Monday, September 30, 2013

When Amazon has your product in its sights

How does (or or .jp or whatever country you sell in) decide on which products to start selling itself? How do you know when your product is about to be taken over by Amazon? In addition to Amazon itself sourcing new products from Trade fairs (some from even across the ocean; eg. Tokyo Gift Show), Amazon has, courtesy of its sellers, a vast repository of products to choose from, and is well aware of which products sell well. Amazon’s targeting of products appears to follow a 3 step process.
When Amazon decides to start selling your product: 
1. Under the “more buying choices” link, Amazon will now be one of the sellers. But their price may well be significantly higher than yours. And if you move your mouse over the “add to cart” button, it will say “not in stock” or “in stock, ships in 1-3 months.” This message will remain so for a period of 1-3 months or more. It is at this stage where Amazon has decided to sell your product. They are likely during this time making contact with the manufacturer, finding out about shipping costs, etc. and trying to secure small quantities of the product for stage 2-the test sales stage. You will retain the buy box during this stage, even if their price is lower (remember, they are a service oriented company and dont want to make their customers wait).
2. The second stage is test sales. This will take place when the  products are now in stock by Amazon to sell on its own. Amazon’s stocks will be small, between 3-10 pieces (move your mouse over the “add to cart” button and you will see how many pieces Amazon has). Now Amazon will take the buy box even if your price is lower. Once they sell out, the product will once again be at stage 1 and you will get the buy box back. After 1-2 weeks, Amazon will again have a small quantity in stock and will once again start selling and retain the buy box. This cycle repeats itself 3-5 times. This stage, Amazon is doing 2 things. (a) confirming that the product consistently sells in their hands b) confirming what you and the other sellers will do about Amazon’s encroachment. If you do nothing, Amazon will have a good idea of whether the product will be more profitable being sold by them or by you.
3. The third stage is full blown sales by Amazon of your product, with ample stock held by the company (hovering over the “add to cart” button now does not give a specific number since that number is larger than 20. Do a test purchase of 100, 200,500,1000 pieces and stop just before purchasing and if it looks like the order will go through, you know they have a lot of stock. Time to find other products!
It is unclear whether aggressively lowering prices at stage 1 or 2 will dissuade Amazon from progressing to stage 3 and most sellers would not try it anyway!

No comments:

Post a Comment