For those with brick-and-mortar stores looking to expand into e-commerce, third-party selling can be a tempting choice. Putting together your own online storefront can be difficult, and it doesn’t always have the market penetration you’re looking for. Turning to an established market, then, can seem like a viable option as a solution.
For small businesses hoping to reach a wider market, there are few wider markets than that of Amazon’s e-commerce. Amazon’s reach should never be disregarded without serious consideration, but selling with Amazon also brings unique challenges; challenges that every business – from garage operations to brick-and-mortar stores – should be aware of before signing up. To help you make an informed decision, here are the pros and cons of selling on the Amazon Marketplace.
Reach and Marketing
Perhaps the biggest – and most obvious – reason companies sell with Amazon is their reach. Amazon sales account for 43% of all US e-commerce, which is a serious slice of the pie. The work and expense of building a vast customer base has already been done for you; all you have to do is sell the products through them to access it. It’s a potential shortcut to success, and one that’s hard to pass up.
Selling on Amazon also gives you access to their formidable marketing efforts. Amazon is already doing most of the work (much of which is even automated, like with the “Customers also bought” feature). Like an established customer base, this can circumvent a massive hurdle for many small businesses that wouldn’t otherwise have the money or the resources to market to the masses.
With so many purchases funneled through Amazon, it has become a familiar and comfortable experience for many consumers. You go to the same website, use the same search function, click the same button, use the same credit card information you’ve already entered previously. No mess, no fuss. Online customers often do what’s easiest, and for many, Amazon is what’s easiest.
The “Everything store” is always seeking to expand their offerings, and that includes big-name manufacturers and brands. And, when they make deals with those brands, often those brands don’t want any competition. For example, one individual had purchased Dunkin Donuts brand coffee to sell on Amazon, only to find out that Amazon struck a deal with the donut shop and banned all third-party sellers from offering the product, leaving him in the lurch with 40 bags of coffee.
Amazon also has some pretty strict guidelines for their third-party partners, and they can (and do, frequently) ban sellers for violations. One such rule is that of negative feedback: a certain number of returns and complaints will leave you blacklisted. Those include when customers lie (with impunity) about products being defective in order to secure a free shipping on a return, or when users are paid to leave negative feedback. So even an honest company supplying a quality product can find themselves at Amazon’s mercy.
Perhaps most crucially, Amazon has the power to outperform almost any product. They keep a close eye on the numbers for sales, and if they see your product doing well, and your product isn’t a unique product, it’s entirely likely that they will begin selling the same product. The problem is that they hold all the cards, with regards to marketing, customer information, and price. This is especially problematic since Amazon often doesn’t adhere to Minimum Advertised Pricing, allowing them to undercut everyone’s price of the item.
An Alternative Approach
For many, selling with Amazon is still the right option, all hurdles and problems aside. For those who find the arrangement a little lacking, there are other options. Selling as a third-party with other e-commerce sites, especially in niche markets, can sometimes secure you a steady stream of more promising sales leads. Selling with companies like eBay, Newegg, Etsy, and Rakuten can often offer many benefits.
For one, most third-party marketplaces are less likely to outsell you, like Amazon. Couple that with fewer sellers on the site, and you’ll see reduced competition. You’ll also have access to loyal customers, who tend to be more educated on subjects related to your products. And let’s not underestimate the value of having control over how and when the purchase is fulfilled – a luxury that Amazon doesn’t always offer.
Depending on your business situation, a little bit of research into alternative approaches can go a long way to giving you the experience you want from third-party selling.
About the Author: Danielle Adams is a freelance writer who’s committed to help build bridges between businesses and their customers. In her spare time, she enjoys learning more about Doba—a rapidly growing e-Commerce platform – reading up on industry books/articles, and exploring her local coffee shop.
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