Amazon Selling: Pros and Cons

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Brick and mortar sales is a concept that is unlikely to ever die out. But as the 2020s have shown us, business owners cannot rely on the in-store experience alone. 

Whether selling online exclusively or opting for the multi-channel route, every retailer today must have a digital ecommerce sales strategy to engage with online shoppers. And the first step towards building that strategy is deciding where to sell.

There are multiple options for selling products online. You can sell through Google. Through Facebook. Through your eCommerce store. And so on. But one of the most popular platforms today is Amazon. 

It’s understood that there are now around two million small businesses selling on Amazon, but is it a good decision for you?  

Who should use Amazon?

Every retail and ecommerce business owner should consider Amazon. However, some types of businesses are likely to see greater success from the platform than others. It all comes down to what sort of audiences you’re hoping to reach using your strategy.

Amazon – along with competitors like Google – is a search-based platform. It works by connecting the keywords you add to your product listings and advertising campaigns with the terms users are typing into the Amazon search engine. 

In essence, Amazon is built on a foundation of active, purposeful searches; people want, you provide. 

Other sales platforms, like Facebook, for example, are different. Users don’t search for products on Facebook as they do on Amazon or Google. Instead, sales are more ‘random’; they’re largely unplanned. Instead, users visit Facebook for interaction and social connection, making ad-hoc purchases based on posts they happen to see. 

Therefore, the Amazon platform is best used by businesses wanting to leverage the power of search engine optimisation to increase conversions and boost sales. However, as with any sales channel, there are some pros and cons of doing so. 

Pros of Selling on Amazon

With so many businesses opting to sell on the Amazon platform, it’s clear that there are many incredible benefits to using this channel. Here are a few of them:

Amazon is where your customers are

Perhaps the biggest reason to sell your products via the Amazon marketplace is that Amazon is where your customers are. 

Amazon is easy to use, offers good customer service, excellent parcel tracking, and fast delivery. It’s no wonder that half of all online product searches begin on Amazon. And even if a customer isn’t quite ready to buy, Amazon is still the place they’re likely to go for information, comparison, etc. 

So if you’re keen to meet your customers in a place where they’re familiar and feel comfortable, Amazon is it. 

Amazon isn’t just about selling products

Sure, Amazon can be a great place to sell your products. But it’s more than just a sales platform. 

As an Amazon seller, you can take advantage of a wide – and ever-growing – range of awareness tools that can help you boost brand visibility, too. 

As a result, more and more businesses are using Amazon as an awareness platform, with the channel capable of assisting retailers in meeting even more goals. 

Features such as shoppable posts, follow lists and Sponsored Brands campaigns are all helping Amazon sellers to do more to grow and develop their business, not just enable sales. 

Amazon delivers the highest ROI

If return on investment is one of the most important factors shaping your decision, you’ll be pleased to hear that, on average, Amazon delivers the highest ROI of any online marketplace. 83% of sellers see a 4x return – at least – through Amazon. 

While ROI from competing platforms like Google and Facebook can be impressive, research suggests that Amazon is still the winner. 

A report by Zogby Analytics indicates that nearly 60% of sellers believe their most significant returns come from the Amazon platform, compared to just 22% who see the greatest ROI from Google. 

Amazon makes it easy to make good decisions

The smartest thing any retailer today can do is move away from guesswork and start making data-driven decisions. 

When it comes to data, Amazon is King. As an eCommerce platform, Amazon holds a huge amount of first-party purchase data, showing exactly what shoppers are buying and when those purchases are taking place. 

This unique insight can help sellers make the right business decisions to maximise revenue at the right time. 

Other platforms can’t rival Amazon when it comes to data. Some only have access to third party data, while others, like Google, primarily hold search data. 

Amazon has everything you need

The number of features available to Amazon sellers is vast. The platform has everything you need to list your products, advertise your products, and generate reports to help you adjust and optimise your sales strategy as needed. 

The Amazon Advertising arm especially offers a range of campaign types to help you promote your listings. 

With all this coming as standard, there’s no need to search for other solutions to support your online sales efforts. This can make it quicker and easier to get started, saving you time and money. 

The Amazon ecosystem is geared to help sellers sell more and do so in a comprehensive manner.    

Cons of Selling on Amazon

There are many pros to selling on Amazon. However, Amazon isn’t the best fit for every business. There are several potential cons, including:

Fierce competition

If you’re looking to build a large and solid customer base quickly, you might not find it as easy to achieve on Amazon as you would on some other platforms. 

Why? Because of Amazon’s popularity. 

Competition can be fierce with so many retailers choosing to sell on Amazon. As a result, it can sometimes feel more challenging to attract and engage customers than on alternative, less popular platforms. 

The intense competition means that to be successful on Amazon, you need to create a great experience by joining Amazon Prime or prioritising customer satisfaction, for example. 

There’s a lot to get to grips with

Amazon may be intuitive for Amazon customers. But using Amazon as a seller isn’t always as easy. 

That’s because the Amazon platform is packed full of helpful seller features and functions that support retailers. 

Of course, that’s a good thing for online retailers. But it does mean there’s a lot to learn, and it can take some time to optimise your strategy for the best effect. 

In the long term, all this will pay off. But in the short term, you’ll need to get to grips with things like inventory, delivery, product listings, images, advertising campaigns, bidding strategies, Amazon SEO, Amazon’s rules etc. It can be overwhelming.

Amazon charges seller fees

Most sales platforms will charge a fee, so this isn’t something unique or unusual about Amazon. 

It is, however, still a downside that you’ll need to think about, especially if you don’t want the fees to eat into your profit margins. 

The good news is that Amazon offers a lot of flexibility, allowing sellers to pay a fixed price or pay a percentage per unit sold (usually somewhere between 8% – 15% depending on the type of product). 

Of course, there are extras to consider, too, such as PPC costs and fees for using services such as Fulfilment by Amazon (Amazon FBA for short). 

Lack of control

When you sell on Amazon, you have to confirm that you agree to all the terms and conditions stipulated in Amazon selling policies, Seller Code of Conduct, and other regulations. 

And to be fair to Amazon, most of this is about what you’d expect. For example, sellers are prohibited from selling illegal products. 

However, Amazon also has stringent requirements for creating product listings, outlining what information can and can’t be placed in descriptions and titles and how images are used. 

It takes away some of the flexibility you may have when using other channels. 

Amazon is a seller

One crucial fact to keep in mind is that Amazon is a retailer. Therefore, you’re competing against Amazon. 

Of course, this won’t be a problem with every product and every category. However, suppose you’re trying to sell similar products to Amazon’s own-brand items, such as AmazonBasics products. 

In that case, you may find it challenging to get the kind of exposure and kind of sales you’re looking for. In addition, the Amazon name is well known and highly trusted, which means that when faced with similar items – one Amazon and one not – buyers may be more likely to choose Amazon’s offering. 

Final Verdict

If you want to sell products online and use a search-based sales platform, Amazon is definitely the channel to consider, even despite these downsides. 

As it’s clear to see, Amazon boasts several advantages over other marketplaces, making it a lot easier for business owners to increase sales and build an online brand. 

While some areas may pose a challenge for retailers, the biggest cons of selling on Amazon can mostly be overcome by developing a solid strategy that minimises risk and boosts success. 

Amazon vs. Your Own Website

A very common question that businesses ask when beginning to sell online is whether it’s worth using a marketplace. Isn’t it better to develop an eCommerce website and sell products through your online store in the long term? 

The answer is that the best online sales strategies combine both, embracing new buying trends. 

The way that shoppers buy is changing. And it has been for a few years. Today, shoppers don’t just visit a website and buy a product. They plan. They compare. They consider. They assess. And they use multiple tools to help them do all that. 

Today’s buyers are what’s known as ‘multi-channel customers’. At the beginning of their journey, they may use Google to learn more about what solutions are available for their problem or need. 

They may then visit brand websites to take a closer look at a selection of those solutions before heading over to Amazon to compare products and check ratings and reviews. Using both simultaneously is undoubtedly one of the best ways to maximise the benefits of selling on Amazon. 

Amazon wants sellers to do this, too. In fact, it’s even developed its own way to connect on-Amazon and off-amazon sales efforts. It’s known as Amazon Attribution. 

You can read more about this feature in our Amazon Attribution guide, but at its core, this is a way to measure performance across various channels and understand how your website is contributing to your Amazon sales and impressions. 

Getting Started

Are you interested in becoming a seller? We can help. At ClearAds, we work with businesses to help them optimise their Amazon sales strategies to maximise the pros while simultaneously minimising the cons, ensuring you’re getting the most value from your online sales efforts. 

Get in touch to find out more about how to start selling on Amazon and how we can help you boost sales, expand your reach, and ultimately grow your business. 

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