The elephant in the room when it comes to ecommerce is Amazon. The assumption among many merchants and their customers is that you have to be on Amazon or you are destroying your business. I seem to hear that all the time.
Actually, I’m not too fond of Amazon. There is a significant amount of business to be had on that platform, to be sure. And it does have some innovative technologies. But Amazon is disrespectful to resellers. It abuses its power and doesn’t work in the best interest of its customers.
Your strategy for Amazon depends on what your business looks like. In this post, I’ll share my company’s strategy with hopes that it helps you.
My company, Beardbrand, is brand-focused. We develop our own products and we are therefore able to set contracts that define who can sell our products on Amazon. We are working to ensure there isn’t a race to the bottom with pricing. If you are a pure retail play, or a drop shipper, Amazon will likely present a different business model.
Since we can define who can sell our products on Amazon, you may assume it would be us doing the selling. But that is not the case. We do have our products on the platform, however, via an exclusive relationship with Etailz, one of the top 25 retailers on Amazon — with significantly more clout than us.
We made the decision to partner with Etailz for a few reasons. We viewed managing our Amazon listings as a different type of business model and one that we were not highly competent at. We tried our hand on the platform and found a bit of success, but it turned out to be more of a distraction. To be successful on Amazon, we would need to spend more time. Rather than investing in a platform that wasn’t ours, we decided to spend time on our top skills: online retail and branding.
We treat Etailz like any of our retail partners. Thus, Amazon becomes part of our wholesale business, rather than an entirely new division within our business. Customers can still pick up our products there, but it won’t be at the high level of service that they can get directly on our website.
The strength of this strategy is our ability to create a unique relationship with our visitors, on our own website, rather than leveraging buyers on a third-party platform. Our primary store performs very well. Platforms like Amazon make up only a small percentage of our revenue.
The risk of building your business on Amazon is that at any moment it can change its policies, kick you off, or start competing directly with you. Every time I attend an ecommerce conference I hear these stories. But when you partner with a big player like Etailz, your opportunities grow. You can utilize the connections and power that a $50 million business brings to the platform.
From a cost standpoint, it may appear that we are losing margin by selling through another reseller. But when we accurately factor in time, energy, and marketing efforts required to run a successful Amazon store, we have found otherwise.
If you don’t have a wholesale division, my company’s strategy might not apply. But if you are already working with retailers, your operations could get a heck of a lot simpler.