Amazon entered Polish market. What does it mean for merchants?
From the end of January, when sellers could register their accounts on the platform, there are speculations about when Amazon will launch in Poland. This day just came.
From today, we can register as customers on the Polish version of the marketplace, choose from the products offered by Amazon, and fully use all the options available by the website. What does the entering of the American platform mean for sellers?
Differences between Amazon and Allegro
The easiest is to compare Amazon to the current market leader- Allegro. Detail comparison was made in the article Allegro vs Amazon – major similarities and differences, but let’s go through the most important ones.
The first thing one can see is the scale difference. In March 2020, Allegro was visited by 17.39 million users. It is the fourth site most frequently visited by Poles and the tenth most popular e-commerce platform in the world. The mobile version was used by over 4 million users in March 2020. In March 2020, the German version of Amazon was visited by 457.47 million users. Amazon is now available in 17 markets.
The next difference is in pricing. On Allegro the product can be put up for auction or sold using the “buy now” option, while on Amazon a product can be posted only with a specific price.
The other important factor is selling cost. On Allegro, registration is free, there is a package of discounts and start-up promotions, however, there are charges for posting offers and sales commissions from 6 to 10%, depending on the category. On Amazon, with an individual account, one can post up to 40 offers per month, paying 4 PLN per offer. If more offers are to be placed, there is a possibility to buy a professional account for 165,91 PLN per month where no additional charges for offers are done. The fixed commission is on average 15%.
FBA vs. FBM on Amazon.
The characteristic feature of Amazon is its logistic models. The selection of the right logistics model is crucial if we want to be successful on this website – the operating costs and margin depend on it largely. When making this decision, you should, first of all, consider the type of products sold, your infrastructure, and human resources. Each case is different and there is no universal recipe – before choosing a model, you should carefully calculate the costs and assess which will be more profitable.
FBA on Amazon – pros and cons
The first model, FBA (Fulfillment by Amazon), is that the entire sales and logistics process is handled by Amazon. The seller only needs to deliver the goods to the service warehouse and ensure the promotion of products. Products purchased by customers are sent to them directly by Amazon.
The main disadvantage of this model is that it involves paying an additional commission for the website. Despite this, it can be profitable, especially for sellers who offer fast-rotating products of small dimensions. It will also be suitable for companies that do not have large warehouses and do not employ many people. FBA offers also receive the Buy Box more often, about which we wrote in more detail in the article on effective price monitoring on Amazon. Sales in this model can also increase conversion because Amazon’s logistics service is perceived by buyers as trustworthy.
FBM on Amazon – pros and cons
FBM (Fulfillment by Merchant) is a model closer to traditional marketplaces, in which the entire sales and logistics process remains with the seller. The auction owner is responsible for product storage and shipping coordination, and the website’s participation is limited to placing an offer.
This solution usually works well for products of significant sizes, because then the costs of their storage by Amazon may turn out to be too high. Before making a decision, it is worth analyzing them thoroughly using special calculators available on the website. FBM generally allows you to have higher margins as well as a sense of control over the sales process. A big advantage of using this solution will also be independence from the agent’s policy and no commission. The FBM model also increases the chance of receiving the Seller Fulfilled Prime (SFP) award, which marks the most trusted sellers on Amazon.
The additional platform on the e-commerce market will not make manual price monitoring easier. It is worth thinking about the automation of this process. Many companies on the market offering price monitoring gather prices only a part of the range of Amazon offers- these with Buy Box.
The Buy Box is a dedicated module located on the right side of selected Amazon auctions that can be used to purchase a particular product. This feature is available only to proven sellers with, particularly attractive deals. Over 80% of Amazon sales are done using this button – this means that access to the Buy Box is an opportunity to significantly improve sales results.
The Buy Box – how does it work?
A characteristic feature of the Buy Box is the fact that it is not permanently awarded to any specific seller – it “wanders” from one offer to another. The position of the Buy Box is always determined by the Amazon algorithm, which analyses other auctions offering a similar product and picks the best one, which, however, is not necessarily the cheapest one. The Buy Box is normally used for new products, but now used offers can also frequently be featured.
Price monitoring in the Buy Box
It is much cheaper and easier for providers of price monitoring services to only monitor offers with the Buy Box. However, with such a large player, it is necessary to monitor the entire platform to get the full picture of its prices. Relying on incomplete data only provides limited knowledge of the prices and offers on Amazon, and it also makes it difficult to identify new sellers. This means that if you make your decisions based on incomplete information, you are very likely to make mistakes.
How should Amazon prices be monitored?
To effectively monitor Amazon prices, you have to start by selecting a provider of monitoring services that monitors all offers posted at the store. At Dealavo, for instance, we provide our clients with complete information about the auctions at the platform, not just the ones with the Buy Box.
What is the point in monitoring Amazon?
By monitoring Amazon, you gain a tremendous opportunity to acquire valuable knowledge about the market, which will certainly make it easier to make the right pricing choices and pick the correct position in e-commerce. With reliable monitoring, you can also find out what your competition is doing in order to effectively set your own prices.
It is particularly important to monitor Amazon if you are a manufacturer and want to determine deviations from MSRP prices (suggested prices) in Europe. In the USA, in turn, manufacturers can enforce MAP prices (minimal prices), which makes monitoring even more critical. This way, you can protect yourself against price undercutting by other manufacturers and losing your margin.
Would you like to effectively monitor prices at Amazon? Contact us and see how we can provide you with complete information about the platform and help you in making the best business decisions.