Sandy's Tech Blog

Pros and Cons of Selling on Amazon - 2019

Today's ecommerce business owner has more options than ever when it comes to where (and how) to sell goods online. You can open a standalone ecommerce site using a number of relatively inexpensive ecommerce platforms (shopping carts), many of which now include marketing tools. Or you can set up shop on one of the many established online marketplaces, namely eBay, Amazon.

Today's ecommerce business owner has more options than ever when it comes to where (and how) to sell goods online. You can open a standalone ecommerce site using a number of relatively inexpensive ecommerce platforms (shopping carts), many of which now include marketing tools. Or you can set up shop on one of the many established online marketplaces, namely eBay, Amazon or Etsy.

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So which option standalone or marketplace, or both -- is best for your ecommerce business? Dozens of ecommerce business owners share a list of the major advantages and disadvantages of selling via Amazon, eBay, Etsy and/or your own ecommerce site -- and why it can make sense (as well as dollars) to have a presence on both.

Following are the Amazon Pros:-

1. Huge customer base.Amazon is one of the largest online retailers [with 244 million active members] and their users are shopping," says Carolyn Lowe, director of eCommerce, UpSpringBaby.com, the creator of health and wellness products for new moms and young children. "For a consumer goods company like UpSpring, this is ideal. It would cost us an enormous amount of marketing dollars to get the impressions and sales that we get from Amazon."

2. Credibility and trust. "New customers may be more comfortable purchasing from Amazon [than purchasing from a website they're unfamiliar with], as Amazon is a known and trusted company," says Cassandra Droogan, founder & president, PYSIS, which makes fashionable, weatherproof overboots.

3. Excellent back-end infrastructure and support, including tax collection and shipping. "Amazon has a great back-end infrastructure to support selling," says Will von Bernuth, cofounder, Block Island Organics. "This means everything from inventory tracking to tax collection (this can be a huge pain, particularly for states like California where taxes need to be calculated down to the zip code) to credit card processing is possible with Amazon's platform. It's all there for you. No need to figure out how to do all the setup yourself."

4. In addition, "Amazon's FBA (Fulfillment by Amazon) service lets sellers ship their inventory to Amazon's warehouse, [where, for a fee,] Amazon then handles sales of the sellers' product, the fulfillment, returns and customer service issues," says Jordan Malik, CEO, FindSpotter. Amazon also makes it easy to ship internationally.

5. Referrals. Another "advantage of Amazon is its built-in algorithm for recommended purchases," says Brad Hines, the founder of Happy China Trading Co., an ecommerce seller of oriental souvenirs and gifts. "Someone may visit Amazon to buy a product that you don't even sell, and your product may come up in a recommended purchase."

6. Similarly, "Amazon affiliates will link customers to [your product] through blog posts, Facebook posts and Twitter," says Kathy Pickus, owner, Dot Girl Products, which provides products and information for girls experiencing their first period. "This relieves [you] from the headache of maintaining an affiliate program."

Following are the Amazon Cons:-

1. Fees. "On Amazon, fees start at a minimum of one dollar and go up to as high as 25 percent of the item's price," says von Bernuth.

2. if you decide to do Fulfillment by Amazon, where Amazon warehouses and fulfills your product, you pay a listing fee plus typically a few dollars in fulfillment fees depending on the item," adds Lowe.

3. I calculated our current total cost per transaction just last week through our FBA business and after adding up the seller fees, warehousing fees and other transactional costs, we pay on average 26 percent for every dollar of revenue we get from that sales channel vs. around 8 to 10 percent on average for Sewelldirect customers, says Cameron Postelwait, marketing director, Sewelldirect.com, which sells connectivity solutions.

4. You're a commodity. On Amazon, "you're mostly a commodity and subject to someone undercutting your price," says Mike Kawula, who has sold on Amazon and eBay as well as his own site and is now a business consultant. "You're [also] competing with Amazon directly if they decide to sell your product," which can hurt your sales.

5. No control over branding. Another disadvantage to selling on Amazon vs. your own site: "There aren't many branding options on Amazon," says von Bernuth. "The only thing you have control of is your products' photos and text description. Everything else is Amazon branded."

6. Customers rarely see who the end vendor is when shopping through Amazon," adds Andrew Van Noy, CEO, Warp9, a provider of Magento mobile commerce services for midsize online sellers. "This disconnects you from the customer, and therefore does not strengthen your brand."

7. You can't capture buyers' email address or remarket to them. "Amazon does not let you capture a buyer's email," says von Bernuth. "On your own site you can set up an email newsletter and encourage customers to sign up for it."

8. Lack of customer loyalty. "Customers are loyal to [Amazon] and not your brand," says Van Noy. So "you lose the repeat business or the ability to up sell/cross sell."