Beware the Dangers of Selling on Amazon Marketplace – Weekly Loop #09

 

Weekly Loop #09

Beware the Dangers of Selling on Amazon Marketplace

There are numerous stories about online entrepreneurs’ success selling on the Amazon Marketplace. For many it really has been the opportunity of a lifetime. That’s not the case for for many businesses including brick-and-mortar stores that have been forced to close due to Amazon lowering prices much like Walmart did to small towns in decades.

This isn’t to argue that Amazon should look out for those businesses; consumers spending choices is the ultimate difference-maker. Instead, it shows how Amazon rightfully looks out for Amazon-first. With over 3 million sellers, they rely on no single-seller making nearly every sellers entirely replaceable.

There are any number of dangers of selling on Amazon, none of which can be completely controlled. Here are the first 7 that come to mind:

  1. Competitors undercutting prices with nearly identical keywords/titles
  2. Hijacked listings where even branded products are listed by other sellers.
  3. Fake negative reviews. It happens and it’s nearly impossible to prove.
  4. Fake positive reviews. Amazon has tried to crack down and many sellers still continue to pump up listings with incentivized reviews.
  5. Changing FBA & commission fees. Amazon raises rates occasionally. Sellers may not like it but not much can be done when relying upon them for nearly the entire process and opportunity.
  6. Unjust account/product suspensions. If a review triggers the wrong keyword, or someone reports an item as counterfeit, your product and or account may be at risk. If you’ve taken the right steps, you should be able to get ti back but there’s no telling how long it may take.
  7. Copycats. If you achieve much success on Amazon, you better be ready for competitors. Without any direct connection to customers, it doesn’t take much to choose a competitor with a slightly lower price next time.

This is just a partial list of the problems of relying on Amazon – or nearly any other third-party marketplace for a significant portion of sales. There are ways to control and mitigate the issues with careful monitoring and maintenance.

Another solution is to build a thriving standalone ecommerce shop for long-term success with direct connections to customers.It’s not easy, as the big ecommerce sites take a growing portion of online sales.

However, as brick-and-mortar-retail has shown, some businesses are thriving by offering something unique to their customers with which big box reatilers and marketplaces can’t compete. Whether it’s personal or local service, product knowledge, relationships, a bigger mission, or something, the best businesses have found a way to thrive online.

Third-party marketplaces like Amazon provide a lot of opportunity – and a lot of potential problems. For long term success, build a thriving standalone ecommerec shop. What’s one of your favorite standalone ecommerce shops that has gone against the trend of big-box and marketplace shopping?

Recommended Links

Each week, we read and watch articles, blog posts, videos, infographics, books and more related to ecommerce. We share some of our favorites links on Twitter, Facebook, and LinkedIn.

In our weekly updates, we pare the links down to our favorite seven links from the past week.

Have a suggestion of something to include? Get in touch.

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“we’ve put together this list of business name generator tools to make sure your brand gets off on the right foot”

Find Your Name: 10 Business Name Generators to Help You Create Your Brand
Mark Hayes Shopify Blog – Company

“Remember, while these business name generators are great tools to start with, they’re no replacement for intuition, taste, and creativity—the human touch. Rather, use these tools to get inspiration for your own ideas, and build off of what the generators present to you.
If you have any tools that you like and we may have missed here, let us know in the comments.”1

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“Shopify Inc. banned the sale of some semi-automatic firearms and 3D-printed guns.”

Shopify Bans Sale of Some Semi-Automatic Firearms, 3D-Printed Guns
Bloomberg Fortune

“The move is a new indication of how Shopify, whose stock has rocketed more than 700 percent since its 2015 initial public offering, is grappling with the responsibility that comes with being the internet’s dominant platform for small merchants looking to sell online. By banning weapons that are otherwise legal to buy, the company is pushing into one of the biggest political and cultural fights in the U.S.”2

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“So The Sill doesn’t just sell you a plant (along with basic care instructions). It also allows you to ask questions of the company’s plant experts”

Plant-focused startup The Sill raises $5M
Anthony Ha eCommerce – TechCrunch

“So The Sill doesn’t just sell you a plant (along with basic care instructions). It also allows you to ask questions of the company’s plant experts”3

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“Each retailer sets their own “cashback” (cryptoback?) rate, and that BTC reward is then moved into a Lolli wallet.”

Lolli launches to give you free Bitcoin while you shop
Danny Crichton eCommerce – TechCrunch

“In many ways, Lolli is symmetrical to another recently launched loyalty app called Bumped. Bumped partners with retailers to drive loyalty, but instead of handing out BTC, it hands out free shares (or microshares) of the stock of the company a consumer just shopped at. The idea there, as with Lolli, is that few consumers own stock these days, and rewards and loyalty can be a mechanism to drive shopping behavior while also providing an initial financial portfolio for consumers.”4

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“we’re going to discuss a number of different ecommerce pricing strategies you can use to help your business succeed.”

Ecommerce Pricing Strategies for Success: How to Price Your Products
Burc Tanir Bootstrapping Ecommerce

“As the saying goes: No one likes to be sold to, but everyone likes to buy. What this means is that even if you’re looking for a product to buy online, everything inside you is looking for reasons why you shouldn’t buy the product.
You can overcome this same feeling your customers likely have when shopping on your site by adopting a range of psychological pricing strategies. There are many different psychological pricing strategies you can adopt, but let’s focus on one popular one: Charm Pricing or “Number 9 Pricing.””5

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“Amazon – the bloated retail goliath of the modern era; hell-bent to destroy all that the small business owner holds dear.”

3 Ways Small Businesses Can Fight with Amazon in Ecommerce
Matt Dho Word-of-Mouth and Referral Marketing Blog

“This is especially true when that small business owner wants or needs to sell products online. How can one compete against the company that sells everything, for less than you can, and ships it for free, faster than you can?It’s impossible, right?”6

“the company said it had nearly 1 million (935,772) active consumers, with that figure growing 43.6 percent over the year.”

Farfetch files for IPO to trade on NYSE as FTCH; has nearly 1M active users of its luxury goods marketplace
Ingrid Lunden eCommerce – TechCrunch

” various reports have pegged the listing to come between $6 billion valuation (CNBC), or as high as $8.37 billion after it lists (Pitchbook).
Either number is a huge boost for the startup. For some context, the last publicly disclosed valuation for Farfetch was in 2016 when it raised at a $1.6 billion valuation.”7

  1. https://www.shopify.com/blogs/blog/name-generators-to-create-your-brand
  2. http://fortune.com/2018/08/15/shopify-bans-3d-printed-guns/
  3. https://techcrunch.com/2018/08/22/plant-focused-startup-the-sill-raises-5m/
  4. https://techcrunch.com/2018/08/22/lolli-launches-to-give-you-free-bitcoin-while-you-shop/
  5. https://bootstrappingecommerce.com/pricing-strategies/
  6. https://www.referralcandy.com/blog/small-businesses-can-fight-amazon/
  7. https://techcrunch.com/2018/08/20/farfetch-files-for-ipo-to-trade-on-nyse-as-ftch-has-nearly-1b-active-users-of-its-luxury-goods-marketplace/
  8. Photo by Jordan Koons on Unsplash

Andrew @ EcomLoop
Are you looking to start or grow a standalone ecommerce shop? I help independent businesses achieve success on the Shopify and WooCommerce platforms. As the owner of multiple ecommerce businesses, I've had the opportunity to get experience with nearly every aspect of the ecommerce industry. I started EcomLoop to help other quality independent businesses using my knowledge and experience. To stay on top of new ecommerce developments, I publish The EcomLoop Weekly Loop, a blog and email newsletter with original thoughts and curated links to help independent businesses improve their businesses.