There are many reasons brands and businesses should sell on Amazon. For starters, half of America’s households have an Amazon Prime membership. I’m not suggesting you shouldn’t sell on Amazon. You probably should. But you shouldn’t sell only on Amazon.
Let’s take a look at the other side of the multi-billion dollar Amazon coin. Here are 6 reasons that e-commerce brands and businesses should diversify away from Amazon and also sell on other marketplaces.
1. Amazon competes against its sellers
Seller beware. While Amazon provides a sales channel for sellers, they should be aware that Amazon is analyzing the pricing and demand data of your products. If there is an opportunity for them to make more profit by manufacturing a similar product themselves, they may do just that.
“While sellers may be impressed by the size and sophistication of Amazon’s marketplace operation, sellers need to remember that the marketplace exists to serve Amazon’s goals, not sellers’ goals. Too many sellers have told me that they misunderstood that Amazon would “partner” with them, only to find out that Amazon’s goals do not always align with sellers’ goals.”
2. You’re missing out on half of the US households who are NOT Amazon Prime members
Many lower income consumers don’t care about getting products in 2 days. They are value shoppers and look to avoid spending on services such as faster shipping. The lowest penetration is amongst families with household incomes below $50,000.
3. Make a mistake and Amazon can (and will) shut you down
By putting all of your sales into one channel, you are creating a single point of failure in your business. This adds substantial risk to your business. As CJ Rosenbaum says:
“When you are conducting an online business through Amazon, an account suspension brings your entire operation to a halt. Amazon Suspensions can happen at any time — even with just one complaint from a buyer.”
4. Amazon fulfillment is expensive
5. Be a bigger fish in a smaller pond
Emerging marketplaces such as Tophatter offer a much greater opportunity to scale your volume. You’ll be one of a smaller number of sellers instead of one of millions.
6. Get 1–1 account management and support
Amazon is simply too large to provide 1–1 account management to their sellers. That’s not the case on emerging marketplaces. High volume sellers on Amazon get support and guidance on how to get started and scale their volume quickly.
Amazon isn’t the only marketplace in town. Dedicate a member of your team to explore selling on other marketplaces. Top sellers on Tophatter do $5 million — $10 million in sales per year. It’s also a very different value proposition for buyers. On Amazon, shoppers go to search for specific items. On Tophatter, they don’t know exactly what they want.
They have purchasing intent, but are coming to discover new items (jewelry, electronics, apparel, home, beauty, and more) they haven’t seen before. Sign up for free and add your items on Tophatter today. There’s no cost to list and you pay only when you sell.
Are you an Amazon seller? Come meet the Tophatter team at PROSPER Show March 13–14 in Las Vegas, baby. Get your ticket here.
Find out more about Tophatter. Sign up and start selling here.
Tophatter Inc was founded by Ashvin Kumar (CEO) and Chris Estreich (CTO), and launched in January 2012. The company has raised $35M to date from Goodwater Capital, CRV, and August Capital. The company has 75 employees globally, and is actively hiring at its offices in Silicon Valley and Shanghai. For more information about Tophatter, please visit: http://www.tophatter.com/about.
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