Every new seller making the transition to Amazon’s marketplace automatically accesses a global audience. In this article, we discuss a few trends in Amazon eCommerce and eCommerce marketplaces in general. Then, we turn to the advantages and disadvantages of selling on Amazon. While it’s not a zero-sum game, you need to know what starting a relationship with Amazon means for your business.
Your Amazon/eCommerce Strategy
But these are complex questions, littered with nuances depending on your company’s circ*mstances and future aims. That’s why in this article, we’ll be looking at the pros and cons of selling on Amazon vs your eCommerce website.
Here’s what we’ll be covering:
- Amazon and Global Ecommerce Trends
- Advantages of Selling on an Ecommerce Site
- Advantages of Selling on Amazon
- Amazon’s Limitations and the Role of Your Ecommerce Store
- Should I Sell on Amazon?
Amazon and Global Ecommerce Trends
Both Amazon and eCommerce are growing at a rapid pace. In 2019, marketplaces contributed to 52% of global online retail sales. After all, online marketplaces account for the majority of global sales nowadays. In Europe, where many already have access to the internet, eCommerce grew by 14.2% in 2019. The global concerns around COVID-19 also accelerated the focus around eCommerce, allowing Amazon to grow 63.3% during the crisis thus far.
Amazon’s strategy is foundational to its success. Manypieces contribute to this puzzle: customer loyalty, owning buyers with the highest search intent, then selling their customer data. The firm focuses on continuously enhancing customer experience and lowering prices along the way.
Under Amazon, customer service wins, and who is prepared to fight them? Wholesalers and retailers have a lot to consider as Amazon remains omnipotent in today’s market. Most important, businesses also need to make strategic decisions around Amazon and marketplaces in general. After all, Amazon has many pros and cons. Before jumping into the specifics of why you should sell on Amazon, let’s examine Amazon’s strategic advantage.
Whether you’re a brand, distributor, retailer or manufacturer, you cannot ignore Amazon as a sales channel.
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Advantages of Selling on an eCommerce site
Full Control
With an eCommerce site, you have full control of every step of the customer purchasing journey. You choose how customers discover, interact, purchase and receive deliveries from your business.
Tell your unique brand story
You have full control of your brand identity and messaging at all times—which also means it can be tailored and amended to match your strategic priorities.
Use Customer Data for Personalisation
Selling on an eCommerce site yields valuable customer information that helps your business. This data boosts your personalisation with email marketing campaigns, targeted discounts, and improved shopping experiences.
Advantages of selling on Amazon
Many benefits come from selling on Amazon: trust, customers, and fulfilment. Let’s learn more about the accounts’ particular benefits.
Access Purchase-Ready Customers
The number one benefit of selling through Amazon is instant access to purchase-ready customers. Amazon shoppers often skip the awareness phase and already know what product they want. This access to customers with high buying intent is one of Amazon’s competitive advantages and good for new businesses looking to grow their audience.
Amazon’s Reputation
Customers buy from Amazon because of its reputation for an excellent customer experience. By selling through Amazon, your business benefits from Amazon’s brand.
It’s easy to use
From a practical standpoint, it’s easy to start selling on Amazon—taking 24 hours if you’re prepared.
Fulfilment by Amazon (FBA)
When you sell with Amazon FBA, you store your products in Amazon’s fulfilment centres and let them pick, pack, ship, and provide customer service for your products. With Amazon handling logistics, you save valuable time and resources.
Amazon’s limitations/Disadvantages
Amazon’s strengths are also its weaknesses. Yes, millions of loyal customers shop on Amazon. But they love Amazon’s marketplace—not you.
Amazon’s Customer Loyalty
While customers buy your products, they are loyal to Amazon, which owns the marketplace and restricts how you can brand your online store. You can display your name and logo as well as a few images but cannot link to your website and social media.
No Data Access for Amazon Sellers
Amazon restricts your access to crucial customer information. Without access to your customers’ behaviour on Amazon, you lose the opportunity to personalise your experience.
Amazon limits your brand
In terms of brand-building, Amazon is a bad option. In most cases, a shopper will type ‘mobile phone case’ into the search bar on Amazon’s homepage. They might filter by price, average customer rating, or get distracted by one of the sponsored products at the top of the page. As a result, Amazon removes your brand from the buying process. Instead, customers focus on product reviews, price and popularity on the Amazon marketplace. Your business, in the end, competes with thousands of other sellers, without using your unique brand story.
Amazon FBA takes control of your business
Although FBA has advantages, you also lose control over your inventory. For example, Amazon might move products between warehouses, rendering them unsellable while in transit. By letting Amazon manage your inventory, you also lose control of your logistics chain. In delivering your products, you lose the chance to interact with your customers during the crucial last mile. Last, Amazon charges an FBA fee, which could impact your business’s profit.
Amazon could take advantage of your success
If Amazon notices the success of your product, they might replicate your product and outcompete you.
The bottom line—should I sell on Amazon?
There are both advantages and disadvantages of selling on Amazon. The big drawback is that you lose control of your brand while selling on Amazon. But, your company’s channel strategy can benefit from selling on Amazon. In the end, you’ll need to consider your company’s ambitions, market share and size. You can start weighing the pros and cons with Vaimo, an experienced partner to global brands in ecommerce, online marketplaces, and much more.
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As an enthusiast and expert in eCommerce, particularly in the context of Amazon, I bring a wealth of knowledge and firsthand experience to the table. Over the years, I've closely followed the dynamic landscape of online marketplaces and the intricacies of selling on platforms like Amazon. My insights are rooted in both theoretical understanding and practical applications, making me well-equipped to delve into the various facets of Amazon's role in the eCommerce ecosystem.
Now, let's dissect the key concepts and information presented in the provided article:
Amazon and Global Ecommerce Trends
1. Market Growth:
- In 2019, marketplaces contributed to 52% of global online retail sales.
- eCommerce in Europe grew by 14.2% in 2019.
- The global concerns around COVID-19 accelerated eCommerce, leading to a 63.3% growth for Amazon during the crisis.
2. Amazon's Strategy:
- Amazon's success is attributed to a multifaceted strategy, including customer loyalty, owning high search intent, and selling customer data.
- The focus on enhancing customer experience and lowering prices contributes to Amazon's strategic advantage.
Advantages of Selling on an eCommerce Site
1. Full Control:
- With an eCommerce site, businesses have complete control over the customer purchasing journey.
- Full autonomy in shaping brand identity and messaging to align with strategic priorities.
2. Customer Data Utilization:
- Selling on an eCommerce site provides valuable customer information for personalization in marketing campaigns, discounts, and shopping experiences.
Advantages of Selling on Amazon
1. Access to Purchase-Ready Customers:
- Instant access to customers with high buying intent is a key advantage of selling on Amazon.
- Shoppers often skip the awareness phase and already know what product they want.
2. Amazon's Reputation:
- Businesses benefit from Amazon's brand reputation, leading to trust and credibility among customers.
3. Ease of Use and Fulfillment by Amazon (FBA):
- Practical ease of starting to sell on Amazon within 24 hours.
- FBA allows businesses to store products in Amazon's fulfillment centers, saving time and resources.
Amazon's Limitations/Disadvantages
1. Customer Loyalty:
- Customers may buy products but remain loyal to Amazon, limiting the establishment of brand loyalty for individual sellers.
2. Data Access Restrictions:
- Limited access to crucial customer information restricts the ability to personalize the customer experience.
3. Brand Limitations:
- Amazon's focus on product reviews, price, and popularity overshadows individual brand stories, making it challenging for sellers to differentiate.
4. FBA Challenges:
- While FBA has advantages, it comes with challenges such as loss of control over inventory and potential fees impacting profit margins.
5. Potential Competition from Amazon:
- If a product achieves success on Amazon, there's a risk of Amazon replicating it and competing directly with the original seller.
Should I Sell on Amazon?
1. Consideration Factors:
- Businesses need to weigh the pros and cons based on their ambitions, market share, and size.
- The decision should align with the overall channel strategy and business goals.
2. Consultation:
- Consider seeking advice from experienced partners in eCommerce, such as Vaimo, to navigate the complexities of online marketplaces.
In conclusion, the decision to sell on Amazon involves a careful consideration of the advantages and disadvantages outlined in the article, taking into account the unique circ*mstances and goals of each business.
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