People drink alcohol at home. No great surprise there. But where they buy their alcohol has rapidly changed. Coronavirus has changed buying habits and accelerated the adoption of buying alcohol online. Amazon is one of the main beneficiaries.
In this article I will show you how to capitalise on this shift. We’ll go through the different ways that you can sell beers, wines and spirits on Amazon and the pros and cons of each option. We’ll then look in more detail about how to kickstart sales once your Amazon store has been set up.
Amazon offers the potential to reach a global audience. 150m Prime subscribers that once never considered buying alcohol from Amazon are now used to buying alcohol from Amazon. That is a game changer.
Done correctly Amazon will now become a major part of any alcohol brand’s distribution strategy.
|Different Selling Options For Brand-Owners and Distributors|
|An Intro to Winning the Buy Box|
|How to Start on Vendor Central|
|5 Things You Need to Know About Negotiating Price with Amazon|
|Minimum Order Quantities|
|Delivery to the Customer|
|How to Sell Alcohol through Seller Central|
|Getting Approval to Sell Alcohol on Amazon|
|How to Fulfil Amazon Orders as a 3rd Party Seller|
|How to Fulfil Orders Directly from your Logistics Operation|
|What You Need to Know About Selling Alcohol in Europe|
|How to Set Up Product Listings|
|How to Improve Product Awareness|
|Marketing Alcohol Products on Amazon|
How you sell your products on Amazon depends on your business model.
If you are the brand owner then the best approach is to sell via Amazon’s Vendor Central platform. More on this later.
If you are a distributor and do not own exclusive rights to a brand in your market then you will sell through the Seller Central platform.
Why the difference?
Vendor is Amazon’s version of a traditional trade relationship. Amazon buys the products and they are presented as ‘dispatched from and sold by Amazon’ on the website.
Amazon will only work on a trade relationship with the brand owner or an entity that has exclusive distribution rights.
Their approach is; why deal with multiple wholesalers when we can deal directly with the brand. It’s an understandable position to take.
If you are a wholesaler then you can sell the products through Seller Central. This is Amazon’s 3rd party marketplace. It is open to any business entity.
3rd party businesses create their own account and listings. Alternatively, if the product they are selling is already for sale on Amazon then they don’t need to create a listing. They simply create an offer on the existing listing.
In this example, there is one listing for Kraken Spiced Rum and 4 offers from 3rd parties. They are all competing to ‘win’ sales of that product.
How do they ‘win’ the sale. Or in Amazon’s jargon; how do they win the buy box
In this scenario it comes down to a few things
The algorithm that decides which seller wins the sale is heavily weighted towards rewarding the lowest price and secondly, how quickly they can deliver. Then the seller rating. If a seller performs poorly on any of these measurements then they will struggle to win the buy box.
Even with a low price a seller will struggle if they have a very poor seller rating
In our example you can see that Click N Drink is priced at £26.95 but is ranked lower than the higher priced offer from Goods Digest. This is because Click N Drink’s seller rating is only 69% – nearly one third of people have given a negative rating. If their rating was above 90% then they would out-rank Goods Digest.
They are some of the basics of selling as a 3rd party on Amazon. If you believe that Seller Central is right for you then click here to jump down the article to our Seller Central guide.
If you’re a brand or exclusive distributor then you’ll need to follow the steps in the next section.
The first and most important thing to know is that Vendor Central is invite-only.
There are two ways to get an invite
Being in contact with the buyer doesn’t automatically mean you can start selling on Amazon.
The next step is to negotiate pricing with them. There’s more to it than meets the eye.
Once you’ve agreed pricing the Vendor Manager will start the onboarding process.
Amazon will be respectful of your MOQs and case sizes. It’s important to explain your processes as part of the price negotiation.
If order quantities influence your pricing then explain this to the buyer. They will discuss this with you and create an initial ordering plan that reflects your requirements.
It’s important that they understand case-packing too.
Amazon’s replenishment systems will send out purchase orders up to twice a week depending on the range and sales volumes. If you don’t specify your case packs then you will receive orders for random quantities that may not suit your warehouse.
Specify your requirements in the negotiation phase and the buyer will ensure the systems only send order requests in multiples of your case sizes.
One of the big perks of using the Vendor Central program is that Amazon handles delivery to the customer.
You will ship units as per the weekly purchase orders to Amazon’s fulfilment centres. Amazon handles everything from that point until it reaches the customer.
This process is called Fulfillment by Amazon or FBA. All products on the FBA program will be eligible for next today delivery for Prime subscribers.
Amazon is well known for it’s speedy delivery. For you as the brand-owner it provides three benefits
If you get to this point in the process then you’ve done everything you need to do in order to start selling on Amazon.
Your Vendor Manager will introduce you to a range of training modules. These will help you to understand how to market your products on Amazon.
We’ll come back to this in more detail later on but for now, it’s important to get into the mindset that Amazon is both a point of sale and a marketing platform. You must engage with both sides to become a successful Amazon seller.
Next, we’re going to walk you through options for businesses that either don’t want to use Vendor Central or are unable to use it because of their business status.
Let’s quickly recap on why you might sell through Seller Central.
Vendor Central is only open to brand owners or exclusive distributors. If you don’t fall into those two groups then the only other option is to use the 3rd party marketplace platform.
Brands and exclusive distributors can also use Seller Central but we don’t recommend taking this option.
I’ll explain why when we come onto fulfilment for 3rd party sellers a bit later on.
Opening a Seller Central account is very easy. You don’t need Amazon’s permission. Before we get into the details it’s important that you are aware of the administrative hurdles that you will have to jump before you can start selling.
Review these regulations before going through the time and effort of creating your Amazon account.
The initial set up is pretty straightforward.
Simply go to https://sellercentral.amazon.com if you want to sell in the United States or if you’re selling in another country head to the local version of this domain (.co.uk, .de etc.)
Creating an account can be done in two simple steps
Let’s assume for now that you have an Amazon Seller Central account. Your first job is to pull together all of the necessary documentation and request approval from Amazon to start selling.
As you might expect there are specific administrative tasks that you have to complete before Amazon will allow you to sell alcohol. Vendor and Seller Central sellers have to meet all of the following requirements.
Meeting these requirements is on top of general selling requirements as explained in this Amazon article. Amazon also assumes that you are adhering to all local, state and national laws.
It will not check that you are, but if for any reason Amazon suspects you are not complying with the law your account will be shut down.
Amazon is very cautious and will act to suspend an account and then ask the seller to prove they are compliant. It’s a huge pain to resolve these situations. You have been warned!
As you’re waiting for approval you can start to plan how you will fulfil customer orders.
There are a number of options. You will need to weigh up the pros and cons carefully.
This question is a no-brainer in most product categories. You have a choice between 3 options
For a more detailed explanation we’ve created this in-depth comparison of FBA V FBM V SFP Amazon fulfilment options.
Most sellers will choose to sell via FBA. Generally, it’s cheaper with far fewer operational overheads. FBA sellers are eligible for Prime next day or 2-day delivery which is a huge plus point for customers.
However, things are different in the alcohol sector. Most alcohol sellers choose to sell through FBM. This means slower delivery times and the need for a warehouse fulfilment operation.
The reason most sellers choose this option is that Amazon’s rules around how to package and deliver products to the fulfilment centres can be prohibitive for most organisations. There is also an inherent risk of shipping delicate items to an Amazon warehouse that is not necessarily geared up to deal with the specific requirements of handling your products.
Here’s what you will need to do if you want to use FBA.
In the UK and Germany there are additional regulations that you will need to comply with.
It’s worth explaining what a FNSKU is at this juncture;
Fulfilment Network Stock Keeping Unit (FNSKU) is an Amazon-specific term. The unit is unique to the seller and product and allows Amazon to keep track of your inventory. When a seller creates an offer the FNSKU is created. This code is printed on product-level labelling.
For more information about meeting Amazon’s criteria for packaging liquids and fragile items review these two help pages;
If you want more control over how products are warehoused and shipped to customers then you can fulfil orders from your own warehouse.
This process is called Fulfilled by Merchant or FBM.
FBM means the seller is processing and delivery orders. In a nutshell, that entails
FBM sellers are not eligible for the Prime badge. This makes it extremely difficult to compete for sales against Amazon.
In this example you can see that Amazon and a 3rd party seller called Drink Specialist are selling at the same price but ;
In that circumstance, the buy box algorithm is always going to favour Amazon.
You could try to offer free delivery and beat Amazon on the sales price but given Amazon’s buying power and market dominance they aren’t afraid to drop prices.
Bottom line is you’ll never out-price Amazon.
My advice is to not expect too much revenue in these circumstances. By all means keep your offer live in case Amazon runs out of stock or ends the Vendor relationship but this approach is never going to lead to significant revenue.
Each country has their own very specific laws relating to the sale of alcohol. This is reflected in Amazon’s own policies. Expect to see very different rules and different requests for official documentation in each country.
Regulations in the United States are much more stringent than Europe.
Examples of Permitted Listings in the US
Examples of Prohibited Listings in the US
In Europe, sellers are free to sell any type of beer, wine or spirit as long as they can meet these requirements
To comply with EU policy in Germany, all products that are listed by weight, volume or length must be marked with a base price (the so-called base price policy). To display the base price correctly, Amazon will require information about your product’s weight, volume or length.
If you are able to meet the general and country-specific requirements then you can move onto the next step which is opening your Amazon account, requesting approval and creating listings.
To request approval, log into your Seller Central account and then head to this page. Scroll to the bottom and you will see a ‘Request Approval’ link.
A word of caution regarding account approvals.
Amazon is a big, slow moving beast. The approval process can take a few weeks. Amazon may ask for additional information or documentation.
The person you’re speaking to at Amazon may not be a specialist in this area. My advice is to provide lots of details and explain in the most explicit manner possible. Going this extra-mile to give more context will help you to get set up much quicker.
Take that from someone that deals with Amazon’s Seller Support on a daily basis!
Now that you have an account, it’s been approved and you’ve chosen your fulfilment method you can start to create your listings.
First, two quick definitions to help us through this process
To find out whether the product is already in Amazon’s catalogue login to your Seller Central account.
Go to Catalogue > Add Products.
Search for the product name, EAN, UPC or ASIN. ASIN is Amazon’s catalogue number.
You’ll find the ASIN in the URL of every listing on Amazon’s website. For example, the ASIN for this product is B00FU9BLKY – https://www.amazon.co.uk/Guinness-Draught-Surger-24-520ml/dp/B00FU9BLKY/
If the product is already on sale then you will be prompted to create an offer on that listing. Those of you who have already received approval to sell alcohol then you can create your offer. If not, you will be prompted to ‘apply to sell’.
Assuming you’ve priced competitively your products are ready to be sold.
Setting up listings on Amazon is only stage one of the process. Don’t expect the sales to immediately come flooding in.
The biggest challenge with online distribution is awareness. Amazon provides the opportunity to access millions of customers but it does so for 1000s of brands.
Getting discovered amongst that vast ocean is the difference between good and great sales. Before I delve into how to increase sales it’s important to understand some core principles of Amazon marketing;
As you can see each marketing activity accelerates the next stage in the process. We call this the Amazon Revenue Flywheel.
Now that we understand the underlying principles let’s walk through the marketing tools that are at your disposal.
These topics are long blog posts in their own right but for now its sufficient to understand the basics
SEO stands for Search Engine Optimisation. It is the practice of understanding how people search for your type of product and optimising your listing to reflect that customer behaviour.
From a practical point of view it means
When people search on Amazon the top of the search results is usually taken-up by ads. Amazon calls these ‘sponsored products’ or ‘sponsored brand’ ads.
Any Amazon seller can use ads. Amazon advertising should be an integral part of every seller’s toolkit.
To say there is a lot of search traffic on Amazon is an understatement. It’s important to appreciate that the majority of that traffic is non-brand (searches that don’t include a brand name) – upto 80% according to this study. That means millions of searches from people that know what they want but are undecided about which specific product to buy.
Ads are based on keyword targeting. You can decide which keywords you want to target or you can let Amazon’s algorithm decide for you.
Often at the start of a campaign it is better to let Amazon decide. This is because the algorithm will pick up any type of relevant keyword. If you pre-empt what those keywords are you may miss out keywords you’re not aware of and lose out on lots of traffic.
To quickly summarise
Increasing sales on Amazon does not have to be a linear process – sales increasing in proportion to the amount you spend on advertising.
Promotions will drive short term sales which in turn improves sales rank. Do this consistently over a period of months and you’ll build up a sustainable Amazon store.
Spikes of promotional activity particularly preceding and during seasonal events will enable you to accelerate sales. This is so important that we often recommend that clients treat some events as loss-leaders. A short-term loss is worth it for the long term benefit of increased exposure.
Here are the main promotions you can run
The most successful Amazon sellers understand all of the levers at their disposal. Knowing how they interact to increase sales is the boss move that takes an Amazon seller from good to great.
Customer behaviour is changing rapidly. The forced acceleration to buying online means that brands have to react quickly.
In the rush to move online it’s important to understand the nuances of each platform. Amazon comes with a huge ‘ready-to-buy’ audience but that also means serious competition.
Choose the right selling method (Vendor or Seller) and invest in Amazon advertising to kickstart and sustain sales.
It’s a pretty simple combination but the difference between the bestsellers and the long tail of also-rans is monumental.
Brands succeed by having a team of people that understand the system, how to leverage the marketing options and how to do all of this in the most profitable manner.
Don’t expect overnight success but by committing to these principles Amazon can be a lucrative new channel for alcohol brands.