Amazon is a massive marketplace that generates billions of dollars in revenue every year. There isn’t much you can’t find on the site, and every day people flock to it for everything from home furnishings to toys, snacks, and even hot tubs. What allows Amazon to offer such a massive selection of products is its thousands of Amazon sellers - merchants who have chosen to sell their products through Amazon’s marketplace.
So, is selling on Amazon right for your small business? Before you decide, here are a few things to consider:
The Benefits of Selling Your Products on Amazon
- Easy to get started. Overall, it is pretty easy to get started selling your products on Amazon, but the setup process will ultimately depend on which products you’re selling. This is because there are specific requirements for certain types of products. Amazon has a Beginner’s Guide that describes exactly how to register for an Amazon seller account and how to list your products.
- Helps your business gain exposure. Listing your products on Amazon can help you reach customers who might otherwise never be exposed to your brand. With a whopping 300 million active customer accounts, Amazon represents a huge selling opportunity for most businesses. And even if consumers are already familiar with your brand, Amazon can increase awareness of your products and make it easier for shoppers to purchase them.
- Can make your operations easier. For some businesses, Amazon can be an alternative to having an eCommerce website. If your products are sold strictly on Amazon you don’t need to worry about managing, updating, and hosting a website, or processing payments on your own. Amazon even offers fulfillment options for businesses that don’t wish to store and ship their own products.
- Provides dedicated support. Amazon works hard to support its sellers. They have an annual conference for sellers called Amazon Accelerate, and sellers can watch the content for free on YouTube. They also offer countless resources and incentives for sellers, as well as forums, A/B testing tools, and a dedicated seller support platform.
Potential Drawbacks of Selling on Amazon
Selling on Amazon has its benefits, but there are some potential downsides as well.
- Fees can be high. To sell on Amazon you’ll need to register for a paid selling plan. An “Individual” plan charges a fee for each product sold, while a “Professional” plan charges a fixed monthly fee regardless of how many products you sell. Beyond your selling plan, you’ll also be looking at a referral fee for each item sold. If you’ve opted into Amazon’s fulfillment option, there will be fulfillment fees as well. And depending on your exact needs, you could face additional fees such as long-term storage fees, Prime shipping fees, advertising costs, or charges for premium account services. Given all of the fees associated with selling on Amazon, you’ll need to ensure your products are priced high enough for you to make a profit.
- Customer management is on you. While the customers you get through Amazon are technically “Amazon customers”, customer care will typically fall on your shoulders. And the expectations that Amazon has for its sellers from a customer support standpoint are high. Customer service issues and returns are typically sent directly to the seller to handle. Because of this, it’s important to be prepared for customer service issues. And keep in mind that if Amazon succeeds in helping you sell a higher volume of products, you may be faced with an increase in customer service-related work. Furthermore, the customer reviews you receive as a seller can make or break your Amazon business. You'll need to address bad reviews quickly and efficiently to keep customers happy and your reputation as a seller intact.
- There is a lot of competition. The fact that it is easy to start selling on Amazon is great news for your business – but it’s great news for your competitors as well. Competition can be extremely high for certain products. And remember that it’s not just other sellers that you’ll be competing against – your listings will also compete with Amazon’s own products. Offering unique products, and maintaining a large volume of positive customer reviews will help your business stand out amongst the crowd.
Is it Worth It?
Ultimately, you’ll need to weigh the pros and cons of selling on Amazon to decide if it is right for your business.
Amazon is a large pond, and it takes drive, determination, and consistency to stay afloat. Given Amazon’s fees, it also typically takes some cash to get started. You also can’t just list your products and forget about them. You have to dedicate time to reviewing your progress, supporting your customers, and making changes to your listings and marketing efforts as necessary.
The reward is that your products can get high visibility and you can potentially increase your sales volume significantly.
Tips for Gearing Up Your Small Business to Sell on Amazon
If you do decide to give selling on Amazon a try, here are some quick tips to get you started:
- Decide what to sell. Products with a higher mark-up are usually a better fit for Amazon than those with a fairly low mark-up. Look at the competition, demand, and shipping costs for all of your products to determine which ones to start off with. Keep pricing at the forefront because you want to make a profit after all of your Amazon seller fees are accounted for.
- Create an Amazon seller account. Review Amazon’s Beginner’s Guide for sellers, and register for your seller account. You’ll need a bank account number and routing number, a valid credit card, a government-issued ID, phone number, and tax information to get started.
- Create your seller profile and list your products. Introduce buyers to your business and products by adding a bio, product descriptions, and photos to your seller profile and listings. You should also add your logo and list your policies for refunds and returns before you start selling.
Regardless of whether Amazon’s seller program is the right fit for you, remember that BankFive is here to help your Massachusetts or Rhode Island-based business thrive. Whether you’re looking for business financing, cash management, or payment solutions, we’d love to match you up with one of our dedicated business banking experts. Don’t hesitate to contact us today!