Do you have e-commerce, and are you thinking of starting selling on Amazon? Amazon is the most famous online marketplace internationally, used by millions of digital consumers every day. A great sales potential for those who have e-commerce, therefore. But why don’t all e-commerce owners jump at the opportunity to use Amazon as their primary marketplace?
Amazon is a very successful sales channel, both locally and internationally, so what prevents companies that already sell online from focusing more on this platform?
The giant has been allowing independent retailers to use its platform to offer their products since 2000: an intuition that has enabled it to become the e-commerce giant it is today, fueling a staggering success. When to open your shop? Some suggest that the best opportunities come from companies with unique products and good margins, which allow you to make money even if Amazon takes its share. Success is not automatically guaranteed: to put your products on Amazon, you must first create a balance between expenses and revenues.
Table of Contents
The Advantages Of Selling On Amazon
The main advantages of selling on Amazon are measured in terms of:
- Sales
- International reach
- Customer acquisition and sales incentives
- Management, processing, and storage by Amazon
- Website functionality
Sales
If you abide by Amazon’s rules and describe your products following the guidelines, your sales and revenue are sure to increase. The marketplace’s millions of monthly users make up such a large volume of consumers that it is virtually impossible not to see the enormous benefits of such extensive exposure. Also, Amazon’s cataloging system ensures that each product appears in the right searches. Furthermore, those who sell on Amazon benefit from the huge investment the platform has made to always come out on top of Google’s results.
International Reach
As a trusted brand worldwide, Amazon offers businesses the ability to expand their offering into multiple markets. It allows you to go beyond your geographic location and extend your reach to other parts of the world where even more customers are ready and eager to buy. Suffice it to say that the Prime membership program alone boasts more than 150 million global subscribers and is constantly growing.
Numerous small business owners attribute their fortune to Amazon, and there are even occasional stories of sellers making millions on the platform. After all, the pandemic has pushed more shoppers to the e-commerce giant, and the company says sellers in its market are reaping the rewards. This aspect leads to more and more brands selling on Amazon.
Customer Acquisition
The coolest thing about online marketplaces is that users don’t use them to search for a specific brand – they use them because they’re looking for a particular product. This increases your chances of attracting new and unique customers by increasing the likelihood that they will “discover” your business.
Sellers on the Amazon marketplace have been responsible for most sales of the company’s products. The more sales they accumulate, the more money Amazon generates. The company said it invested over $ 30 billion in logistics, tools, services, and staff to help small and medium-sized businesses for 2020 and 2021. It also provides technical support, loans, and credit assistance through its Amazon Web Services cloud computing platform.
Management, Processing, And Storage By Amazon
The tasks of running a website, processing payments, storing inventory, and picking and shipping items to fulfill orders can be complicated tasks for a small business to manage. Amazon makes it easy for sellers to register, place items and start selling. For those interested, stock and ship items (for a fee) through the FBA program.
Items may also be Prime eligible, making them more eye-catching than their competitors for those who want fast, free shipping. For a company simply looking to start selling quickly and outsource much of the logistics involved in retail, Amazon can be a very attractive option.
Website Functionality
The Amazon website is very fast, reliable, and easy to use for consumers, thus improving the customer’s propensity to buy. For sellers, the portal offers the possibility to manage the product catalog, inventory, prices, rules, and shipping rates and to view complete statistics on the company’s operations: all elements to consider when choosing between commerce and marketplace.
The Cons Of Selling On Amazon
However, selling on Amazon also has some cons:
- Competition
- Lack of control
- Commissions
- High price sales
Competition
Amazon is one of the biggest players in its field, so there may be thousands of other sellers your business will have to compete with. Marketplace Pulse, an e-commerce intelligence firm, estimates approximately 2.4 million active sellers on the platform. Small companies and companies sell at low prices because they can market products that come directly from the factory. And then there’s the competition from Amazon itself. The company has launched dozens of products under its brand, which compete with third-party merchants. Not all have been successful, but Amazon has been accused of prioritizing their products in search results.
Lack Of Control
By subscribing to a marketplace, you must abide by its rules. Amazon focuses on products, not sellers. This means that you have very limited means of showing your brand presence. There is no contractual, legal or moral obligation for Amazon to allow a particular seller to sell on its site. Amazon can change the terms and conditions, fees, and services offered in any way it prefers. The seller has no control over any of these changes or their timing.
Commissions
While your revenue will certainly increase by selling on Amazon, it all comes at a cost. Regardless of whether you have a professional account, you will still face commissions. There is no fixed percentage: you can have a basic charge and not pay any subscription or a professional performance at the cost of 39.99 euros. The commissions vary based on the product category and its selling price: the reporting commissions range from 6 to 20%, with an average of 15%. The mid-range products are subject to an additional commission (of call).
What are these products?
- Books
- DVD
- Music products
- Software
- Computer
- Video games
Sales Can Be Expensive
In addition to collecting a monthly fee from professional account merchants and managing its share of each sale via a referral fee, Amazon may charge various other fees depending on the services used. Features like Fulfillment by Amazon, consulting services to help sellers, and advertising all come at an additional cost.
Amazon states that these add-ons are voluntary. He doesn’t force anyone to pay them, and many sellers on his marketplace don’t. But often, one feels almost obliged to participate. If you don’t advertise to increase the visibility of your listings, those listings can easily be buried in the deluge of products. If you are not part of FBA, your items may not be eligible for Prime shipping.
When To Sell On Amazon
To evaluate if it is the right time to sell on Amazon, you can take advantage of the following indicators. Open your store on the marketplace if:
- You are selling a “basic” item, and you do not mind earning little for each sale
- You are a new business, you have no customers, and you don’t know a good way to get people to find you
- You sell used and refurbished items that are already on Amazon (people click the Used button frequently, and if you can compete on price and good reviews, you might have a great channel)
- People are searching Amazon for your brand
- Your product belongs to the sectors of electronics, books, or cheap household items: the dominant categories on Amazon.
If you have an established brand, make your products, and are quite successful, selling on Amazon could benefit your business. You will potentially engage with more customers as long as you can bear the cost.
Also Read: Amazon And Google Punished By The CNIL For Their Use Of Cookies
