5 Amazon Cons for Ecommerce Businesses to Know About

When it comes to ecommerce, there is no denying the power of Amazon. With billions of dollars in sales and millions of customers worldwide, it is easy to see why so many businesses choose to sell on the platform. However, Amazon is not without its drawbacks. In this article, we will take a closer look at the five biggest cons of selling on Amazon that ecommerce businesses need to be aware of.

Amazon’s Dominance in the Ecommerce Landscape

Amazon’s dominance in the ecommerce landscape is both a blessing and a curse. On one hand, it means that there are millions of potential customers on the platform. On the other hand, it means that there is a lot of competition. With so many sellers vying for attention, it can be difficult to stand out. In addition, Amazon’s algorithm is designed to favor products that are already popular, making it harder for new sellers to gain traction.

Despite the challenges, many sellers still choose to sell on Amazon due to its massive customer base and the convenience it offers to shoppers. However, it’s important for sellers to diversify their sales channels and not rely solely on Amazon. This can include selling on other ecommerce platforms, building their own website, or even selling in brick-and-mortar stores. By diversifying, sellers can reduce their dependence on Amazon and potentially reach new customers.

High Competition on Amazon Marketplace

As mentioned, competition is fierce on the Amazon Marketplace. This means that sellers need to constantly be optimizing their product pages, advertising, and pricing strategies in order to stay ahead of the pack. In addition, the high competition means that profit margins can be thin, particularly for smaller businesses that cannot take advantage of economies of scale.

One way that sellers can differentiate themselves from the competition is by offering exceptional customer service. This includes responding promptly to customer inquiries and complaints, providing detailed product information, and offering hassle-free returns. By providing a positive customer experience, sellers can build a loyal customer base and stand out in a crowded marketplace.

Another factor that contributes to the high competition on Amazon is the ease of entry into the marketplace. Anyone can create a seller account and start selling products, which means that there is a large number of sellers offering similar products. However, this also means that there is a lot of potential for new sellers to enter the market and succeed with the right strategy and execution.

Amazon Fees and Commissions

Amazon charges a variety of fees and commissions for sellers on its platform. These include referral fees, fulfillment fees, and subscription fees for certain programs. While these fees are designed to cover the cost of using the platform, they can also eat into sellers’ profit margins. In addition, the fees can be complex and difficult to understand, particularly for newer sellers.

Referral fees are charged by Amazon when a seller makes a sale through the platform. The fee is a percentage of the sale price and varies depending on the category of the product being sold. For example, referral fees for electronics are higher than those for books. It’s important for sellers to factor in these fees when setting their prices to ensure they are still making a profit.

Fulfillment fees are charged by Amazon for handling and shipping products to customers. These fees vary depending on the size and weight of the product, as well as the shipping method chosen by the customer. Amazon offers two fulfillment options: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). FBA fees are generally higher, but they also offer the benefit of Amazon handling all aspects of shipping and customer service.

Limited Control over Product Pages

One of the biggest drawbacks of selling on Amazon is the limited control that sellers have over their product pages. While Amazon provides a range of tools for optimizing product pages, ultimately the look and feel of the page is determined by Amazon’s design. This means that sellers have less control over branding and product positioning than they might on their own website.

Additionally, Amazon has strict guidelines for product page content, which can limit the amount of information that sellers can include. This can be frustrating for sellers who want to provide detailed product descriptions or highlight unique features. However, it is important to follow these guidelines to ensure that the product page is optimized for search and meets Amazon’s standards.

Restrictions on Customer Communication and Data

Another major drawback of selling on Amazon is the restrictions on customer communication and data. Amazon prohibits sellers from contacting customers directly, which can make it difficult to build a loyal customer base. In addition, Amazon owns all of the data on customer behavior and purchasing habits, leaving sellers in the dark about key insights that they could use to improve their businesses.

Furthermore, Amazon’s strict policies on customer communication can also lead to frustration and confusion for both sellers and customers. If a customer has a question or concern about a product, they must go through Amazon’s messaging system, which can be slow and impersonal. This can result in negative reviews or even lost sales if the customer decides to purchase from a different seller who is more responsive.

Another issue with Amazon’s control over customer data is that it can limit a seller’s ability to expand their business beyond the Amazon platform. Without access to customer information, it can be difficult to create targeted marketing campaigns or develop new products that meet the needs of their customer base. This can ultimately hinder a seller’s growth and limit their potential for success.

Counterfeit Products and Brand Protection Issues on Amazon

Counterfeit products and brand protection are ongoing issues for sellers on Amazon. With so many sellers and products on the platform, it can be difficult to police infringement and counterfeit activity. This can damage the reputations of legitimate sellers and harm their sales. In addition, it can be time-consuming and expensive for sellers to protect their brand rights on the platform.

One of the challenges for sellers is that counterfeiters are becoming increasingly sophisticated in their methods. They may use high-quality packaging and product images to make their products appear legitimate. Some may even use fake reviews to boost their ratings and deceive customers. This makes it even harder for sellers to identify and report counterfeit activity.

Difficulty in Building a Strong Brand Identity on Amazon

Similarly, building a strong brand identity can be challenging on Amazon. With limited control over product pages and a lack of direct communication with customers, it can be difficult to differentiate a brand from its competitors. This can make it harder to build a loyal customer base and increase sales over the long term.

One way to overcome this challenge is by utilizing Amazon’s brand registry program. This program allows brand owners to have more control over their product listings and access to additional marketing tools. By registering your brand, you can also protect your intellectual property and prevent counterfeit products from being sold under your brand name. However, the process of registering can be time-consuming and requires meeting certain eligibility criteria.

Risk of Being Dependent Solely on Amazon Sales

One of the biggest risks of selling on Amazon is the potential to become overly dependent on the platform for sales. While Amazon can be a great sales channel, it is important for ecommerce businesses to diversify their sales channels in order to avoid being too reliant on one platform. This can involve building a website, selling on other marketplaces, and investing in advertising outside of Amazon.

Another factor to consider is the potential for Amazon to change their policies or algorithms, which can greatly impact a seller’s sales and visibility on the platform. For example, if Amazon decides to prioritize their own private label products over third-party sellers, it could greatly affect the sales of those sellers. Therefore, it is important for sellers to stay up-to-date on any changes or updates from Amazon and adjust their strategies accordingly.

Alternatives to Selling on Amazon for Ecommerce Businesses

For businesses that are looking to diversify their sales channels, there are a variety of alternatives to selling on Amazon. These can include selling on other marketplaces like eBay or Walmart, building a website and driving traffic through advertising, or even setting up a brick-and-mortar store. Each of these options has its own pros and cons, and it is important for sellers to carefully evaluate their options before making a decision.

Another alternative to selling on Amazon is to partner with other businesses or influencers to promote your products. This can be done through affiliate marketing, where you offer a commission to partners who refer customers to your website or marketplace. You can also collaborate with influencers in your industry to showcase your products to their followers, which can help increase brand awareness and drive sales. However, it is important to choose partners carefully and ensure that their values align with your brand to maintain authenticity and credibility.

Strategies to Overcome the Cons of Selling on Amazon

For businesses that have decided to continue selling on Amazon, there are a variety of strategies that can help to overcome the platform’s cons. These can include investing in advertising and marketing outside of Amazon, building a strong brand identity through social media and other channels, and optimizing product pages to rank higher in Amazon’s algorithm. In addition, it is important for sellers to carefully manage their inventory and pricing to maximize profit margins.

Another strategy that can be effective for sellers on Amazon is to diversify their sales channels. This can involve selling on other online marketplaces, such as eBay or Walmart, or even creating their own e-commerce website. By spreading their sales across multiple channels, businesses can reduce their reliance on Amazon and mitigate the risks associated with selling on a single platform.

Finally, it is important for sellers to stay up-to-date with Amazon’s policies and regulations. Amazon frequently updates its policies, and failure to comply with these policies can result in account suspension or even termination. By staying informed and following Amazon’s guidelines, sellers can avoid costly mistakes and maintain a successful presence on the platform.

Preparing your Business for Selling on Amazon

Before selling on Amazon, it is important for businesses to carefully prepare. This can involve researching Amazon’s rules and policies, setting up a professional seller account, and optimizing product listings and pricing. In addition, it is important for sellers to have a clear understanding of their inventory management and fulfillment strategies.

Legal Considerations for Selling on Amazon

Finally, sellers also need to be aware of the legal considerations of selling on Amazon. This can include complying with local regulations and taxes, protecting intellectual property rights, and managing any disputes that arise with customers.

Overall, while there are certainly cons to selling on Amazon, for many ecommerce businesses the platform remains a valuable sales channel. By carefully evaluating the pros and cons, and implementing effective strategies, sellers can successfully navigate the challenges of selling on Amazon and build a profitable ecommerce business.