What is Amazon Marketplace? (Full Answer)
What is Amazon Marketplace?
Amazon Marketplace is an ecommerce platform owned by Amazon that allows third-party sellers to list and sell new or used products alongside Amazon‘s own retail listings. Sellers can tap into Amazon‘s vast customer base of over 197 million users to market their products globally.
How Amazon Marketplace Works
Sellers create an account on Amazon Seller Central to access tools for listing products, managing inventory and orders, handling shipping and returns, and tracking sales performance.
There are two main fulfillment options:
Fulfillment by Amazon (FBA): Sellers store their inventory in Amazon‘s warehouses and Amazon handles storage, packing, shipping and returns.
Fulfilled by Merchant (FBM): Sellers store inventory and ship products to customers themselves.
Amazon collects fees for transactions facilitated through its marketplace. This includes referral fees on each sale as well as FBA fees for sellers using that fulfillment method.
Benefits of Amazon Marketplace
For sellers, key benefits include:
Access to Amazon‘s vast customer base: Over 197 million monthly visitors.
Increased credibility selling under Amazon‘s brand name.
Fulfillment and shipping services through FBA.
Exposure to Amazon Prime members. Prime listings enjoy free 2-day shipping.
Advertising options to promote products, including Sponsored Products.
For buyers, benefits include:
Wider range of products and competitive pricing.
Fast shipping with Prime listings.
Confidence in purchases backed by Amazon‘s policies.
Drawbacks of Amazon Marketplace
For sellers:
High competition from millions of other sellers. Harder to stand out.
Commissions, fees and storage costs can eat into profits.
For buyers:
- Potential to receive counterfeit or poor quality products from some 3rd party sellers.
Selling on Amazon Marketplace – Getting Started
Follow these key steps to start selling as an Amazon merchant:
Sign up for an Individual or Professional Selling Account
Choose between two plans:
Individual ($0.99 per item sold)
Professional ($39.99/month subscription)
Upgrading to a Pro account provides more seller tools and support.
List Products and Manage Inventory
Create listings with titles, descriptions, images and pricing to attract buyers. Keep inventory levels in sync across channels to prevent overselling.
Choose a Fulfillment Method
Decide between Fulfillment by Amazon (FBA) or self-fulfillment based on product type, order volume and budget. Hybrid models are also an option.
Promote Listings with Advertising
Consider Sponsored Products ads to increase product visibility in search results. Coupons and Lightning Deals also help spur sales.
Provide Excellent Customer Service
Communicate promptly to resolve issues, build loyalty and earn positive seller feedback.
Amazon Marketplace vs Amazon Vendor Central
These two seller programs differ in several ways:
Who Can Join
Amazon Marketplace is open to any business or entrepreneur. Vendor Central is by invite only for established brands, wholesalers and manufacturers.
Ownership of Buyer Relationship
Amazon Marketplace sellers communicate directly with customers. Vendor Central, Amazon owns the buyer relationship.
Fees & Pricing Control
Amazon Marketplace charges sellers a commission fee on each product sold. Sellers have more control over pricing.
Vendor Central sellers negotiate a wholesale price but Amazon determines the retail price shown to customers.
Fulfillment
FBA is optional for Marketplace sellers. Vendor Central sellers rely on Amazon to handle fulfillment exclusively.
Product Assortment & Inventory
Marketplace sellers can offer a wider range of unique and custom products. Vendor Central focuses on national wholesale brands.
So in summary, Amazon Marketplace offers more independence and direct buyer relationships, while Vendor Central provides a streamlined approach for established brands.
Success Tips for Amazon Marketplace Sellers
Follow these best practices to thrive as a seller:
Closely monitor your listings and inventory levels in real time.
Offer competitive pricing but don‘t sacrifice too much margin.
Respond to customer queries and resolve issues promptly.
Collect feedback through surveys to improve your offerings.
Take advantage of Amazon‘s advertising tools to promote listings.
Stay up to date on Amazon‘s fees, policies and algorithm changes.
The Bottom Line
Amazon Marketplace provides a highly visible ecommerce platform for entrepreneurs and brands to tap into over 197 million customers. Sellers gain instant credibility and global reach.
While success is not guaranteed due to intense competition, savvy sellers can thrive by actively optimizing their listings, providing excellent customer support, and leveraging tools like FBA and Amazon Advertising. Maintaining inventory availability and healthy margins are also key.
With proper effort and strategy, Amazon Marketplace represents an unparalleled opportunity to grow an online retail business.
