Most retailers recognise that Amazon can be a huge opportunity for their business. There are tonnes of new customers actively searching for your product. However, if you ask any retailer, there will almost certainly be some aspects that are frustrating or elements that they don’t like about the marketplace.
As with any channel, Amazon has a huge list of pros and cons and it’s important to weigh these up when you’re considering whether to sell (or continue to sell) on the world’s biggest marketplace.
What are the pros and cons of selling on Amazon?
#1 – A Huge Audience
It’s no exaggeration that Amazon is the world’s biggest marketplace. However, Amazon is not only huge, but it is expanding fast. Recently, the marketplace has gained traction in the Netherlands and they have plans to launch in Sweden soon too. They are growing quickly in Australia and other emerging markets and so this is a huge base of customers to consider.
#2 – Increased Efficiency
Selling on Amazon will force your company to be more efficient. Although Amazon can seem too strict toward its processes, it will also help you to follow some best practices that you can export to the rest of your business. Whether this is for improving the efficiency of your delivery experience, or improving your stock replenishment.
#3 – A Research Platform
People will look to evaluate your product on Amazon no matter what. Amazon is the main place to start a search for a product in several markets. If your customers like to buy your products offline, some will still check it first on Amazon. They will be looking for information and insights into characteristics, reputation, and competitors. Without this channel, you will be missing out on this key touch point. If your product is not there they may learn about a competitor.
#4 – Brand Ownership
If your product is on Amazon because a reseller is selling it, there is a chance that the images and descriptions are poor quality and hurting your product reputation. You can register your brand on Amazon to make sure your brand is well represented and you maintain ownership. If you want to sell your products yourself on Amazon, you can also keep the margins, and maintain a high quality brand image.
#5 – Credibility
If a new potential customer isn’t familiar with your brand, they may be reluctant to buy a product on your website. However, when it comes to Amazon, they automatically expect a basic quality and service and so there may be an increased chance of purchase because of the added credibility.
#6 – Time-Consuming
Selling on Amazon will require lots of time. Amazon has many specific processes and services that you need to apply, fill, and adapt. While starting to sell on amazon is a straightforward process, the competition is so strong that doing the minimum to comply with the Amazon policy will not take you to a leading position. With Amazon, you have to do everything well: stock, delivery, great product pages, images, and client support.
#7 – Forces Change
It will force you to change the way you work. You may already have a tax or inventory program that allows you to be productive and fit with your own business processes. However, if you want to work with Amazon, you will have to work in a way that makes Amazon efficient. This could mean changing your software or procedures to fit with the Amazon requirements.
#8 – Unexpected Costs
You can end up paying extra Amazon tax for unexpected things. One example is Amazon advertising. Only a few years ago, organic ranking was the key factor for been well-positioned in Amazon and having good sales. These days the related product recommendations have been almost completely replaced by ads. Therefore, you need to invest in advertising at least to protect your brand from competitors ads and maximise the opportunity of the huge customer base.
#9 – Risk of Amazon Brands
Amazon can end up becoming a competitor. If you develop a profitable category in Amazon, you may end up facing unexpected competition from Amazon Basic, Amazon Essentials, or exclusive brands from Amazon (that may even be advertised under another brand). Amazon will not control the category, but they will take an interesting piece of the cake.
Huge opportunity with risk
Every retail business is different and selling on Amazon is a consideration many will have to take. There’s no denying that Amazon is a huge opportunity if you get it right, although there is some risk.