If You Can’t Beat Amazon, Maybe You Should Join It
Updated · Sep 15, 2008
Like many small business owners, Joan Goldner, the president of About Your Time LLC and publisher of BusyBodyBook Organizers, had a goal when she started her business five year ago: to market and sell her products (personal and family organizers) to as many people as possible, using a variety of venues. As part of her plan, Goldner set up an e-commerce site. Then, three years ago, she started selling her products on Amazon.com (as well as other places). “Amazon, clearly the largest e-tailer, made perfect sense,” she said.
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For booksellers, the cost to join the Advantage program is $29.95 per year plus a 55 percent standard commission on the sale of items, according to the Web site. (For additional information about Amazon Advantage, visit the Advantage page. Amazon also has many other programs targeted at e-commerce businesses, including Pro Merchant and WebStore by Amazon, which you can learn about by visiting the Amazon Services page.)
As for Goldner, she believes being on Amazon has been a good thing, albeit a learning experience. “It was pretty frustrating at first because they requested very few pieces (and we bear the cost of the shipping),” she explained. However, after Goldner respectfully requested Amazon order greater quantities of her organizers, sales began to take off. “In my second year they actually asked how many I thought would sell through,” she said, instead of just asking for an amount. Goldner requested an initial stock up of 400 pieces, and by the end of that year Amazon had sold several thousand.
The Advantages of Selling on AmazonImproved Search Rankings for Your Products
One of the big benefits of selling on Amazon is better search rankings, at least for the products you are selling on Amazon.
“If you type purse hanger into Google, the very first result is one of our Zook Hook purse hangers on Amazon.com, [whereas] my Web site is somewhere between page one and page three,” said Alexis Meisel, the founder of Zook Hooks Inc., which sells fun and stylish “quality” purse hangers, who is also an Amazon Pro Merchant. “We get nearly ten times as many visitors to our product pages on Amazon.com as we do on Zookhooks.com,” she continued. “So search ranking is a key benefit of doing business with Amazon.com.”
Safety and Security
“Amazon has been established for a long time, and because of the history and longevity of the brand, their shoppers feel a sense of safety and security,” explained Pinny Gniwisch, the founder and executive vice president of marketing of the successful online jewelry and gem store Ice.com, which is an Amazon Platinum Merchant. “By leveraging that, customers who do not know the Ice.com brand can feel safe purchasing through Amazon. They also have great customer service.”
Another reason e-commerce businesses like using/selling on Amazon.com is Amazon’s metrics and inventory control.
“The cost to sell on Amazon.com is negligible — about $40 a month — and the commission is fair at 15 percent (this varies by category),” said Meisel. “In return, I have access to impressive site metrics and inventory control that are comprehensive and easy to use.”
But probably the biggest reason that e-commerce businesses use Amazon.com is the site’s selling power.
“We receive over one third of our monthly sales through Amazon.com,” said Meisel. “The name is more recognizable. Amazon accepts international credit cards, and it is easy to add a few purse hangers to a customer’s shopping cart as he or she chooses from millions of products.”
“They also have a huge customer base and their site is extremely sticky,” added Gniwisch. “Many shoppers find us through Amazon and can easily return to our product pages.”
The Disadvantages of Selling on AmazonThe Competition Can Be Brutal
Perhaps the biggest disadvantage of selling on Amazon is that you could be competing with yourself — or with other Amazon merchants and even Amazon itself if it happens to like your product(s).
“If you load a product on Amazon and it becomes popular, the product will quickly attract other sellers who will match the product and compete on price. And eventually Amazon’s Retail department will bring in the product themselves, which eliminates your sales of the product,” explained Aaron Rubin, an Amazon Pro Merchant and the owner and CEO of S&A Industries, LLC, which operates KarateDepot.com and some other niche retail sites.
Don’t Put All Your Eggs in Amazon’s Basket
“If you are a small business, I think it’s wise to not have just one major customer or one major vendor [like Amazon],” said Alexander Dake, the founder and publisher of Cosimo Books, a specialty publisher that sells its books on Amazon.com and other online bookstores. The company also has its own e-commerce site (the backend of which is powered by Amazon, one of the many services Amazon offers). “When you do that, you are dependent on that one party — and it could put you at a disadvantage.”
Tough to Build Customer Loyalty
Also, Amazon does not allow merchants/sellers to directly contact Amazon customers, even if they bought the merchant’s product. “Amazon owns their customers,” stated Gniwisch. “So we are unable to do any direct marketing to customers acquired through Amazon, which means we cannot e-mail any customers acquired through Amazon.”
And most customers, if they bought your product on Amazon “usually remember Amazon.com, not your name,” added Rubin.
They’re Amazon and You’re Not
Another potential disadvantage is that customers used to ordering from Amazon may expect the same level of service from your smaller e-commerce site.
“Amazon provides such great customer service that my customers doing business direct with Zookhooks.com expect the same,” said Meisel. “For example, right now, I cannot ship as quickly as Amazon does through its fulfillment centers.” To counter this problem, though, Meisel has “learned to only promise what I can deliver, and then to surpass those expectations,” something all e-commerce sites should strive to do.
(Continue to Page 2 for Advice on Whether to Add Amazon as a Sales Channel)