Amazon recently announced Launchpad a custom program that helps start-ups “launch, market and distribute” new products on Amazon. The program is really a re-skinned version of Amazon's Vendor Express, but it's goal is to let smaller manufacturers sell directly to Amazon. The reason for the re-branding? Simple - it's cooler and let's them position it as an option for business that were funded by Kickstarter, Circle up, or just an old fashion invention.
Their pitch is that you get to tap into Amazon's massive presence to quickly build your brand leveraging their platform to grow. They are correct - Amazon is the largest online retailer with over 1.4 billion sessions last Christmas. A recent Forrester survey noted that 50% of American's search for product on Amazon regardless of whether or not they're going to buy on the site.
Any Company needs a presence there and Amazon is positioning Launchpad as the way to do it for start-ups. But is it worth it? Here's the details you need to know about:
- You sell to Amazon at wholesale.
- Amazon sets the retail price (not you). Prices can (and will) adjust based upon overall competition
- You have to provide free product to start.
- You are charged an additional 2-3% fee for returns.
- You are changed an additional 10% fee for marketing fund support (but you don't control how its spent)
- Any promos or special offers are funded by you.
A better alternative for a start-up is to sell via Amazon Merchant and leverage Amazon's fulfillment services (FBA). It gives you
- Direct control over your pricing - critical if you're building up a retail channel
- A set 15% fee to Amazon (plus shipping costs)
- One of the most affordable and efficient logistic systems in the world
- Amazon buyers still get free 2 day shipping direct from Amazon's warehouse
- You still get access to product ads, but not necessarily brand pages. You spend exactly what you want, where you want it.
If you're a larger manufacture, Yeoman recommended both as part of your overall plan in addition to fully investing in Amazon marketing programs. When you combine merchant and vendor relationships you fully leverage the amazing selling engine that Amazon has created.
Contact us today if you're interested in implementing a better Amazon plan.