When considering selling on Amazon, B2B manufacturers will often look to the Seller Central selling approach, also called 3P or third-party, which offers control of retail pricing, higher revenue and profitability, and more complete control over inventory and product content. However, with these benefits comes increased responsibility. Optimizing an Amazon presence using the Seller Central model requires considerable effort, expertise, and strategic planning.
For these reasons, when B2B manufacturers start to think about selling on Amazon, one of their top questions is whether to integrate their technology platforms with Amazon’s systems. In today’s digital age, businesses of all types and sizes rely heavily on software systems to manage their business. From inventory to customer relationships, nearly every aspect of business can be managed through software, making these systems essential for achieving smooth operations.
Integrating software platforms such as ERP (Enterprise Resource Planning), PIM (Product Information Management), and OMS (Order Management System) can streamline the flow of information back and forth between a seller and Amazon and reduce the level of manual effort needed to effectively manage the channel.
But integrations are complicated technical projects that can be extremely time consuming and costly to accomplish, even while using the well documented APIs (Application Programming Interfaces) that Amazon provides. Conducting an integration effort upfront, prior to launching a selling program on Amazon, can add months (or even years) to the time needed to get up and running on the marketplace, particularly considering the enormous workload and pressures on IT departments.
So the question arises: Is an integration necessary to get started in selling on Amazon?
The Short Answer: No
Integration projects can be long and expensive. Recognizing this, Amazon has deployed significant resources available through its Seller Central dashboard that eliminate the need for sellers to do any integration upfront before beginning selling.
Extensive reports are available, both online and in downloadable format, that provide all of the information a business needs to conduct vital functions such as inventory reconciliation, order processing, and accounting reconciliations. In fact, the data Amazon provides is sufficiently comprehensive that we often find a formal systems integration is unnecessary until a company scales to a substantial amount of revenue and transaction volume. Typically, it’s best to consider an integration when a business reaches at least a few million in revenue on Amazon. However, we have clients who have not integrated and are approaching $20 million in sales on Amazon.
So the short and easy answer is no, sellers do not need to integrate their systems with Amazon.
That said, it’s still necessary to set up processes to extract the data Amazon provides and import it into your current systems. When setting up a Seller Central account, businesses need to exchange various pieces of information with Amazon so they can properly manage orders and their own accounting. There are essentially four types of data that need to be exchanged:
Product Information: To be successful on Amazon, you need to provide high-quality product details, such as product descriptions, images and videos, pricing and stock information, and other elements. Amazon takes these data points to present them to buyers and facilitiate purchasing decisions. Product data must also be maintained on Amazon, requiring updates for new products, price changes, inventory changes, or other product details.
Brand Information: This includes brand story, physical location, brand videos/images, and other relevant details.
Order Information: When Amazon takes orders under the Seller Central model, Amazon acts as the merchant of record. Once an order is placed, Amazon collects funds from customers, and the order becomes a receivable to the seller. Order information needs to be transmitted back into the seller’s systems for accounting and sometimes fulfillment purposes (depending on the fulfillment method the seller is utilizing). Amazon pays out to sellers every two weeks, minus their fees (commissions, Fulfilled by Amazon fees, storage fees, etc.). This information needs to be reconciled in your company’s systems to ensure orders are properly accounted for. Amazon provides detailed reports with all this information that can be downloaded to import into your systems.
Shipping Information: If your company is handling fulfillment of individual orders placed on Amazon (called Fulfilled by Merchant), the order will need to be input into your systems in order to fulfill it. This includes customer name, shipping and billing address, and product(s) ordered, among other things. Of course, if you are leveraging Amazon’s FBA (Fulfilled by Amazon) service, you do not need to import information into your systems at the time of order, as Amazon will fulfill the order on your behalf. You may still want to import this information into your systems for other reasons, though.
When to Consider Integration
At some point, companies may reach a level where the benefits of an integration become considerable. If a seller is generating several million in revenue from Amazon, it could make sense to explore integration to streamline data flow out of and into internal systems, making workflows and processes faster for accounting and operations teams.
Amazon offers well-documented APIs that allow Seller Central accounts to connect directly to Amazon’s systems for data exchange, eliminating the need for manual processes. Effective integration requires technical expertise to connect your systems (ERP, PIM, OMS, etc.) with Amazon’s APIs. In some cases, Amazon provides resources to assist with integration (we often assist our clients in connecting with Amazon technical support when they reach a point where integration is desired). For more information on Amazon’s APIs, check out Amazon Developer Services.
However, integrating with Amazon is not required for developing and launching a selling program on the platform. In fact, we often find that the benefits of starting an Amazon selling program without integration far outweigh the cost and time required to engage in the integration process. Amazon’s reporting is sufficient for businesses reaching well into the millions of revenue in most cases.
As a result, the vast majority of Enceiba’s clients start by using Amazon’s dashboard and reporting features to manage the data required for their Amazon operation. As your business grows and reaches higher revenue levels, though, exploring systems integration options can help streamline operations and improve efficiency, supporting greater sales volumes and profitability.
And if you’re not sure whether integration is necessary or not, give us a call. Our Amazon experts can assess your sales and Amazon store, and make a strategic recommendation to help you ensure you’re on a growth trajectory on the world’s largest marketplace.