Merchants: Amazon is not Your Friend

Many ecommerce businesses are far too reliant on Amazon. It’s never good to have too much revenue coming from a single customer, and that’s essentially what many merchants have done by building businesses entirely on the Amazon Marketplace.

Every week, there are listings of Amazon businesses for sale with 6, 7, or even 8 digit annual sales that have a minimal website, no email list, and get over 95% of sales from Amazon. Many of them literally get all sales from Amazon. While purchases may come from hundreds or even thousands of customers, the truth is that Amazon is ultimately in control and could shut off access at any time. Without the Amazon platform, these businesses have no connection to past customers and virtually no other sales channels.

With Amazon taking a increasing portion of new ecommerce sales and marketplace sellers continuing to grow their share of Amazon sales, an argument can be made for concentrating on the platform where consumers increasingly spend their money. Certainly, many sellers can attribute enormous growth in their ecommerce businesses to the Amazon marketplace. The problem comes when, rightly or wrongly, Amazon changes their rules, adds fees, removes a listing, or even suspends an account entirely.

There are plenty of stories from sellers about how they’ve been treated unfairly by Amazon and the dangers of the marketplace. In some cases, the sellers had it coming. In other cases, sellers may have been the victim of a competitors’ dirty tactic, accidentally flagged by a bot, or just unlucky. Typically, the issue can be addressed and everything gets fixed, though there’s no guarantee. Regardless, the result is a loss of sales for at least a period of time.

Amazon’s goal is to be customer-centric and they do not appear to have much interest in helping sellers thrive, beyond helping their own sales. With literally millions of sellers, and a general commodification of products, sellers have seemingly little leverage. Customers shop Amazon.com out of convenience and in most cases, there are multiple products that fit their needs. Amazon can suspend a listing and still get the sale with the next best listing. The brand or merchant makes no difference to Amazon.

With shoppers increasingly turning to Amazon, it’s difficult to build a direct connection with customers. For the long term success of an ecommerce business, it’s crucial to establish channels beyond the Amazon marketplace. Give customers a reason to connect or buy direct from your business. Become less reliant on the Amazon Marketplace because Amazon is not your friend.

 

 

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.