Lesson 4

Why Every Seller Needs to Study Amazon.com

If you sell online, you need to pay careful attention to Amazon.com and learn as much as you can about the giant retailer. This is true even if you do not sell on Amazon! No matter what you sell or where you sell it, Amazon.com is almost certainly your biggest competitor.

Even if you sell through your own online store or through eBay, Amazon will have a huge impact on your business. Among other things, Amazon can have an effect on your prices, your profits, your sales volume, and your customers’ expectations. If you don’t take Amazon into account, you could find yourself losing a lot of money real fast!

Amazon Is Probably Your Biggest Competitor

If you don’t believe Amazon can have an impact on your business, you need to take a look at some figures compiled by the website ExportX. ExportX noted that Amazon.com listed 232 million products in the USA, and Amazon.co.uk listed 132 million products.

That means there’s a very good chance that whatever product you sell is listed on Amazon right now. ExportX also mentioned that Amazon had 24 million items listed in its electronics department and 20 million in its sports & outdoor categories in the USA alone.

The question you need to ask yourself is not "does Amazon compete with me?" but instead, "in what ways is Amazon.com competing with me and how can I deal with that competition?"

How to Use Amazon to Set Your Prices  

The ExportX figures suggest that Amazon is your biggest and most aggressive competitor. They also indicate that it is simply insane for a seller not to closely study Amazon.

And yet this competition doesn’t have to be a negative, because Amazon is actually one of the best tools for determining average prices on the web.

Obviously, the first and most important piece of information you will need to find out is what Amazon is charging for the products you are selling. Fortunately, it is very easy to discover this information; it is as simple as going to Amazon.com and checking the prices listed by Amazon and other sellers.

Simply enter the product you are thinking of selling, or currently sell, into Amazon’s search bar, and hit go. Then go over the results that come up. You should have no problem identifying the average price for the product being sold. If you click on the prices listed for new and used products under the "More Buying Choices" option, Amazon will even give you a price comparison.

Amazon will actually display the prices its third-party sellers are offering, with the lowest price listed first. Amazon will also tell you what your competitors are charging for shipping.

So Why is This Information Important?

This kind of information is invaluable for a number of reasons. First, you now have information on your competition. Second, what you are seeing is exactly what your customers are seeing when they look for your products. Finally, you have raw pricing data to work with.

So as you can see, Amazon is not just your biggest competitor; it is also an extremely valuable resource.

How to Leverage Amazon

The best way to use Amazon.com to set prices is to visit our Market Research Lab. The Market Research Lab uses eBay data to let you see the average end price charged for products, the profit potential, competition ratings and more. By getting insight into how much a product sells for on eBay, you can get a fair idea of what it will sell for on Amazon. 

With this tool, you have an easy way of determining if you can charge a more competitive price than the average Amazon.com seller. All you have to do is subtract the average end price the Market Research Lab gives you from the average Amazon price.

A good way to determine if you can make a profit selling a certain product on Amazon.com is to subtract the wholesale price from the Amazon price. This can show you if the price you plan to offer is competitive, and, more importantly, it can show you what potential profits you can expect to make.

How to Be More Like Amazon

As a seller, you need to pay attention to Amazon because the online retail giant sets the standard for online retailers. If Amazon does something new, your customers will probably expect that you do the same.

For example, many retailers offer free shipping because Amazon offers free shipping. So now many of your customers will expect you to offer free shipping because Amazon does. Other customers will expect you to have a very liberal returns policy, because Amazon does. Customers will also expect you to ship their products quickly. Why?

Because Amazon does!

This also means that you will have to try to match some of Amazon’s actions. Obviously, you cannot match Amazon’s resources, but you can mimic Amazon to a certain extent.

For example, almost every retailer can offer free shipping, and you can quite easily set up a returns policy that is similar to Amazon’s. Also, by shipping or fulfilling orders within 24 hours of being received, you can give a response time similar to Amazon’s.

Pay Attention to Amazon

Perhaps the most important lesson for sellers to be found in this article is this: Pay close attention to Amazon.com!

Go to Amazon on a regular basis to see what’s happening. Then ask yourself, how do these changes affect me and my business?" Amazon is constantly changing the way it does things, implementing new policies and trying out new strategies.

And you need to be aware of these changes.

Remember, your customers probably buy from Amazon, so they are aware of what Amazon is doing. The point is, if you can keep on top of what Amazon is doing, you can anticipate your customers’ demands.

Using the Media to Research Amazon

Something else that the top sellers do is watch the media for news reports about Amazon. Reporters pay close attention to Amazon, and many of the stories about the company contain a lot of good information. Investment websites often provide in-depth information about Amazon’s latest projects and changes to the retail website.

Here’s a great tip to keep in mind: Try doing a news search on Amazon on a regular basis, say once a month, to look for any major changes. If the changes affect your business, pay close attention because Amazon has a long history of delivering nasty surprises to competitors!

Now you see why it is so important to study Amazon. Keeping abreast of the latest developments at the giant retailer can help keep you on the cutting edge of online retail. It can also be the difference between having a profitable business or a flop!

Not sure how to work with Amazon? Read our step by step guide to sell on Amazon for online sellers like you.



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