Taking the leap into online sales can be equal parts exhilarating and terrifying, especially for sellers who aren't exactly sure how to get off the ground. One of the biggest points of consideration? Selling on Amazon versus going it alone.
Many SMEs view Amazon as the enemy, posing an existential threat to brick-and-mortar stores of all sizes and putting mom-and-pop operations out of business. Despite perceptions, this isn't the whole truth. In reality, Amazon can offer significant advantages to small businesses, providing access to massive audiences that otherwise might be impossible to reach.
If you're wary about the effects of Amazon, it may be time to change your stance. Here's what your business stands to gain with a presence on the nation's largest e-commerce platform.
1. An Unbeatable Reach
When shoppers Google keywords that relate to your product, where are they most likely to go: a small, untested retailer or Amazon? In almost every instance, the answer is unequivocally Amazon. Almost everyone shops on Amazon from time to time, whether to make big purchases every once in a while or frequently for regular shopping.
Further, 64% of households now have Amazon Prime, demonstrating exceptional loyalty that leads to Amazon purchases over the competition wherever possible.
As a small business, establishing an Amazon e-commerce presence can take advantage of the site's ubiquity, tapping into a vast array of opportunities otherwise unavailable to a small brand. One study even found that selling on a marketplace like Amazon can increase customer loyalty, helping you stay ahead.
In addition to reaching more customers, Amazon also provides extra incentive to buy. In fact, many customers search for items on Amazon that they find on a vendor website first to take advantage of perks like free shipping, so the more visible you are on Amazon, the better it will be for your sales.
2. Tools to Stay Competitive
Think your items on Amazon will get ignored for products from bigger brands? It's certainly possible, but the numbers are in your favor: more than half of all sales on Amazon – all $44 billion worth in 2017 – are made from third-party sellers. Some handle their own fulfillment while others allow Amazon to take the reins, but overall, there's no real difference in terms of who consumers choose to shop with: the Amazon name is all it takes to create a presence.
As of the end of 2017, over three-quarters of Americans admitted to buying the majority of holiday gifts on Amazon. When asked why Amazon was the choice over big box stores and small retailers, most participants cited free shipping, both Prime and standard, as their primary motivation.
Most small businesses just starting out don't have the resources or capital to offer two-day shipping at no cost, putting new retailers at a disadvantage – but with Amazon, you can easily keep up with demand. Amazon also allows buyers to take advantage of other perks, like using credit card points to pay for items and promos for delayed shipping, that smaller vendors can't match.
3. A Better Reputation
For many consumers, the logistics of how sales on Amazon work are unclear. Selling on Amazon is truly as easy as signing up for a sales account and listing items (though it is important to learn about the FNSKU Amazon requires, along with some of their other selling policies.) However, many consumers equate buying on Amazon to shopping from within Amazon's warehouses, lending a credibility that isn't often seen in startups or new e-commerce operations.
A purchase made on Amazon is expected to arrive on time and in the quality described, and the background of the seller doesn't always enter into the equation.
As a small business just finding your footing in e-commerce, you don't yet have a reputation in place. Customers who shop with you will have to take your word for it that items will be what they expect.
However, sales on Amazon can boost your credibility, offering a reassuring legitimacy that will inspire new buyers to take the plunge with you. This is particularly true for those businesses who choose Fulfillment by Amazon – a benefit that can qualify you for Prime status.
That Prime stamp can be a big advantage; Prime customers spend, on average, $600 more per year than non-members.
4. Fast, Easy Fulfillment
For many small businesses, the difficulty of selling online isn't the establishment of an e-commerce platform, it's the complexities that go into the fulfillment process. As operations scale, it can get much harder to process orders, collect inventory, pack boxes, and ship out goods on a reasonable timeline.
Without strong inventory management techniques in place, an inability to manage fulfillment can lead to missed shipments, delays, and a compromised reputation that will send customers running.
Amazon can lighten this load, taking on the heavy burden so that you don't have to. FBA, or Fulfillment by Amazon, is a cost-effective and straightforward way to get your online sales operations off the ground.
Amazon's resources can manage the process from start to finish, including storing, packing, processing, and shipping your items in a virtually seamless process. While there is a cost – fees vary by size, weight, and time of year in addition to required storage space – the advantages almost always outweigh the expense.
Making the right decisions for your e-commerce operation takes time, effort, and plenty of due diligence, and it's easy to make mistakes. Selling on Amazon, however, is nearly always the right choice.
Due to the negative stereotypes, many small businesses shy away from taking the plunge with Amazon, but in most circumstances, the e-commerce giant actually helps, not hurts.
With advantages that range from an extended reach to opportunities for fast and simple fulfillment, there's a lot to be gained by partnering with Jeff Bezos' internet titan.
Laura Gayle is a full-time blogger who has ghostwritten more than 350 articles for major software companies, tech startups, and online retailers. Founder of BusinessWomanGuide, she created her site to be a trusted resource for women trying to start or grow businesses on their own terms. She has written about everything from crowdfunding and inventory management to product launches, cybersecurity trends, web analytics, and innovations in digital marketing.