SHOULD YOU SELL ON AMAZON?
As the behemoth continues to inch closer in becoming the world’s first trillion-dollar company, gone are the days when Amazon was small enough for brands to safely ignore.
With its substantial influence in how products get discovered, evaluated, and purchased, brands are still caught playing catch-up today. The power of the Amazon engine is clear, and so are the underlying figures touting its indisputable reach.
55% of consumers turn to Amazon first when searching for products online
(2016 BloomReach Study)
So why have some companies and brands taken so long to react? At the forefront, businesses may be forgiven for underlying concerns of losing brand control, fear of negative brand image, increased margin pressure, and the menacing threat of Amazon itself deciding to take market share. Here are some of the considerations to be made:
1. How mature is your brand?
If your business is relatively new, particularly to the online space, selling on Amazon can be an effective way to generate sales. Acquiring new customers and prompting exposure can be hard to achieve; Amazon offers fast access to millions of potential customers (whilst you still work on your own e-commerce site). Equally, selling on Amazon is a nifty way of testing the market for a new product.
2. How differentiated is your product?
If you are selling products that are identical or very similar to that of other companies (even Amazon itself), building long-term business value can be extra challenging. Consider how differentiated your offering is and recognise whether what you’re selling is strong enough so that customers know that they are buying something that is yours.
3. How much would you pay Amazon?
This largely depends on the type of seller account you choose depending on your anticipated sales volume: Individual or Professional plan. Once you factor in the fees charged by Amazon (~15% for most product categories), are you still taking in a healthy profit margin? Equally, if your product has significant competition, others may undercut your pricing and put further pressure on your net margins.
4. How much control do you want or need?
Not only does Amazon by nature limit how you can communicate with your customers, but crucially, it also states that it is the responsibility of you, the brand, to secure distribution, and rarely gets involved in removing unauthorised sellers selling your product.
Do you due diligence and weigh up your options. Consumers often expect great products to be found on Amazon, and with the significant revenue growth potential of Amazon, a well-managed presence can help your business reach the next level.
Helping to decide whether to sell on Amazon is a core part of our Growth Hacking & Strategy service. Already have an existing Amazon store and need a quick health check? Check out our eCommerce & User Experience service where we can help optimise your listing to increase sales.
Feel free to contact us and we’d be happy to help!