Could selling on Amazon be better than focusing on your own website?
It’s unsurprising that most online retailers focus the majority of their efforts towards their own websites and shopping channels
However, the well-publicised fact is that Amazon is the largest online marketplace on the planet, attracting millions of shoppers every second. This alone should make us carefully consider where our spend is most effective. This point is compounded by the considerable growth Amazon has achieved during the past two years, growing by over 200 percent during the COVID pandemic..
With this in mind, is there an argument for directing more resources towards Amazon instead of your own sales channel?
Here, Amazon expert James Pitts-Drake (CEO and founder of Optimizon Amazon Agency) discusses the pros and cons of increasing your presence on Amazon (instead of investing more in your own channels)
Customer Reach
It’s an obvious point that Amazon has a larger reach than your own website. But the extent to which Amazon has become an integral part of the shopping landscape is underlined by the estimate that roughly 66 percent of consumers start their online shopping search on Amazon.
This means that Amazon is the first touchpoint for many shoppers, regardless of the size of Google’s reach. Yes, some shoppers will shop around for the best deal. However, if your product has a short buying cycle, many consumers may not even find you. They start and complete their search on Amazon.
One of the arguments against achieving higher customer reach via Amazon is that you lose direct relationships with your customer base. However, this doesn’t need to be the case. You can still resell to your Amazon buyers via your own channel with the right steps in place. In addition, if your branding is taken care of properly, the build up of customer trust could lead to an increase in visits to your own website.
Essentially, listing on Amazon puts your products in front of millions of shoppers.
Costs
We have many discussions with clients around costs. Amazon is perceived as being an expensive space for retailers to trade, given that significant percentages of your turnover can end up being absorbed (when taking into account selling fees, pay-per-click advertising costs, FBA & packaging costs, etc).
Whilst businesses often resist these costs, they rarely compare them to the cost of running their own sales channel, and the associated logistical costs. For instance, the business might have to pay expensive developers to manage the platform, pay for a larger premises and more staff to process and pack the orders. On top of that, you might be paying for expensive Google ads or other marketing costs. All of these things are wrapped up in Amazon’s costs.
On the flip side, you will still need to employ staff to take care of troubleshooting and customer service. With Amazon, customers have come to expect the ability to contact a customer service rep straight away.
Logistics
Amazon Prime shoppers have come to expect delivery to their door within a day of purchase.
With the best will in the world, most businesses cannot match the speed and logistical prowess of Amazon.
All businesses have the option to make use of the Amazon FBA (Fulfilled by Amazon) service. Make no mistake, Amazon’s fulfilment speed and trustworthiness is its biggest asset.
You should also bear in mind that some Prime customers try to only buy on Prime to get their fast, free, one-day shipping. Why would they want to wait four days or more for their item when they can get it in the morning?
International Exposure
Amazon’s international exposure and brand trust allows you to bring your product offerings into new markets quickly. What’s more, Amazon is expanding into new territories all the time.
This means that businesses can go beyond their local reach to sell into overseas markets with relative ease.
Take Brexit for example. Some UK businesses have found it difficult or burdensome to sell into European markets since the UK’s exit from the EU. However, selling into the EU via Amazon relieves some of that burden, since you can rely on Amazon to distribute your products from their warehouses. You only need to send your items in bulk once (if you are using Amazon FBA), as opposed to distributing every individual European sale separately.
Visibility
Most new businesses quickly discover that getting eyes on their products is a huge challenge. If you are a new business with no customers and you don’t have a good way for people to be able to find you, Amazon represents a good shortcut to market.
You can optimize your product pages for the right keywords and ultimately benefit by getting your listing to show up on page one of Google. Amazon has a huge amount of ‘domain authority’, so product pages rank well for highly competitive terms. Achieving the same search engine results from your own store would take a lot of time and a considerable amount of money.
Brand searches
Despite the benefits discussed above, Amazon is a competitive marketplace and success isn’t a given. There are many techniques for optimising Amazon listings, many of which we discuss in other articles. However, controlling your brand on Amazon is the first step to drastically improving your Amazon infrastructure.
If you manage an established brand, it’s likely that people are searching Amazon for your brand name today. This is a huge bonus and a fantastic marketing opportunity, providing you fully control your brand on Amazon (at Optimizon, we have a team of Amazon experts who can help you take control of your brand).
Pros & Cons
As mentioned above, Amazon is a competitive marketplace and success isn’t a given. It is true that the marketplace can be price driven, which can erode your margins, particularly if your account setup isn’t optimised. However, a well optimised account with total brand control can mitigate against a race to the bottom on prices.
Another negative is the lack of control from selling on Amazon over your own platform. Amazon could suddenly change its algorithm, leaving you with far fewer customers than you had last week. Although this is true of all channels, including Google.
To protect yourself against any one of your channel change impacts, a dual-strategy multi-channel commerce approach is a good idea in most cases. For example, on your main site, you might prefer to focus on your flagship products, whereas on Amazon, you sell overstocked inventory, sale items or second tier branded accessories. There is no better channel to move large inventory quickly thanks to the massive customer base.
Alternatively, you could sell all products on both platforms equally, ensuring that all branding messaging is in sync. This allows customers to find your products easily on any platform, and for you to achieve overall growth in sales and branding. You may also find direct traffic to your online shop increases too.
As discussed, Amazon can also be powerful to attract new customers if your brand is just starting out.
Key Takeaways
Wherever you decide to focus your spend, ensure that ALL costs are taken into account. Amazon may be cheaper to sell on than your own platform when all overheads are accounted for, and you’ll get the benefit of lightning fast deliveries, etc.
The most important thing is to ensure that your campaigns are well optimised, and that you have total brand control.
It’s always a good idea to diversify, particularly to mitigate against sudden changes on a particular platform. Remember, those changes can take place on Google just as much as they can take place on Amazon.
As always, if you need any assistance with optimising your Amazon account, or controlling your brand on Amazon, our experts are on hand to assist you.