The Pros & Cons of Selling on Amazon

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Amazon is the world’s largest online retailer, with expanded avenues besides the e-commerce approach. Amazon holds a competitive spot in the consumer electronics market with the various Amazon Echos and Firesticks and connects customers to digital content through Prime Video, Amazon Audible, and Amazon Kindle, among its many other popular products and features. Many consider Amazon’s worldwide e-commerce store to be a chief location for them to list their goods. This makes sense considering the fact that Amazon is widely successful, with sales of approximately $283,000 USD per minute and $17 million in revenue per hour.

However, as successful and wide-reaching as Amazon has proven itself to be, many retailers have their hesitations about whether selling on Amazon’s platform is a smart idea. We asked business professionals and CEOs to weigh in on the various pros and cons of selling on the platform. Keep reading to receive a well-rounded picture about whether selling on Amazon is the right move for you.

Pro: Getting Started Is Simple; Con: It’s Hard for Your Products To Be ‘Found’

“Amazon makes it easy to reach a large consumer base at scale and gives you the tools and infrastructure needed to do so. Getting started is certainly easier than setting up your own website and warehousing infrastructure. Create your product listing, send inventory to an FBA (Fulfillment by Amazon) warehouse, and you are in business. [However,] it has gotten increasingly hard to be ‘found’ on Amazon, as it has been flooded with products from internet marketers and ‘me too’ products attempting to game the system. It’s a constant battle to fight counterfeits and listing ‘hijackers’ have been growing,” says David Heacock, CEO of FilterBuy.

Pro: Amazon’s Popularity and High Traffic

“Amazon has helped to grow our business immeasurably. Amazon is not only the dominant force behind e-commerce right now, but behind commerce in general. While it’s important for every small business to build and maintain their own retail website, you simply can’t compete with the number of eyes that can find your product on Amazon. Not only would I recommend becoming an Amazon Marketplace Partner to small businesses, I would argue that becoming established as an Amazon Marketplace Partner is imperative to the future success of any small business. Amazon only continues to grow and the propensity of global consumers to look to Amazon to make purchases only continues to grow. Amazon is the future (if not the present), and businesses will either adapt to it or get left behind,” says Nate Masterson, Marketing Manager of Maple Holistics.

Con: Fierce Competition in a Competitive Market

“A major con of selling on Amazon that discourages many sellers and deters many potential others is the fierce competition. With any number of competitors hoping to achieve major success through the platform, and hundreds to thousands of pages of search results, unfortunately only a handful of businesses will find themselves truly pleased with their experience. Amazon’s ranking system places certain sellers’ products at the top of search results while millions of products go unseen by shoppers visiting the site. The exact variables that determine the ranking are ever changing, so unfortunately, many people operating their businesses fully or partially through Amazon won’t succeed in the manner they are hoping to. Of course, there are a few general areas you can focus on to boost your ranking, but there’s still no guarantee that you’ll find any significant success with Amazon as your e-commerce platform,” says Rachel Jones, Head of PR of Hope Health.

Pro: Amazon’s Wide Reach

“Amazon has proven itself as an incredibly wide reaching e-commerce platform, so an immediate pro of selling on Amazon that you simply can’t ignore is the sheer number of customers who shop there. It’s estimated that almost 200 million people visit the site each month, and their locations are spread around the globe. If you’ve been struggling to reach customers outside of your immediate area, or have made it a goal to spread your audience, Amazon could be a great option to help you achieve this,” says Marcus Hutsen, Business Development Manager of Patriot Coolers.

Con: Pricey Commission Fees

“A well known con about selling on Amazon is the commission fees charged on every product sold. These commission fees range anywhere between 6 and 45 percent of the selling price of the item, an undeniably high price tag at the higher end of the range. Amazon takes more than just commission fees from those who sell through the platform; there are also closing fees, monthly account fees, shipping prices, and more, all depending on numerous factors that vary from seller to seller. It is, however, expected that every e-commerce platform will charge sellers varying expenses, so sellers have to compare these costs against Amazon’s. While some businesses find that the additional fees Amazon charges are worth the traffic and customer reach, others find the fees are not feasible,” says Tavis Lochhead, Co-Founder of Looria.

Pro: Customers Already Trust Amazon

“Amazon has done the groundwork to become a trusted and loved e-commerce platform. You can bring up the company in any social circle and receive the response that those people shop there often. In a sense, if you use Amazon effectively, you can ride on their coattails of success when listing your items for sale on their site. Your products take on an aura of seeming more trustworthy by appearing on such a trusted site. Customers can buy your products for the first time without it seeming like a risk because they know they can utilize shipping and return policies that have worked for them in the past. Online shopping is more prevalent and set up for ease in some countries than others, but Amazon’s global reach means it receives traffic from people in even these areas. The factor of Amazon’s trustworthiness is a major selling point,” says Ann McFerran, CEO of Glamnetic.

Pro: Large Scale Retailers Trust Amazon For Additional Sales

“Maybe you’ve noticed that many major brands sell their products on Amazon. These include Levi’s, Eddie Bauer, Weight Watchers, Adidas, and The Disney Store. Since customers can already buy some of their favorite brands through Amazon (and potentially utilize Amazon’s features like Prime Shipping at the same time), they are further attracted to make their purchases through Amazon. And that in turn benefits all sellers, because the more customers shopping the site, the more likely your products are to be recognized and purchased,” says Phillip Montalvo, Director of Marketing of Azuna.

Con: You’re Selling on Amazon’s Terms

“Some business owners find it incredibly frustrating and difficult to sell their products through Amazon due to the control the wide reaching platform holds over all of the ins and outs of the arrangement. Factors like fees, shipping, merchandising, and even branding are all in Amazon’s court, which is a tricky situation for business professionals who trust their own ideas and processes but cannot implement them. Another detail to consider is that Amazon’s control extends to sellers’ entire ‘storefront’ on the platform. With customer satisfaction and the upheld reputation of Amazon as its top priorities, the company won’t hesitate to shut down a seller’s store if it jeopardizes either. So if you want to sell through Amazon, be aware that your continuation of working with them is tenuous,” says Amanda E. Johnson, Chief Marketing Officer of Nailboo.

Pro: Receiving More Brand Awareness

“When you sell through Amazon, you’re using the platform’s popularity to drive your sales. With all the other factors in the arrangement, not every seller finds that they make enough of a profit on the site to outweigh all the cons. But if you are one of the businesses that finds you can use Amazon to your advantage, operating through the site can be a fantastic means of customer acquisition,” says Eric Elggren, Co-Founder of Andar.

Pro: Reduced Marketing Costs

“In a sense, when you sell on Amazon you can contribute less to your marketing budget because the site helps market your products. While there are many factors that go into the ranking algorithm (to a degree that some sellers consider those whose products are featured near the top of search results to be akin to lucky lottery ticket winners) and your products aren’t guaranteed to be frequently viewed by visitors, when you sell through Amazon you don’t need to market the e-commerce store itself, because Amazon is already a household name. You should certainly still be using your marketing budget in other ways, but you can focus less on bringing traffic to the site you’re selling on (Amazon). You will, however, still want to contribute time and effort to increasing your products’ visibility on Amazon,” says Jason Reposa, Founder and CEO of Good Feels.

The question of importance remains as, “Is it wise to sell my products on Amazon?” The answer is not cut and dry, and will vary on the features you are looking for in a retailer platform. However, the above pros and cons of selling on Amazon as listed by business professions with experience managing their e-commerce stores should provide you with all you need to know about whether listing your products on Amazon sounds like the right step for you.

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