Approximately half of the items sold on Amazon are not the multinational’s own products, but those of independent companies. The world’s largest marketplace is an unrivaled showcase for small distributors, to whom it offers many advantages, but also some disadvantages.
Today there are two fundamental ways of selling on the Internet. The first is to create your own digital store, which allows you to maintain almost complete control over it. The second is to sell through one of the many existing marketplaces, even if this means ceding part of the sovereignty over our business in exchange for a profit that we consider to be greater.
Today Amazon is, by size and reputation, the most important marketplace in the world and also the one preferred by those who buy on the Internet, especially in the European and American markets. Here are the many benefits for companies that choose to distribute their products through this global ecommerce giant, as well as the disadvantages they face.
Advantages of selling on Amazon
1. Selling where the buyer wants to buy
Reality shows that several hundred million people around the world prefer to shop on marketplaces like Amazon than on other types of ecommerce. The reasons for this are manifold and include everything from a shopping experience that these users find very satisfying, to the wide variety of existing offerings, to the advantage of buying everything in one place and through a single payment.
There is nothing more complicated for a business than getting new customers. This is solved in Amazon, because users who browse this marketplace have a high purchase intention. This is so because of the huge inventory that Amazon has, but also because it has managed to gain the trust of its customers.
2. A gigantic and international marketplace
The second advantage enjoyed by businesses that distribute through Amazon is obvious: it allows easy and quick access to a gigantic market. This is especially interesting if a business is just starting out or if it wants to put a new product on the market, because Amazon will catalyze the launch process in a very short time.
A presence on Amazon also allows people from other parts of the world to buy your products. This is true especially in Europe; for other countries, it depends on the case.
3. No need to worry about the technical side, only about selling
There are those who sell on Amazon but have their own e-commerce business, and also those who only sell through this channel. For the latter distributors, Amazon is a way to sell on the Internet without the need to invest in servers or in the maintenance of an online store, or to have knowledge of programming or web and mobile development. To become a seller on Amazon, all you have to do is create an account and start uploading your products, with their respective photos and characteristics, according to Balcázar. Amazon is extremely easy to list products, upload inventory and manage orders. All you have to do is click the Next button.
Disadvantages of selling on Amazon
1. Financial cost
Every great opportunity also involves some cost, and in the case of Amazon the most obvious one is economic: using its wonderful distribution platform is not free. The associated companies have to pay an important fee.
There are several distributor accounts and, depending on the one chosen, the amount of that invoice will vary. But it will not be cheap, since a toll is paid for each sale made, another that depends on the price of the product sold plus shipping costs, another that is exclusive for some items (books, music or video games) and one more that is fixed and monthly.
In addition, being on Amazon does not mean that your products lack competition. Quite the contrary, since it is very likely that Amazon will try to prioritize its own products, to which must be added the high number of businesses that will offer others very similar to yours.
2. Goodbye to YOUR customers, they are now Amazon’s customers.
The oil of the digital era is customer data, but this valuable information never reaches the hands of the companies that distribute through Amazon. There are very clear rules so that the seller serves the orders, but cannot access the customers,” says Balcázar. This hampers any subsequent attempt to build customer loyalty.
Amazon’s monopoly on data also includes that of promotional campaigns. It is the marketplace that decides, for example, which offers will be in force during the week of Black Friday. And retailers, whether they want to or not, will have to adjust their offers and prices to those set by the ecommerce giant.
3. Failures are highly punished
If our products garner negative opinions, the punishment will be severe. Amazon forces brands to be very strict with the quality of their products, to create very complete cards so that the user understands very well what he is going to buy before uploading it to the cart. For example, Amazon’s standards are very demanding on issues such as the speed with which customer queries are answered, the effectiveness of shipping, the percentage of failures in the preparation of orders or the number of defective products.
Therefore, if a significant number of customers post complaints, negative comments and low ratings about any of our products or our shipping systems, Amazon will punish us… To the point that payment of our fees can be delayed for weeks or even cancelled. After all, it should be remembered that it is Amazon that receives payment for the products and not the sellers.