My wife and I started our online store back in 2007 and ever since our first year when we made 100K, we’ve been growing in the double and triple digits.
But here’s the thing. With every passing year, we are finding it more and more difficult to maintain our double digit growth. Don’t get me wrong. Our store makes plenty of money and I’m really happy with where we are at.
But there’s always a part of me that wants to grow it even more. In addition, I often feel pressure to show positive growth because of this blog:) I know it shouldn’t be that way but I do feel it.
Anyway, my wife and I have been exploring various options for growing our ecommerce store. And in the grand scheme of things, there aren’t that many options to choose from.
One, you can sell new and different products to open up new markets. In fact, this was one of the main reasons why we attended the Canton Fair this year after a long hiatus.
Two, you can sell more to your existing customers which is why we’ve been focusing more efforts on email and content marketing this past year.
Three, you can find new marketplaces and new customer bases that you haven’t tapped into yet.
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Enter Amazon
For the longest time, I’ve resisted selling on Amazon. Why? It’s because I didn’t want Amazon to erode our market share. I didn’t want our store to be commoditized along with the rest of the listings on Amazon. And most importantly, I didn’t want to succumb to the devil:)
But recently, my friends Lars and Kenric pushed me over the hump and finally convinced me to start listing our goods on Amazon and our results thus far have been pretty stellar.
In our first week of listing just 3 products on Amazon, we sold over 60 units in a matter of 8 days which blew my mind! Here we were as a brand new seller, listing completely new products with 0 reviews, and our products sold like hot cakes!
Here’s the best part. Did selling on Amazon cannibalize our regular online store sales? Not at all. In fact, our main online store grew around 25% in sales during the same period.
In the grand scheme of things, Amazon is just another marketplace. Some people like to shop on Amazon and some people like to search for products online.
And as I mentioned in my last post, the best way to future proof your shop and grow your sales is to sell your goods in as many different marketplaces as possible.
Going forward, selling on Amazon will be a huge growth driver for our online store in the coming year. Thanks Lars and Kenric!
Should Everyone Sell On Amazon?
So based on what I just told you, should you all just go out and start selling on Amazon? Not necessarily. And you DEFINITELY should never abandon your efforts on your own website!
Amazon.com should be used as another channel for your business while you focus your efforts on building up a property that you own and control.
Ultimately, your goal should be to establish a long term brand and use Amazon to further that goal. So with that in mind, your ability to be successful on Amazon will depend on your products and your margins.
First off, if you are dropshipping or selling other people’s goods, selling on Amazon will eventually result in a race to the bottom in terms of pricing.
When a lot of shopowners try to sell identical goods and fight for the buy box, the only real way you can compete is on price.
Sure, there are some ways around this like creating special bundles for your goods or offering freebies with every purchase but in the long run, price will be your only leverage which never ends well.
Therefore, if you are in a high competition niche with low margins and ZERO value add, Amazon is probably not the place for you. In fact, if you have ZERO value add, you probably shouldn’t be running your business in the first place.
The Ideal Amazon Scenario
Because of the high selling fees that Amazon charges, you pretty much need to have high margins (at least >50% and preferably >66%) in order to be successful.
Therefore, the best way to take advantage of Amazon is by selling your own branded products. In fact, I would strongly argue that selling your own branded products is the best way to ensure that your online business has a long term future irrespective of Amazon.
Either that or you must establish some sort of exclusive buyer relationship with your vendor that nets you an advantage.
Is selling or creating your own branded products more difficult to do? Yes, it’s a little more work!
But at some point, you have to ask yourself whether you want to create a long term sustainable business versus making a couple of extra bucks with straight arbitrage.
Is Selling On Amazon Too Easy?
My immediate success on Amazon made me excited and worried at the same time. When a brand new seller can get a simple listing up and make money right away, alarm bells usually start ringing in my head.
Ever since I’ve been contemplating selling on Amazon, I’ve seen many new courses and strategies pop up on how to “game” the Amazon system.
And I’m sure that these strategies do in fact work. But will they work in the long run? Probably not. I’ve been seeing a lot of junk listings on Amazon and they are already starting to crack down on crappy sellers.
In fact, the Amazon of today kind of reminds me of EBay in 2005 when you could practically throw anything up and it would sell.
In the long run, I’m willing to bet that Amazon will start shutting down entire categories and screen new sellers much more closely to make sure that they have legit businesses.
And eventually, the market will become saturated with sellers for practically every type of product imaginable. Your main defense will be your brand.
Selling On Amazon Is A Necessary Evil
Amazon is evil. You must follow their rules and you have no control. But the fact is that lots of people shop there. So if you have your own branded products, should you be selling on Amazon? Hell yeah!
In fact, selling on Amazon is a great way to start out whether it be to validate your niche or to make some sales until your own branded website kicks into high gear.
I was skeptical at first but now I’m a believer. In fact, my experience with Amazon is one of the reasons why I will be putting together comprehensive Amazon tutorials for my online store course in the coming year.
Bottom line? It is always in your best interests to have your own website and brand. But there’s lots of money to be made by taking advantage of the different marketplaces.
While you are selling on Amazon, you should simultaneously be ramping up on SEO, CSE traffic, SEM and email marketing for your own website with the expectation that Amazon could ban you any day.
