Learning How to Speak Amazon

Let's just say, you better know the alphabet before you start your Amazon selling journey. There are several acronyms that you must understand if you want to be successful.

This post will contain all the acronyms I think you will need to know and understand before you start selling on Amazon. Let's start with the basics.

• COG = Cost of Goods
  • This means exactly what it sounds like. It's simply the amount of money you spent on the product. Did you buy it from the store for $5? Then your cost of goods is $5.
• ROI = Return on Investment
  • ROI is a ratio of your COG and your profit. It's calculated as a percentage and gives you a better idea of how profitable the item is. So if your COG was $5 and your profit was $5, then your ROI was 100% meaning you basically doubled your money.

Now that you know the basics, it's time to learn how to speak Amazon.

• ASC/ASA = Amazon Seller Central/Amazon Seller Account
  • I may or may not have made this one up. Either way, it's still an important call out and one you might see from time to time.
• FBA = Fulfilled by Amazon
  • As a seller, you have two different ways to sell your products on Amazon. The first method is having Amazon fulfill your products, also known as FBA. This means that you, the seller, ship the items directly to an Amazon warehouse. When a customer purchases your item, Amazon will ship the item for you. A huge benefit to using FBA is that you don't have to spend as much time dealing with customer service. You may need to respond to customers from time to time, but that is on a rare occasion. Amazon literally does all of the dirty work for you - refunds, return requests, customer complaints, etc. Cons to selling FBA? It can take some time for your items to reach the warehouse and get checked in. Just make sure you factor this in if you are selling a seasonal item or one with an expiration date.
• FBM = Fulfilled by Merchant
  • The second method of selling on Amazon is FBM, which means the merchant, or seller, is fulfilling the item. This means that you are responsible for prepping, packing, and shipping the item to the customer once an order has been placed. You are also responsible for customer returns and must respond to customer questions and requests in a timely manner. FBM can be extremely profitable if you are willing to do some extra work. Just remember to factor in shipping costs when purchasing the item to make sure it is still profitable!
• IPI = Inventory Performance Index
  • To be honest, I'm still trying to wrap my head around what IPI is and how it may impact my selling account. Essentially, IPI shows you how well you are managing your inventory. It takes into consideration excess inventory, sell-through rates, stranded inventory, and in-stock inventory. IPI can dictate storage limits and how much you spend on storage fees. Monitoring this number and your performance on Seller Central will help you understand how well your business is performing and areas of improvement. Amazon has created a great FAQ on this topic, which is linked here.
• ASIN = Amazon Standard Identification Number
  • An ASIN is a combination of 10 letters or numbers that identifies a product in Amazon's catalog. An ASIN is specific to Amazon and is not used on any other selling platform. Every product will have an ASIN linked to it. The only possible exception to this is books, as they may be linked to their ISBN (International Standard Book Number). To list an item, you will need to list to an existing ASIN or create a new one. I personally have only listed to existing ASIN's and, to be transparent, I don't even know how to create a new ASIN.
• FNSKU = Fulfillment Network Stock Keeping Unit
  • An FNSKU is an Amazon specific barcode that links the item to the seller. It's a combination of 10 letters and numbers that is unique to each individual seller. It only applies to FBA sellers as it is used to manage inventory in warehouses and track seller's products as they move around in the fulfillment process.
• SKU = Stock Keeping Unit
  • It is easy to confuse a FNSKU with a SKU, but there are obvious differences. FNSKU is for Amazon, while the SKU is for the seller to make it easier to track inventory for business purposes. When listing an item on Amazon, you must assign it a SKU. The SKU can be whatever you want it to be. It can be a list of random letters and numbers, but I try to put more thought into it. When I first started selling on Amazon, my SKU was date I purchased item, store name, and cost of good. For example, an item purchased for $12 at Walmart on 2/9 would have a SKU of 29WMCOG12. I recently changed my method so I could easily see what my breakeven price is (thanks for the idea, Nikki Kirk!). Now my SKU would be 12WMBE36.
• UPC = Universal Product Code
  • You know that barcode that you see on literally everything? That barcode (and the numbers below it) are known as the UPC. UPC's are item specific and scannable. The UPC is what is scanned at the register and it's also what you can scan on the Amazon Seller app when you are sourcing.

Learning all the different acronyms can get confusing, especially for new sellers. It is easy to get ASIN, FNSKU, SKU, and UPC mixed up, so know that you are not alone! Just remember that the ASIN identifies the product in Amazon's catalog. FNSKU links the item to the letter. SKU is assigned to a product by the seller and UPC is assigned by the brand or distributor for that specific item.

It is crucial that you make learning these a priority early in your selling journey. Learning to speak Amazon can be tricky and, at this point, I'm questioning if learning a new language would be easier!