The DNA of an Amazon Seller

Since the explosion of online retail sites in the early 2000’s where traffic was primarily obtained through organic or paid search, e-commerce has evolved to a variety of highly lucrative or costly marketing segments, depending on your skill and luck. Online sellers now use a plethora of methods to drive traffic and sales for their products, software, and services including search engine optimization, paid-per-click advertising, social media campaigns, affiliate marketing, and more recently marketplace expansion.

After Jeff Bezos drew up the idea for his 3rd party marketplace division of Amazon.com and then executed on that idea, an entirely new marketing channel became available to millions of businesses. This division, the Amazon 3rd party marketplace, has grown to sell more product that it’s older brother, the Amazon Retail division. Any person or company can sell on the 3rd part marketplace, and these sellers are composed of brand manufacturers, distributors and resellers. Because there are so many sellers actively competing for sales on the marketplace, many of the tech savy sellers have seen a need for a particular service and branched off creating a vast ecosystem of hundreds of solution providers which support by software or skilled service.

The evolution of the Amazon Seller is an interesting development. Some have migrated from eBay, some are website owners looking for additional ways to market their products, and many are entirely new entrepreneurs looking to build an online business. Don’t confuse them with your early eBay adopters though – this new breed of internet entrepreneur, the Amazon Seller, has a different makeup than the eBay power sellers, the Etsy merchants, or even veteran website owners.

Our management team at Buy Box Experts has personally worked with over ten thousand sellers and has witnessed the pitfalls they run into, the tactics they use to succeed and the qualities they possess to thrive on the marketplace. While there are an estimated two million Amazon Sellers, only a portion of them succeed on the marketplace. We’ve witnessed a pattern of unique traits enjoyed by these successful sellers.

Let’s take a look at the DNA of the Successful Amazon Seller:

The Operational Engineer

In a recent survey of 1500 sellers, likely representing top tier accounts, a high percentage of respondents reported the use of software and other tools which help them manage and understand their business from a data-driven, automated process.

Since Amazon sellers often list thousands of products and utilize dozens, if not, hundreds of suppliers to purchase inventory, they must have an understanding of the blueprint of the entire “Amazon Machine.” Like an engineer they intuitively know how each gear and mechanism within this machine can influence its production, including sales velocity, profitability, seller performance metrics, product return rates, customer happiness, supply chain logistics, etc.

Outsiders to the Amazon world are often surprised to learn that Amazon Sellers use advanced software tools to automate and run several processes simultaneously within their organization. The most broadly employed types include inventory management software to help replenish stock levels on the marketplace, repricing software to adjust product pricing to compete for the Amazon buy box, feedback software to solicit product reviews from customers, and listing software to manage the content displayed for the products sold on the Amazon marketplace.

Advanced sellers look for opportunities in their business model to replace repetitive tasks with software to maximize efficiency and to increase profit margin. Not only do they work to incorporate processes and software to run large and complex parts of their business but they also utilize that software to produce data sets which are ripe for analysis.

The Data Scientist

Most of the elite sellers on Amazon scour product information to gain a competitive edge. Rather than rely on finding new products randonly at a tradeshow, they crawl the Amazon site for sales rank data on products to assess how many units are sold, look at how many other accounts are selling any particular products of interest, pour over product reviews to learn all of the features customers wish a product had, and utilize tools to gauge the product’s price over time. All of these outwardly displayed data points help them develop internal metrics to identify products and brands to bring into their own portfolio or to create themselves.

These same sellers also utilize data to forecast product sales months in advance, understanding seasonal trends and historical stock levels of their suppliers, and purchase large quantities well before and holiday sales peaks (i.e. the 4^th quarter). Their accounts tend to maintain sales throughout the holiday season, while competitors, lacking the foresight to purchase extra inventory, run out of inventory in late November of early December.

Like a data scientist the best Amazon sellers go granular. They look at performance metrics for each of their individual products and brands. They don’t just rely on a monthly P&L to assess their business. They analyze how quickly each product sells, its profitability, and its return rate. They use this data to help them eliminate unprofitable product and purchase the right amount of profitable items.

The Philosopher

We’ve witnessed many sellers join the Amazon community and begin to build a seemingly thriving business. Sales are strong, sometimes insanely strong. Product is moving so quickly that purchases orders are placed without any hesitation. Then, suddenly, sales stop – Amazon has begun to purchase the product directly from the manufacturer and sell it on the site, or the supplier has decided to sell directly on the channel cutting off distribution of its product, or several competitors have entered the space driving the price down. Overnight, these sellers are left with hundreds or thousands of units which they must liquidate, often at a substantial loss.

To succeed on the channel, it requires focus on current products and tasks while maintaining a broad vision for additional opportunities and foresight of category and marketplace trends.

Whether innately obtained or learned at the school hard knocks, successful sellers seek balance. They often diversify across categories and dozens of suppliers and brands. If one product makes up a large percentage of their business, they seek to replicate that success many times over through the additional of other products rather than rely on a few best sellers.

The Expert Negotiator

Although we do see many sellers create an advantage over their competitors with proprietary product research tools or advanced account management software, that leverage tends to get adopted by other sellers pretty quickly.

In our experience the most consistently successful sellers don’t just incorporate the latest software applications, they also have a supply-side advantage. In fact some of the top sellers on the channel today actually lack intelligent forecasting, have never used feedback solicitation software, and don’t use repricing tools. Their sales would probably benefit with these tools, yet in spite of lacking that technology and know-how, their business still perform extremely well. And that’s because they have the same thing every other top seller ALWAYS has: well-kept, unique supplier relationships.

In order to the find the best product deals and make those deals, these sellers have developed impressive social skills and professional networks. And they often walk a tight-rope, driving a tough bargain position with their suppliers while maintain a close relationship.

Summary

From embodying an empirically driven engineer or data scientist to embracing the control and balance of a philosopher or negotiator, selling successfully on Amazon requires a diverse skill set, extensive knowledgebase, and a unique personality.