10 Reasons to NOT Launch Amazon & 10 Reasons to Launch

Starting a business on Amazon provides a significant opportunity for success in the online marketplace as it offers reach to millions of customers. However, it also presents challenges that could affect your brand, business, and financial success. This article examines the advantages and disadvantages of selling on Amazon, pointing out 10 reasons to reconsider before starting and 10 convincing reasons why it could benefit your business. Whether you are new to selling or an experienced brand evaluating this platform, knowledge of these factors can assist in making an informed choice.

10 Reasons Not to Launch on Amazon

Here are some reasons that you should consider before launching your brand on Amazon:

1. Lack of control over brand

When brands sell on Amazon, they frequently forfeit control over how their products and identities are portrayed to customers. Sellers are unable to fully customize their listings on Amazon's standardized product pages, causing the potential for your brand to be indistinguishable from competitors selling the same products. This standardized approach prevents brands from creating a unique experience through custom visuals, tailored content, or distinctive packaging on their websites. For brands wanting to uphold a high-end image of their brand, these elements pose challenges in distinguishing their products or managing customer perspectives.

2. High Competition

Intense competition is a major hurdle that sellers encounter when operating on Amazon. The market is crowded with millions of sellers from all categories, making it difficult for individuals to build their brand identity. Competition on Amazon is made even more intense by the pricing environment. To remain competitive, sellers often compete in price wars for the "Buy Box," sacrificing profit margins in the process. Experienced sellers with greater sales volumes and more efficient supply chains have the advantage, while new or smaller sellers find it challenging to compete.

3. Lack of Customer Data

A significant limitation of selling on Amazon is the inability to access customer data. Amazon keeps all important information such as contact details, purchase history, and preferences when a customer buys something. This obstacle hinders sellers from establishing direct connections with their customers or developing customized marketing strategies. While independent eCommerce platforms allow businesses to gather and analyze customer insights for enhancing retention and engagement, Amazon acts as an intermediary and closely monitors all customer interactions.

This restriction can be especially irritating for brands emphasizing building loyalty or designing distinctive shopping experiences.

4. Relying on Amazon

Being one of the biggest and most powerful online platforms, Amazon has a strong influence on various aspects of a seller's operations, including visibility, sales volume, and account status. Those who concentrate only on Amazon as sellers may be at risk of being affected by alterations in Amazon's regulations, search algorithm, or account suspension. If a seller's account is abruptly suspended or limited, their entire income could be in jeopardy.

5. Thin Profit Margin

Platform fees, price competition and other expenses on Amazon lead to narrow profit margins for sellers. In some product categories, fees can be as high as 30% or higher of the sales price, which reduces sellers' potential profits significantly. Furthermore, the high level of competition within the platform compels numerous sellers to participate in battles over prices to attain the sought-after "Buy Box," which guarantees top visibility and conversion rates. This continual undercutting leads to decreased prices and smaller profit margins, particularly for inexpensive or standardized products.

6. Hijacked Listings

Hijacked listings may happen when numerous sellers are allowed to list a specific product on one page. Even though the main goal is to simplify the shopping process, it also creates opportunities for fake sellers or unauthorized individuals to exploit popular items. When a product listing is taken over, unauthorized sellers can infiltrate the original listing, typically selling fake or lower-quality versions of the product for a reduced cost. This affects not just the profits of the initial seller but also harms their credibility since clients might get inferior items that spoil the reputation of the brand.

7. Amazon's Competitive Practices

The competitive practices of Amazon can pose major obstacles for third-party vendors. One of the standout practices is Amazon's ability to collect and utilize data from sellers to introduce its rival products. Amazon can use sales data, customer preferences, and pricing strategies to develop private-label products that rival those sold by independent sellers. The Amazon-branded items are frequently sold at discounted prices and given special prominence in search rankings, potentially hurting the revenue of outside vendors.

8. Complex Logistics on Amazon

Complicated logistics is a key difficulty for Amazon vendors, especially for those who use Fulfillment by Amazon (FBA). Juggling inventory in numerous warehouses, meeting shipping deadlines, and adhering to Amazon's rigorous storage and labelling criteria can be challenging for sellers. Every item must be accurately sorted, packaged, and delivered following Amazon's guidelines to prevent expensive mistakes and delays when not managed correctly.

9. Amazon's strict and inconsistent policies

Amazon has strict rules for product listings, inventory management, and customer service, and breaking them can result in penalties like account suspensions or product removals. The policies can be rigid and unclear at times, resulting in sellers being at risk of losing their accounts or sales unexpectedly due to arbitrary enforcement. Amazon's rules regarding product authenticity, customer complaints, and packaging may result in instant suspensions, so sellers must closely follow specific guidelines to avoid this outcome.

10. Time and Resource Investment

Selling on Amazon requires significant time and energy from sellers especially if they are unfamiliar with the platform's complexities. Managing product listings, optimizing for search, and maintaining inventory takes considerable effort. Moreover, it is essential to regularly monitor metrics such as feedback, reviews, and order performance to prevent account suspensions or penalties. Consistently dedicating time to running an Amazon store can create a workload similar to a full-time job, taking focus away from other areas of business expansion.

10 Reasons to Launch on Amazon

1. Low Startup Cost

Establishing your Amazon store typically requires less startup cost than building your e-commerce website. Unlike building your website from scratch which requires hosting and domain purchases, amazon offers a built-in infrastructure to sellers. Sellers can just list their products without having to develop payment processing and shopping cart systems. Moreover, Amazon's FBA program allows sellers to utilize their logistics network instead of building their warehouses or shipping solutions.

2. Easy Setup

Amazon offers a simple process for sellers who want to introduce their products on the internet. The procedure is simple, needing little technical expertise. Vendors can easily start selling by just creating an account on SellerCentral. The platform also provides ready-made templates for product listings, allowing easy uploading of product descriptions, images, and pricing details. Even inexperienced sellers can easily establish their store using the provided tools and guidance, avoiding the need for expensive eCommerce systems.

3. Improved SEO on Amazon

Improving SEO on Amazon can drive significant traffic to your products, hence increasing sales. Highly Optimized titles, descriptions and bullet points can improve the rank and visibility of your listings. Furthermore, having a high review score and keeping a good customer feedback loop can enhance the credibility and relevance of your product in search results. By utilizing Amazon's advertising features, such as Sponsored Products, you can also direct specific traffic to your listings, thereby improving SEO. Optimizing these important factors can improve a seller's ranking on Amazon and result in increased visibility and potential sales.

4. Established Audience

Amazon has an established audience of millions of shoppers which is a significant advantage for sellers. Amazon's large number of users means that it draws in customers who are already willing to buy, thus lowering the need for extensive efforts and resources to attract visitors to a website. This existing audience is especially beneficial for inexperienced sellers or lesser-known brands who may not have the funds to generate awareness through conventional marketing or alternative online selling channels.

5. Advanced Marketing Tools

Amazon helps sellers to reach their target audience by providing various advertising tools and promotional features. One of the most effective tools is Amazon Advertising which provides options to sponsor brands, products or display ads. Such tools allow sellers to make promotions based on specific keywords or categories to target potential buyers. Amazon also offers promotional deals and coupons for sellers to create discounts that attract more customers. These tools offer valuable insights about a brand's audience and help sellers adjust their strategies accordingly.

6. Credibility and Trust

Amazon is considered one of the most reliable eCommerce platforms worldwide, drawing in millions of shoppers who trust its dependable customer service, safe payment options, and strong buyer protection measures. This trust allows new sellers to easily establish credibility by listing their products on Amazon. Additionally, Amazon's Prime subscription, which includes quick, no-cost delivery and special offers, encourages customers to buy on the site, typically favouring products eligible for Prime membership. This high trust level, amazon's reputation and global reach to millions of customers offer a significant opportunity for sellers to build their brand among their target audience and make sales.

7. High traffic and visibility

Selling products on Amazon provides extensive exposure and a large audience, with millions of active users visiting the platform every day. Due to Amazon's solid reputation and thorough advertising campaigns, products listed on the platform are exposed to a worldwide audience, usually without sellers needing to make much effort to attract visitors. The platform's search engine indexes products based on relevance, so listings with the correct keywords are more likely to be seen by potential buyers.

8. Amazon Prime Members

Sellers on the platform highly value Amazon Prime members as a customer segment. Prime subscribers, totalling over 200 million globally, receive perks like complimentary two-day shipping, exclusive discounts, Prime Day access, and a smoother shopping process. Prime members are known to spend more on Amazon, making them an important target audience for any brand. For sellers, this means there is a big chance to boost sales, as Prime membership promotes regular and repetitive buying. Sellers can utilize FBA to make their products more appealing to prime members.

9. Fulfilment By Amazon

FBA offers a lot of advantages to sellers making it a powerful tool for growing their business and success on Amazon. Fulfillment by Amazon provides sellers with a complete logistic solution including inventory control, packaging, shipping and customer support so sellers can concentrate more on expanding their business. FBA offers access to advanced logistics, thereby reducing shipping times and providing a broader geographical reach. It also makes sure that products are eligible for Prime Members, increasing exposure and sales. Sellers have the option to use Amazon's multi-channel fulfilment to handle orders from other platforms, making operations more efficient.

10. Unique Product Acquisition

Amazon offers a platform for sellers to sell and advertise special products to a wide audience. By utilizing its well-established marketplace, sellers have the opportunity to offer unique or specialized products to a worldwide audience, typically with less competition compared to other platforms. Vendors have the opportunity to utilize Amazon's resources, including the Brand Registry, to safeguard their distinctive items and guarantee they are noticeable in a competitive market. Moreover, sellers can use Amazon's extensive customer base and data-driven insights to discover and target untapped markets, enabling them to introduce unique products that meet specific customer demands.

Conclusion

Selling on Amazon presents difficulties as well as potential advantages. Although challenges such as intense competition, strict policies, and lack of control may seem problematic, the platform's worldwide presence, dedicated customers, and innovative features establish it as a valuable means for expansion. By comprehending and balancing these elements, sellers can determine if Amazon is in line with their business objectives and goals.