Should Your Business Sell on Amazon?

Amazon can provide your business with the flexibility, autonomy and global reach without the hassle of traditional sales models. With its expansive reach, unparalleled customer base, and Fulfillment by Amazon (FBA) service, the platform beckons entrepreneurs with promises of success. But is it the right fit for your business? We have developed a list of the pros and cons of selling on the e-commerce giant to help you make an informed decision.

The Amazon Advantage

Amazon stands as a colossal marketplace, boasting over 300 million active customers across 180 countries and experiencing a 52% year-over-year growth in third-party sales. With more than 150 million Amazon Prime members globally, the platform’s reputation for speedy fulfillment and excellent service has become a hallmark for consumer trust.

Pros of Selling on Amazon

• Increased Sales Potential: Access to millions of active customers searching for products positions your business in front of a vast audience. Amazon’s credibility and user trust can also translate into brand recognition and repeat customers.
• International Expansion Made Easy: Amazon’s global shipping capabilities simplify the process of reaching customers in over 100 countries, sparing sellers from navigating complex international logistics.
• Low Marketing Costs: Amazon’s established customer traffic reduces the need for extensive marketing efforts. Plus, utilizing Amazon’s platform negates the immediate necessity of building and maintaining your own website.
• Fulfillment by Amazon (FBA): Leveraging Amazon’s extensive fulfillment network provides a hassle-free inventory management and shipping solution. Additionally, FBA status grants access to Amazon Prime shipping and buy box priority, incentivising customer purchases.

Cons of Selling on Amazon

• High Competition: The platform’s immense popularity means fierce competition, especially for the buy box. Sellers offering the same products engage in a battle where Amazon selects the optimal seller for customer purchases.
• Selling Fees: Amazon charges selling fees, either $0.99 per item sold or through a $49.95 monthly professional plan, with both of these options excluding GST and additional selling fees. potentially impacting profit margins, especially for low-margin products. It is important to make sure that your margins are high enough to cover these fees.
• Order Management Complexity: Managing inventory across multiple platforms requires efficient synchronisation to prevent selling sold out items.
• Complex Data Feed Requirements: Consistent, updated product data uploads on Amazon demand meticulous attention and adherence to specific procedures, potentially adding complexity to operations.

Further Considerations

While Amazon offers unparalleled access to Prime members and a massive consumer base, it’s important to acknowledge the potential downsides. The relinquishment of control over certain aspects, high competition, and the intricacies of managing fees and data feeds pose challenges for sellers.

Selling on Amazon can provide businesses with numerous benefits and potential, but success on this platform requires careful planning. It is important to weigh the advantages against the potential drawbacks to determine if the platform aligns with your business goals and values.

Keep an eye on our workshops page for our ‘How To Sell on Amazon’ workshops we will be running in 2024.