Some brands still avoid selling any of their products on Amazon. For certain lifestyle brands, luxury brands or brands with heavy products that are costly to ship, a strategic choice to avoid Amazon may make sense. The rest of the companies who currently aren’t selling on Amazon may simply be leaving money on the table.
If you are a small to mid-sized company, selling your products on your branded website will likely cost you more than if you only sold through Amazon. Do the quick math — the cost of building and maintaining a mid-tier platform, the cost of the 3PL (Third Party Logistics – order processing, warehousing pick/pack and ship), the cost of consultants or the in-house marketing team, the Information Technology team, the cost to purchase and connect a marketing database CRM solution, the cost to host the site on a server… the list goes on. If you aren’t already making millions in online sales, your profit margins are likely razor thin the first time you run a promotion or discount to boost sales revenue.
There are a number of compelling reasons to sell your products on Amazon because they have an advantage over traditional ecommerce: “…visitors to Amazon.com are further down the purchasing funnel than visitors to Google or Facebook” as Marcus Wholsen stated in WIRED, Amazon’s Next Big Business is Selling You. Amazon has a treasure trove of shopper purchasing information and the advertisement tools to market products to people. Amazon is also one of the most visited websites in the U.S, sixth behind the web giants Google, Microsoft, Yahoo, Facebook and AOL.
Amazon is currently the largest US retail website, according to eMarketer, far surpassing any competitors. The numbers are staggering by comparison and it can be likened to the big box store take-over of the mom and pop shops and local chain stores. Amazon has upset the big box model and the branded ecommerce model dramatically and it will continue to disrupt the retail shopping world. According to Lauren Gensler in a May 2016 Forbes article, The World’s Largest Retailers 2016: Wal-Mart Dominates But Amazon Is Catching Up in 2016, Wal-Mart was still the planet’s largest retailer for 2016, but Amazon is closing in fast.
Selling on Amazon has its clear advantages to operating your own ecommerce site, but before you fire your Director of Ecommerce, her web development team, marketing managers and 3PL provider, there are still many good reasons for running and maintaining a good branded ecommerce experience. You can own the conversation with the customer by maintaining your own website in a way that isn’t possible on Amazon. You can test new product releases before they go to market on your own ecommerce site and prove the case of public interest in the product to larger retailers if you have a multi-channel distribution model. There is also valuable information to be collected on your ecommerce platform using one of the many CRM solutions available.
The recent store closures and bankruptcies filed in 2017 signal a clear changing of the times. Derek Thompson in his April 2017 article in the Atlantic, What in the World Is Causing the Retail Meltdown of 2017, makes three points about the reasons for the shift: 1. We are spending more online, 2. We built too many malls, 3. People are spending more on food and drinks instead of material things. Amazon is the largest ecommerce company and people are indeed spending more online. That combination guarantees market domination for the foreseeable future.
The key to surviving the ever-changing retail landscape is to avoid getting stuck in the habit of following the same paths. Innovation is a key to survival, including where and how we sell our products to the next generations of customers. Don’t cut the cord to that beautiful branded ecommerce site you have painstakingly optimized over the years, however you might consider earning a little more profit by also selling direct to consumer on Amazon or you might just be leaving good money on the table.
If you are interested in learning more about selling on Amazon, check out our free Guide to Selling on Amazon published on LinkedIn.