There are many pros and cons to selling on Amazon. Whilst the pros are widely promoted it is important to be prepared for the cons of selling on Amazon before committing to the platform. This is particularly pertinent for existing retail brands with an ecommerce channel.
This list is by no means exhaustive; however, they are all scenarios that we have come across whilst working with ecommerce retailers across a range of sectors.
1. Owning Your Customer
When you sell products on Amazon your brand gains an opportunity to reach consumers who are actively looking for products like yours on their platform. This allows you to sell your products to Amazon’s customers, not to gain new customers for your brand. A majority of the time, those customers will not directly interact with your brand before, during or after purchase. Amazon owns the customer.
If you plan to sell your products on Amazon via the FBA method then “Amazon will pick, pack and deliver your goods to the end customer”. That sounds really convenient; however, you have no control over:
- Product packaging, it will be packed in Amazon boxes
- The fulfilment experience, it will be delivered by Amazon drivers
- Customer service if the customer has a question or complaint about the product
You have also not gained any useful customer insight such as their demographics, where they live, why they might be choosing to purchase your product.
2. Pricing
Online price checking has become almost second nature to consumers.
- When in-store, can I get it cheaper online?
- When shopping online, can I get it cheaper elsewhere or for the same price with free next day delivery on Amazon?
As soon as you are selling your product on Amazon you need to keep a global view of your pricing strategy across platforms. Even if you are making sure the Amazon price matches your RRP, remember that they can win the customer because of their free delivery offering to Amazon Prime members.
If you do not, then even when a customer has discovered your brand through platforms that you own and invest in; your website, social media, any direct mail or other marketing activity, you will still lose out to Amazon. Yes, you will sell a product but at a lower margin and as per point 1 you will have lost ownership of the customer’s experience with your brand.
3. Discounting Strategy
When you become a seller on Amazon you are committing to two main discounting events: Black Friday and Amazon Prime Day. Your products will either be part of these massive discounts or will miss out on sales as competitors embrace the offers. This is not necessarily a bad thing; Amazon invests a lot of money advertising these events and it can entice people to buy who may not have otherwise done so.
However, you must consider what your brand’s discounting strategy is. Will you have a Black Friday offer? Will it compete with Amazon’s? If you do not offer a like-for-like promotion then you run the risk of losing the direct sale to Amazon, as per point 2 above which will ultimately lead to loss of ownership of the customer, as per point 1. If you do offer strong discounts, what precedent are you setting for your brand? Do you want to be running 30-40% discounts every Black Friday to meet customer expectations? Is it worth it, to win the customer direct? That depends on the nature of your products, but the answer could well be yes. Black Friday ecommerce strategies are complex, you can read more about our recommendations for Black Friday SEO.
4. Brand Presence And Associations
Amazon is an online behemoth, that is why you want to sell your products on their platform. They have incredible advertising and marketing power. From TV and radio advertising, to billboards, to affiliate programmes, to Search Engine Optimisation and Pay Per Click. This can work to your advantage, but also to your detriment.
Presence on Google
We have seen clients be outranked and outbid by Amazon for their own brand terms in Google. It’s not that the client’s website is not on Page 1 of Google for their brand name, just that Amazon with MOZ Domain Authority of 94/100 has the reputation to rank higher than the original retailer’s website for product name terms. So, if one of your customers recommends their awesome “carefully crafted product name” to a friend and the friend looks for that “carefully crafted product name” in Google, they will find Amazon first. So, where are they likely to buy it from? For full brand and product name terms we have seen clients pushed out of the Google Ads auction as Amazon has the buying power to simply increase bids on products that they can see are selling well. This is usually most prominent during seasonal shopping periods, rather than all the time. So, its only a problem at the time that potential customers are most actively looking to purchase…
Presence on Amazon
There is of course another search engine that you will be competing on when you sell products on Amazon; Amazon’s search results. Amazon’s search engine is somewhat more primitive than Google’s and you will find a lot of product titles stuffed with a series of synonymous terms or as many possible uses for a product as possible. This is in order to increase the likelihood of the product showing up highly in the search results for as many search terms as possible. Are you willing to do the same? What about your “carefully crafted product name”? Given that Amazon makes the seller information pretty inconspicuous the only connection that a customer might be able to make between the product that they are looking at on Amazon and your brand is the product name. If you want to maintain the integrity of your branding on this platform, then how do you intend for customers to find your products?
- By relying on existing brand awareness? Then why not let them buy from you directly at a higher margin and with full ownership of the customer’s relationship with you?
- Will you advertise on Amazon? Thereby, paying more money to Amazon to sell your product to someone that you have no long-term customer relationship with and are making a low margin on the transaction. Surely this budget would be better used winning the customer to purchase on your own platform?
Amazon also shows related products all around its platform. Are you happy with the products that Amazon is associating your product with? Would you choose to be on the same shelf in the same Department Store as those products? If not, then perhaps this is not the right “Department Store” for your brand.
Have A Plan For Selling Your Products On Amazon
These considerations are not here to dissuade you from becoming a seller on Amazon, it can be a transformative sales channel for many businesses. Just make sure that you have a plan to benefit from the sales growth that comes when you sell your products on Amazon but not become reliant on it. We recommend the following steps in order to benefit from selling your products on Amazon whilst maintaining and growing your own direct to consumer brand:
- Start at an off-peak time for your business
- Create a product strategy for which products you want to sell via this channel and test
- As much as possible and especially for more luxury brands, keep ownership of fulfilment. You can ensure that the customer’s experience from opening the box to using the product is to your standards. You can also add inserts, incentivising the customer to engage with your brand directly
- Pay attention to Amazon reviews, take action if getting negative reviews
- Use Amazon as a testing ground for new products or making changes to product names, descriptions etc. before launching them through your main owned platforms
- Keep seasonal ranges for your owned direct to consumer channels
- For every £1 you invest in Amazon advertising, save £2 for your own direct to consumer advertising (such as Google Ads, Google Shopping or Social Media Advertising)
- Do not let Amazon, or any alternative sales channel, dominate your focus. Always give at least equal marketing time and budget to building your direct to consumer brand
If you are an ecommerce brand considering becoming a seller on Amazon or are looking for a way of becoming less reliant on Amazon as a sales channel then we can create a digital marketing strategy for you. This will identify where your biggest opportunities and threats are and make recommendations on the best route forward to maximise your brand and ecommerce revenue.
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