To Amazon or not to Amazon

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In a previous post, I talked about the necessity for SMBs to get their storefront online by creating their own online shopping website. However, I didn’t address a common objection. One of the most straightforward ways to go online is to become an Amazon seller. As an Amazon seller, you don’t even need to have an online website, you simply advertise your products on Amazon’s website. You then leverage the 150 million or so people that visit Amazon per month and who trust the Amazon brand.

 

It was a very compelling argument back in 2000 when Amazon introduced third-party selling. But, is it so compelling today?

 

In 2000 setting up your own online shopping website would have been pretty challenging and beyond the capabilities of most SMBs. You would have had to be pretty interested in IT and/or willing to hire some expensive outside consultants to make it happen. For these reasons, Amazon, eBay and other online shopping channels were an excellent way to get into the online game (and SMBs could manage with an ebay inventory spreadsheet template).

 

Fast-forward to 2018 and things have changed. It is now possible, with cloud-based software like Systum, to get online with a minimum of cost or effort.

 

Does being an Amazon seller still make sense?

 

Systum is integrated with Amazon. We still think it is powerful channel and for many businesses it will make sense. But there are two principle arguments against it being your main game: margins and customer data.

 

Amazon charges are complicated and vary according to category. The principal portion is what they call the referral fee, which ranges from 6% to 20%, but is usually around 15% of sales. If you measure this against the price of opening a brick-and-mortar retail location, this is a pretty small price to pay — thus the popularity of Amazon to many sellers.

 

However, if you already have a brick-and-mortar storefront and you are running your online shopping site based on Systum, does paying 15% of your margin look so good? The answer will depend on what kind of volume you can generate on your own website. It may make sense to focus that 15% of sales on online marketing to build your brand.

 

This is especially true because of the value of customer data. When you sell on Amazon, you move product, but getting data on who is buying your product is harder. Customers that buy on Amazon are Amazon customers, not your customers. Amazon has their email addresses and pre-purchase browsing histories and that data is not available to Marketplace sellers.

 

In contrast, when you sell to customers directly on your own website, you have all that data. With Systum you can analyze their pre-purchase history to see what they were considering. With their email addresses (and permission), you can send them offers based on that history, perhaps offering them discounts on something they had looked at but not bought, or offering them other similar products.

 

You also have a more direct relationship with the customer. They came to your site. They know your brand. If you work hard on it, you have the potential to turn them into return customers who are loyal to your brand. All of which is much harder on Amazon.

 

As discussed in Play to your strenghts, one of the great strengths of smaller businesses is the personal touch. You need to recreate the personal experience that a customer might have in a specialty retail environment, but online.

 

To do that requires good customer data and integration of that data across marketing, sales, support and customer care. At every customer touchpoint, you need to communicate your knowledge and interest in that customer. With fully integrated software, as you have with Systum, it is possible to do this and offer something more than just the lowest price on Amazon marketplace.


 

Categories: eCommerce

Tags: amazon, ecommerce, third-party selling, Software

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Molly Mehlenbacher

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