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The Pros and Cons of Selling on Amazon

~ 9 Minute Read

As some of you know, I’ve been selling a product in the “tobacco” accessories niche for the last two years with noteworthy success.  The vast majority of this selling has been on the Amazon marketplace.  During this time I’ve had the opportunity to reflect on selling through Amazon FBA.

Today I want to give you some insights of learned and some of the main reasons I continue to sell on Amazon, and some reasons why you might consider selling direct to consumer on your own website.

Pros of Selling on Amazon

1. Leverage Amazon’s Traffic

Unless you’ve been living under a rock or are the kind of person that plays golf 5 days a week, you likely realize just how popular Amazon is.  Amazon is the 4th most popular site in the United States according to Alexa.com, a site that is in fact owned by Amazon.

The most recent number we could find estimated that 183 MILLION people visited Amazon sites every month.

Selling on Amazon allows you to tap into this amazing volume of traffic.  My Amazon product page generally gets over 200 visitors per day.  These are people looking to buy, and with a conversion rate of ~9% you can see how by leveraging Amazon’s traffic I am able to make a decent number of sales every day.

Attempting to get even 200 people to view my product on my own website would cost me a lot of money in advertising and there’s no way I’d hit the 9% conversion because I wouldn’t have the built-in trust factor that I get by selling on Amazon.

2. Amazon FBA

Many people don’t realize that when they buy a product on Amazon, often times these purchased items come from small independent sellers like myself who send our products into Amazon warehouses via the Fulfillment By Amazon (FBA) program.

To use the Amazon FBA program you have to sign-up for an Amazon Seller’s Account.  The seller’s account allows you to go through the process to send product into Amazon’s warehouses and to create product listings.

Once your product is inventoried at the Amazon warehouses then they are ready for sale.

By using the Amazon FBA program you get the following benefits:

  1. Amazon will ship to customers on your behalf each time you make a sale
  2. Amazon will handle any customer service issues related to shipping and returns
  3. Leveraging of Amazon’s Prime shipping service and improved keyword rankings for selling via FBA

Now let’s make something clear, you can use an independent fulfillment company to send product out on your behalf if you decide to sell on your own so that you aren’t running to the UPS Store shipping orders on the daily.  However, Amazon FBA is the most seamless fulfillment option there is, period.

If you are going to sell on the Amazon marketplace then using the FBA service is a must if you want to increase your chances for success.

3. Trust

I mentioned this briefly in our first pro to selling on Amazon.  Here’s the deal: Amazon instills a crazy amount of trust.  They have a liberal return policy, ship fast, and often have lower prices than the competition.  This brings buyers back time and time again.  I know this from personal experience because it seems like almost every day a new package from Amazon is showing up on my porch.

By selling on Amazon you can take advantage of Amazon’s trust factor without spending years building it up yourself.

4. Amazon Knows How To Get You To Buy

Jeff Bezos and his crazy kids have been mastering the art of getting people to buy shit they don’t need since the mid-90’s.

Think you can do it better? Think again, you can’t.  They have whole teams whose sole purpose is testing and further optimizing the customer experience so that they are more likely to make a purchase when they visit Amazon.

If you can’t beat them, join them.  By using Amazon’s FBA program you are basically letting Amazon handles all the dirty work of getting people to buy.  You get to sit back and just send your product in and let the sales come in without dealing with high maintenance web site management.

Cons of Selling on Amazon

Now that you have a taste of the good things that come with selling on Amazon it is time to go the dark side.  While I do continue to sell on Amazon, I have been tempted to go out on my own on several occasions.  Here’s why:

1. Amazon Rankings

“You can’t hang with my Dodge Dakota bro”

I will be the first to tell you that I fucking hate dealing with Amazon and Google rankings in the same way I hate douchers in lifted pick up trucks with those fake ball sacks hanging from the back.  It may be the biggest pain-point when it comes to affiliate marketing and selling on Amazon.

When you decide to sell on Amazon you are essentially at the whim of Amazon’s rankings.  Yes, you can optimize your listing to help you rank, but there are no guarantees, and Amazon changes what they are looking for from time to time and this can change your product’s ranking for important keywords overnight.

One of the most concerning ranking indicators is Amazon’s preference for ranking the cheapest products highest.  Because Amazon has a reputation of selling products for less than other sites, they like putting cheaper products at the top of the rankings.  This can entice price wars and quickly kill profit margins.

This is something you can avoid by selling on your own website where you don’t have to compete for rankings, but in turn you’ll likely spend more to bring people to your site.

2. Stiff Competition

Pretty accurate representation of what it is like competing for sales on Amazon.

There are literally hundreds of versions of the product I sell available on Amazon.  This means that I’m literally competing with each one of these products for sales.  The competition on Amazon has become very tough, and it is only getting harder.

As mentioned in con #1, price wars happen somewhat frequently on Amazon.  Amazon loves this because it drives the prices down and they can sell more volume.

During my first few months of selling my product, there was a big price war and I wasn’t sure my product would survive as I refuse to engage in price wars as I feel they hurt the value of a brand and I didn’t want my profit margins to go down.

Thankfully, my product did survive and everything shook out and the pricing of each brand has been pretty stable for over a year, but the next price war could be right around the corner.

3. No Buyer Emails

“Just shopping for new pants”

One of the biggest pros of selling your product on your own site is that you get access to each buyers information, including their email.  This allows you to sell to this buyer again and again through email marketing.

When you sell through Amazon, Amazon keeps each buyer’s email secret.  I am unable to sell to my buyers through email, which is a big disadvantage.  Amazon does this because Amazon wants to sell to the buyer, and they don’t want their sellers to become competition.

Because of this, if you sell consumables it may be worth it to try selling on your own at first, as you can build a passionate following that you can email to keep connected to your brand.

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