A ten-point checklist before you start trading on Amazon

If Amazon follows previous global patterns, all indications point to the global marketplace launching in South Africa around October 2023. This doesn’t leave local brands with much time to lock down their marketplace strategies if they hope to take advantage of Amazon’s first Black Friday. Head of Operations (Marketplaces) at Incubeta, Anouck van Rietschoten, shares her experience of helping brands successfully launch and flourish on Amazon, providing a ten-point checklist to help brands ensure they are ready for the world’s most complex marketplace.

1. Be honest with yourself 

Before brands take the first step they need to do a thorough assessment to establish if they should be on the platform. Amazon has made profitability calculators available to help brands better understand trading feasibility. But before even looking at the more complex questions like ‘will we be profitable?’ brands need to establish if they will actually have an audience on Amazon.

2. Make sure you have the right resources

Supporting an Amazon play is more resource-intensive than many think. To make sure your brand gets a good showing you will need to have teams to manage your logistics, marketing and administrative support. Business leaders shouldn’t assume they can add the support requirements to their teams’ existing workload and have a positive outcome.

3. Fulfilment can be challenging

Making sure you have the stock and that it is available at the right time at the right warehouse is paramount. Amazon is an incredibly competitive environment and shoppers are used to next-day delivery. Delays because of poor stock management will cost you big – both in lost customers, but also in poor reviews.

4. Rome wasn’t built in a day 

With a well executed marketplace strategy companies can have large parts of their product catalogues shipping around the world in just a couple of months. As attractive as this sounds, companies are often caught out if their expansion is too aggressive. Having a solid masterplan and then breaking it down into a regionally-specific rollout will lower expansion risk. It will also allow companies to test markets, and refine their delivery region by region.

5. Everything but the kitchen sink 

One of the biggest mistakes made is when brands insist on listing their entire product catalogue on Amazon. Amazon’s fulfilment, although excellent, comes at a cost and having a huge number of products listed will quickly add to operational expenses. Start small and learn how the marketplace and its fulfilment requirements work. Building up once you are proficient at managing your brand on the platform will de-risk your efforts.

6. Manage expectations 

In a new market companies can aim for break even between six to 12 months. In a more mature market known brands can look at turning a profit faster and can aim to see profitability between three to six months. For brands which don’t already have an established audience, this will take longer and needs a solid marketing strategy to drive awareness and sales. It’s also important to remember you will need to re-invest at least 15% of sales back into the business in the first year, although this will drop to around 8% per year going forward.

7. Cut your teeth of on less complex platforms 

The complexity of listing and trading on Amazon makes it the toughest global marketplace to crack. Its advanced nature requires intimate knowledge of its marketing and pricing best practices and brands and resellers would do well to learn the ropes on less complex marketplaces before venturing onto the Amazon platform. South African brands might consider testing their wings on Takealot as a precursor to an Amazon launch.

8. Your brand’s reputation is on the line, pay attention 

Not paying attention to how your products look and how your brand is represented on the marketplace can cause long-term damage. Most shoppers use Amazon because of the huge variety. They will quickly move on to a competitor if they see poor images or read a bad review because your fulfilment is poor. Invest the time and effort into ensuring great quality from the start.

9. Own your brand – even if you don’t start trading immediately

Amazon is an open platform and resellers can just as easily sell your products as you. By getting ahead of the curve and registering your brand, you retain control of it. It’s important to remember that brands can be hijacked and despite Amazon clamping down on fakes, the only way for brands to protect themselves is to participate.

10. Every region is different  

Brands hoping to use Amazon as a quick and easy way to break into new trading regions should be aware that there are nuances to regional trading requirements. Regulations differ across regions and there will be compliance issues to be dealt with as expansion occurs. It’s also important to remember that it’s not just the contents of your products that need to be checked, but packaging regulations also differ by market.

Despite its complexities, Amazon can deliver a very profitable new sales channel. In the US more than 60% of shoppers begin their product searches on Amazon and South Africa is likely to follow suit over time. In short, Amazon offers an excellent way for brands, especially less known ones, to enter new markets or expand their existing ones. Having a marketplace partner who has extensive experience in assisting brands across the globe will, of course, further de-risk your next move.