As in all kinds of strategies, it is important to know what advantages and disadvantages Amazon has for e-commerce. Amazon has become the world’s largest online buying and selling platform. It is no coincidence that its owner, Jeff Bezos, is among the richest people in the world.
Many companies want to promote or sell their product in this North American market, as it allows them to reach a much wider audience.
Amazon offers its customers the ability to sell any kind of product online anywhere in the world, which makes it relevant compared to other companies such as Alibaba or Aliexpress, which dominate, above all, the Asian market.
Jeff Bezos’s company has about 180 million people shopping on its platform each month, which generates a large amount of profit.
Although most companies want to sell on Amazon for e-commerce, this has a number of important advantages and disadvantages that need to be considered before diving into this market.
Increase your opportunities with Amazon for e-commerce
Amazon offers its customers the opportunity to be part of a privileged group together with one of the largest and most prestigious companies in the world. It is no coincidence that many ecommerce companies want to sell their products through this platform, as it gives them positioning, privileges, and the concrete possibility to say that they sell their products on Amazon.
With the North American company, it is possible to reach many markets such as North America, Europe and other regions of the world, although its strength lies in its unbeatable customer service.
For an e-commerce company, selling its products on Amazon can be very beneficial, especially because the name the company offers gives credibility and professionalism to its business.
Advantages of selling on Amazon
There are many factors that influence e-commerce companies who want to sell their products on Amazon, some of the specific advantages are as follows:
1.- More sales
Every day, with each passing month, millions of new people enter the Amazon platform to make their purchases. This is why so many decide to sell their products with an Amazon ecommerce strategy.
The numbers favor the North American company, which has a base of 300 million active accounts of potential customers, 170 million site visits, and a profit of $100 billion a year, making Amazon for ecommerce the number one company.
2.- Credibility and trust
Companies that decide to sell their products on Amazon for ecommerce do so because they know that they are generating not only profits from the sales of their products, but also other benefits such as credibility and consumer trust.
Users prefer to buy from Amazon rather than from any other store they have never heard of. Even in countries where online sales are not strong, Amazon for e-commerce is winning. For example, in Latin America, Amazon’s main competitor is Mercado Libre, but even so, the marketplace giant is better positioned than its competitors.
The reason, above all, is its return policy and quick customer service. Having the support of such an established company gives the customer the confidence, not only that they will receive their order, but that in case of any problem, the platform will respond to solve it.
3.- Constant and international expansion
With Amazon’s e-commerce strategy, any product can reach any corner of the globe. Which generates a very large profit for any company to reach any market.
In Amazon, any person or company can identify whether their products are attractive to customers in other corners of the world. In that case, you can create an Amazon Global listing without having to deal with logistics, payment systems, foreign currencies, etc.
4.- Economic costs of marketing and advertising
Regardless of the category, any product can start selling from day one on Amazon. Competition will be very strong, since it not only competes locally with other products, but does so globally with any other company dedicated to the same market.
But a plus point for the platform is advertising. You can run ppc campaigns to improve your visibility and reach customers with targeted and personalized ads. It also allows some interesting advertising modes, such as sponsored ads. Similarly, advertising on the platform also helps you improve your organic positioning within it: if you reach customers with your ads, your sales increase; and more sales mean better positioning.
5.- No inventory? No problem.
Amazon has hundreds of product distribution centers around the world, any company can send their products to Amazon and they will take care of preparing the products, catalog them and distribute them themselves.
Amazon for ecommerce has a very important advantage and that is the Amazon FBA or (Fullfillment By Amazon) a specific place where they manage, store and distribute products at very low prices. This allows the company to catalog its products in Amazon’s famous free shipping, which will greatly affect sales in its favor, as well as save labor as Amazon handles all the logistics.
Disadvantages of selling with Amazon for e-commerce
As in almost all areas of life, not everything goes well and there are things that can be improved or are difficult if you want to use Amazon as a sales company for the products you want to offer.
Before you start selling with Amazon for e-commerce, it is important to know what disadvantages it might have to determine whether or not it is worth trying.
A.- High competition in the marketplace
As you can imagine, having a global marketplace makes a certain company’s products compete with others manufactured in other latitudes, so competition in this area can be very fierce.
You have to have a strategy aimed primarily at the long term. If a company sells the same product as many others, it will be competing on Amazon. Remember that pages on Amazon are organized not by sellers, but by products.
In this case, it is Amazon that decides which products to place first in searches, which can greatly influence the final sales of a given product.
This is why winning the buy box is very important for companies. The algorithm that Amazon uses for its products is yet to be deciphered and is constantly evolving, but some steps can be taken that will undoubtedly help a product’s ranking.
- Very good feedback.
- On-time product distribution.
- Answer customer questions on time.
- Have competitive prices.
- Keep the inventory up to date.
B.- Amazon commissions.
In Amazon for e-commerce, not everything is rosy. There are aspects that cannot be hidden and, one of them, are the commissions that Amazon charges for the sale of any company’s products on its platform.
On Amazon you pay a percentage for each sale made. Therefore, it is necessary to keep track of how much that percentage is in order to know exactly what the real profit margin is at the end of the sale. You may find that it is not profitable for you to approach a strategy on the platform.
Amazon’s commissions range from 8% to 16%. In luxury items such as jewelry, the commission can be as high as 20%. Shipping management also costs about $6 or $7 depending on the product.
C.- Inventory management
This case is very special, and especially applies to those who also sell their products on various platforms, not just Amazon. At this point it is important to keep inventories up-to-date at all times with tools designed specifically for this.
This option is important so that the company does not end up offering products that are not in stock at the time of purchase by the customer and there is a delay in sales and delivery times.
This also benefits companies because it reduces expenses for clicks that do not generate final purchases. In short, the important thing is to manage the products the company offers through Amazon for ecommerce not in one place, but in multiple sales platforms.
Q.- Inappropriate management: a very severe punishment from Amazon for ecommerce
For Amazon, the quality of its products is very important, which is why having a failure or problem can cause a low ranking on the platform.
You should create very complete tabs or descriptions of your products so that people can get a clear idea of what they are going to buy. They should include quality images and if possible in high-definition format so that the product is well appreciated, otherwise Amazon will take action on it and may even sanction the company.
E.- Success is not guaranteed on Amazon for e-commerce.
Amazon analyzes very well the performance of each of the products that are sold on its platform to know which ones are the best positioned or the ones that people are searching for to a greater extent. A product that sees its profits increase by 100 percent over a certain period of time and could quickly cause Amazon to decide to increase costs for that product such as stock, storage, etc.
As Google does with different web pages and its algorithm, Amazon for ecommerce also has its own and if you see that something is not working in the best way, you will most likely act on it.
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