The Pros and Cons of Expanding Your E-Commerce Business to Amazon

If you're thinking about expanding your e-commerce business to Amazon, there are a few things you should consider before making the decision. While selling on Amazon can have some great benefits, like access to a huge target audience, there are also some potential drawbacks, like having difficulty building your own brand loyalty on another branded platform.

But with a little planning and preparation, selling on Amazon can be a great way to grow your business. Below, we explore the pros and cons and some tips for getting started.

Why Sell On Amazon?

There are many reasons to sell on Amazon, depending on what kind of products you sell and how you want to run your business. Below, we list some of the biggest perks of having an Amazon storefront for sellers:

A Larger Audience

When you sell on Amazon, your products are displayed not only on Amazon's website but also on the sites of its millions of third-party sellers. This gives you a huge potential customer base that you wouldn't have access to if you were selling only on your own website.

Get Started Fast

Another advantage of selling on Amazon is that you can get started quickly. Unlike setting up an e-commerce site yourself, which can be a time-consuming and expensive process, selling on Amazon just requires that you create a seller account and start listing your products. And since Amazon is such a well-established platform, there's already built-in demand for many types of products.

Integrates Easily With Other Platforms

If you're already selling on another e-commerce platform, like Shopify or BigCommerce, then you'll be happy to know that it's easy to integrate your sales with Amazon. There are various apps and plugins available that will allow you to sync your inventory and orders between platforms, so you don't have to worry about managing two separate systems.

No Restrictions On Selling On Other Platforms

Unlike some other marketplaces, such as eBay or Etsy, Amazon doesn't place any restrictions on what other platforms sellers can use. So if you want to sell on multiple marketplaces or keep your own e-commerce site running alongside Amazon, nothing is stopping you from doing so.

Potential Drawbacks For Sellers

Unfortunately, like with any platform, there are some potential caveats. Depending on what products you sell, there may be more or fewer drawbacks with owning and operating an Amazon store, including but not limited to:

Stiff Competition

As the largest e-commerce platform in the world, Amazon is no stranger to competition – it's one of the main reasons why some sellers choose not to use Amazon. With over 2 million active sellers, plus Amazon-branded products, there's a lot of competition for buyers’ attention and dollars.

Sellers must be strategic when it comes to pricing, shipping, and marketing to stand out from the crowd. Additionally, because Amazon favors its own products over those of 3rd-party sellers in ads and search listings, many sellers feel they are at a disadvantage.

Limited Opportunities For Brand Loyalty

Another potential drawback of selling on Amazon is that there are limited opportunities for building brand loyalty. Because buyers can purchase products from any number of sellers on the platform, it can be difficult to turn them into loyal customers.

Some ways to overcome this challenge include offering competitive prices, providing exceptional customer service, and ensuring fast and reliable shipping times. By going above and beyond for your customers, you can increase the chances that they’ll remember your brand the next time they need to make a purchase.

Other Things to Think About

This list certainly isn’t comprehensive and there are dozens of things you can explore before getting started if you want to prepare ahead of time. Here are some other tips to keep in mind as you decide if Amazon expansion is right for you:

Is Amazon the Right Place For Your Business or Products?

First, think about whether or not Amazon is the right place for your business itself. If you make handmade, eclectic, or one-of-a-kind pieces, these might not do as well on Amazon as they might on a platform like Etsy, eBay, or even your own Shopify storefront.

On the other hand, kitchen gadgets and small, useful items tend to do very well on Amazon, so if some or all of your products fall into these categories, the e-commerce giant might be a good fit.

Products that are sold on Amazon need to be small, lightweight, and unbreakable. It's also best if they're not perishable and don't require any special care. Another thing to keep in mind is that certain categories are restricted on Amazon. These include but aren't limited to alcohol, drugs and pharmaceuticals, offensive material, weapons and explosives, and live animals.

Do You Have a Plan for Shipping & Fulfillment?

Expanding your business to Amazon can be a costly endeavor. In addition to the cost of listing your products, you'll also need to factor in shipping and fulfillment expenses. And if you're looking to expand internationally, there are even more costs to consider.

To offset some of these costs, you might want to consider using Fulfillment by Amazon (FBA). With this program, Amazon will store your products in their warehouses and handle all of the shipping and fulfillment for you. However, there is a fee per product for this service, which can add up quickly if you have a lot of products.

Another option is to ship your products yourself. This can be more expensive and time-consuming than using FBA, but it gives you more control over the process. And if you're expanding internationally, it might be your only option since FBA isn't available in all countries.

Can You Invest Money Into Marketing?

Marketing is an important part of any e-commerce business, but it's especially important when expanding to new platforms like Amazon. Customers on Amazon are bombarded with choices and it can be difficult to stand out from the crowd without investing in good digital marketing, like quality graphics and content.

Make sure you have the budget now and in the future to dedicate a portion to advertising your products on Amazon and in other places. If your marketing budget is too slim, you’ll likely get significantly less traffic to your storefront, which can essentially negate all the work you did to get your shop set up.

The Bottom Line

As you can see, there are many pros and cons to expanding your e-commerce business to Amazon. Whether you own a Shopify store already or are looking to open up your first shop on Amazon, it's important to carefully consider whether or not this is the right platform for your specific business, the products you sell, the marketing budget you have to work with, etc.

If you’re not well-prepared with knowledge of what you can do to set yourself up for success, you’re certainly setting yourself up for failure. These tips are just a start, but everyone starts somewhere. With perseverance, dedication, and effort, you can position your Amazon store for the best possible results.

You can try listing just a few items on Amazon to see how well they do, or you can run ad campaigns for a few weeks to see how well they perform. If your test listings and ads do well, you can confidently start putting more money into building your storefront. Depending on the items you sell and the type of business you want to run, Amazon may be the perfect fit.