Selling on Amazon can be a great way to make money online. But before you start selling on Amazon, there are some things you need to know about selling on Amazon pros and cons.
But before you dive in, it’s important to weigh selling on Amazon to see if it’s the right fit for you. I have been selling products on Amazon for over 7 years and I can help you decide whether it’s right for you.
In this post, we’ll explore the pros and cons of the Amazon sales channel, focusing specifically on the selling benefits and disadvantages.
So whether you’re looking to start an ecommerce business, starting a wholesale business, or you’re an existing Amazon seller, this post will help walk you through the pros and cons of Amazon.
5 Pros of Selling on Amazon
Amazon can be a great way to start and grow your ecommerce business. Whether you’re new to ecommerce or a seasoned seller, understanding the pros and cons can help you make informed decisions.
Here are 5 of the best advantages:
You Benefit from The Trust Consumers Have in Amazon
One of the biggest advantages of the Amazon marketplace is that its audience already trusts the platform.
Amazon has built a reputation for providing a seamless shopping experience and ensuring customer satisfaction.
Amazon sellers benefit from this trust, as consumers are likelier to purchase an item sold only from Amazon than third party sellers. This means that you don’t have to work as hard to establish your credibility as a seller, as the Amazon website already does much of the heavy lifting for you.
Access to Amazon’s Marketing Tools
One of the significant advantages of being an Amazon seller is access to Amazon’s marketing tools. These tools can help sellers increase product visibility, improve product ranking, and drive monthly sales further.
Amazon’s marketing tools include Amazon Advertising, Sponsored Products, Sponsored Brands, and Amazon Live. These tools allow sellers to create and run targeted campaigns that reach potential customers who are interested in their products.
One of the key benefits of Amazon’s marketing tools is that they are designed to be easy to use. Even sellers with little to no marketing experience can create and run effective campaigns that drive sales.
More Customers and Sales
Amazon is already attracting millions of new customers every day, which you can access to sell products. Depending on your niche and how competitive it is, you can sell your products pretty easily.
For example, when I started selling on Amazon, I was able to reach a much wider audience than I could have on my own website. By leveraging Amazon’s platform, I was able to get sales in a short amount of time.
Amazon has over 300 million active users worldwide, which is an enormous advantage for selling products. By selling on Amazon, you get access to these customers without having to invest in marketing and advertising to attract them to your own website or store.
Low Marketing Costs
One of the biggest benefits of selling on Amazon is that you don’t have to spend as much on marketing your own products. With Amazon, you get access to their massive customer base, and they take care of a lot of the marketing for you.
Amazon invests heavily in advertising and promoting products on its platform, so you don’t have to. This means you can save a lot of money on marketing costs and focus on other aspects of your business.
For example, when I started selling on Amazon, I didn’t have a large budget for marketing my products. However, by learning Amazon’s search engine, and figuring out how to rank listings using SEO, I was able to drive more sales without any advertising costs involved.
Increased Product Visibility
When you sell on Amazon, you gain access to a global audience that you may not have otherwise been able to reach.
Amazon’s platform is designed to help sellers get their products in front of as many customers as possible. This increased visibility can increase sales and more products sold.
For example, you can use Amazon’s FBA service to store and ship your products, which can help you qualify for Prime shipping and increase your visibility of products sold on the platform.
By leveraging Amazon’s massive customer base, sales channels, and established trust, you can drive more sales to your online store and build your brand reputation.
Don’t Have to Handle Your Fulfillment With Amazon FBA
Another advantage of selling on Amazon is that you can take advantage of the Fulfillment by Amazon (FBA) program. With FBA, Amazon takes care of the storage, customer care, packaging, and shipping of your products, which can save you time and effort.
Buyers tend to purchase items with free Amazon Prime shipping, which is another bonus for you.
Additionally, Amazon prioritizes Prime products in search results, which can increase your visibility on the platform and lead to more sales.
Understand Your Fulfillment Options
When it comes to selling on Amazon, one of the most important decisions you’ll need to make is how you’ll fulfill orders. There are a few different options to choose from, each with its own pros and cons.
The first option is to fulfill orders yourself, also known as Merchant Fulfilled. This means that you’ll be responsible for storing, packing, and shipping your products to customers when they place an order. While this option gives you more control over the fulfillment process, it can also be time-consuming and costly, especially if you’re selling a large volume of products.
Another option is to use Amazon’s Fulfillment by Amazon (FBA). With FBA, you send your products to an Amazon fulfillment center, and they handle the storage, packing, and shipping for you. This can save you time and allow you to focus on other aspects of your business, but it also comes with some fees and restrictions.
For example, FBA fees can vary based on the size and weight of your products, as well as the time of year and other factors. Additionally, FBA requires you to comply with certain packaging and labeling requirements, which can add to your costs and complexity.
Ultimately, the fulfillment option you choose will depend on your specific business needs and goals. If you’re just starting out and don’t have a lot of inventory, you may prefer to fulfill orders yourself to save on costs. On the other hand, if you’re looking to scale your business quickly and focus on growth, FBA may be a better option.
Regardless of which fulfillment option you choose, it’s important to consider the impact on your overall profitability and customer experience. By understanding your options and making an informed decision, you can set your business up for success on the Amazon marketplace.
How FBA Works
The FBA service allows sellers to store their products at Amazon’s fulfillment center, and Amazon takes care of the fulfillment process, including picking, packing, and shipping orders. This can save sellers a lot of time and effort, as they don’t have to worry about managing their own fulfillment systems.
There are several pros and cons to using FBA for your Amazon business. Let’s take a closer look at some of them.
Pros and Cons of FBA
Selling on Amazon can be a great way for small businesses to reach a wider audience, sell, and increase their sales.
However, one of the biggest challenges of selling on Amazon is fulfilling orders in a timely and efficient manner.
This is where Amazon’s “Fulfillment by Amazon” (FBA) service comes in.
Pros:
- Another advantage of the FBA service is that it can help sellers win the “Buy Box.” The Buy Box is the section on an Amazon product detail page where customers can start the purchasing process by adding items to their cart.
- Customer Trust: Using the FBA service can also help build trust with customers, as they know that their orders will be fulfilled by Amazon’s reliable and efficient system.
- It can also save small and medium-sized businesses a lot of time and money.
- Amazon’s fulfillment systems are incredibly efficient, meaning that products can be shipped out quickly and accurately. This means that sellers can focus on growing their business and creating new products, rather than worrying about packing and shipping customer orders.
However, there are also some potential drawbacks to using the FBA service.
Cons:
- Higher Fees: FBA fees can be higher than other fulfillment options, which can eat into your profit margins. It’s important to carefully calculate your costs and pricing to ensure that FBA is the right choice for your business.
- Limited Control: When you use FBA, you give up some control over the fulfillment process. You won’t be able to inspect and package your products yourself, and you’ll have to rely on Amazon to handle customer returns and refunds.
- Storage Limitations: FBA also has limitations on storage space, which can be a problem if you have a large inventory or seasonal products. If you exceed your allotted storage space, you may be charged additional fees or face restrictions on your inventory.
Is selling on Amazon that easy?
Getting started as a seller on Amazon is relatively easy. The Amazon Seller Central platform provides all the tools and resources you need to set up your seller account, inventory management, list your products, and start to sell your products.
There are also plenty of resources available to help you optimize your listings, manage your inventory, and handle customer service.
Create Your Own Online Store and Start Selling On Amazon Today
There are many reasons why people want to sell on Amazon. Some do it as a side hustle, while others want lasting financial freedom.
Personally, learning how to sell on Amazon 7 years ago changed my life. Selling on Amazon gave me the freedom and flexibility to work from anywhere, set my own hours, and scale my income as much as I wanted.
Whether you’re looking to supplement your income or start a sustainable online business, Amazon offers a powerful platform that can help you achieve your goals. The best thing about this is that you can do this from anywhere in the world!
And the best way to learn how to succeed on Amazon is by learning from experts who have already done it. Click here to see my favorite course that I recommend for those just starting out.
The Cons of Selling on Amazon
While there are definitely advantages to selling on one of the biggest online marketplaces, there are also some downsides to be aware of. One of the most significant Amazon cons is the high level of competition.
High Competition
The current number of sellers on Amazon means that it can be challenging to stand out from the crowd. This is especially true in popular categories like electronics, beauty products, and home goods. With so many sellers vying for the same customers, it can be difficult to get your products noticed.
However, it’s important to remember that not all competition is bad. In fact, competition can push you to improve your product offering, customer service, and marketing strategies.
If you’re willing to put in the work, you can still succeed on Amazon despite other sellers selling there.
One way to differentiate yourself is by offering the same product or a unique product or a product with better quality or features.
With the right approach, you can still succeed and build a profitable business on this platform. Just be prepared to work hard, differentiate yourself, and adapt to the ever-changing marketplace.
High Selling Fees
Despite Amazon offering many great benefits, these benefits also come with hefty marketplace fees and fulfillment fees.
Get to Know the Costs of Selling on Amazon
First, you must pay for your seller account. Amazon has two selling plans: Individual and Professional plan. With the Individual Plan, each sale has a fee of $0.99. The professional seller plan charges a subscription fee of $39.99 per month and there are no listing fees.
Aside from the cost of the selling plans, Amazon also charges a referral fee that varies depending on your product category. These fees range from 8% to 15% per unit sold.
If you’re not sure whether you’ll be selling more than 40 orders a month, the Individual plan is a good option. Paying $0.99 per order can really eat into your profit margins, so it’s definitely worth considering.
Lack of Control and Ownership
Another one of the drawbacks is the lack of control you have over the customer experience.
Because Amazon acts as the middleman between you and the customer, you may not have much say in shipping, returns, or customer support. This can be frustrating if you want to offer a personalized experience to your customers.
Additionally, it’s important to remember that when you sell on Amazon, you’re essentially renting space on someone else’s platform.
While it can be a great way to reach a wider audience and generate sales, you don’t actually own the platform or your customers. This means that if Amazon decides to change its policies or search algorithm, your business could be significantly impacted.
No Insight Into Customer Data
One of the potential downsides of selling on Amazon is that you don’t have as much insight into customer data as you would if you were selling on your own website. Amazon provides basic sales data and customer demographics, but not detailed information like email addresses or buying behaviors.
This lack of data can be a disadvantage for Amazon sellers who want to build a relationship with their customers. Without access to this data, it can be harder to personalize your marketing and offer targeted promotions to get repeat customers.
Risk of Suspension
Another issue is that poor customer reviews can have a significant impact on your sales on Amazon. With so many sellers competing for the same sales channel, it’s important to maintain a high rating and positive reviews.
Excessive negative reviews or even counterfeit product complaints can lead to suspension or revocation of selling privileges.
Amazon Limits Warehouse Space at Peak Times
During busy times like the holiday season, Amazon might not have enough warehouse space to accommodate all sellers’ inventory. This could potentially limit the amount of products you can store and in turn, impact your sales and revenue.
At times of high demand, Amazon focuses on the inventory that has a fast sales rate. This can pose difficulties for smaller merchants who may have limited stock or lower sales velocity. During high-volume shopping periods, it’s possible that your products may become unavailable or run out of stock. This can lead to frustration for both you and your customers.
One way to avoid this is by using their inventory planning to predict demand and adjust your inventory levels accordingly.
Know How To Create Optimized Amazon Listings
Amazon is the largest e-commerce website in the world, with over half a billion users. It’s estimated that about half of all online sales are made on Amazon.
But getting started on Amazon isn’t as easy as just setting up a seller account and uploading your listings. There are some things that you need to know before starting your own business on Amazon.
When it comes to being successful on Amazon, having optimized product listings is super important.
The more optimized your listings are, the better they will be recommended to buyers and rank on the first page of search results.
But what does it mean to have an optimized listing? And how do you make sure that your products are as optimized as possible? Let’s take a look.
To optimize your listings, you’ll need relevant keywords, high-quality images, and compelling product descriptions.
That’s where Helium 10 comes in – it’s a tool that I and many successful Amazon sellers use.
One of Helium 10’s best features is its Cerebro keyword research tool, which allows you to see what keywords a listing on Amazon is ranking for.
This is a very powerful feature that allows you to see what keywords a competitor is already ranking on Amazon, and which ones you should be targeting.
This tool has personally helped me many times with helping my product listings organically rank on the first page.
If you’d like to try Helium 10, you can use my code MIB20 to get 20% off for 6 months ($120 VALUE)!
Who is Amazon good for and why?
Amazon is a powerful platform that can be a great option for a variety of sellers. Here are some examples of who Amazon is good for and why:
- Small Business Owners: Amazon is a great option for business owners who are looking to expand their reach and sell their products to a wider audience. Business owners can tap into Amazon’s massive customer base and reach millions of new customers without having to invest a lot of money in marketing and advertising.
- Private Label Sellers: Private label sellers can benefit from Amazon because they can use Amazon’s fulfillment services and Prime shipping to deliver their products quickly and efficiently to customers. This can help private label sellers compete with larger, more established brands and gain a foothold in the market.
- Established Brands: Established brands can use Amazon as a channel to reach a new audience and increase their sales. By leveraging Amazon’s platform and marketing tools, established brands can promote their products to a wider audience and gain more exposure leveraging multiple channels.
- International Sellers: Amazon is a global platform, which means that international sellers can use the platform to sell their products in multiple countries. This can help international sellers expand their reach and grow their business on a global scale.
Conclusion
Ultimately, the decision to sell on Amazon should be based on your specific business needs and goals.
While there are certainly some potential downsides to selling on the platform, there are also many benefits, such as low marketing costs, access to millions of customers, and the trust consumers have in the Amazon brand.
By weighing the pros and cons carefully, you can make an informed decision about whether or not selling on Amazon is the right choice for you.
