All About Journal TI Today

Do Small Businesses Sell Through Amazon?

Jun 21

Amazon is one of the largest marketplaces right now, with a net worth of $1115.58B. Over the past few years, Amazon has made some great changes both in its policies and its features. From in-home delivery to one-click shopping and personalized recommendations, it is now considered one of the most convenient and customer-friendly online stores. 

Not just for customers; in fact, Amazon just keeps getting better for business owners too. Previously, the platform had a complicated relationship with small businesses, especially because owners made very little profit due to long-distance shipping, etc. However, with the local selling program, things have become comparatively easier for everyone.

How Can Small Businesses Leverage The Amazon Platform? 

It’s true that the pandemic affected businesses all around the globe, but if you look deep into it, there was a silver lining to it too. Especially for small business owners, the pandemic proved to be a blessing in disguise because 2020 was a boom year for them. As per research, almost all small and medium-sized businesses on Amazon saw an increase in their sales by 30%. 

Even today, if you are a small business, then it’s high time that you leverage Amazon, opt for an ecommerce accelerator and then see your business bloom like never before. There are three main reasons why it’s going to work out for you; 

  • You’ll get more traffic
  • You’ll gain credibility 
  • Amazon is quite serious about its commitment to small business partners

What’s the biggest challenge small business owners face when starting their own brand? They find it hard to reach out to the customers, and they face difficulty in getting people to find their online store. On top of that, they want their customers to take them seriously. Now, this is where Amazon can work wonders for you, as it solves all these problems once you partner up with it. 

It goes without saying that Amazon is one of the most popular online stores right now, and it’s the most-visited platform too. So your first issue as a small business is solved here as you can leverage all that traffic that you’ll be getting in the name of Amazon. In other words, once you register yourself as a seller on this marketplace, you’ll become “visible.” 

Pros And Cons Of Selling Through Amazon 

Just like any other marketplace, there are both pros and cons for a small business when getting started with Amazon. Let’s talk about some of them in detail so that you know what’s the right decision to make. 

Advantages

1-It’s Easy To Get Started On Amazon 

Launching your own online store can be a little overwhelming. Especially if you don’t have a team or the right resources for it, you’ll be dealing with a lot on your plate. So to cut down the hassle, Amazon is probably the best solution for you, and launching yourself on this marketplace is quite straightforward. When partnering up with Amazon, you get both; a large customer base and a proper infrastructure.

All you have to do is to create your product listing and then send the inventory to the FBA or opt for some Amazon business broker who can help you here. Once done, you are then in business! 

In some categories, it’s quite easy to get started, and you’ll immediately start getting buyers. However, if your category is a little common, then you should be prepared to face some tough competition here. Especially if you want to lure your customers, then you’ll have to offer quality products and lower prices to beat your competitors. 

2-Adequate Profit Margins 

If you are a small business with unique products, then Amazon can work wonders for you, and you’ll be getting adequate profit margins here. Especially after the FBA program, Amazon has taken away all the heavy weight of logistics off your shoulders. This all leaves quite a lot of room and time for business owners to work on their products and improve their quality.

If you are a company that makes and markets its own products, then price control is of utmost importance here so that you are left with some good profit margin after giving Amazon the hefty commission that it needs. In addition to the listing fees, Amazon charges somewhere around 15%-20% of the sale price, so this is where you need to do your homework first. 

The Downside Of Selling Through Amazon 

There are two downsides for both small, medium, and large businesses selling through Amazon. The first is that the marketplace charges a heavy commission on all of your sales. Especially for a small business, it can be a little tricky to control the pricing as you have to lure the customers and offer them affordable products. At the same time, you have to keep Amazon's commission in mind, and then there’s your own profit too. In short, until your sales go through the roof, you’ll be making very little profit. 

Secondly, Amazon owns your customer relationships which means that you won’t be able to remarket to Amazon or sell your products directly to your customers even in the future. In simpler words, you actually don’t have any customers of your own; in fact, when you are using this platform, they are Amazon’s customers. 

Conclusion 

Running an online business is not easy. For a small business, Amazon comes with a lot of opportunities, but then of course, there are a few compromises you’ll have to make too. What we believe is that either you get started with Amazon or get left behind because the online eCommerce competition is growing tough with time. So before it’s too late, you should take a step forward, make some adjustments for the time being and compromise a bit with Amazon for the sake of all the benefits it comes with. Once you’ve made enough sales and once you become the brand that you want to, you can then build an online empire of your own.