Should You Sell Your Products on Amazon?
Updated: Feb 28
Every business wants to grow—sales, knowledge base, product development, customer base— we all want to expand our territory and sphere of influence. If your company is a product based company, sooner or later you'll like need to address whether or not to sell on Amazon. Here are a few things to consider to help you decide.
Millions of people use Amazon around the world, and they maintain better than a 90% customer retention rate. Amazon shoppers tend to stick with Amazon, giving you the opportunity to tap into existing customers and expand your own loyal base. It can also expose your products to potentially millions of new customers your traditional marketing content has yet to reach, Stateside and/or international.
Keep in mind, as well, that Prime members are offered free 2 day shipping, which is another way Amazon builds loyalty. Prime shipping can be a deal breaker between clicking “complete order” or “save for later.” If prime members become a persona for your products, you may move one step closer to converting them to customers-for-life because they feel as though you are taking care of them and giving them a deal.
One of the biggest bottlenecks in a company’s productivity can be the shipping process, especially these days. There are delays in supply chains and transport, so the Amazon delivery system can be a huge help. Once Amazon has your product in their warehouse, they take care of shipping everything to your customer. This alone can save you hours—or tens or hundreds, depending on how much product you move—of time.
However, you still have to ship your items to Amazon’s warehouse, and they have a strict protocol for how they receive packages. If their guidelines are not met, you risk chargebacks or orders not being processed. So make sure you understand the process—be sure it works for you and your company.
While Amazon gives you access to a wider audience, it's certainly not for free. Roughly $1 is taken from every sale if you are an individual seller. The terms change if you have a professional account, but the principle remains the same. There are also referral, fulfillment, storage, and shipping channel fees. The best thing you can do is to fully understand your overhead and break even point to accurately assess if selling on Amazon will actually put more money in your pocket versus taking money out.
The beauty is that anyone willing to abide by their rules can sell on Amazon. The downside is that anyone willing to abide by their rules can sell on Amazon. While your consumer base may expand, so do your competitors. So you may have to be a bit more creative with your offering to stay competitive. If you can be flexible with your pricing, Amazon is ideal for you. But if your margins are tight, it may prove more trouble than it is worth.
Another item impacting competition is reviews. Reviews will make or break your business on any platform. If you have a loyal customer base that is proud to champion your brand, you may have a great shot at making it on Amazon. But if you're still working out the kinks in your production process or the product itself, you may want to go ahead and iron out the details before jumping headlong into the fierce Amazon marketplace. Bad reviews are difficult to overcome.
These are only a few of the factors that can impact your decision to dive into the world of Amazon, but they can act as a springboard for research to determine whether or not Amazon is the right fit for your brand.
If you're ready to create brand-developing products that connect with your customers and enhance your brand, CōDRA is the collaborative partner you need. Contact us here.