The most common pitfalls of selling on Amazon

Over 300 million customers, the possibility of using the logistics infrastructure ensuring delivery to a customer, management of returns and products storage. Additionally, access to over 15 marketplaces which manage sales in over 180 countries. All of that is made available by one selling platform. It sounds like a dream come true for selling abroad, doesn’t it
In the past few years, Amazon has been getting more and popular among Polish companies. Most of them see the platform as an opportunity for a quick expansion on the foreign markets. However, as if often happens, big opportunities come with big risks. Basing on the experience of managing several dozens of clients and our own sales we can pinpoint the most common pitfalls in selling on Amazon.

  • Our brand is an exclusive brand – domestic companies which are well-established on the Polish market often apply the same strategies to sell on foreign marketplaces. The fact that a brand has a strong position in Poland does not necessarily mean it will also prosper in Germany. Talking about a strong position, I mean brands for which we are willing to pay more because of the brand itself and not because of the features of the product. Over three-quarters of Amazon searches are non-brand enquires. It could be argued that Amazon is a “brand agnostic” marketplace. It could be exemplified with Nike’s decision to stop selling on the platform. Price and a very good product presentation are what count on Amazon. Because of that, very often we can see small companies which tailor their offer especially for Amazon and win with big and strong brands.
  • Let’s list a few products in a merchant model and see how they sell, later on, we will start investing – it is as if you wanted to check if you have a passion for racing cars, bought a fiat panda and decided that if you liked it you would buy a Porsche as a next step. Just like a fiat panda will not let you check if you are passionate about racing cars, listing a few products with poor descriptions in a model in which the delivery to a customer might take a few days, will not let you experience Amazon’s potential. Achieving significant revenue takes time and requires investment. Basing on our experience, the first 6-10 months on Amazon is a constant investment in listing promotion. Only after this time, you can start counting your profits.
  • The ACOS of a campaign is 200% which means the campaign should be shut off – As a person who has a long-time experience with marketing in Google ecosystem, approaching PPC on Amazon was intriguing, to say the least. To simplify, on Amazon we deal with campaigns which create traffic on a listing and in these campaigns ACOS has little meaning; as well as with campaigns whose purpose is to directly increase sales, and in such case ACOS is the key. While analysing PPC campaigns we need to consider its effect after around two weeks since the end of displaying the creation. A common mistake is to judge campaigns by the rates typical for display campaigns on portals or in Google network.
  • Price, price and once again price – “You see, the competition has higher prices, so we are not going to lower ours”, “Why are you showing me some no-name products? We need to compare to premium brands” – we hear these arguments against lowering prices every single day. The second argument relates to what I wrote about in the first point. If your brand is not to be found in Harrods, then for an Englishman you are not Premium. The first point exposes some misunderstanding regarding the operation of Amazon catalogue. Just because something gets listed, does not mean it sells. These discussions always come down to a question whether a company wants to be on Amazon or make money on Amazon. Of course, there are ways to defend the price. If you are interested in how to do it, please contact us.

To sum up, Amazon is a huge opportunity for Polish companies to sell abroad. Personally, I think, that it is even a greater opportunity for small companies rather than big corporations which think they can bend Amazon’s rules for their convenience, as they are used to doing on the domestic market. However, selling on such a demanding platform is not easy and it is not enough to list some products, because they are doing fine on Allegro. The process of achieving significant revenue (our brand has generated around 20 million revenue) requires time and investment.