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Weighing the Positives and Negatives of Adding Amazon as a Sales Platform By Megan Stanczak

Megan Stanczak is an Amazon Strategy and Listing Optimization expert, as well as the owner of Stanczak Retail Consulting. She is dedicated to helping product-based brands achieve steady and sustainable growth as Amazon sellers.
For more advice, tools, and resources for selling on Amazon, follow her on Instagram @stanczak.retail.consulting, and subscribe to her e-mail newsletter.

If you own a product-based brand and have been thinking about the next steps to grow your business, you’ve likely been considering expanding your sales channels. You likely already know that it’s important that your product can be found by your customer in multiple places they frequent, both online and physical locations. Giving your customer the option to decide where they want to buy your product is a way to service them and meet them where they are comfortable.

There are all sorts of 3rd Party Marketplaces that small businesses can sell their product, including but not limited to Amazon, Etsy, eBay, and Walmart.com. All selling channels have unique opportunities and disadvantages, and Amazon is no exception. Although Amazon, unlike its competitors, has an unignorable advantage… 

Earlier this year Forbes reported on a study that concluded 89% of consumers are more likely to buy products from Amazon than other e-commerce sites. Think about that for a minute. 

In 2019 over 66% of online product searches begin on Amazon. This number has grown exponentially over the last several years and with the boost of Amazon Prime subscribers as a result of 2020 COVID-19 shutdowns, that growth is likely to continue.

You’ve probably heard statistics like this before, and you’ve probably asked yourself Is Amazon Right for My Business? I often hear this question from potential clients who may be wary of selling on Amazon, and rightfully so. In this article, I’ll talk about some major benefits and downsides to selling on Amazon so that you can make a more informed decision for your business. But first, check out what you’ll need to have secured before selling on Amazon. Then let’s talk about the first hurdle: How to actually get started selling on Amazon. 

How to Sell on Amazon

Before even considering selling on Amazon, it’s important to first discuss the different ways you can sell your product on the marketplace. Amazon has two main ways to get your product up and running. The first is through Seller Central (also referred to as 3P). The second is through Vendor Central (1P). What are the main differences?

Seller Central is for businesses that want to sell ON Amazon.com, and this platform is accessible to almost anyone. 

Vendor Central is for businesses that want to sell wholesale TO Amazon, and this platform is by invite-only.

Because Vendor Central is by invite only and not accessible to most small businesses (it also limits brand’s control over their Amazon presence and pricing), from this point forward I will be only referring to Seller Central when talking about selling on Amazon in this article.

Once you’ve decided to sell on Amazon via Seller Central, the next step is to choose which type of selling plan you’ll want to sign up for, Individual or Professional. If you are a registered business, Professional will be the only real choice here, as it’s almost impossible to scale using an Individual account.

The Positives

Now that we have the basics covered, let’s get into the good stuff – The Positives and Negatives to selling on Amazon.

3 major benefits to selling on Amazon include the ability to scale, a large audience, and Amazon’s FBA program.

If you have inventory ready to sell, Amazon is a way to scale (and potentially pretty quickly). Amazon is the largest online marketplace in the U.S., and one of the largest in the world. Just having your product on the marketplace is setting you up to scale (assuming your product page is optimized and ready to be found by customers in relevant search results).

Amazon has a large, captive, and (most importantly) a ready-to-buy audience. All it takes is some SEO work on your listings! Brands I’ve worked with have seen an average 50% increase in their Amazon sales 1-3 months after we worked on listing optimization, and that number increased to 170% 6-9 months after. 

Another great benefit of selling on Amazon is their FBA program. Amazon’s Fulfillment by Amazon (FBA) program enables sellers to send their inventory to FBA warehouses for Amazon to handle both fulfillment AND customer service, allowing you to provide fast prime shipping and exceptional customer service to customers. FBA allows you to spend time on what you do best, building your brand, and focusing on making a kick-a$$ product!

The Negatives

Reader’s beware – Not everything is rosy on Amazon. There are plenty of downsides to selling on Amazon, as there is on any selling channel. While I believe the opportunities usually outway the negatives for product-based brands who are ready to scale, there are some major hurdles to be aware of before starting to sell on the marketplace.

The first major negative that I want to address is not necessarily because it’s the worst of the downsides, but because it’s the most concerning barrier from the perspective of most small businesses I talk to – Fees. Amazon is the KING of fees. They charge a $40 per month account fee for Professional plans. Then on top of that, they take 15% of every sale. If you choose to opt into their FBA program, there are fees associated with pick-pack-ship, storage, and optional fees like inventory prepping and labeling, inventory removal, etc. It is worth noting that customer shipping is covered with the FBA fees.

The second downside of selling on Amazon is the competition. It seems as though everyone these days is selling on Amazon, and not to mention at low prices! JungleScout’s Chrome Extension is a great tool to use to analyze the type of demand and competition your niche experiences on Amazon. 

The third and most annoying negative of selling on Amazon is the lack of control over your account. If you decide to sell on Amazon, just remember, it is not YOUR website. It’s Amazon’s website. What they say goes. They don’t like the title of your product? They can suppress it from being seen by customers. If your product is on their list of prohibited items, or they *think* it’s on the list, they can suspend it from being sold. Do they think you are breaking their long list of rules stated in their selling agreement? They can close your account. Don’t let this scare you away, there are methods to use to make sure you are maintaining a healthy Amazon account. 

Weighing It All

Deciding whether or not to sell on Amazon can seem overwhelming, but if you play by Amazon’s rules you have the opportunity to grow your business. For many, the positives far outweigh the negatives, and the added sales volume brought about by the Amazon marketplace outweighs the seller fees.

Download my Free Guide to Selling on Amazon for Beginners, which I created for small businesses to get started selling on Amazon on Amazon the right way so that you can build a foundation for profitable and sustainable growth.

And remember, don’t put all of your eggs in Amazon’s basket – because after all, it’s their basket and they can take it away. Prioritizing your brand, your products, your website, and your audience will allow you to grow your whole business, sustainably, across ALL of your sales channels.  

Do you think Amazon might be a good fit for your business? I want to hear from you! Subscribe to my newsletter and follow me on Instagram @stanczak.retail.consulting then let me know!

Photos by Traci Elaine Photography.

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