I’ll admit…selling on Amazon can make selling online ‘easier’. You don’t have to set up an online store, build an email list, buy a URL, zero social media, you can take super plain pictures and not need creativity for lifestyle pics, and so much more.
You can set up your shop within minutes and be ready to take orders by the day's end.
There are seriously low barriers for anyone to start, but with low barriers to entry, there will be an ample supply of competitors.
Don't use selling on Amazon as your only revenue stream!
I’ve had a few things over there for a couple of years, but I only use this as a side gig and wouldn’t use it to hold all my eggs. In fact, I actually use this thought for any marketplace platform. eBay, deal sites, selling on Amazon, any of it. If you are only posting your products there, then wouldn’t you technically be working for that company?
They start making sales for you, you start depending on that money, then you become almost locked into the place forever…which wouldn’t be a bad thing if things stayed the same. But we all know what happens when we run our business in someone else's playground. They can change the rules instantly and you can lose everything in the blink of an eye. They don’t care how much you complain or moan or need the money to pay for food…you are the little guy in their eyes and in other words, the marketplace business owns you.
I have personally set up an Amazon store. You know I’m all about testing and figuring out the best way to make sales and showing you the results. Last year, I took one of my products and within a week had sales coming in. Great! I thought I was on a roll. Sound the drums.
Within 3 weeks my shop got shut down and to this day we still can not get any answers as to why it was shut down.
Jared (the hubby), tried for over 6 months before he gave up. Can you imagine if that happened to you after you’ve been running your business for years? I’m so glad this happened within 3 weeks to remind us that this is not the end all be all.
I had a good friend Bryan, this happened to him too. He was selling multi-millions each year and overnight, he lost everything. Amazon shut his store down for months before he could get it back up again. He eventually had to let go his entire staff go because they while they waited for Amazon to respond to his emails, he literally had his hands tied with tons of inventory and couldn’t make any sales off that platform.
In fact, it’s his mission right now to teach other Amazon sellers to sell on other platforms as Amazon is getting termed as an online business bully.
They literally don’t care about you or your business. Ever noticed how top-selling brands now have a knock off Amazon brand? Yup, there is that too. Sell enough and amazon itself can become your competition. That’s a fun thought.
Okay, rant over.
Here’s the thing. If you want to be successful in business, don’t put all your eggs in one basket. Sure you can sell on Amazon, but you need to be able to sell time and time again even if the iron fist comes down. Multiple sales channels and the ability to sell time and time again without the fear of losing everything because someone somewhere in the world hit ‘suspend’ on your account.
SO here are the vital reasons why you should NOT be selling on amazon alone.
I think this could be the mic drop right here and just walk away. Have you ever asked someone where they got something and they said ‘Amazon’? Yup, most people can’t remember the brand. They don’t know what shop on Amazon they got it from. They just got it from Amazon. The reminder that even our very own descriptions of where we purchased products are going back to ‘working for Amazon’ again.
People have a hard time transferring brand loyalty from Amazon. It’s all about Amazon and never about the shop owner.
Remember when you used to buy your favorite band's CD. You could listen to that cd over and over again and it cost around $15 bucks. Then let’s say that band went on a concert tour. You’d stay up all night just to get tickets…heck, even ‘sleep’ on the sidewalk to be first in line. Then you’d be willing to pay extra cash just to get better seats. You go into this knowing you’ll only hear them sing that song one time.
You’ve paid more, but get less playtime, and you’ll remember the name of that band for the rest of your life and even teach your kids their songs. (Yes, I may be recalling my New Kids On The Block story)
Why? An experience. Humans crave an experience.
They want to be part of something. Amazon ships a brown box. You have the ability to ship a ‘concert’. A way to give a human connection and gain lifelong customers.
I have shipped products for 10 years and every purchase I put in a Laffy Taffy. You know the sticky sugary stuff with a joke on the package? Why? Because something that small gave me true customers. They filmed videos of their kids running to the front porch tearing through the box to find the candy and laughing when they told the kids that they couldn't have it so they could eat it. I would send packages of Laffy Taffy to my top customers randomly with a thank you note and they raved about my store on social media.
They took pics of their favorite Laffy Taffy joke and posted on social about how it brightened their day. My signature bonus with all purchases was to ship that concert and it only took a bit of sugar and a joke to create a smile. It worked. Still to this day, as my first e-commerce business was sold, I’ve done it with every other business I own and still get pics of smiles and taffys from my customers.
Don’t want to do taffy? Check out my other post on what you can include in your packaging to give it that concert feel.
Oh and one other small note: You can’t put discounts for further purchases in your packaging. That is a no-go, no-way rule from Amazon. What a bummer as I put in a thank you/discount card to encourage repeat purchases in my packages and from just that one little added bonus…in one year I sold an extra $24K. (link to that post) Yes, 24K. I don’t take that lightly as that’s almost as much as I made teaching in an entire year! Oh and the extra sugar on top of that is that it made customers super happy to get a discount code and I didn’t have to pay advertising fees. Nope, not a one. It was more money in my pocket. Cha-ching. I can only imagine if someone would have told me this little trick 10 years ago! Use it…it’s a good one!
Okay, maybe a mic drop needs to happen again with this one too. Marketplaces like Amazon don’t allow you to get your customers' email. Yes, I know there are sneaky ways of doing it, but it increases your chance of getting shut down. I can’t even imagine what I’d do without my email lists. Have you ever dreamed of going to an atm and having it shoot out money into your hands?
Ya, this is what your email list can do. Last week, I sent out an email to my pillows business list. IT has about 23K contacts on there and we sold around $12k. Guess how much commission I paid out? Zero. Guess how many Amazon fees I paid out? Zero. Guess how much more I put in my pocket? A lot. Now, in all honesty, I do pay $150/month to hold my list, but I’ll pay $150/month all the months to make $12k. AND that is with one email. Just one.
Your email list will be one of your greatest assets. Feel free to grow your list and put that money in your pocket and not Amazons.
Cross sales, Upsales
Can I do a 3rd mic drop or is this when it gets annoying? Ug, all these things. ALL THE THINGS are the reasons why you have to have your own shop!
Ever noticed how Amazon cross-sells and even upsells for you, but it’s someone else's products?
I was in there the other day buying some brain vitamins (I’ll update you on those at some time in the future) and as I scrolled down to the comments, Amazon was trying to sell me on a competitor's product. What!?! Can you imagine going into Subway and having Ronald McDonald try and talk you into buying a burger?
Give me my space and let me sell…dang it!
In your own shop, you can 1000000% control that and even give upsells to increase YOUR order cart value and not someone else's.
Race to the bottom.
Remember the concert vs buying a cd from earlier? Do you remember where you got your cd from? I’m guessing probably not and it really didn’t matter as you were only looking for the cheapest price. You could have gotten it from the grocery store, the mall, or a bookstore. It only mattered about the price. Give it to me cheap! Well, welcome to the world of amazon. It’s a race to the bottom price. Which means your margins will be the first to suffer. You’ll notice amazon only allows white background images…which makes it extremely hard to brand your products with that thumbnail so everything looks the same. The only difference to the consumer…price.
Set up your own shop and your pictures can tell a story in a place where the only competition is you.
Oh and one more small fact that should lighten up your day. Amazon has bots that race over the products and if your competitor is selling it for less, you can lose out on the buy box and it goes straight to your competitor. Just like that and it will kill your sales.
Hijackers and copy cats
This was a daily occurrence for us. Hijackers (other shop owners) would come in and steal our pictures and list them for cheaper. We’d have to continually watch these and report them. We had to do this until we could get a branded account which still didn’t help 100%. We even had bad reviews based on the other vendors' crap products when it was sold by them.
If someone is stealing your products in the ‘real’ online world, there are many places you can report them and get them shut down for good. With Amazon, it was a daily wait game… and let’s not forget to mention that this was a huge time suck. Checking and reporting every single day. Ug.
Revenue vs Profit.
Have you ever been happy because you sold something…or a lot of something and then ran your numbers to show that you really just lost money. Ya, you paid for your customers to get their products? IT STINKS!! Ya, I’ve done it and it took that smiley face of mine and turned it into a frown lickety-split. On Amazon, their technology is super focused on your revenue vs showing you your profit. Trying to run numbers on just a single product can leave you to growing gray hair a few years earlier!
In fact, there are 3rd party sites that have been developed to help you read amazon numbers. Whaa?? Yes, you have to pay another site to help you read the numbers correctly.
Yes, I learned this the hard way. Man, I’m good at mistakes, but I’m also good at working hard not to repeat them!
We were selling a product over there for $14.99. Hog Heaven margins I thought…until I finally figured out that it was costing us a bit over $16 from some of the costs that amazon was charging and didn’t know until I ran the month end of the fees and advertising costs. Ouch. That one hurt.
PST…ebay is good at making the focus on the revenue as well.
The ratings game when selling on Amazon.
Sigh…this makes me sick, but did you know there are groups out there … REAL GROSS people that go buy products and leave bad reviews? Amazon is trying to crack down on this, but it’s still happening! Words like ‘fake or counterfeit’ are usually the words used when the ratings are malicious. When feelings are used then that is usually a real review.
Then lets flip to the complete opposite side. Leaving a bunch of 5-star reviews quickly on a site can get the site shut down as well. AND you guessed it, there are groups that do this too.
Your battle with ratings and responding quickly to feedback felt like I had a newborn baby to constantly attend too.
Your own site…you set the rules and one of them is that you don’t get banned.
You usually lose when selling on Amazon:
Amazon’s policies always favor the buyer in almost all cases. With one of our businesses, we personalize products. If the consumer buys it and decides they just don’t want it anymore then they can ask for a refund. Usually, with personalization, all sales are final because…ya know…people can pick some unusual combinations. That’s why we offer personalization…it’s personal to them alone and not others. So…we get the product back and end up having to donate it because of the combo of name and design, let’s just say wouldn’t be a big seller. We eat the costs. Not a fun game.
So to sum this all up. I know a few points were a bit of a rant, but I’m not saying to never sell on Amazon. What I am saying is If your eggs are all in one basket, whether it be Amazon, eBay, Etsy, Rakuten, or any market place you could be walking on thin ice and it’s one I don’t recommend walking on.
Set up your own store so you can:
Market in multiple locations
Build your ATM (…errrr email list)
Grow YOUR brand
Make your rules
Spoil your customers
Put that money in your pocket where it belongs. Why? Because You Can.
Want to know how to get started?
Watch my free masterclass on how learning just 3 things helped my daughters go from 0 to selling over $100k in 9 months and they did it on their own site…not one ounce of marketplace/Amazon anything.