|Wed Mar 20 2013 15:32:28|
Opinion: Fees Not the Only Consideration When Selling on Amazon
By: Lisa Suttora
A recent Reuters article suggests that a growing dissatisfaction among Amazon sellers over fee hikes is driving them to consider alternative selling venues. While rising fees are always of primary concern for sellers, the Reuters analysis fails to address the most compelling reason for third-party merchants to have an Amazon sales channel.
Amazon offers its sellers unique benefits not available in any other marketplace...
Ability to Scale
The ability to scale without incurring massive operations and logistics overhead is one of the most powerful benefits of selling on Amazon.
For years, one of the primary roadblocks for expanding an online store has been the ability to cost effectively warehouse and ship large volumes of products. Limited by the number of orders they could physically process in a day, small businesses looking to scale had few options other than opening a warehouse and hiring a team. A costly expense that can easily cripple a growing business.
With Amazon FBA (Fulfillment by Amazon), even a one-person operation can now affordably outsource the order fulfillment process.
By leveraging the services and fulfillment infrastructure provided by FBA; rather than spending eight hours a day packing and shipping orders, online sellers can now focus on revenue generating activities like sourcing and marketing.
Many wholesale suppliers are now willing to ship directly to FBA on behalf of the merchant, an approach that further reduces fulfillment costs.
Amazon makes it easy to run the numbers on the cost of Merchant Fulfilling vs. FBA by using the Amazon FBA Calculator.
Amazon's Multi-Channel Fulfillment gives sellers even more reach with the ability to ship eligible orders from other marketplaces (or a website) through the FBA system. Additionally, both the FBA International program and FBA Export allow sellers to expand internationally without the need to fulfill individual orders.
But scale isn't the only reason to exploit your Amazon sales channel…
High Quality Buyers and Massive Traffic
As one of the world's fastest growing market places, Amazon knows how to attract buyers - and lots of them!
With more than 120.8 million unique visitors in December 2012, Amazon brings an abundance of buyers to the site. Third-party FBA merchants also enjoy increased visibility in front of Amazon's best buyers - the Amazon Prime customer.
Amazon's Prime customers spend as much as 150% more upon becoming Prime members. With free 2-day shipping on orders fulfilled through an FBA warehouse, and an easy 1-Click checkout, Amazon has all but eliminated any buying friction for Prime members.
It's no wonder that Amazon is the first stop when Prime members come online to shop. Robbie Schwietzer, vice president of Amazon Prime, recently told Businessweek. "In all my years here, I don't remember anything that has been as successful at getting customers to shop in new product lines."
And while Amazon's ability to bring buyers in the front door continues to increase, they're also succeeding at making Amazon.com the go-to choice for product research.
The Amazon Search Engine
According to Forrester Research, 30% of shoppers now go directly to Amazon to research a product before buying, bypassing Google completely. While Google attracts 13% of online product search, Amazon is quickly becoming the search engine of choice for online shoppers.
These days, not having a presence on Amazon means your products may not be found online.
While the Reuters article asks whether or not sellers can afford to sell on Amazon, the real question is - can you afford not to sell on Amazon? Based on the benefits and exposure that Amazon brings, for most sellers, having an Amazon sales channel is a must.
Is Amazon the "perfect" marketplace? There is no such thing. Every marketplace has its unique issues. Price and margin compression as well as increased seller competition (both from third-party merchants and Amazon) are challenges faced daily by sellers.
It should be noted that this week, eBay unveiled a new fee structure as part of their 2013 Spring Seller Release. As part of the release, eBay has posted a comparison fee chart for eBay and Amazon sales.
While at first glance, eBay's new fees appear to be less than Amazon's fees, it's important to note that PayPal fees are not included in eBay's fee calculations, while Amazon's posted referral fees do include payment processing costs.
Ultimately, the decision to sell in any marketplace must not only be determined by fees, but also by the benefits the marketplace brings to your business.
Lisa Suttora is an ecommerce marketing strategist, and founder and CEO of Lisa Suttora International and WhatDoISell.com. Since 2004 Lisa has worked with online merchants in 7 countries and over 2500 niche markets to grow thriving online businesses. Approximately 98% of Lisa Suttora International customers have an Amazon FBA sales channel (many with a multi-channel presence on eBay and other marketplaces). For further information on selling on Amazon and to get your free copy of the strategy webinar "Vision. Strategy. Moxie. How to THRIVE in Ecommerce in 2013" visit www.thrivein2013.com.