Business • Marketplaces
Since launching in 2005, bicycle parts and accessories retailer, CyclingDeal.com have remained proudly Australian owned and operated. But despite their office in Dandenong, Victoria being the central hub for all operations, over two-thirds of Cycling Deal’s sales are made in the United States. Of those American sales, 5% are from eBay, 2% are made on Walmart.com, and a whopping 90% come through Amazon US. In fact, Amazon’s presence in the US is so large, that by 2021, they’re predicted to account for 50% of all sales made online. Nick Gu, owner and founder of Cycling Deal says “in the next 3-5 years, Amazon Australia will have made a very similar impact on Australian online retail.” While that might sound like an ominous prediction, Nick thinks Australian retailers should embrace the arrival of the retail giant. After his own success with the American branch, it’s easy to see the opportunity.
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Nick credits Amazon US’s popularity with customers to its free and timely delivery. For members of the subscription service, Amazon Prime, delivery is always free, and guaranteed within two business days. A service that smaller retailers just can’t compete with. Nick’s advice to those not using Amazon FBA is to refine your shipping options and make sure you’re offering competitive shipping times and prices.
Another way that Amazon US sets itself apart from other marketplaces like eBay, is how it displays products. Instead of customers having to wade through pages and pages of the same item, Amazon requires that sellers ‘register’ to sell a particular SKU. When the customer searches for the product, they see a single listing, with a host of sellers. The best ranked retailer appears in the coveted ‘buy box’ position, which is the most obvious selection for a customer looking to make a purchase.
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Nick says that Amazon determine the occupant of the ‘buy box’ by considering how well the item is priced, and how well the seller is ranked. Positive customer feedback, timely order fulfilment, product quality, and a track record of good seller conduct are all factors in determining how well a seller is ranked against others. And it is also important to ensure your product listing itself is optimised.
When trying to get his brand in the buy box, Nick’s tactic was to forgo a profit for the first few months by listing his products at cost price. By gaining traction as a good value seller and securing great reviews, Nick set himself up for a stream of steady profits once his buy box position was secured.
However, with all new Amazon Australia sellers starting on the same level at the time of launch, Nick says not to worry about drastically reducing prices. His advice is to focus on offering good value for money, and ensuring you have your inventory management under control. He goes on to explain:
Amazon are not forgiving when it comes to overselling. While other marketplaces like eBay might offer a refund to the customer, Amazon US will cancel the order, block your listing, and ban your account after your first warning.
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Playing by the rules is crucial in every aspect. Nick recalls when he was just starting out and accidentally priced his Amazon US listings at a more expensive rate than his website. “My account was banned and I was told I had to change the listing prices immediately. Amazon makes it very easy for customers to report disparate pricing, so as a seller, you can bet that you’ll be held accountable.”
Despite the learning experiences, Nick is thrilled with his business results and credits his expansion into Amazon US as one of the best decisions he’s ever made. “Amazon Australia’s launch is a huge opportunity. I’m at a stage now where most of my business is automated, and thanks to Amazon bringing in so many sales, the money makes itself. As long as retailers are prepared to embrace the change and play by the rules, this is a chance to earn big.”
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