Because Amazon is so dominant in eCommerce, selling on Amazon can feel like more of an obligation than a choice. However, sellers have faced severe drawbacks. The downsides of doing business with Amazon have led even some major brands to pull out of the site.
Your reasons for choosing Amazon Marketplace may be excellent, but you should be aware of the risks of selling on Amazon before you sign up.
Competition for the Buy Box is fierce and sometimes dirty.
The Buy Box is Amazon gold. It lets shoppers easily buy that item with a quick click, so the competition to win the Buy Box is fierce. If your product has the Buy Box, other sellers will sometimes resort to underhanded tactics to steal it from you. When that happens, dealing with the fallout can be time-consuming and expensive.
One dirty trick that sellers have reported is that they get a big sale, cleaning out their inventory for a product. Until they can restock, someone else gets the Buy Box. Then, the buyer who made the big purchase returns it, so you miss out on a busy sales season.
Amazon’s rules are strict and often enforced arbitrarily.
Amazon holds its sellers to strict standards. You need to have excellent reviews, few returns, and a track record of on-time delivery. The company takes customer complaints seriously, which can get sellers into trouble, even when they are in the right.
If you get banned or have a product delisted, it can be hard to restore your Amazon listings.For people whose primary business is to sell on Amazon, a ban can be devastating, and it can take months of effort to get a ban reversed.
Because of price competition and Amazon rules, it can be hard to make a profit.
The Amazon Marketplace exerts downward pressure on prices. That’s great for consumers, but it can be challenging for sellers trying to make a profit. You might find that you have to reduce your price on a popular product to retain the Buy Box, and that can squeeze your margins.
You’re competing with Amazon-branded products, and Amazon has all the data.
Amazon is a data company as much as an eCommerce company. It has data on everything that sells on its platform. The company can use that data for its own product development and marketing. Sellers with popular products might find their products in competition with items made and sold by Amazon. When that happens, Amazon items usually get the Buy Box.
You don’t have control over your own business.
When you sell something on Amazon, the customer is Amazon’s, not yours. While there are benefits of that—the customer has the confidence to buy your product because of Amazon’s customer service, for example—it’s also a lost opportunity. You don’t build customer relationships. Their loyalty is to Amazon, not to you.
And, as mentioned above, Amazon gets the final word on your Marketplace sales, which can put you out of business in an instant.
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