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Are you new to online selling? Do you need suggestions on whats the best platform Amazon or your own website for product selling? Are you aware of Amazon pros and cons?
Every new seller who is giving a launch to the online business has two options. Either sell the items on a big eCommerce marketplace or start their own shopping site. Amazon is an eye-catcher for them when they think of an eCommerce marketplace. Amazon selling turned into a boon from zero to seven figure business. But, on the other side, it turned into a nightmare as well.
So, it is necessary to have the knowledge of plus and minus points of Amazon selling vs your own website before you start the business. Lets start with the benefits of selling on Amazon.
Pros of selling on Amazon
Biggest eCommerce platform
Amazon is the biggest eCommerce marketplace on the internet. Yes, of course you knew it. Amazon.com is the 8th most visited site on the internet.
Amazon.com ranks #3 in the USA.
Amazon.com ranks #8 in the UK.
Amazon.in ranks $4 in India.
Amazon.ca ranks #5 in Canada.
Amazon.fr ranks #6 in France.
Amazon.it ranks #4 in Italy.
Amazon.de ranks #4 in Germany.
Data source: Alexa.com
The traffic metric shows the dominance of Amazon in America, Europe, and Asia continents.
As per Statista, he site received billions of traffic every month. The statistics of Amazon.com metrics shows a constant flow of traffic in billions between the period of January 2021 to June 2021 globally.
This makes it an ideal platform for all sellers to sell on Amazon. Your brand and products will reach to billions of customers giving you a wide opportunity for sales.
Trust of customers on Amazon
The major issue to any new/existing business is gaining trust of customer. You cannot convince them easily by making a shopping website and running ads. A lot of frauds and data breach on websites make customer insecure while making a purchase online.
With Amazon, the case is different. Amazon is a big eCommerce marketplace giant and customers have faith on Amazon. It is because Amazon has earned their trust in the last 20 years. So, selling your products through Amazon will fill the trust issue gap. A survey conducted by Feedvisor suggests, 89% buyers in the USA trust Amazon over other eCommerce for online purchases.
Source: Oberlo
Amazon customers directly search product on Amazon instead of search engines. So, their higher purchase intent gives your best opportunity to grow your business.
150+ countries sellers accepted to sell on 18 Amazon marketplaces
Amazon has total 18 global marketplaces and do product deliveries in 200+ countries and islands. It does not bound a seller to be a resident of these 18 marketplace countries to sell products on Amazon.
It accepts sellers globally having valid documents, resident proof from 150+ countries. Let’s say, you are a seller from Kenya and want to sell on Amazon USA, you can start your business. Go to Seller registration page, follow the form process, attach required documents and you are done. Amazon support will verify your application request and help you start selling on Amazon.
Run Hassle free business through FBA
Amazon provides two selling options on its platform FBA and FBM business. An FBM business is a merchant fulfilled business, where seller keeps inventory on his side and when he receives the order, he/she need to process it through a shipping/courier company.
While FBA business stands for Fulfilled by Amazon. Send your inventory to Amazon and sit relax. When the seller receives an order, Amazon team deliver the order to the customer’s door providing you shipping as a service. You can run hassle free business. The best part, Amazon handles the refund and return cases for you. If you are new to Amazon business or online business, you can be benefitted with FBA.
Promotion as a service
Amazon provides promotion as a service to sellers as well. You will get various kinds of product promotion and marketing features within the Amazon dashboard. It includes Sponsored product ads, sponsored brand ads, deals and discounts, A+ content, ERP (Early reviewer program, Vine program etc.
The sponsored ads program feature allows seller to promote their listings on Amazon to its audience. Amazon displays the listing ad on the search page, competitor’s listing page etc. The ERP and Vine program helps the seller/brand in gathering customers voice (reviews and ratings) on their listing page.
Easy integration to third party apps
Amazon seller central allows seller to integrate their dashboard to third party apps like Shopify, Magento, and WordPress etc. This way you can keep a track of the inventory and order delivery. Whenever a customer orders a product on Amazon, you will get order invoiced generated in your third party app, and you can even process the orders from these apps and the data will be updated to Amazon seller central.
MCOF
Amazon introduced MCOF (Multi-channel order fulfillment) service to sellers. This feature allows the FBA sellers to sell on other marketplaces (Walmart, ebay, Etsy etc) and Amazon will deliver their third party orders.
Suppose, you kept your inventory in the Amazon warehouse, You are selling the product on Walmart other than Amazon. When a walmart customer orders your product, you can fulfill that order through MCOF. Share the order details in the MCOF section with the Amazon team, they will handle the rest. Hurray! your order will be packed and parcel to your Walmart customer.
Cons of Selling on Amazon
High Competition
Amazon generates billions of traffic, as we discussed in the pros section through the chart of Statista. This marketplaces has billions of products listed from millions of sellers. You will find hundreds and thousands of sellers competing in a single niche or category. So, making a market on Amazon is a quite tough role for new players. Even, sustaining the growth is a challenging task for established Amazon sellers.
One should do good Amazon product and market research before starting the business. Take help from an Amazon marketplace consultant, they will help you in right product launch and guide you step by step in your journey.
Amazon fees
Every seller whether doing FBM or FBA has to pay referral fee on every sale they generates through Amazon. Amazon charge 15%-45% referral fee on the product sales. It varies from category to category.
Apart from Referral fees, if you doing Amazon FBA business then, you need to pay the FBA fees. Amazon deducts FBA fees on each FBA order. This fee comprises for order delivery to the customer from their warehouse.
Amazon has two selling plans for sellers, individual and professional selling plan. The individual selling plan lets you list and sell products on Amazon but keeps your account limited. Also, the seller has to pay $0.99 additional fees on every order (exclusive of referral fees)You cannot run ads on Amazon, deals and discounts campaigns etc. While, the Professional seller plan gives you full access to Amazon selling. You can list unlimited products, send unlimited units to Amazon inventory for FBA, and run promotional and sponsored ads for better performance. The professional selling plan costs $39/month.
For FBA sellers, Amazon charges monthly storage fees. It is obvious, it is giving you space to keep your inventory in its warehouse, so for its maintenance and supply chain, you have to pay Amazon storage fees. The storage fees is calculated based on the cubic feet area your inventory is using in the warehouse.
Strict policies
Amazon has a keen policy “Customer satisfaction is the must”. To maintain and deliver the best services to its customers, Amazon made strict policies for sellers. This make selling on Amazon quite restricted and difficult to sellers. A seller has to maintain a good reputation while doing business with Amazon.
You should provide on-time delivery to your customer. The order defect rate and return should be under 1%. Else, this could lead to selling privileges restrictions. Even, a back to back return rate could suspend your Amazon selling account. Amazon does not even guarantee account reactivation if account get suspended.
Less control
Amazon sellers have limited control on its Amazon business. Amazon assures product return policy within certain period of time to customers. It means if a customer has purchased the product, he/she can return the item within few days, if they do not like it. Amazon accepts their decision.
If it is a genuine reason, a customer defected product or something, then it does not look odd. But, what if customer return without any reason or defect. You will lose the shipping fees. If you doing FBA business, you have to bear more loss in such case.
Also, the customers you are selling products are Amazon customers. So, you have limitations while doing communication with them. You can not send promotional emails to them. You can send emails for having a feedback on your listing. In other cases, you can discuss with them regarding returns/product issue.
Always maintain a good product quality product delivery. It will save you from negative comments of the customers on your listing page. If you get a negative review or less rating on the Amazon listing, you cannot bribe your customer in exchange of removing the negative feedback. Doing so, you are risking your selling account.
Buy Box Race
The Buy Box is a “Add to cart” or “Buy now” buttons set available on the listing page. If you are a product reseller and selling a brand product, let’s say Nike Air shoes. You will find multiple sellers selling the same EAN on Amazon. All the sellers have to compete with themselves to win the buy box to fall sales under their shoes.
See the below example, The Nike Gymnastics sneakers. It has a buy box of Wiley’s Reserve. If I will order this shoe, Wiley’s reserve will get this order. The seller is doing FBA and thats why the listing has a tag ships from Amazon.
Now, look at the right hand side footer section, You will find this listing has other nine offers from different sellers. The listing has been marked in stock by other sellers as well. You can compare offers from different sellers and can select another seller too for making the order.
Factors that influences the buy box are inventory level, seller rating, FBA, order completion rate, and selling price. You need to keep close monitoring on the listing to win the buy box and sustain it.
If you are launching a brand new product on Amazon, then also Amazon does not guarantee buy box unless its FBA launch program. The easiest way to gain buy box is doing FBA business. Sending your inventory to Amazon works as a trusting factor. Your inventory will be at Amazon’s warehouse, and this ensures the Amazon algorithm regarding product authenticity and delivery.
For FBM sellers, getting a buy box is a challenging task in the start of their business. Though, there are examples and experiences of sellers gaining buy box from day who are selling products under $35 on the Amazon marketplace. With some initial sales and feedback gains, you can have the buy box on your FBM listing too.