Business development · 18 June 2018

Is Amazon Prime right for micro business exporters?

Is Amazon Prime right for micro business exporters?
For businesses who want to cut marketing, warehousing and delivery costs, Amazon Prime could be a likely option. But how do you get started?

When Helen Rolfe realised that her love of design could become a viable business idea, she left her career in facilities management behind to start her own business, Lente Designs.

The Aylesbury based business originally sold Kindle and iPad cases to local customers.

“As her business expanded, very quickly her house began to fill up with products. She couldn’t even find a chair to sit on,” said Simon Donegan, Head of Seller Services at Amazon UK. “Her husband and her were working around the clock to manage the orders coming in. They needed a logistics partner for better work life balance.”

For Rolfe, selling on Amazon was a safety net that let her venture into the world of business with less risk and greater visibility on customer feedback.

Outsourcing her logistics allowed her for the first time in a long time to take a holiday, do the school run every morning, and even take her son to Disneyland,” Donegan said, speaking at Amazon Academy Newcastle, a day dedicated to connect, inspire and inform the North East’s growing businesses eager to grow via ecommerce.

Rolfe is one in tens of thousands of examples of SMEs using Fulfilment by Amazon to help their business grow at home and abroad.

What is Amazon Marketplace?

According to Donegan, 50% of purchases are from marketplace sellers on Amazon globally. In the UK, Amazon Marketplace sellers have generated £2.3bn in exports, generating more than 20% year-on-year growth in 2017.

Amazon Marketplace allows retailers of any size, including sole traders, to use Amazon’s infrastructure and sell their products on the platform

The concept is that you’re only charged a fee when you sell, not to list. The percentage-based fee is also dependent on the category of the listing, he explained. “If you sell something for £100, in a category where referral is 15%, we’ll charge you £15.” Other fees include a flat-rate monthly subscription, which Donegan explained gives businesses “access to all the bells and whistles of sellers central,” such as dashboards and personalised help.

Amazon Marketplace hosts two types of sellers: casual and professional. Casual sellers sell 35 items or less every month, and are only charged after the sale.

Professional sellers sell more than 35 items a month and have access to bulk listing so they can sell a lot more products at a time and reach more potential customers. They are charged a monthly subscription fee on top of the referral fee.

Why Amazon Prime?

“Next-day delivery is no longer a nice-to-have, but a necessity. Same-day delivery is also on the up,” Donegan added. “People filter searches by these delivery options so your product may not even be seen by customers if you don’t.”

Amazon’s SME tracker polled the confidence of small businesses in the UK. Its latest findings revealed that marketplace businesses have employed around 85,000 people to keep pace with growth.

Access to European marketplaces

More than 100 million customers visit Amazon’s EU websites each month. According to Donegan, this opens up opportunities to reach these markets without the cost of shipping to them, if sellers choose pan-European Fulfillment by Amazon.

“Sellers can send stock into local FC, and Amazon algorithms will figure out how to make your products available for same-day or next-day delivery to compete with local brands.

Buying customers are in 180 countries, and if you’re a bit nervous about expanding or entering new markets, there are simple steps to reach customers, Donegan explained.

Through Fulfillment by Amazon, sellers can tick the exporting enable box which will let any customers shopping on the UK site buy those products. “And we’ll take care of it on your behalf,” he added.

“You can reach prime customers the moment you set up. So that’s millions of customers without major upfront costs.”

The dos and don’ts of selling on Amazon Prime

Sellers of fresh food products can’t currently use Amazon Prime to sell. “We don’t yet have chilled storage, so no fresh food right now,” he said.

His biggest piece of advice for sellers on the platform is to put as many units as you can into Fulfillment by Amazon to reach as many people as possible. “Even if your product hasn’t sold yet, it is likely to increase visibility and organic rankings,” he added. “Also, remember to follow all labelling guidelines. This is crucial.”

“Don’t put thousands of units in stock right away. There’s no limit, but ask yourself if it works for you economically. If you can, it’s a great thing to do.”

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

Franchising