Most people think Amazon is just another eCommerce site.
They visit Amazon, search for the product they want, and complete their purchase. They don’t pay attention to whether a product is “Sold by Amazon” or “Fulfilled by Amazon.” And since a majority of the products on Amazon fall under one of those two categories, their shipment arrives in a box with Amazon branding.
But Amazon is much more than “just” an eCommerce site, especially for sellers.
With over 300 million active customers, there’s no doubt it’s a great platform for selling your products. Who wouldn’t want to take advantage of all that free traffic? Without it, there are many products and businesses that the average customer would never know about.
However, using Amazon as your main sales channel isn’t always the best option. First and foremost, it isn’t cheap. Each time you make a sale, they take a 15% commission off the top. And if you use Fulfillment by Amazon (FBA), they take another cut for fulfillment fees. And then there are long-term storage fees (which are now charged monthly).
Unless you jack your prices up, selling on Amazon is less profitable than direct sales from your own website. And since they do everything in their power to prevent you from getting your greedy little hands on the customer data, it’s nearly impossible to get people to move from Amazon to your website.
But there’s still a way you can — and should — use Amazon to your advantage. Rather than looking at it as a sales channel, you can use Amazon as a marketing channel.
And one way to do this is by using the Fulfillment by Merchant option.
Why use Amazon Fulfillment by Merchant?
Fulfillment by Merchant (FBM) is one of the two options that you have as an Amazon seller. FBM is exactly what it sounds like — when someone buys your product on Amazon, you send the order directly to the customer. You cut out the middleman. Amazon doesn’t touch or handle your product, they just process the transaction.
Here’s why this is a good thing:
- You maintain complete control of your supply chain.
- You’re responsible for quality control.
- You control the customer experience (branded packaging, promotional products, etc.).
- If your product is large or expensive, FBM saves you money. You don’t have to pay Amazon to store or ship your product.
- MARKETING. Remember, Amazon will not see or handle your product. It goes from you straight to the customer. This presents a great opportunity to leverage marketing to grow your business!
While Fulfillment by Amazon and Fulfillment by Merchant both have their advantages, FBM is an often-overlooked option for many sellers.
When Should I Use FBM?
These types of products may be better-suited for FBM:
With Fulfillment by Amazon (FBA), you are charged much higher fees for oversize products. If your product weighs more than a couple of pounds and is larger than a shoebox, the fulfillment fees may be cost-prohibitive. And if your product doesn’t move off the shelves fast enough, the long-term storage fees may eat up the rest of your profit.
Warehouses are hot in the summer! Food products, supplements, lotions, creams, and many other similar items are susceptible to heat damage. These products won’t hold up very well in Amazon warehouses. By using FBM, you can make sure your product is being stored correctly.
Seasonal Products or Inconsistent Sales
Some products sell inconsistently for a number of reasons. One example is seasonal items. Maybe you sell pool toys or hunting gear, and your sales spike during those seasons. Your sales could also be inconsistent if you’re a brand new business or selling a brand new product. In these scenarios, Amazon Fulfillment by Merchant may help you avoid long-term storage fees or costly removal orders.
Products With Slim Profit Margins
If your product is less than $15-20, you’re going to pay $2-4 alone in commissions. Then, FBA fees may eat up the rest of your profit.
But, this isn’t limited to less expensive products. You could also sell a product for $80 that cost you $50. After $12 in commissions and another $12 in FBA fees, you’re left with $6 profit. And that isn’t even factoring in advertising spend or storage fees.
These are generic examples. But for FBA to be profitable, you need a lot of margin.
Products that Benefit from Custom Packaging
Another good use of FBM is if you want to control your customer experience. For example, you might have your own branded packaging that you’d rather use versus the standard Amazon fulfillment box. Using your own packaging will help you stand out and make your customers more likely to remember your brand.
Use FBM as a Marketing Channel
There’s one final reason why you might choose FBM over FBA. If Amazon doesn’t work for you for any of the reasons above — or if you just want to do things your way — you can leverage it as a marketing channel to increase your exposure and brand awareness. In this case, you can simply use Amazon as the means to an end.
Four Ways to Use FBM for Marketing
If you fall into the last category of sellers, here are four ways you can use FBM to market your business.
1. Use Unique Packaging
When a buyer gets your product in the mail, the first thing they see is the packaging. Sure, they’ve seen what the product looks like online, but this is the first time they actually get your product in their hands. If their first impression of your product is an impersonal brown Amazon fulfillment box, they won’t have a very memorable experience. So, try giving your customers unique packaging to get them excited about your product. Here are a couple of ideas:
- Use attractive shipping materials to improve customers’ first impressions of your product. Instead of a plain brown box with Amazon Prime tape, maybe your boxes have inspirational quotes or use bright colors that are on brand.
- If being eco-friendly is an important part of your company, FBM gives you the chance to use sustainable packaging materials. You can also choose how much packaging to send with your product to decrease waste.
2. Include Marketing Materials
Give your customers an incentive to keep using your product and see what other products you offer. And more importantly, give them a reason to visit your website and not Amazon. For example:
- Include coupons for future purchases that are only redeemable on your website.
- Ask for feedback or customer reviews in exchange for discount codes.
- Run a giveaway on your website for a new product, and announce the giveaway on a packaging insert
There are many other ways to incentivize people to visit your website and either buy more products or give you their email address. And once you do this, you own the customer data.
3. Personal Touches
Fulfilling your orders yourself gives you the ability to personalize each package. You can include a handwritten “Thank You” note addressed to your customer. This kind of extra care and attention makes your customers feel special and gives them a reason to keep purchasing your product and recommending it to their friends.
And I have a great personal example for this. I have one product that I sell in 20-packs on Amazon, and I noticed that many people bought multiple units at a time. They wanted more than 20. So, I started hand-writing a simple note on each packing slip. I told them that we offered bulk discounts and to email me directly if interested. And it worked like a charm. I started getting emails from people who wanted to order thousands of them! So I sold them thousands directly and cut out the 15% Amazon commission.
When you use FBM, you could throw in freebies for customers. Maybe you have a new product that you want more people to try, or maybe you want to reward loyal customers. Free samples or schwag are great ways to do this. And it will make people remember you.
After all, who doesn’t like free stuff?
All these ideas give your customers a reason to be loyal to your business or brand. And for products or businesses that don’t quite work with Amazon as the primary sales channel, they’ll help you leverage the world’s busiest eCommerce platform as a marketing channel to grow your business.
Can you think of any other clever ways to use Amazon FBM? Let us know in the comments!