As the world’s largest online marketplace — and, according to estimates, accounting for more than 40% of all online retail sales in the U.S. in 2021 — Amazon is an absolute behemoth in the e-commerce world. And for many brands, diving into the Amazon waters can deliver big online sales boosts.
But for any brand, the opportunities Amazon can provide for sales gains also come with some costs. If your brand is thinking about offering its products for sale through Amazon, consider these eight important factors and how they may impact your business before finalizing your decision:
1. Amazon’s fees can really add up
When you sell your brand’s products on Amazon, the online retailer will, of course, want to make some money for itself on the sale, too. (After all, Amazon didn’t become one of the most valuable brands in the world without generating some big income.) Before you commit to listing your brand’s products for sale on the site, you’ll want to fully understand all of Amazon’s associated fees for setup, receiving, storage, shipping, etc., then recalculate your profit margins so you can evaluate whether the move is a winning one for you.
2. Listings don’t guarantee success
The process of listing a product for sale on Amazon is a relatively straightforward one. And once it’s there, a large pool of potential buyers should be able to find it there. But to see substantial sales on the platform, sellers must put in a range of additional efforts beyond creating the listing, such as optimizing their listings and finding ways to stand out from the competition (more on both of these below). Amazon also offers a range of on-site advertising solutions that can help sellers catch more attention from buyers.
3. The competition is pretty brutal
With more than 3 million sellers offering their goods on Amazon in North America, brands that want to find high levels of success in the online marketplace must find ways to stand out from the competition. Of course, an attractive price, a low (or free with Prime) shipping cost and a wealth of positive reviews are the biggest drivers of users’ purchase decisions on Amazon. And a few other ways to set yourself apart with Amazon shoppers include:
- strong keyword optimization on your Amazon product pages, with readily available info in your listings including valuable keywords and important product highlights
- well-thought-out and professional product photography that shows the product in use, effectively exhibits key product features, and answers common buyer questions such as how big or small a product is and what sets it apart from similar offerings on Amazon
- a high seller rating, which can be achieved by ensuring that a quality product is delivered and that any user issues or complaints are resolved quickly and effectively
4. Good reviews are crucial
Good product reviews are one of the biggest keys to setting a brand’s offerings apart from the competition on Amazon. And of course, a quality product and a good shopping experience are the foundation to getting good reviews. But to ramp up their review numbers, sellers can employ tactics such as using Amazon’s “Request a Review” feature after deliveries are completed, utilizing the Amazon Vine program and, when shipping out their products, including packaging inserts that include review requests.
5. The ‘Buy Box’ can drive a big boost
When multiple sellers on Amazon are offering the same product, they will often all appear as available options on the Amazon product details page — but only one appears most prominently, greatly increasing that seller’s odds of winning the sale. The seller who is most likely to be chosen — overwhelmingly — is the one whose product is featured in Amazon’s Buy Box (also known as the Featured Offer). This is the white box on the top right side of the product detail page featuring a prominent button allowing customers to add the product to their cart.
Entire books have been written on tactics for winning the Buy Box, but some of the top strategies include developing a lengthy tenure selling products on Amazon, pricing competitively, ensuring high product availability, keeping info on in-stock inventory updated with Amazon, offering multiple shipping options (including free shipping) and ensuring a good customer experience.
6. FBA is helpful … and costly
The “Fulfillment by Amazon” (FBA) program is a powerful one that lets sellers store their offerings at Amazon warehouses, then have Amazon handle the picking, packing and shipping for them when orders for their products are placed. Benefits for buyers who purchase FBA products include generally faster order fulfillment, free shipping (and free two-day shipping for Prime members), Amazon customer support and, when needed, easy Amazon returns. For sellers, though, Amazon’s fulfillment fees can put a substantial dent in their margins. Before signing up with FBA, sellers should carefully consider the pros and cons of the program to evaluate whether it is a good move for their brand.
7. You lose control of the customer experience
When a product is sold on Amazon, the seller gets to collect the sales proceeds, which can certainly bring a boost for company profits. But, unlike when the same product is sold through the seller’s own website, the seller is unable to exhibit much control over the buyer experience, as this for the most part lands in Amazon’s realm. Further, the seller can’t use the sale to collect valuable customer information that can be used to boost their CRM capabilities — leaving them unable to, for example, conduct remarketing activities with the customer that could boost future sales and nurture brand loyalty.
8. Opportunities abound
With such a huge pool of potential buyers up for grabs — plus a range of powerful tools and services available to Amazon sellers — the world’s largest online marketplace presents clear and abundant opportunities for brands looking to grow their sales volumes. And if the platform is a fit for a brand despite the decreased sales margins, high levels of competition and other disadvantages it can present, Amazon can be a great way for a business to boost its bottom line and generate growth.
Could your brand use the help of a team of seasoned marketing professionals to step up its online sales? At The Brandon Agency, our team of certified brand strategists and data-driven marketing experts has a wealth of experience in e-commerce — including Amazon launches and sales. To get started with help ranging from a simple website analysis to a comprehensive strategy tailored to boost the performance of all of your marketing campaigns, contact us today.