Pros & Cons Of Selling On Amazon

Whether you love it or loathe it, there is no denying that Amazon is a big deal. With over 300 million active users and over 197 million monthly visitors, it is the biggest retail market in the world.

This makes it a very attractive sales channel for businesses of all sizes, and it stands to reason that most retailers will, at some point, consider whether or not to sell on the platform.

But is it a good idea?

Well, there are certainly some good reasons for selling on Amazon depending on the nature of your business, but there could be some issues too.

Below, we’ll take a look at the pros and cons of using Amazon for your business, so you can decide if this is the right move for you and your customers.

The pros of selling on Amazon

Let’s start by looking at some of the reasons your business could benefit from selling goods on Amazon and why you should consider this as an option.

Opening your business up to a bigger audience

Setting up an Amazon business account can open you and your products up to a much wider audience. After all, Amazon works like a search engine and anyone that visits the site looking for specific products could be directed to your store.

Once you’ve got them through the virtual door, you increase your chances of securing repeat customers. Not only this, but as Amazon is used on a global scale, you can open yourself up to an international audience if you’re prepared to ship to other countries.

Increasing sales

Following on from the above, reaching this larger audience can lead to an increase in sales. After all, higher volumes of traffic to your products and online store will increase your chances of making a sale.

And as we said, with millions of consumers visiting Amazon every month, you are far more likely to convert visitors to sales than on smaller platforms.

Targeting customers where they like to shop

Marketplaces like Amazon, eBay and Etsy are becoming the chosen way to shop for many consumers. These platforms give shoppers an easy way to find what they’re looking for and to shop around for the best product at the best price.

Therefore, joining a marketplace like this means you can target consumers where they like to shop, therefore increasing your chances of making a sale once again.

Lowering marketing costs

There are several ways you can advertise on Amazon, and these can be a very affordable way to reach more customers. Firstly, you can take advantage of the fact that Amazon already attracts millions of visitors, but more than this, as visitors find your individual products, they can also be directed to your store to look at your full range of goods.

Then there is SEO and using keywords to your advantage. By optimising your product descriptions carefully, you can help more customers to find you. You can also pay to have your products featured and to show higher in search results.

Enabling you to start selling right away

In most cases, once you’ve set up your Amazon business account, as long as everything is OK, you should be approved within 24 hours. This means that you can get your store up and running quickly and start selling pretty much straight away.

Removing the need to hold your own stock

Lastly, Amazon fulfilment centres mean that you can ship your goods in bulk to Amazon, and they will fulfil your orders for you. This means you don’t have to hold this inventory yourself, and each time a customer orders from your store, Amazon will package and ship the goods directly from these fulfilment centres.

There are fees to pay for this option, but this is relatively little in comparison. This can help you to save time, money and resources on storing your goods, packaging them and paying to have them shipped.

The cons of selling on Amazon

While there are clearly some great benefits to selling on Amazon, there are also some downsides you need to consider before setting up your store.

Paying marketplace fees

Selling on Amazon opens you up to a much wider audience and can skyrocket your sales, but that will come at a cost. You will need to pay marketplace fees to use the platform, particularly if you’re relying on fulfilment centres.

The amount you pay will depend on what you’re selling and how much. Prices typically start from £25 a month to use the platform, plus additional selling fees deducted as a percentage of each sale you make, so you will need to take this into consideration.

This is particularly important if you’re selling products that already have a lower profit margin.

Competing with thousands of others

Amazon might attract millions of visitors each month, but it also attracts millions of sellers too. This can make the competition very fierce, especially if you’re selling popular products or in a popular niche.

Although you can use keywords to try and boost your rankings if multiple sellers have the same product, Amazon will determine who they think is the best fit and display those products higher on the page. This can make it even harder to get your goods in front of the right people.

Limiting your control

If you’re using Amazon fulfilment centres, you limit the amount of control you have in getting goods to your customers. Although Amazon typically promises quick shipping, you might be restricted in how much you can brand your goods and communicate with your customers.

Not only this, but you might even find you’re told what you can and can’t sell in some places, limiting the goods you can offer through your store. Therefore, you need to be prepared to relinquish control in some areas if you want to sell through Amazon.

Keeping inventory in sync

Finally, if you’re using multiple marketplaces, selling in-store or through your own website, managing your inventory can be tricky. As Amazon doesn’t sync with your shopping cart system, it can be challenging to keep on top of your stock status in real-time, which can increase the risk of running out and disappointing customers.

Therefore, if you’re selling on multiple platforms, you need to make sure that any orders placed through Amazon are brought into some sort of central order management system. This can lead to additional work and additional spending if you don’t already have this type of system in place.