Amazon Prime Wardrobe

Amazon Prime Wardrobe

Amazon has introduced a service that will put more of a hurting on traditional retail outlets.  It is a service where you can try on clothes before you buy them.  The more you buy, the more you save.  This article from Zerohedge goes into more detail:

Zero Hedge Amazon Article

Good or Bad?

I guess the answer to this question depends on who you ask.  This may seem good out right if you are a consumer, but when you think about the implications this may have in the future for smaller retailers, then you begin to see issues with this service.

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Who will get preference in the search results of Amazon Prime Wardrobe?  How much will the service cost?  I have been unable to find answers to these questions as of right now.  You see if brands can pay for preference with this service, then there is little chance for the small business to ever compete with the larger brands.

Amazon Fulfillment Centers

What if Amazon begins making their own clothing brand?  What will be the chances of Amazon giving preference to another brand over their own?  This service would require retailers send Amazon their inventory in order to be on this program.  When you send Amazon your inventory, especially with clothing, they can begin to see what styles are selling.  There are many issues that come up when you consider who will be effected when this service launches.   Amazon is really becoming the Wal-Mart of the internet.

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With Amazon you don’t see the stores it has put out of business because they are all online in most cases, but even this is changing as Amazon expands into the retail and grocery spaces.  The empty retail spaces throughout America can be seen in abundance already.

Start your own Ecommerce store

It is now more important than ever to have a back up to Amazon if you are selling things online.  I recommend Shopify as they make it easy to create a store.  Click this link to start your free trial:

UPS branded label

You can have your store up and running within an hour.

Yes it is difficult

It will be difficult to get started, but there are so many resources out there to help you grow your web presence.  This blog is dedicated to helping you grow your site.  I want you to do well and compete with Amazon.

Use Amazon to grow revenue and convert those engagements to your own website.

Thanks for reading and check out the zero hedge article for more information on this.

 

Let me know what you think of this by leaving a comment below!

 

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Grow sales online

How do you grow sales online?

This is a common question that people ask when starting an E-commerce site.  The answer of course is different for everyone because the world of e-commerce changes from day to day.  Some people hear about a friend who started a Shopify store that is making $100,000 a year working from home.  People that hear these stories think that they are getting the complete story.  How did they really grow sales online?

You see it is possible that the person is running a store making $100,000 a year working from home, but is that the entire story?   How many hours did this person spend learning how to build a web presence before he got to this level of sales?  Often times when we hear success stories where the teller of the story makes everything seem so simple.

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Ironically one of my favorite quotes on this subject comes from Jeff Bezos when he said ” I find that most over night successes take 10 years to develop.”  By the time we hear about a successful person, they have already put in the work to get there, so we get the illusion of it being an over night success.

grow your sales onlineThe History of Amazon

As you can see from the graph above, Amazon is no over night success.  Though it does seem that way.  They have 80 million + prime members that desire two day shipping.  What was the first thing you bought on Amazon?  If you look back through your history, then you will probably see a progression from one random thing to multiple things to everything.

The site is called Escapeamazon.com, but I do admire still what Jeff Bezos has accomplished thus far.  I don’t want to discourage people from getting started on Amazon, but if you are going to rely on Amazon for all of your sales, then who is in control of the business you created?

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Sometimes the revenue Amazon provides can make you forget why you started selling the product in the first place.  Amazon does make it easy to sell on their platform.  Now I want to draw your attention to something else, the orange brownish line in the chart above.

How to will Amazon make income?

Amazon has built a business that no doubt has a massive amount of revenue coming in.  They are reinvesting this revenue to grow their business.  At some point the investors of Amazon will want profits out of Amazon.  Private label Amazon products have been popping up here and there.  When the investors start to bail out on Amazon, where will they turn for profits?  Let’s say that you have a best selling product on Amazon with no patent and no intellectual property rights.  If Amazon were to copy your product to an Amazon branded product, then what would be your legal course of action?  Do you have the legal team to beat Amazon’s?

Now maybe this doomsday scenario will never happen for you.  It is unlikely that you are a best seller on Amazon just from a statistical stand point, but you should always be considering that one day if you become successful, then someone will want to take what you have earned.  You need to build a moat around your business.

Get away from comfort

Amazon is comfort.  They provide an easy way to sell your product without much work.  What you need to do is create alternative stores on Etsy, Ebay, and most importantly your own website.  I recommend Shopify as you know:

UPS branded label

You can start a free trial, and have a store up within an hour.  Click the banner above to find out more.

Keep working

The most important thing is that you keep working at your goals.  If your goal is to start a business, then do that.  Amazon is a great place to start, but do not rely on them for everything.  I started this blog to help small business owners retain profits that they are giving away to third parties.

Thank you for reading, and share this with your social networks if you find this helpful.

From my personal Etsy store:

A handmade gift that everyone will love

Amazon Fresh and Whole Foods

Amazon Fresh and Whole Foods

As you probably know, Amazon is in the process of buying Whole foods.  I wrote about this Last Time if you need a refresher on the subject.  The purchase of Whole Foods might be an attempt at an expansion of the Amazon Fresh program that launched in some cities.

 

Amazon Fresh whole foodsMore Amazon Fresh

Amazon Fresh costs $299 a year, so now with 400+ Whole Foods stores we can expect for the number of memberships sold to increase.  The problem with this is that there are a number of different services out there that already do this for $0 annual membership fees.  Insta Kart and Shipt are just a few that exist today.  I am sure that Amazon has a plan with the stores, but in order for this to be a good investment for Amazon they are going to have to downsize the current workforce.

Omni Channel – Redirection

With Amazon growing in size, it is now going to be more important that your business operate on multiple marketplaces.  Have a store on Ebay, Etsy, Amazon and your own website.  Your own website is going to be the most important store you have.  The problem you will have is that your website will take the most work and get the least amount of traffic.

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If you haven’t set up a website yet, I recommend looking at Shopify to start your website in under an hour:

UPS branded label

Customer Redirection

Redirecting customers to your own website is a way to drive traffic to your site that is simple and effective.  When you receive an order from one of your other stores, you offer the customer a discount of some sort that encourages them to go to your website.  Most places will not like you do to this because obviously it takes business away from them.

Include a note along with the order to your customer thanking them for the order and give them the discount code.  Encourage them to post your website to their social networks instead of your Amazon, Ebay or Etsy store name.

The most effective way to encourage people to do this is through the law of reciprocity.  I wrote about the Law of Reciprocity in my Chialdini series.  You can read more about this here: Reciprocity

Essentially one of my recommendations is to include a free gift with your order from Amazon, ebay or Etsy.  If they ordered your product here, then they will like what you have on your website as well.  Give them something free without telling them your going to do this.  Include the note as well that shows them where to go if they want to order more.  This will help you get more sales online.

UPS Branded label

One thing that UPS offers that other carriers don’t is a branded label.  You can process this label through UPS Worldship only.  You can add images that you want to this label.  I have seen many retailers add a QR code that directs people to their own website.  If your marketplace allows you to print your own labels I recommend this program to ship through UPS.  UPS is more expensive than other carriers, but they are more reliable especially when shipping international.  Here is an example of the branded label:

UPS sure post

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Contact Us  with any questions you may have.

Amazon Buys Whole Foods

Amazon Buys Whole Foods

Amazon announced they will buy the Whole Foods grocery chain for  $13.7 billion dollars.  There are many articles out there discussing this move.  I would like to focus on the effects this will have on its current vendors.

I am assuming that Amazon will create a pick up in store option now for Amazon Prime customers.  This is a natural fit to get people to walk in to the store.  The idea here would be that if they can get their prime customers to go in and pick up something, hopefully they will also buy something else while they are there.

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What will it look like?

Will Amazon reduce jobs of the current chain to implement its more efficient technology?  The Amazon Go stores don’t require cashiers at all.  I imagine that Amazon will implement something to make the chain more efficient.  Every other company in the retail space is hurting because of Amazon, so it is strange that they would want to move in to retail now.

I imagine they are moving toward a same day fulfillment type of business:

Amazon Wholefoods

Amazon takes it all

In the model shown above Amazon would be the company in all stages of the fulfillment process.  They are the place you go to buy the product online.  They have the fulfillment center that would ship the order to the customer.  Amazon now has the stores where you can pick the product up the same day you purchase it.

Amazon will need some way of making the trip to the store hassle free if possible.  If you can buy something on Amazon Prime then go in the store to pick that item up the same day without taking too much time out of your day, then the Amazon Whole Foods acquisition can be valuable for the company.

Amazon Sellers

What does this mean for the companies who sell on Amazon?  Will their products be placed in whole foods stores now?  Maybe Amazon will charge shelf space to its suppliers like it charges its FBA customers for warehouse space on unsold items.

This development is all the more reason for you to start up your own website, so that you are not relying on Amazon for all your revenue if you are an FBA customer.

I recommend Shopify to get you started in under 30 minutes:

UPS branded label

They offer a free trial, so you can see if this will be a good fit for your business.  You can always reach out to me if you have any questions as well.  Contact me with any questions on this story. Have a great weekend!

 

E-Commerce Trends

E-Commerce Trends

If we look at the E-commerce trends happening all over the world, one thing is clear:  E-commerce is growing fast!  This graph shows the extent of the growth over the past few years.

Growth Trends ecommerce

As you can see, the e-commerce market is now approaching 400 billion dollars.  This is significant and is the fastest growing sector in our economy.  If you don’t have an e-commerce store set up, now would be a great time to build one on Shopify:

UPS branded label

Physical Retail

The world of retail is changing.  There have been record breaking closings of retail locations around the world.  It seems the only company trying to get in to the retail space is Amazon.  Amazon should consider looking at the trends around it’s own industry, and they would probably reconsider opening retail locations.

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More retail locations have closed this year than in 2008 after the great crash!

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Amazon Private Label

Amazon’s private label is growing.  This should be a concern for every company that sells on Amazon.  Let’s say you have a popular item you sell on Amazon, what is to stop them from private labeling your product?  If they sell your product under the Amazon label they keep all the profit, and you will have no course of action in which to go after Amazon.

This is why I strongly feel like Amazon sellers need to be aware of what Amazon is doing.  Maybe this won’t happen to you, but you should have a plan if it ever does.  If you don’t have an independent website at the very least then you are exposing your self to be hurt by something like this potentially happening.

amazon private label brand

As you can see from the image above, Amazon is gaining market share in diapers.  They have already taken the lead in the battery market.  When someone searches for batteries and diapers on Amazon, who do you think has priority in the search results?

Protect yourself

I recommend filing a patent and trademark if you can.  There are websites online that will do this for you at little cost.  When you are sending your products to Amazon fulfillment houses, they can easily re-engineer your product.  They have access to the top sellers as well, so they know which items they can make money on.

It is not to say that Amazon is going to do this, but you can bet that battery manufacturer and diaper manufacturers are scared of what Amazon is doing right now.

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You should sell on Amazon starting out, but you should work on driving this traffic to your website.

Amazon Fees and more

target market

Amazon Fees

Here I have listed many of the fees you will expect to see when selling on Amazon.  See the chart below for the categories and the fees associated with each category.  Keep in mind that when selling on a site like Shopify on your own personal website, the most you will pay is 5.5%.  You can see that all of the categories from Amazon are above that threshold.

 

 

Prior approval may be required to offer products in the categories listed under “Categories Requiring Approval.”

Amazon Fees:

Categories Amazon deducts the greater of the applicable referral fee percentage or applicable per-item minimum referral fee.See “Referral Fees” notes above.
Referral Fee Percentages Applicable Minimum Referral Fee(applied on a per-item basis unless otherwise noted)
Amazon Device Accessories                45% $1.00
Baby Products (excluding Baby Apparel) 15% $1.00
Books4 15%
Camera and Photo¹ 8% $1.00
Cell Phone Devices* 8% $1.00
Consumer Electronics 8% $1.00
DVD4 15%
Electronics Accessories
  • 15% for the portion of the total sales price up to $100; and
  • 8% for any portion of the total sales price greater than $100
$1.00
Furniture & Decor 15% $1.00
Home & Garden (including Pet Supplies) 15% $1.00
Kitchen 15% $1.00
Major Appliances
  • 15% for the portion of the total sales price up to $300; and
  • 8% for any portion of the total sales price greater than $300
$1.00
Music4 15%
Musical Instruments 15% $1.00
Office Products 15% $1.00
Outdoors 15% $1.00
Personal Computers 6% $1.00
Software & Computer/Video Games4 15%
Sports (excluding Sports Collectibles) 15% $1.00
Tools & Home Improvement 15%, except 12% for base equipment power tools $1.00
Toys & Games² 15% $1.00
Unlocked Cell Phones 8% $1.00
Video & DVD4 15%
Video Game Consoles4 8%
Everything Else³ 15%
Categories Requiring Approval Referral Fee Percentages Applicable Minimum Referral Fee
3D Printed Products 12%
Automotive & Powersports 12%, except 10% for tires and wheels products $1.00
Beauty 15% $1.00
Clothing & Accessories 15% $1.00
Collectible Books 15%
Collectible Coins See Category Requirements for referral fees.
Entertainment Collectibles See Category Requirements for referral fees.
Fine Art See Category Requirements for referral fees.
Gift Cards 20%
Grocery & Gourmet Food 15%
Health & Personal Care (including Personal Care Appliances) 15% $1.00
Industrial & Scientific (including Food Service and Janitorial & Sanitation) 12% $1.00
Jewelry 20% $2.00
Luggage & Travel Accessories 15% $1.00
Shoes, Handbags & Sunglasses 15% $1.00
Sports Collectibles See Category Requirements for referral fees.
Watches
  • 16% for the portion of the total sales price up to $1,500; and
  • 3% for any portion of the total sales price
  • greater than $1,500
$2.00

Refund Administration Fee

If you refund a customer for an order for which you have already received payment, Amazon will refund you the amount of the Referral Fee you paid for the item(s), minus the applicable Refund Administration Fee, which is the lesser of $5.00 or 20% of the applicable Referral Fee.

For example, if you refund a customer the $10.00 total sales price of an item in a category with a 15% Referral Fee, your Refund Administration Fee will be $0.30 ($10.00 x 15% Referral Fee = $1.50).

 

You have to pay Amazon to refund?

You need to pay Amazon when your customer wants a refund or needs to return an item.  This fee is kind of ridiculous to me because your customer gets all of their money back, but you pay Amazon to make this happen.  You also pay Amazon to sell your product.  Amazon charges a fee of $40 to sell on their platform.

If you are not a pro seller, then you pay $1.00 per listing but you will not pay the $40 fee.

Three Alternatives

There are three alternatives to Amazon, you can use Shopify, Big Commerce or Woocommerce.

Again, we recommend selling on Amazon as a source of revenue.  We still want you to know how much you are being charged on their platform.  There is a FREE TRIAL on all three of the above mentioned sites.  Click this link to look at Shopify:

target market

 

Check out all three and choose the one you are comfortable with.  Also, look at this link  to see what marketplaces you should be selling on.  You want to be on as many market places as you can.  The more market places you are on, the more sales you will get.

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