently, our entire system processes just over 1 billion data points per week, a growth of 40% over the past 2 years. etailz data growth

While we now enjoy countless benefits of a robust data platform, our data operations were not always so streamlined. We had to adapt to the growing number of business initiatives and data requirements. We grew our engineering and data teams to build our platform and continue to invest in our data infrastructure today. The tools we use give us the ability to acquire, update, and distribute data with ease. Our platform is amenable to adding new data sources, managing prioritization queues, and delivering real-time data.

In short, our data platform is the stanchion from which the rest of our services stem.  

Data & Insights Power Our Services

We provide dozens of ecommerce services that cover the full gambit of running and optimizing an online business, including inventory and supply chain management, brand protection, digital marketing, creative services, and tax compliance. We also have developed a suite of software services, including self-service options for ad managementseller & price tracking, and Amazon seller reimbursements. All our software and services are exponentially improved by leveraging our data platform, and those benefits are shared by all of our partners, fueling their success. 

How does Kaspien process and manage mission critical data?  

Our primary analytics data pipeline (and associated workflow) is orchestrated via Apache Airflow. We’ll go into further detail about how we use Airflow in a later blog post (see here and here for some good introduction material). Airflow allows us to build in diagnostics, tests, and monitor the progress for all our systems, which include applications and databases. 

data processing cycle

Our analytics data is largely warehoused in AWS S3 and RDS, Redshift, MongoDB, and Snowflake. We use these various warehouses for the different types of data that we need to collate to be useful for our analytical purposes, which vary from team-to-team. 

Our data pipeline starts with the systems we developed that gather data from marketplace APIs, third-party data sources, and our web-scraping systems. We process 3 million data points per hour from these systems. We then prepare our data to be collated and structured to ensure data integrity and maximum utility for our teams. 

Aggregating disparate data

Many of our experiments and exploratory analysis depend on systematic data collection to ensure high-resolution and high-quality data. Our rich datasets covering pricing, demand, product metadata, among many others, have grown by 15% month-over-month over the past year. 

At this point the data are stored in their final form in warehouses for our ‘end-user’ processes to consume, such as internal dashboards, purchasing applications, or inventory management systems. But for the Data Team, the data in these warehouses are not final. Rather, they are but a collection of staging warehouses to then further transform and load into our own analytics databases. From these databases, we prototype forecasting models, respond to real-time research needs, or explore new aspects of our data. 

Data Benefits Our Partners 

Ultimately, the insights derived from our data platform help our partners and clients grow. Our diverse portfolio of data combined with our partner’s portfolio creates synergies we can harness.  

For example, while our partners may have sales and marketing data for their own portfolio of products, we can use our data to simulate and forecast sales. For marketing efficiencies, we have data related to pay-per-click ads, search engine optimization, and retargeting going back years for hundreds of thousands of products. Our Business Intelligence teams can stand up dashboards for monitoring key performance indicators that we know are important to track, personalized for each partner. Our historical data on shipping lead-times and product warehousing cycles will help our partner manage inventory and capital allocation. And last but certainly not least, our Data Science team uses these data to train AI models for our core business and partners. 

Data is the core of what we do. It enables us to make improvements on the micro and macro levels for our partners, fueling their growth to new heights. If you want to leverage our data, software, or services, get in touch through our contact form.

Map of US and Importance of Dynamic Fulfillment Network

With the unexpected onset of COVID-19, many brands and manufacturers faced a production standstill ranging from weeks to months, jeopardizing and even killing their businesses. The coronavirus restricted supply chains, exposed structural fragility, and revealed a severe lack of emergency resources. In short, many companies just weren’t prepared. Even now, many states are not yet back to business-as-usual.

The impact on supply chains and fulfillment was one of the most pervasive and damaging effects inflicted on businesses. To safeguard against this in the future, brands and sellers alike have been exploring new fulfillment options.

At Kaspien, we’ve spent the last 12 years working with brands of every level, size, location, and structure as a third-party retailer. During that time, we’ve created a robust fulfillment network. From a small processing area in the back of our corporate office to now utilizing 7 fulfillment centers across the United States, we’ve built an efficient and resilient fulfillment network that has protected our partners’ businesses.

In this post, we’ll outline some of the key benefits of and advice for expanding your fulfillment network.

3 Benefits of a Dynamic Fulfillment Network

1) Mitigates Geographic Risks

If we’ve learned anything over the past few years, it’s that the world is unpredictable. Our partners are in every corner of the country, and as such, there are many different environmental and situational obstacles that can impact product fulfillment.

Whether it’s wildfires, hurricanes, or a pandemic, any business is subject to interruption when catastrophes arise. The West Coast Port Strikes of 2015 was one of those situations for us; we didn’t see it coming, and the sudden inability to process imported goods through west coast ports certainly impacted our normal business functions, and many of our partners faced similar issues. Lead times lengthened and we faced out of stocks.

The port strikes showed us that we needed fulfillment centers on the east coast in order to protect our and our partners’ businesses. Now that we have fulfillment and processing centers around the country, including both coasts, we can minimize the impact of geographically constrained events.

2) Lead Time and Freight Cost Improvements

Many manufacturers are facing tighter margins these days, as well as an added sense of urgency to have shipments turned around to Amazon quickly. By diversifying and growing our fulfillment network, we’ve seen a favorable upswing in lead time and freight cost.

According to Kaspien’s Strategic Warehouse Director, Jeff Bernatz, “In 2020, we’ve seen a ~20% decrease in overall turnaround time at our warehouses, directly tied to the increase in available locations and available staff to handle the workload.”

We work with many manufacturers who do not have the capacity or expertise to complete product preparation in compliance with Amazon’s fulfillment center requirements. For them, shipping to one of our processing facilities is essential, and that could translate to longer lead times and higher shipping costs. But, because we have a large fulfillment network, there’s always a processing facility close by, no matter where our partners are shipping from in the US. As a result, our partners pay a lower freight cost and shorter lead times since they’re shipping shorter distances.

For brands seeking to partner with retailers and/or logistics providers, always ask about their fulfillment network. A larger network will position you to get better margins and run a more efficient sales channel.

3) Handle Higher Volumes and Scale

A large fulfillment channel always enables us and our partners to scale faster, pushing more products at a higher rate. “Since expanding to 7+ warehouses, total unit volume through our warehouses has increased ~15% vs the same time YTD period in 2019,” said Bernatz.

More locations and a higher staffing capacity have allowed us to process more orders in less time. With this added capacity, we have room to expand into previously infeasible programs, such as direct to consumer fulfillment, distribution, etc. It also eliminates the backlog we can sometimes see during peak sales seasons, such as Q4 and summer.

The Benefits will Outlast COVID-19

For many companies, this pandemic has highlighted the extraordinary value of a diversified fulfillment channel. However, all the aforementioned benefits of a large fulfillment network will continue even after the pandemic ends. Though the coronavirus may have prompted you to explore new fulfillment options, it’s worth continuing that research so you can position your brand to weather future storms and continuing growing.

We’re always happy to share our learnings from the past 12 years. If you want to learn more or discuss a partnership, get in touch through our contact form or schedule a call with one of our ecommerce experts.

The Ultimate Guide to Prepare for Q4 on Amazon

Remember the days when Q4 was the focal point of the year for retailers? 2020 has certainly stolen that spotlight and pushed any semblance of normalcy to the back seat. But thankfully, the familiar panic of Amazon Q4 prep is slowly creeping back, and it’s go time.  

Year over year, restrictions on Amazon continue to increase, so it’s imperative that you start planning no later than late June. Which is now, folks! That’s why we’ve put together this prep guide. This guide will help you put Amazon Q4 prep back on the roadmap for 2020 and set yourself up for success. (Here’s hoping 2020 doesn’t throw us all another curveball – like locusts, that would be very bad.) 

Designate Leaders to Guide Strategy 

Your future success ties back to your team and partners. You need to start with a look at your internal teams. Who within your organization is taking ownership of Amazon? Does that person need additional support? Who are your warehouse and shipping partners? Do you have SLA’s in place that you can count on? Many brands turn to an expert partner to help fill those gaps, leaning on Amazon-focused digital agencies or retail partners that conveniently come with a fully stocked tool belt of standard operating practices and resources.  

Regardless of what your team looks like, you need to finesse and develop an org-chart that explicitly designates working procedures, growth targets, demand forecasting, warehousing solutions, and marketing per person. Your success is tied to those KPI’s, and your team should have them top of mind as well.  

If you don’t already, begin scheduling quarterly business reviews to allow for pivot time if the KPI’s are not lining up with targeted goals. Take inventory of segmented portions of your operation: What do stock levels look like? Have we heard of sourcing issues? What are our customers saying? Are there any product issues noted from reviews? What does your Amazon presence look like? How are advertising budgets performing? The answers to those questions will drive the strategic implementation and changes for the upcoming quarter and help position you well heading into Q4 on Amazon and beyond. 

Conduct a Content Audit 

In line with the basics, commence an audit of your catalog and corresponding creative assets. As Kaspien says, “People remember 80% of what they’ve seen and just 20% of what they read, which is an important reminder. At minimum, the top 20% of your product catalog should have Amazon-compliant and visually exciting A+ Content to boost shopper buying confidence. Then stroll on over to your Storefront – have you organized your product categories in a logical fashion? Is your brand story being portrayed to meet customers at an emotional level?  

Check out our video that deep dives into 12 Amazon marketing services

A+ Content and Branded Storeare one of the simplest ways to communicate who you are as a brand and reduce negative reviews. If you can write a big green check mark next to that advice, then take it one step further. Determine which products could use a ‘seasonal facelift’ and find ways to incorporate holiday themes into the gallery of your product detail pages. If you are a manufacturer of photo frames, could you photoshop a snowflake into the frame? Small changes to your organic marketing efforts can make a big difference when customers are scrolling through hundreds of products trying to find a gift. Simple images that naturally connect dots in our brain are a surefire way to stand out from the crowd. 

A+ Content Page on Amazon

AMAZON Q4 TIMELINE 

Determine Q4 Stock & Lead Times 

Do your due diligence hereThis is one of those tasks that will be critical for a brand to take ownership of. You need to know what your expected lead times will be, based on where your product is manufactured. And if that’s proving difficult due to the Coronavirus affecting predicted ship windows, you’ll need to be ready to invest in more expensive options. Air freight is the most expensive option, but it delivers results. Costs range greatly by product and day, and fees are based on “dimensional weight,” so cost also varies greatly by the volume you ship. Due to COVID-19, the costs of air freight have increased dramatically from where they were a year ago, so this should be a last resort.  

Get creative with your strategy and think outside the box. If you have sourcing issues with your manufacturer, look for unique ways to fill in the gaps. Are portions of the product or packaging not sustainable? Could you find a U.S. based manufacturer that can make the product out of recycled materials instead? Invest in new partnerships right now to ensure you don’t reach 10x growth without inventory to continue the trend.  

Some sellers have learned a hard lesson about tardiness in past years, and we’ve all learned from those mistakes. Amazon implemented key FBA holiday selling dates for Amazon.com that can act as a guide right now (given Amazon hasn’t realized 2020 dates quite yet) 

Amazon Seller Q4 Timeline with Key Dates

Apply to Applicable Categories ASAP 

New brands and products have an increased hurdle this year, as Amazon continues to increase its barrier of entry for some categories. Recently, our brands have experienced issues in gaining access to the Personal Safety and Household & Medical Supplies and Equipment categories, requiring them to apply and, in some cases, wait over a month for any response.  

Start this process immediately to ensure you gain access prior to using expensive shipping methods to get your product here in time. On this note, it never hurts to have a marketplace back-up plan. Is Walmart a good fit for your products? If so, begin the process of either finding a partner to help you launch there or apply on your own. For more information about Walmart, read our blog here.  

Use Prime Day to Inform Amazon Q4 Strategy 

While certainly not its primary purpose, Amazon does provide a convenient holiday that is a perfect opportunity to analyze sales, brand visibility, and advertising performance – Prime Day! Prime Day is a phenomenal opportunity to get a peek into the future and collect data points that should be used to develop a Q4 strategy. The increased volume of shoppers, increased ad spend, and heightened opportunity to rope in new loyal customers creates a similar landscape to what Q4 looks like on Amazon – namely, weeks prior to Black Friday and up until December 15th. Check out our top 5 tips for how to maximize Prime Day sales.

There are whispers that Prime Day will be moved to September, given the current situation, which is considerably later than past years July dates. While that reduces the time you have to use Prime Day stats to your Q4 advantage, don’t cut it short. Sources say there could be a ‘Summer Sale’ that can act as a great segue into Prime Day and thus provide two pools of data from which you can develop strategy 

Meltables Will be Accepted Starting October 15th 

There are a few additional key dates that are certainly worth sharing for the world of meltable products. Per a notice Kaspien received in April 2020, “[…] meltable inventory will not be fulfilled or accepted by Amazon fulfillment centers starting May 1, 2020. Meltable inventory will be accepted again starting October 15, 2020. ‘Meltable’ refers to heat-sensitive grocery, health, and personal care products that are eaten or swallowed, including chocolate, gummies, and probiotics.” Brands that fall into this category should work backwards, using their lead time, to understand when inventory should be prepped and ready to send back into FBA. 

AMAZON MARKETING FOR Q4 

Create a Product-Level Advertising Strategy 

If ever there was a secret sauce for Amazon, advertising is it. Amazon Advertising is one of the most profitable areas of Amazon, and Pivotal Research reported that, Amazon is expected to reach $38 billion in advertising sales by 2023.” If something is making Amazon money, you need to pay attention to it, because you can guarantee they are.  

Many brands find this planning metric quite difficult, given the variety of aspects that span budget constraints, inability to see into the landscape future, and catalog size. To avoid a drinking from the firehose situation, go back to your basic target planning. If you have a partner, sit down with them and discuss what your high-level goals are. Use resources around you to understand target ACoS, ROI, ROAS, and budgets. Spend some time doing the math to understand your per product margin, and work backwards to figure out how much you’re willing to spend on customer acquisition. 

Watch our webinar for an in-depth overview of how to create high performing Amazon ad campaigns

Many brands fall victim to assigning one target for their entire catalog, but if you have multiple products with varying price points, then you should be developing an advertising strategy at the product-levelA product that’s 5% over the target ACoS needs to be optimized differently than a product that’s 20% over the target ACoSEven if your target ACoS is the same across the board, varying price points necessitate a product-level strategy. A $10 product with a 10% target ACoS needs to be optimized differently than a $100 product with a 10% target ACoS. 

Amazon PPC Management Software Can Help

This is no small feat, so find time and cost saving tools to help you do this. We’ve even built one: Kaspien AdManager. Our 30-day trial allows brands to test our strategies and see results before committing to a subscription. Explore your resources and network with others in the industry to help yourself.  

Request a demo

Work Backwards from Goals 

To understand performance and refine strategy, you’ll need to track advertising KPI’s. Start with goals: Define when you will bid up and bid down, how you’ll mine high-converting search terms and at what frequencyin what ways you will identify low converting keywords to be added as negative keywords, and finally, what your daily spend budgets need to be in order to work within your product level marginRemember, Amazon only gives you advertising data for about two months, so find a way to store this insight and lean on the findings once Q4 rolls around. 

Use Amazon Promotions Before Q4 

Seemingly overshadowed by the power of Amazon Advertising are evergreen marketing tactics that deserve a fighting chance: Promotions! Start running promotions now, collect the data, store it, and analyze it. Lean on a combination of tactics, including coupons, Deals, BOGOs. While each targets a different subgroup of shoppers, you’re gaining insight into what lowered price points increase sales and which promotion types yield successful results and should be used during Q4. Hot tip: Today’s Deals during Q4 are about as crowded as B&M stores on Black Friday, so think about using other promotions, like coupons, to help carve out a space for your products in the rush.  

beauty products with a bow

Advertise Beyond Amazon 

Additionally, one of the most successful tools Kaspien has used to circumnavigate the crowded Deals section during Q4 is off-Amazon advertising. Inventory your visibility on other platforms, like Facebook, Instagram, Google, etc., and start A/B testing ad types on those platforms. While some categories are better fit for social advertising, don’t be afraid to get creative here. Who would have thought that a face shield would be a prized holiday gift? Use that to your advantage and sync up with partners in the space to help build content and advertise your product in ways that you hadn’t previously 

Social media marketing for Amazon

Influencers are another incredible way to call out to both niche and major segments of the population and get eyes on your brand. Many brands halt at the thought, thinking their products just aren’t a great fit – but you’d be surprised. And you don’t have to spend a fortune, tapping into micro influencers can be a powerful option.  

Take this example:
Watchmaker Daniel Wellington is known for collaborations with fashion and travel influencers, but the brand also frequently works with CanadianBros (@CanadianBros), an Instagram account for two dogs named Jasper and Louie. Though dog lovers isn’t an obvious audience for a watch company, the fact that the account has featured Daniel Wellington on more than one occasion indicates it’s working. In one post, Louie gazes up at his owner who just happens to be wearing a Daniel Wellington watch. Like many of the account’s other posts, the caption is from the pup’s point of view.  

The big bonus here is most influencers allow brands to have rights to the content they develop which can be used on your direct sites, social pages and even Amazon. 

More free resources

Q4 Planning Starts Now 

We are living in a different time, and while nothing is certain, being a brand on Amazon puts you at an advantage during the holidays. Customers can shop from the safety of their couch, and you can help put a smile on the face of recipients around the country. 

Think of the extra time you have as an opportunity to really give Q4 2020 the planning it deserves. Sit down with your teams, cultivate your goals, develop new relationships, and talk reality with your suppliers. Look at your products through a new lens, play around with organic marketing tactics, and take the time to implement an advertising strategy that spans both marketplace and beyond. The time is now. And if you need support, you can always reach outWe’d love to chat about your goals and the tools and services we have to help you reach them. 

Happy Q4 planning! 

Consumers are shifting their spend from brick and mortar stores to ecommerce marketplaces

If you’re shopping for an Amazon agency but aren’t sure if now is the right time, consider this: Consumer spend in ecommerce is expected to grow 18% this year, while spend in brick and mortar retail is expected to drop by 14%. This forecast supports two important trends we’ve seen since the start of the coronavirus pandemic in the US:  

1) More shoppers are buying more of their goods online. 

2) Shoppers who previously did not shop online are now using ecommerce sites.  

We fully expect both of these trends will outlive the pandemic, which means that brands who aren’t selling online are going to be at an increasing disadvantage.  

Now is the time to sell online, Amazon is the place to do it, and an Amazon agency is one of the best ways to do it. To help you decide if you want to work with an Amazon agency, we’ve prepared a list of the top four considerations and benefits of hiring an agency. 

#1 – Working with an Amazon Agency is Simply Convenient  

Selling online is challenging. Managing the supply chain, inventory, marketing, listing optimizations, case management, customer reviews, and reporting requires a full-time team. If you don’t have the personnel, expertise, and/or software in-house to successfully manage these programs, it’s far easier to hire outside help. An Amazon agency provides the staff, experience, strategy, and software needed to grow a profitable and secure Amazon business. Furthermore, hiring an agency will likely be cheaper than hiring comparable personnel in-house.  

Even if you’d prefer to manage your online sales channel independently, an agency can be a good stepping stone, laying a strong foundation for your online business while you prepare resources internally to eventually take over. 

#2 – You Maintain Control of Your Brand 

When you work with an Amazon agency, you maintain an inventory position; in other words, you’re the seller. No one else is between your brand and your customers. Shoppers will see that the product is made by yousold by you, customer questions are answered by your brand, and that can build trust 

Now, how does that work when partnering with an agency? When you work with an agency, they’ll manage the backend of your Amazon channel through your brand’s seller account. This means all their expertise and resources are applied from within your own account, so consumers see only your brand on the frontend of a listing. This is one of the many differences between working with an agency and working with a retailer. A retailer will optimize your listings through their seller account, whereas an agency does so through yours. 

Ultimately, maintaining inventory control and optimizing your sales channel through your own seller account results in greater transparency and control. You can access your account to review performance whenever you want. The agency can (and should) advise, but you have the final say on all things. 

#3 – You’ll Save Time to Focus on Other Areas of Your Business 

Getting the most out of your online business requires hours of attention. Amazon is not a “set it and forget it” marketplace. Each ASIN (Amazon Standard Identification Number – an alphanumeric code Amazon uses to identify each product) requires regular review and management if you want to maximize your sales 

We serve as an Amazon agency for many leading brands with varying catalog sizes. On average, we invest 60 hours per week in channel management for brands with 100 or more ASINs. That time includes inventory management, sales forecasting, customer review management, listing optimizations, paid marketing optimizations, and more. But as a result of investing so many hours on a weekly basis, we drive continual strong growth. 

Now, if you don’t have such a large catalog, you’ll naturally require less time for channel management. Just keep in mind that hours per ASIN is not a linear chart. The time commitment per ASIN typically reduces as the number of ASINs increases because, in most cases, groups of ASINs share similarities, so the same content can be adapted to suit multiple ASINs.  

#4 – The Costs Pencil Out 

One of the most important questions is price. How much does it cost to work with an Amazon agency?  

At Kaspien, our agency partnerships start at a $3,000/month retainer. However, if you’re seeking assistance for only specific services, such as marketing, all of our offerings are also available as managed services. Our managed services start at $100/hour. 

If you think about it, that means working with an agency is actually less expensive than hiring a full-time employee to run your online sales channel. Furthermore, you gain much more than a single employee by working with an agency; you tap into the collective knowledge of hundreds of professionals and a suite of software (at least, if you work with Kaspien). That expertise, strategy, and automation translates into more sales and greater profitability, to the point where your Amazon agency pays for itself and then some.  

Learn more about Kaspien’s Agency or request a free brand consultation to see what we could do for your brand. 

Listen to the podcast episode: 

 

The Difference Between First-Party and Third-Party Sellers 

If you’ve thought about selling online, you’ve probably heard of firstparty (1P) solutions offered by top marketplaces, like Amazon and Walmart. But what does that mean exactly 

First-party simply means that the owner of the marketplace platform also has a retail entity that partners with brands and represents their products. For example, Amazon has a retail division called Amazon Retail, though in the Amazon community, it’s frequently just called “1P.” Amazon Retail buys inventory from manufacturers and distributors at wholesale cost, then sells the product on Amazon.com. They also offer additional services to their brands for online protection and digital marketing. Walmart also has a retail division that functions much the same. 

What, then, is a third-party seller, or 3P? A third-party seller functions similarly to a first-party seller, however, they do not own the platform on which they are retailing, hence the “third-party” name. A third-party seller can be a dedicated retailer, as is often the case, or it can be the brand itself, if the brand chooses to sell their products without assistance from another entity.  

On Amazon, third-party sellers began as a minority, but now account for more than half of the sales made on Amazon. To compete with 1P, many 3P sellers have expanded or enhanced their services to make a 3P partnership more enticing than a 1P partnership.   

How to Decide if 1P or 3P on Amazon is Better for You 

Iyou’re a brand trying to decide whether to partner with 1P or 3P, look at the data. Where do you believe the market is going? At Kaspienwe look at this kind of market data quite frequently. For us, one of the most interesting pieces of data is how sales volume is oriented on Amazon. 2018 was the first time that third-party seller volumes surpassed Amazon volumes on the Amazon marketplaceIn Amazon’s latest earnings report, they reported that 53% of overall gross merchandise value (GMV) was from third-party sellersCompared to previous years, GMV has grown from 30% to 50%.  

Based on this data, we can infer thaAmazon wants their growth to focus on their 3P businessThat leads to the ever-important question: Why would Amazon favor 3P growth over 1P when they operate their 1P business? The truth is surprisingly straightforward: Ultimately, having other sellers on their platform provides a better economic outcome for Amazon because they avoid inventory risk while still profiting from commissions and marketing fees. 

Another key consideration when comparing 1P and 3P is service offerings and performance. What sort of capabilities and expertise do these providers offer to meet your brand’s needs? Do they have a proven track record of success? Are they helping you grow or just maintaining the status quo? Maximizing success depends on finding a partner who can not only provide for your current needs, but also provide new opportunities for growth. 

One of the most important services, especially for larger, more established brands is control. Amazon has spent the last year under intense scrutiny due to rampant counterfeits and illegitimate sellers who threaten consumers and businesses, and this lack of control has made some major brands sever ties with Amazon. For example, Nike announced they are pulling off the Amazon platform because they don’t feel they have the control or creative freedom they want in their 1P partnership with Amazon 

Icontrol of your branding, control of pricing, control of consistency, and control of messaging are important to your brand, then you’ll likely be more satisfied by working with a third-party seller. 

If you’re interested in comparing the costs associated with 1P versus 3P, check out our whitepaper, The Costs of Amazon. It compares expenses for 1P, 3P, and direct-to-consumer options. 

The Future of Third-Party and First-Party Solutions on Amazon 

Judging by historical trends, we will continue to see third-party volumes grow at a higher rate compared to Amazon Retail (1P)As previously described, this is partly due to the economics being more favorable for Amazon when more sales come from third-party sellers, presuming of course that those third-party sellers are reputable and don’t harm Amazon’s reputation with consumers.  

However, it’s unlikely that Amazon Retail will ever completely disappear because some top tier brands are more comfortable working directly with Amazon. Amazon has also been alleged to require top tier brands to work with 1P if they want to list their products on Amazon. Amazon would do this because, in the case of global brands, they may make more revenue through the 1P model than 3P.  

How Does 1P and 3P Apply to Other Marketplaces, like Walmart.com or eBay? 

We’ve compared 1P and 3P for Amazon, but how do they apply to other major online marketplaces, like Walmart and eBay?  

It comes back to consistency and control. When brands work with 3P seller, they can have a single entity manage all of their channels in unison, ensuring that pricing, content, and marketing are consistent. This provides a clean and positive customer experience, while also mitigating the risks of competing marketplaces rolling up the Buy Box because of pricing inconsistencies across marketplaces. If brands partner with 1P for each marketplace, establishing that same consistency will be very difficult and require more active monitoring and communication on the brand’s part. Kaspien offers services for third-party retail, direct selling supported by an agency, and direct selling independently supported by self-service software.

If you’d like to learn more about any of these services, reach out through our contact form. 

100 terms every Amazon seller should know

Selling and marketing on Amazon involves dozens of moving pieces. To help with this problem, we’ve compiled a list of 100 terms every Amazon seller should know, including terms related to digital marketing, logistics, finances, and the fundamentals. For ease of use, the terms are listed in alphabetical order. 

Also check out our list of 20 Terms Every Walmart Seller Should Know.

1. A9 Algorithm: Amazon’s proprietary search engine algorithm for determining search results on Amazon.com. 

2. A/B Testing (Split Testing or Bucket Testing): An online marketing strategy used to see which of two versions of marketing collateral yields the best results. The difference between the two versions is typically limited to a single element, such as the subject line of an email, so that testers can confidently attribute differences in performance to the changed element.  

3. Ad Management Software: Software used to streamline management of Amazon ads, typically by improving data visibility, the user interface, and automation. In the case of Amazon, most ad management software is for pay-per-click (PPC) ad types, such as Sponsored Product Ads. 
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4. Advertising Cost of Sale (ACoS): The cost of ad divided by the sale. For example, if a product costs $10 and it takes $1 worth of ad spend to generate a sale, the ACoS would be $1 divided by $10, or 10%. ACoS is often used to assess the efficiency of advertising campaigns on Amazon. 

5. Amazon A+ Content: An extra feature for product detail pages available to brands that are enrolled in Amazon Brand Registry. This feature allows brands to add additional copy and images below the bullet points in a product detail page. Amazon claims they increase conversion rates by up to 10%.  
Learn More >

6. Amazon Ad Groups: On Amazon, Ad Groups are a subsection within a sponsored ads campaign that contain ads, targets, and a default bid. Ad Groups can contain a single ad or multiple ads grouped by like products, brands, or campaign goals. Targets can be either keywords, ASINs, or categories. Ad Groups are available for Sponsored Product and Sponsored Display campaigns. 

7. Amazon Attribution: An Amazon service that allows sellers to measure the impact of different sales channels, such as email, video ads, and display ads, by creating unique URLs that enable attribution tracking. The Attribution dashboard in Seller Central allows users to see conversion metrics, such as “page views, “add to cart, and “purchases. 
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8. Amazon Best DealsOne of several types of promotions that sellers can run on Amazon where a product is offered with a 15% discount over a 2-week period. During the deal, the product is featured on the Today’s Deals page. The product must have an average rating of at least 3.5 stars and selling price of at least $10. 
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9. Amazon Brand Gating: An invite-only Amazon program that allows manufacturers and private label sellers to control who can resell their products. This program helps prevent unauthorized third-party sellers from listing products. 
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10. Amazon Brand Registry: An Amazon program that enables brands to gain additional protections and access to additional marketing services. Enrollment in Brand Registry is free, but requires a trademark registration number. Brand Registry provides access to Amazon’s infringement reporting tool, brand stores, A+ Content, Sponsored Display Ads, Sponsored Brand Videos, and more. 
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11. Amazon Brand Store: curated digital storefront on Amazon where brands can list their entire Amazon catalog in a convenient and branded experience. This feature is available only to brands enrolled in Amazon Brand Registry.
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12. Amazon Buy Box: The top right section on the product page where consumers can add items to their carts. The Buy Box is awarded by Amazon to sellers based on product price, availability, seller performance, and whether the product is offered with FBA or Prime shipping.
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13. Amazon CouponsAdvertisers can enroll up to 50 ASINs into a single coupon and offer either a dollar amount or percentage off. The coupon cost to the advertiser will equal the discount + $0.60, both of which are subtracted from the coupon budget. Each coupon must have a minimum of $100 for the budget, however, advertisers will be charged only for redeemed coupons. 
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14. Amazon Damage Allowance: To cover the cost of handling and disposal of damages, Amazon charges vendors a damage allowance. Vendors can choose not to agree to this damage allowance, but they then must fund the cost of returning the item themselves. 

15. Amazon Early Reviewer Program: The Early Reviewer Program is an Amazon-run initiative that can generate up to five new reviews on a selected product. Amazon randomly contacts verified buyers of an enrolled product and offers the customer an incentive to leave a review within the specified offer period. Amazon offers the buyer a small Amazon account credit (typically $1-$3) that can be used on future Amazon purchases. To qualify for the program, products must have a price point of at least $15 and fewer than five reviews. The product can remain in the program up to one year or until it receives five new reviews, whichever comes first. 
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16. Amazon Enhanced Brand Content: A feature offered to Amazon’s vendors and Brand Registered brands that allows them to add additional information to their product detail page. This extra real estate appears below the bullet points on a product detail page. 
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17. Amazon Headline Search Ads: Renamed to Sponsored Brand Ads, this ad type displays a banner ad at the top of the search results page. The banner ad contains a brand image and features up to three products. This ad type is typically best suited for generating brand awareness. 
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18. Amazon Lightning DealsDeals that run for several hours on and appear on the Today’s Deal page. This deal type offers a limited quantity of units determined by the seller. To be eligible, the brand must have a proven track record of selling well, a minimum 20% discount off the lowest price in the trailing 30 day price or lowest price YTD (whichever is lowest), sales history, and a 3star rating or higher. 
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19. Amazon Live: Through Amazons app, Amazon Live Creator, sellers can broadcast livestreams where they demonstrate products usage, features, and benefitsFeatured products appear directly below the live broadcast.
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20. Amazon MarketingMarketing services that are available on the Amazon platform, including Sponsored Product Ads, Sponsored Brand Ads, Sponsored Display Ads, Sponsored Brand Videos, Amazon Coupons, Deals, Amazon Live, Amazon Posts, DSP, Brand Stores, A+ Content, and more. Amazon continuously adds and retires marketing services. 
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21. Amazon Product Categories: Amazon groups products by specific categories and has different selling requirements for each. These requirements can include additional fees, performance checks, and other qualifications. An example of a product category is “Apparel, which includes Outerwear, Athletic Wear, Innerwear, Belts, and Wallets. 

22. Amazon Prime Exclusive Discounts: A price discount exclusively for Amazon Prime members. Products with Prime Discounts display strike-through pricing. To be eligible for this promotion, a product must be Nationally Prime Shipping Eligible, have a rating of 3.5 stars or above or no reviews, offer 20% off current price, the discount must beat the lowest price offered for the ASIN in past 30 Days by 5%, and the seller must have at least a 4-star seller rating. 

23. Amazon Seller Central: An Amazon platform used by Amazon sellers to market and sell products to Amazon customers.  

24. Amazon Sponsored Brand Ads: Formerly called Headline Search Ads, this ad type displays a banner ad at the top of the search results page. The banner ad contains a brand image and features up to three products. This ad type is typically best suited for generating brand awareness. 
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25. Amazon Sponsored Brand Videos: An Amazon ad type that displays a video on the Amazon home page and in the search results. The videos display on mobile and desktop. Amazon recommends including subtitles in the video. 
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26. Amazon Sponsored Display Ads: Pay-per-click (PPC) ads on Amazon and Amazon-owned websites and apps that target shoppers by searches, views, purchases, or products. 
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27. Amazon Sponsored Product Ads: Pay-per-click (PPC) ads that appear in strategic areas on Amazon, such as the top of the search results page and within a product detail page. These ads give brands products more visibility and increase the likelihood of purchase by consumers.
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28. Amazon Spotlight Deals: Deals that run for 24 hours on the Amazon Today’s Deals page or until stock runs out. These Deals are subject to minimum revenue and units sold thresholds. Criteria for Spotlight Deals include whether the item is Top Selling Product, the lowest price trailing 365 days, and a 4-star rating. 

29. Amazon Standard Identification Numbers (ASINs): A unique alphanumeric code for a product listed on Amazon. The ASIN can typically be found in the URL of an Amazon product detail page and in the further details section of the product detail page. 

30. Amazon Vendor Central: The Amazon platform used by manufacturers and distributors to sell product directly to Amazon’s first-party (1P) retail division, Amazon Retail. 
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31. Amazon Vine: An invite-only program for Amazon customers who regularly leave reviews marked helpful by other customers. These customers are deemed trusted reviewers and gain access to free products, for which they provide customer reviews. These reviews are identifiable by a green stripe and labelled with Amazon Vine Program. 

32. Amazon Web Services (AWS): Amazons cloud computing platform that offers services such as infrastructure as a service (IaaS), platform as a service (PaaS), and packaged software as a service (SaaS). AWS also offers solutions for database storage, compute power tools, and content delivery services. 

33. AutomatiCampaignsA campaign type within Sponsored Products in which the advertiser sets a default bid at the Ad Group level and Amazon places ads automatically for customer search queries it deems to be relevant. These are commonly used to find new keywords that Amazon’s algorithm views as relevant for the products being advertised. 

34. Average Order Value: The average amount a customer spends at a digital storefront in a single order. You calculate this by dividing sales revenue by the number of orders taken. 

35. Average Time on Site: The average amount of time a visitor spends on a website. Usually defined within a specific timeframe. 

36. Bid: The maximum amount an advertiser is willing to pay in order to get an ad to place for a specific search term. 

37. Bid OptimizationThe act of adjusting the bid for keywords in Amazon ad campaigns in order to improve performance. Bids may either be increased because ads are not competitive enough for important keywords, or they be can be decreased because ads are utilizing budget too quickly. 
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38. Brand Awareness: The degree of consumer recognition of a brand based on the brands copy, colors, logo, products, qualities, and style. 

39. Business to Business (B2B): A transaction in which a business sells products or services to other businesses. 

40. Business to Consumer (B2C): A transaction in which a business sells products or services to an end consumer. 

41. Call to Action (CTA): The action that marketing materials are trying to encourage the audience to take, such as “subscribe,” “add to cart,” or “sign up.” 

42. Certified Service Providers (CSP): A person or organization that is certified under the Streamlined Sales and Use Tax Agreement to perform sellers sales and use tax duties (excluding the obligation to remit tax on its own purchases).  
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43. Chargebacks: When a customer contacts their bank about a charge they don’t recognize or dispute, rather than contacting Amazon or the seller about the issue. 

44. Click-ThroughRate (CTR): The percentage of visitors on a page who first view then click on an advertisement. 

45. CopywritingThe writing of marketing, advertising, and promotional materials. 
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46. Conversion Rate: The percentage of visitors to a page who take a desired action, usually in the form of purchases.  

47. Cost of Labor: The sum of employee wages that have been paid. This also includes employee benefits and payroll taxes.  

48. Cost-per-ClickA method of billing determined by the number of times a visitor clicks on an advertisement. This is Amazon advertising’s primary billing model. 

49. Demand Side Platform (DSP): Amazon’s advertising platform that enables advertisers to use Amazon’s consumer data to target shoppers on Amazon and Amazon-owned websites and apps with display and video ads. 
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50. Dropshipping: A method of retail fulfillment where the seller does not keep product in stock. Instead, the seller waits until a consumer purchases the product online, then the seller buys the product from the manufacturer and has the product shipped directly from the manufacturer to the consumer. This method is often used for products not eligible for preferred fulfillment methods, like FBA. 
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51. Discount Code (Coupon Code or Promo Code): A code that shoppers use during checkout to redeem special offers or discounts. 

52. First-Party Seller: A seller who owns the marketplace upon which they sell. Amazon Retail, for example, is the one and only first-party seller on Amazon.com.  
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53. Fulfillment by Amazon (FBA): An Amazon service in which third-party vendors keep their product at an Amazon fulfillment center. Amazon will pick, sort, pack, ship, track, and handle shipping, returns, and refunds of these products for a fee. 

54. Fulfillment by Amazon (FBA) Fees: A fee charged by Amazon for each unit processed through FBA. The fee is based on the product’s size and weight. 

55. Fulfillment by Amazon (FBA) Storage Fees: A fee charged by Amazon for your inventory that occupies space in an Amazon Fulfillment Center. This fee is based on the daily average volume (in cubic feet). 

56. Fulfilled by Merchant (FBM): A fulfillment method where the seller manages and controls their handling and shipping process, as opposed to Amazon or a third-party logistics provider 

57. Fulfillment Centers: A physical location where third-party logistics (3PL) providers, like Amazon Fulfillment, fulfill customer orders for online sales. 

58. Gross Margin: The revenue a business retains after subtracting costs, calculated by subtracting cost of goods sold from net sales revenue. The higher the gross margin, the more working capital a company has.  

59. High-Converting KeywordsKeywords in a pay-per-click (PPC) advertising campaign that drive high conversion rates. Identifying these keywords and adding them to sponsored ad campaigns is an essential part of optimizing an ad campaign. 

60. Influencer MarketingThe promotion and selling of products or services by having people with social influence and followings promote the product on their social media accounts. 
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61. Invoice: An itemized record of a transaction between a seller and a buyer. 

62. Key Performance Indicators (KPIs): Metrics that are actively tracked in order to gauge a company’s long-term overall performance. These are usually set to compare the company’s performance to other companies within the same sector and to previous years’ performances. 

63. KeywordsWords or phrases that shoppers frequently use when searching for a given product. Including keywords in the copy on the product detail page or in Amazon sponsored ad campaigns helps products place higher in the search results and drive more traffic to listings. 

64. Landing Page: A webpage created solely for an advertising campaign. It is where visitors “land” after clicking on an ad or a link. 

65. Listing OptimizationThe process of revising the copy and images on a product detail page in order to improve organic placement in the search results and conversion rates. This process often includes adding keywords to the listing title and bullet points, revising copy to improve readability and highlight key features, and including images that demonstrate product use, features, and benefits. 
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66. Low-Converting Keywords: Keywords that drive particularly low conversion rates within a pay-per-click (PPC) advertising campaign. Identifying and negating these keywords is an essential step in improving the efficiency and performance of a sponsored ad campaign. 

67. Minimum Advertising Price (MAP)The minimum price for which sellers can advertise a product, typically issued by the manufacturer. 

68. Minimum Order Quantity (MOQ): The minimum number of products or units that a supplier will produce at one time. This number helps ensure that the supplier is producing enough products or units to drive a profit after the costs of production. 

69. Marketing Campaign Management: The planning, executing, tracking, and analysis of marketing campaigns from the beginning to the end. 
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70. Marketing Co-opAn agreement between a manufacturer and a seller where the manufacturer pays for a portion or the entirety of paid marketing efforts for their product. 

71. Marketplace Facilitator: Businesses or organizations that arrange with third parties to sell products and services on its platform. Through this they can facilitate retail sales. 
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72. Marketplace Facilitator Laws: Legislation around sales tax responsibilities of Marketplace Facilitators. 
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73. Manufacturing Cost: The cost of materials and production borne by the manufacturer. 

74. Media GalleryThe section at the top of an Amazon product detail page containing images and videos. 
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75. Net Profit Margin: The percentage of revenue that a company retains as profit after subtracting all costs. 

76. Net-TermsThe amount of time that passes between a seller acquiring inventory from a manufacturer and the seller paying the manufacturer for that inventory. This delayed payment enables sellers to generate revenue to help pay for the purchase order.  

77. Paid SocialPaid targeted advertisements run on social media platforms, such as Facebook and Instagram. 
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78. Pay-per-Click (PPC): type of digital marketing in which marketers pay a specific amount each time their ads are clicked. This model is used in most types of Amazon ads. 

79. Purchase Order (PO): The order a retailer places with a vendor to acquire product. This includes the quantity of product ordered and the price paid for it. 

80. Product DescriptionA section near the bottom of the Amazon product detail page where additional product information can be shared. 

81. Product Detail Page: Also called a “listing,” the page featuring a specific product that includes a title, bullet points, product description, media gallery, enhanced brand content, and customer reviews. 
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82. Product Profit Margin: The difference between how much the product sells for and the actual cost of the product itself. This is sometimes referred to as a “markup. 

83. Product Rank: A product’s rank compared to other products in each category as determined by Amazon’s algorithm. A lower rank is better, indicating higher customer reviews, more traffic, more sales, and better organic placement on the search results page. 

84. Production Costs: The cost for manufacturing products or services. These can include labor, raw materials, supplies, delivery costs, and general overhead. 

85. Retail Arbitrage: The practice of buying products from distributors, wholesalers, retailers, and so on, then reselling those products at higher price. The resale usually takes place online. 
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86. Retail Price: The price of product when sold to an end consumer. 

87. Return On Advertising Spend (ROAS): A measurement of the effectiveness of a digital advertising campaign. Very similar to ROI, this metric is specifically for paid advertising campaigns and helps online business determine best methods and improvements for future digital advertising campaigns. 

88. Return-On-Investment (ROI): A comparison of the amount invested to the amount generated by that investment. ROI is frequently used when measuring the value of paid marketing in generating overall revenue. To calculate ROI, divide the amount generated by the cost of the investment.  
89. Sales Tax: A tax on a sale, transfer, or exchange of a product or service. Usually this tax is applied to the end consumer and not the seller. 

90. Search Engine Optimization (SEO)The science of making web pages more attractive to search engines by implementing highly searched keywords in a page’s frontend content and meta content, optimizing content length, and more. On Amazon, SEO typically involves implementing keywords into product detail pages to improve their organic placement on the search results page. 
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91. Search Engine Results Page (SERP): The page that is generated from a system after the user inputs their query. An example of SERP would be the Google results page. 

92. Seller AgreementA contract signed by businesses that sell on Amazon wherein they agree to comply with all of Amazon’s policies.

93. Social Media MarketingA type of marketing conducted on social media platforms such as Facebook, Instagram, Twitter, LinkedIn, Pinterest, Snapchat, and more. This marketing typically seeks to connect brands with their target audience, build brand name recognition and loyalty, increase sales, and drive website traffic. Social Media Marketing often involves content creation, engagement with followers, analysis, and running paid social media advertisements.  
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94. South Dakota v. Wayfair, Inc.A landmark supreme court decision that holds sellers responsible for collecting and remitting sales tax in any state where they surpass a certain sales threshold, even if the business lacks a physical presence in the state. 
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95. ThirdParty Seller(s): An independent company that sells products on a marketplace they do not own, such as Amazon. Third-party sellers are common on Amazon, accounting for over 50% of all sales on Amazon.com. 
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96. Third-Party Logistics Providers: business that provides services for inventory management, distribution, warehouse storage, product preparation, labelling, and fulfillment for other companies. 
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97. Today’s Deals: A page on Amazon that features products currently running Deal of the Day, Lightning Deals, or Best Deals. This is the second most visited page on Amazon. 
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98. Use Tax: A tax on a storage, use, or consumption of a product or service which has not had sales tax applied to it. 

99. Vendor Fees: A fee collected by vendors to cover the cost of processing sales taxes and transferring them to state and local governments. 
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100. Wholesale Costs: The price of products purchased in bulk from the manufacturer, as opposed to the retail price, which is an increased price charged to end consumers commonly used by retailers/resellers. 

Selling Online Can Help Mitigate Business Risk

COVID-19 will be here for months, disrupting our communities and our businesses in ways that we are only beginning to understand. If you have only operated your business in brick & mortar stores, moving your brand online can help you shield your business from adverse effects of the economic fallout from the coronavirus. We can speak from firsthand experience: Kaspien was founded at the height of the last recession in 2008. While many industries struggled to survive the rough economy, we not only survived the recession, we thrived in a vibrant and fast-growing market.  

Yes, online marketplaces like Amazon are a different beast today than they were 12 years ago, but there is still security to be found in diversifying your assets. Expanding your brick & mortar business to have a strong presence on Amazon, Walmart, and other growing online marketplaces is a smart way to position your brand to survive unexpected shifts in the market, like the one we are currently experiencing. 

How to Start Selling on Online Marketplaces 

When expanding to major ecommerce platforms like Amazon and Walmart.com, brands have three general routes for listing their products online: first-party, third-party, and direct-to-consumer.  

Definitions: 

  • First-party (1P): A first-party business model is when you sell product wholesale to the marketplace (like Amazon Retail or Walmart Retail), and they sell the product at retail price on their platform. In a 1P relationship, you get paid a large check once every few months.  
  • Third-party (3): A third-party business model is when you sell product wholesale to a third-party seller (like Kaspien), and the 3P sells the product at retail price on Amazon, Walmart, or wherever else you’d like to curate a brand presence. In a 3P relationship, a single retailer can represent your brand across all channels. As with the 1P relationship, you get paid a large check every few weeks to few months.  
  • Direct-to-Consumer (DTC): A direct-to-consumer business model is when you, the brand, manufacture product and sell it on marketplaces yourself. Instead of a periodic large paycheck, you generate a much smaller but steady stream of profits as products sell. This can be done independently (hiring the necessary teams internally) or by partnering with an agency (hiring the necessary teams externally). 

Other than the cash flow model, the biggest difference between the three business models is in who provides the personnel, expertise, strategy, hardware, software, infrastructure, and time needed to successfully run an online business.  

A Word of Warning About DTC 

Although the idea of cutting out the middleman may have strong appeal to individuals with a strong and wholly commendable do-it-yourself attitude, there’s good reason that 1P and 3P not only exist, but flourish. Providing the needed resources – material and immaterial – is a lot of work. It takes teams of people and years of experience to excel at, so many brands find it easier and still highly profitable to use 1P or 3P. If they so desire, they can then work towards DTC while still actively growing an online presence 

We say this not to warn you away from DTC because we’re a 3P (through our platform model, we can actually serve as your 3P, agency, or provide you with industry-leading software for your own teams to use. To us, it doesn’t matter how you sell; we can help in the way that best serves your brand. But that’s another story). We say it to simply educate you about the reality of the situation and equip you with the information needed to make an educated decision.  

Which Online Business Model is Best? 

To determine which business model will best serve your brand as you look to expand your online presence, we’ve compiled a list of key considerations, as well as a list of next steps you can take immediately.  

Our whitepaper, The Costs of Amazon, explores each of these considerations and more in greater detail.
Download it for free
!

4 Key Considerations for Selling Online 

There are four basic key considerations as you plan to expand your business on Amazon, whether it’s for the first time or you’re scaling your efforts there.  

1. Cash Flow 
We touched on this in our definitions of the three primary business models, but cash flow differs in each business model. In 1P on Amazon, for example, brands are typically paid on Net-90 or Net-120 terms. These PO’s also tend to be larger than what 3P’s purchase. In a 3P relationship, brands are typically paid on Net-30 to Net-60 terms, so brands are paid more frequently. In a DTC model, brands operate off of sales revenue. Each cash flow model has its pros and cons, and which serves a brand best depends on the brand’s existing infrastructure and whether a brand can adapt their revenue model.  

2. Resources 
Does your team have the experience and knowledge needed to run an efficient online business? This includes marketing, product preparation, inventory management, brand protection services, tax compliance, and more. Does your business already have the hardware and software in place to manage your processes and infrastructure? This is doubly important as businesses begin to work remotely to comply with social distancing mandates. It takes a village to run an optimal online business. The answers to these questions will be a significant factor in determining whether you pick 1P/3P retail model versus a DTC model.  

3. Services 
We just mentioned the many services that go into driving a successful business on Amazon. In addition to asking “if” you have resources for them, you should also consider the quality and price of each. 1P and 3P’s offer many of the same services. Now it’s a question of who can provide the better results for the better price.  

4. Control 
Finally, and crucially, there is the question of brand control. When you work with another business – whether it’s a manufacturer, logistics provider, seller, or agency – you relinquish some control of your business. That’s just the reality, which is why it’s so important that you take time to explore their services, negotiate contracts with clauses about who can sell your product and who can update your product listings, and generally make sure you find a company that will work with you as a partner in the full sense of the word. 

Next Steps to Start Selling Online 

Those are the considerations, but what action items can you take today? Supply lines are hurting at both ends, and there’s a strong sense of urgency to act now so you can minimize the adverse impact to your business caused by COVID-19.  

Here are our recommendations: 

1. Shop Around 
We’d love for you to work with us as your 3P, agency, or software provider, but you should do your homework. There are many 3Ps, agencies, and software providers out there. Which one offers the best customer support, the most effective services, and the best pricing? While selecting a partner to help you launch or expand your online presence is not a permanent decision, it will have lasting impacts, so do your due diligence and find a partner who will position your brand for long-term stability and growth.  

2. Ask for Advice 
Reach out to your professional and personal network for advice. Get advice from people with firsthand experience, whether that’s friends, family, colleagues, or even competitors. Faced with the threat of this crisis, it’s our duty to put aside competition and work to protect our communities and businesses, and thereby help prevent any greater economic hardship than we already face.  

3. Once Informed, BDecisive 
Do your research but do it quick, and once you’ve found a good match, act quickly. The sooner you can get your online business running, the more damage you can mitigate.  

4. Scale Smart 
Ignoring online marketplaces as a business venture is risky, but going too far too quick can also be dangerous. As you seek to expand your brand online, make sure that you’re putting your best foot forward. Which products have the best opportunity to succeed? Making this assessment is largely dependent on category saturation and competitors. Invest in your most differentiated products first, and then expand your online catalog from there.  

Learn More 

We recently published a whitepaper that explores each of these factors in much greater depth. Download The Costs of Amazon whitepaper for free here. 

We’re always happy to answer any questions you have. Please feel free to reach out through our contact form or schedule a call directly with one of our ecommerce specialists.