Small Business and Amazon
I read an article recently that stated Amazon dominates half of all online sales in the US. 49% to be exact. That statistic is from 2018, so I fully expect it to be more than that now. That is mind-blowing but not surprising, at least to me. My husband and I decided to buy a prime membership probably 5 years ago and we still agree it is the best choice we ever made. The luxury of having almost anything you need delivered to your door in 2 days or less (for most things) is pretty awesome! It was precisely because of our own use of Amazon that we decided to jump into selling products from our little company there as well.
A little backstory on our small business
I think our first online appearance was around 1999, back when we barely new what email was and AOL was all the rage. Since sierraproducts.com was already taken, we decided on noveltybowlingstuff.com and purchased that domain name. Back then it was just one page with a basic title, product photo and description of our business, but most importantly it displayed our toll free number and business address. This began the era of the “birthday mom” and our little business found a whole new market of consumers besides just bowling centers! All of a sudden we were getting calls from moms (and dads) who wanted bowling pin sippers for their birthday parties.
Then came the online “shopping cart.” I think our first website with ordering capabilities was in 2007 and we’ve been through probably 4 different “shopping cart” software programs since then. The newest (and best) which was just implemented in September 2019. The invention of the internet has sure been good for small businesses like ours!
Now back to the Amazon part of this post…
To be fully transparent, there is a white bowling pin water bottle that sells on Amazon that is a “Chinese knockoff” of our bottle. It is smaller by about 2 inches and holds 24 ounces instead of 32. It also has terrible red rubber bands on it that seem to break easily (according to multiple reviews). Yes, it is cheaper than ours, but it is simply not good quality at all. But I digress.
In 2015 we started getting phone calls from customers asking for pricing on the white bottles. Once we gave them the price they would state “Why are they so much cheaper on Amazon?” We would then have to explain that we don’t sell our bottles on Amazon and how they were different. The fact that they could get 9 different colors was a big selling point (and still is!). After getting so many calls just like this one I decided to look into selling on Amazon too.
Amazon is complicated
I’m going to be honest with you, taking the leap was not easy. Selling on Amazon is complicated and requires a lot of research. We didn’t want to just jump in without enough knowledge to make the right decisions. I read too many horror stories about small businesses losing money on Amazon! I had to figure out how to package our products and create UPC codes so we could label them. We also had to decided between Amazon FBA and Seller Fulfilled.
It wasn’t until late 2016 (after SO MUCH research) that I created our Amazon selling account and created our first listing. We decided that the 12 pack of mini bowling pin containers was the best item to start with. This was and still is the second most popular item for “birthday moms”. I packaged 42 sets, put them in one large box and shipped them off to the Amazon warehouse. Then I crossed my fingers and said a little prayer hoping I made the right choice! And it was (the right choice). They became our most popular item on Amazon!
How Amazon FBA (fulfilled by Amazon) works
The seller (me), packages and labels the product and sends it to an Amazon warehouse (they will select where it goes and produce labels for you to print and put on the box). Then Amazon is in charge of everything from that point on. They send the packages all over the US and also take care of customer service.
It’s important to note that Amazon takes a percentage of every sale. So, as a small business it’s important to set a price so you don’t lose money!
Those seller fees can get quite high as there are:
1.”Referral fees” (based on product price)
2.”Fulfillment fees” (cost to store, pick and pack the product)
3. “Inventory fees” (extra fees for storage if your product stays in the warehouse too long)
4. Fees to ship your product to the warehouse. You also have to keep an eye on inventory and keep things in stock.
Just last year we started selling some of our items as seller fulfilled on Amazon. The fees are less but you have to deal with disgruntled customers when/if there is an issue with the order. Luckily we’ve had very few issues, but man people can get downright nasty (that’s a story for another post, ha ha).
The Best Thing About Selling on Amazon
The biggest plus for selling on Amazon is the exposure. Google used to be the first place people go to find what they want, but now I truly believe it is Amazon. Selling on Amazon has been one of the best decisions we have ever made.
For those who have made it this far and aren’t going to sell on Amazon I want to impart a little knowledge. When you buy online from a small business website (after finding their product on Amazon) please remember, they are not Amazon. They do not get special deals on shipping from UPS like Amazon does. 2-day shipping is expensive for a small business!!!! So when they tell you its $45 extra to get that product in 2 days they are not lying or trying to scam you. It really is that expensive to ship (for example) from CA to NY in 2 days!
“Free shipping” isn’t free. Let me say that again: “FREE SHIPPING” ISN’T FREE. The cost of shipping is built into the price of the product. That’s why on our website it is $10.50 for one sipper (with free shipping) but it’s only $3.85 each when you order 50 sippers (with free shipping). I hope that makes sense!
Now, for those who are looking to start selling on Amazon, I’d love to try and answer any questions you might have. I’ve learned a lot in the last 3 years. So post your questions below or shoot me an email. Thanks for reading!