Here is the answer I provided to a client asking the question: “Can you explain to me how it works that I get more setting it up through you (Neoflix) than going directly to Amazon. Thanks.”
For independent distribution purposes, there are two programs offered by Amazon that are relevant in this discussion: one is called Advantage, the other is Marketplace.
Both programs are fully searchable on Amazon’s site, but with Advantage, Amazon more actively place the product on keyword searches and referrals. They also require that the fulfillment is done by them. For their “marketing” efforts, they take about 45-55%, depending on whether they surround the offer with promotions and discounts, such as free shipping. Our clients have discovered that if you add the cost of shipping the products to Amazon, their net is approximately 40-50%.
The Marketplace program allows a merchant (in this case, Neoflix) to open up a store and place products on Amazon for sale. The main drive to the product will be keyword search and product ranking (which improves over time as long as the product is selling). There isn’t the product referral marketing (for example offering people who bought this item also bought that…), but you have a full independent product page where description and reviews are available. Amazon takes 20% from the sale. After the shipping and processing fees (Neoflix ships using USPS 1st class vs Amazon shipping using standard mail) are deducted, most clients receive about 65-70%.
The monthly marketplace store fee is about $50, which Neoflix pays. This saves clients a lot of money–especially if the volumes are not there to justify it.
It’s also possible for clients to be in both the Advantage and Marketplace programs. We have two clients who are trying that now.
