Pros and Cons of Selling on Amazon

Amazon is synonymous with online selling. If you are already selling online and thinking about expanding to include Amazon or just thinking about starting out there, here are some tips to help you make an educated decision to see if the etail giant is a right fit for your type of business. These are some pros and cons taken from interviews with merchants who sell on Amazon, so you can get an insider’s view of the whole picture:

PROs:

  • The first and most obvious plus about Amazon is, of course, the access they give you to millions of buyers every day. This really is the most important reason why sellers want to be on Amazon, it gives them access to such a broad base of customers.
  • Amazon takes the risk away from the merchant by processing the payments and assumes any risk against fraudulent transactions.
  • Benefit from advanced features. Features like product association to promote your product when shoppers are searching for similar products give you extra added exposure that you would not have elsewhere.
  • Marketplace feel brings in buyers and has a good reputation. Buyers are not worried about doing business with Amazon merchants; there is no hesitation, so there is a better conversion on sales.
  • Set up is easy. There is no website to build, and no platform or details to worry about.

CONs:

  • Their house, their rules; merchants must abide by the rules imposed by Amazon such as the return policy and the delivery times. Amazon has a 30 day return policy, so if there is a case where you normally don’t accept returns or has a smaller window; it must be extended to a 30 day return period. Each merchant sets their own delivery window, however if you have different products with different delivery times it is not possible to change delivery times for different products.
  • Although Amazon absorbs the risk and processes the payments for you, they take a percentage of the sales and they also only pay most merchants every two weeks. So in many cases, you need to wait to get your money every other week.
  • The benefit of being in a large merchant place that attracts buyers also means that it is very competitive, so be prepared to lower your price to a competitive level. If you cannot make a profit at the competitive pricing, it is good to figure that out ahead of time rather than wait until you took the time to set it up.
  • Amazon holds merchants responsible for the metrics and reviews. Overall, monitoring merchants for quality and customer service is a good thing, however for smaller merchants, only a few bad apples can spoil the pot, as they say.  Since buyers know that their reviews are important, unfortunately they can often hold this over merchant’s head in an effort to get what they want. One of the metrics monitored is email responses and Amazon wants you to respond to every email. One merchant interviewed said, “I can’t tell you how many times that turns into a bit of an issue, even if a buyer isn’t complaining or being argumentative about something, but the ‘thank you’ email, then I reply ‘you’re welcome’ to that email and they write ‘thank you again’. It just becomes tedious.” Just a few cancellations from buyers can ruin your metrics and put you in the “dog house” with Amazon, as one merchant compared it to.

Leave a Reply