Is Amazon right for you?

Amazon has always been a popular platform. It is convenient and quick to open a store and has a wide customer base. It has always been an ideal sales platform for sellers. Every year, countless new sellers enter this battlefield.

Although Amazon registration is simple, sellers should not blindly make the decision to open a store for this reason. You need to plan carefully before doing business, and you need to first investigate whether this platform is suitable for you.

As the saying goes, every industry has its own rules, and Amazon has its own set of survival rules. It is not too late to make a decision after understanding the real situation of the platform.

Unless the brand strictly controls the distribution channels, it is common to see hundreds of sellers selling the same product. This situation leads to very fierce price competition, and sellers always sell products at extremely low profits in order to expand their advantages.

One of Amazon's advantages is that it can collect all the data about consumers' searches and purchases, but Amazon only discloses a small portion of this data to sellers.

This creates a huge advantage for Amazon. The platform's self-operated stores can purchase hot-selling products based on data and increase sales. The advantage in data makes it a no-brainer for self-operated stores to win the Buy Box.

Amazon has an advantage in self-operated pricing because it controls the prices of sellers. It is even willing to lose some profits on pricing. Sellers either lose sales because they cannot compete with Amazon on price, or they lose profits because the prices are too low.

Therefore, direct competition with Amazon’s own business is not conducive to the efficient and long-term development of the business.

FBA is a logistics and delivery service provided by Amazon to sellers. Sellers deliver products to FBA warehouses, and then Amazon is responsible for delivery.

FBA can ensure that consumers get products quickly, achieving Amazon's ultimate goal of providing consumers with the highest quality and smooth shopping experience. At the same time, fast delivery services can also increase sellers' conversion rates.

Amazon considers each order to be a one-time sale and does not allow sellers to conduct post-sale remarketing.

Amazon makes it clear that distribution is the responsibility of the brand. Amazon rarely removes unauthorized sellers, and anyone can sell products on the platform as long as the products are legal and do not pose a risk to customers.

Amazon requires every seller to reply to customers within 24 hours. Amazon has the most stringent requirements in the industry in terms of delivery time, confirmation emails, order cancellation rate, etc.

For non-exclusive distributors, it is difficult to gain a large market share unless they have a significant price advantage. For example, if there are 10 distributors selling the same product, then each distributor’s sales share will not exceed 10% - unless the price is lower than others. This can easily lead to price wars and low profits.

There is also the issue of authorization for dealers. Some gray dealers may thrive on Amazon, but once they are found by Amazon, it is difficult to prove their authorization. Even if there are formal documents, if too many buyers complain, sellers still have to spend a lot of effort to resolve them.

If a specific authorization is reached with the brand and other sellers are not allowed to sell, then the seller can easily obtain the Buy Box and will not have to worry about sales.

But a new problem has also arisen. It is now very convenient for brands to sell on Amazon. If the brand is willing to take on daily operations (or outsource them to agents), it can sell directly to consumers without going through distributors.

Amazon allows sellers to sell large or dangerous goods, but sellers also need to consider costs and FBA warehousing restrictions. When selling these products on Amazon, it is recommended that sellers do a research first to analyze whether it can bring economic benefits.

In the past five years, more and more Amazon sellers have begun to build their own brands. Combining product reviews and sales rankings, these sellers dig deep into the market gap and then launch their own brands to fill this gap.

If private label sellers can continuously innovate and optimize the promotion of new products, they can thrive on Amazon.

If a brand has gained a high level of popularity, then many Amazon consumers will definitely search for it on the platform. If they can't find it, they may turn to competitors. For such brands, Amazon is a very good sales channel. As long as you open an Amazon account, take good care of the listing content, and invest in some advertising, you can bring in a steady stream of sales.

After analyzing these business models on Amazon, we can see that no matter how big or small the brand is, as long as you own the brand's intellectual property rights and have your own product coding, you will have greater advantages in selling on Amazon than ordinary sellers.

The above are several factors that sellers should consider before entering Amazon. In future articles, we will introduce Amazon operation skills in more detail, so please continue to pay attention.