From Shelf to Market

May 13, 2024 -- Posted by : dwarren

Launching a physical product has been quite an adventure. This article isn't about creating a product or marketing a product - those are separate hurdles. This article is about what we've learned trying to legally sell a product we already have. Hopefully this will be useful if you're going through the same process.

Well-funded startups will have people or consultants to specifically help with compliance, which is what a lot of these items are. If you have those resources available you should use them. This article is from the point of view of people that don't have those resources available.

Obligatory: You should consult your lawyer for actual advice.

Selecting a Marketplace

Instead of placing the product for sale on our own website, we decided that listing on a well-known marketplace would be better for customer confidence. Customers will know that they can get a refund if they're not satisfied.

We decided to sell on Amazon because the barrier to entry is low, but also because the barrier to purchase is low. Our target audience is people building SaaS products, either internally or as startups. Anyone that has dealt with purchasing "enterprise products" has stories of spending weeks trying to get an actual price - we want our product to be easy to purchase.

Amazon allows you to pack and ship yourself, but for small items Fulfillment by Amazon (FBA) doesn't actually cost that much. For our product FBA costs $4.14 per item, and the total seller fees come to $11.35.

So We Need a Trademark

We discovered you need a trademark to sell on amazon - it's a story of good intentions and unintended consequences. This is my interpretation of why that's the case:

Amazon SKUs (aka ASINs) identify the product not the supplier. B00MTSIBMU means Lemon Lysol Wipes regardless of who sells it. This allows Amazon to present products nicely, but somewhat breaks down under game theory, leading to the Amazon gaining a reputation as a "wild west" for sellers. Say you have the following situation:

  1. Your company Quizmox sells two products on Amazon - ShelfMini and the ShelfMax.
  2. Your competitor Spunglu sells a similar product ShelfPro.

This is one of a number of shenanigans that occurred in practice:

  1. Spunglu buys a bunch of ShelfMinis on Amazon.
  2. Spunglu resells them on Amazon as ShelfMax under the same ASIN for $1 less.
  3. People buy items from Spunglu since they're the cheapest.
  4. ShelfMax starts getting a bunch of bad reviews saying the product doesn't match the description.
  5. Quizmox is now on page 2 due to bad reviews, so everyone buys ShelfPro instead

Amazon hasn't sat idle though - they have tried to reduce these kinds of shenanigans by introducing Amazon Brand Registry.

Amazon Brand Registry

Under the new Amazon rules you aren't allowed to sell something unless you have permission from the brand owner, or you can prove you're the brand owner by holding a Trademark. This way Amazon doesn't have to be the arbiter - that's up to the US Patent and Trade Office.

The down side is that now you have to spend some amount amount in legal fees to register your brand as a Trademark if you haven't already. So far it has cost about $800 in legal fees, and it will cost a bit more down the road to convert it to a final Trademark.

A side effect of needing a trademark to sell on Amazon is - the US Patent and Trade Office is very far behind. Applications are taking close to a year to process. If you see brands on Amazon named IWxPumJo and other silly combinations of letters - those are manufacturers of generic goods registering trademarks just so they can sell on Amazon.

I Had No Idea What a Trademark Is

Coming from a technical background I assumed a trademark was like a DNS name - it's something you register to use and then use it. After contacting our lawyer that's not even close to accurate.

To get a trademark you have to prove you've actually conducted trade under that mark - that is you sold something with that brand on it. You would think there's a chicken and egg problem, but you can get an application number by filing an Intent to Use application, which gives you an application number that's adequate to register the brand on Amazon. After we get some sales we'll have to go back with evidence to change that to an actual trademark.

Getting a UPC Code

Another requirement to sell on Amazon is getting a UPC code. If you google "get UPC code" you'll find a large number of places to buy UPC codes, but as it turns out there is only one that's accepted by Amazon - a company named GS1.

We chose to buy a block of 10 for $250, but you can also but smaller or larger blocks. In hindsight getting a 100 block for $750 may turn out to have been the better deal. According to the GS1 guidelines, once you mark a UPC as released it is forever locked in stone. So if you're in the prototyping phase like we are you could burn through a fair number of UPCs.

FCC Compliance

At first google, FCC compliance seems like a massive wall to climb - I've seen estimates between $3K and $30K to have your product tested. If you're just using parts built by somebody else, you would think you can just include their testing - and it turns out there is such a thing. It's called a Supplier Declaration of Conformity.

If you have a product like ours that's basically a single-board computer with packaging and software, single-board computer manufacturers provide this for you on a platter.

There is one bit of strange-ness in this process though. The contact information given by the SBC manufacturer was in China, and the Amazon Seller page requires contact information in the United States. I placed a support case with Amazon to ask the question:

Amazon Support Request
My product is based on a single-board computer, and I have a Supplier's Declaration of Conformity from the SBC manufacturer. My problem is that it doesn't fit the form on the add product page: It wants a US address and the SDOC contact address is in China, and it doesn't include an email contact. I can keep the document on file and put myself as the contact so that you have a US address, but is that acceptible?

The amazon response was either from a script or from an AI, because it didn't show any understanding of the question:

Amazon Support Response
Unfortunately it was not possible to determine the nature of the problem reported from the information we received so far.

In order for us to address your problem, we will need some additional information. Please reply to this message with the details requested below:

1. The problem described in detail, including the exact text of the error messages and whether those messages appear in the browser window or in another pop-up window.
2. If so, exactly the same text or data that you entered in the form that caused the error.
3. A screenshot of the error message (if any).
4.Asin number.

I never received a response from the manufacturer. Since I can't find any regulation about SDOC having to have a US contact, I listed our contact information and keep the certifications on file in case anyone requests them.

Hazardous Materials

One of the questions you're asked when you first attempt to create your item in Amazon Seller Central is whether your product is a Hazardous Material. It isn't entirely obvious what qualifies as Hazardous Materials, but our product didn't seem to be related to any of the categories they list. That wasn't entirely satisfying though.

  Anything is hazardous if inserted into the wrong orifice.  

Lucky all of the materials used in our product are available for sale on Amazon, and it's possible to look an ASIN to see if it's flagged as Hazardous Materials. We ran through each item and none of them were listed as hazardous, so by the "transitive property of hazardous-ness" our product must not be hazardous.

Trial Shipment

As of 5/13 we've shipped an initial 5 units of inventory to Amazon Fulfillment Services. I know that's a small number, but this is a dry run. We tried our best to follow their packaging and labelling guidelines, but it's entirely possible we missed something. I don't have any reason to expect Amazon to go "full malicious compliance" though - hopefully they'll just tell us what's wrong.

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