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When launching a new business, Amazon might be just the place to break ground. As the world’s second largest online marketplace, there are millions of customers just waiting to be found. However, like any time you start a business, there will be pros and cons involved in literally every aspect of your day-to-day affairs.
That being said, what most Amazon sellers have found is that there is a huge deviation between selling on Amazon as an established business and one that is just starting out. Therefore, the pros and cons of selling on Amazon may be affected by just how established you are within your market and what your ultimate goal is in choosing to sell on Amazon.
Pro: A Great Place to Gain Exposure as a Startup
As mentioned above, Amazon really is a great place to gain exposure as a startup. Whether you are a manufacturer or a retailer, this is where you can reach the largest audience with a minimal amount of effort. Yes, you will need to put effort into your listings, but with the proper tools, customers will find you through the search function.
Con: Are Those Customers Really Yours?
One of the grey areas many businesses have begun looking at is in terms of whose customers you are selling to. According to one UK businessman who was quoted in Forbes online magazine, Amazon owns the customer relationship. Businesses are not allowed to re-market to them and/or actively sell to them at any point in the future. Exactly what this means for customer retention is anyone’s guess, unless you continue selling on Amazon. This is one that would seriously warrant further research.
Pro: Fantastic Exposure for New Products
You may not be a startup and your business may have a solid customer base, but what happens if you want to gain maximum exposure for an innovative new product line? Many businesses think of Amazon as a marketing tool because their audience is just so huge. You can gain exposure for your new products and this might be an area where Amazon can’t own that relationship. While you couldn’t market to those customers outside of Amazon, if you already have an established brand, they will find you in the future with a simple search.
Con: Learning to Manage Your Inventory
Here is one that is both a pro and a con, but when just starting out as an Amazon merchant, it can be a bit frustrating. When you’ve shipped inventory to one of Amazon’s warehouses, the actual figure they have on shelves may differ from what you’ve shipped. Amazon merchants have found discrepancies in the past because of such things as breakage and lost boxes during shipments. Most of the time those boxes show up down the road, perhaps loaded on a wrong pallet or left in the carrier’s warehouse for later delivery, but when seeking to keep control of inventory to determine when to ship more can be a real challenge.
Pro: Inventory Management Software Takes Much of the Pressure Off You
Sometimes inventory management gets a bit tricky while waiting for a return to make it back to the warehouse. Inventory management software takes much of the burden off you because a great deal of it is automated and when it comes to issuing refunds, using an Amazon refund service leaves little for you to do except wait for your share to be returned to your business account. In other words, learning to manage inventory and refunds can be made easier with the right set of tools.
Pro & Con: Do You See the Cup Half Full or Half Empty?
When it comes to selling on Amazon, it boils down to the cup half empty vs cup half full conundrum. Sometimes its both a pro and a con being an Amazon seller. You might not own those customers and you may be paying fees on everything you sell but just like Micky D’s and Burger King, high volume more than compensates for keeping your own customer base all to yourself.
If you can reach out to literally tens of millions of customers around the globe, don’t your chances for closing a sale increase exponentially? The $64,000 question is whether or not it really matters to you if that customer relationship belongs to you or to Amazon if they faithfully come back time after time to you as an Amazon merchant. You may be paying what many businesses consider to be a high commission, but wouldn’t you be paying a marketing team just as much?
Just remember that there isn’t another marketplace on earth that provides you with the number of tools available to you as on Amazon. Once you master the fundamentals, the customers are there for the taking. Remember, if Amazon profits, so do you, so what’s the big deal? Sounds like a plus to us!