The Pros and Cons of Becoming a Private Amazon Seller

Using an app to start an Amazon seller account has its pros and cons. On the one hand, you can outsource all of your storage, shipping, and customer service. But that comes with its disadvantages. Because you outsource these components, customers associate key components of their buying decision with Amazon instead of your business.

For example, consumers associate the timely customer response and speedy delivery with Amazon. Your name also doesn’t appear on the packaging they receive; Amazon’s does. However, because Amazon takes care of your shipping and they have international brand recognition, you can expand into international markets far easier than if you create an eCommerce website.

This article discusses the pros and cons of becoming a private Amazon seller. Choosing whether to use Amazon for your product largely comes down to whether your profit margins are large enough to withstand the cut Amazon takes from each purchase. You also have to decide whether you want to handle the details that come with storage and shipping.

Pro: It’s Easy to Start As a Private Amazon Seller

Getting started in Amazon is simpler than designing and launching a website, figuring out product storage, and handling inventory on your own. Amazon FBA simplifies the inventory, storage, shipping, and customer service aspects of your business. Granted, it’s easier to launch on Amazon for some products than others, the advantages of easy initiation are still there.

However, don’t let the easy start fool you. It can be too easy to start selling on Amazon. Imposters can flood the market and undercut your pricing, luring your customers away with cheaper products. Counterfeits are everywhere and “listing hijackers” are on the rise.

Con: Other Sellers Can Steal Your Listings

“Copycats”- a word originating from China referring to charlatans who produce knock-off products based around high-performing brands- are rampant on Amazon. These imposter business people list counterfeit products under legitimate ASIN (item numbers) and steal business from legitimate sellers. Additionally, the negative reviews affect legitimate sellers.

Amazon is conducting efforts to eliminate counterfeits and hijacking through its Brand Central registry, but the efforts still aren’t up to par. Forbes also reports that third-party sellers are being bought up quickly.

Pro: It’s an Excellent Opportunity for Companies With Unique Products and Adequate Profit Margins

Becoming a private Amazon seller has tremendous potential for small business owners who don’t have the resources of larger companies. It’s especially beneficial for those businesses that have exclusive products. To start, there are tons of Amazon seller tools that make the storage and inventory process easier for smaller businesses.

The Amazon Marketplace is user-friendly and it empowers these businesses to market their products and control their destiny. It eliminates the logistics and lets business owners focus on what matters most: the product and the experience it brings customers.

Con: Amazon Can Eat Into Your Profits

Companies that manufacture and market their products have to institute rigid pricing control measures to ensure they don’t lose too much of their profit to Amazon. If you sell your products at low-markups, it’s challenging to make a profit using Amazon because they take some of your margins.

The flip side of this scenario is that companies who decide to forego the Amazon route run into a different conundrum. They run the risk of someone buying their products wholesale and selling them for a higher markup on Amazon.

These instances identify the need for businesses to closely examine their pricing structure and whether their profit model makes sense in the Amazon-driven world.

Pro: International Reach

One of the most apparent benefits Amazon gives companies of all sizes is the opportunity to expand their brand on an international scale. If you feel stuck in the local market and you feel like your product has the opportunity to reach larger markets, Amazon is, by far, the most logistically sound brand outreach solution for small businesses.

Con: Amazon Owns the Customer Relationship

Amazon handling the customer relationship is a double-edged sword. They take the negative aspects out of dealing with customers but they also tie your hands when it comes to creating a pleasant buying experience.

If Amazon screws up the shipping process, the customer associates the negative experience with your brand. The customers you sell to technically aren’t yours. They’re Amazon’s.

Pro: Customer Outreach

Using Amazon also takes the pressure off your brand outreach program. Because Amazon is such a large marketplace, people will naturally find your product that wouldn’t if they were just browsing online.

If you opt to sell your products privately, you have to worry about driving traffic to your website. Amazon removes that bottleneck because millions of people visit Amazon every day. All you have to worry about is targeting specific keywords that direct traffic to your product.

Con: Lack of Control

Overall, the biggest drawback of selling on Amazon is the lack of control you have. Amazon takes large chunks of your profits and controls your customer relationships. Marketing and branding are a huge determinates of small business success.

With Amazon, you have the benefit of expanding your brand on an international scale. However, you can’t brand your product as much as if you create your branding in-house.

Pro: You Already Have Trust With Amazon

When you sell on Amazon, you enjoy the benefits of Amazon’s reputation. If your Commerce site is new, customers will likely be tentative to trust your offers. It will be difficult to establish a new niche with relatively unknown customers.

Marketplaces such as Amazon already have established relationships. Amazon is also tough on sellers when it comes to complaints, so the consumer trusts if a company succeeds on Amazon, it’s because they have quality products.

Conclusion- The Pros and Cons of Becoming a Private Amazon Seller

Being an Amazon seller comes with its perks and drawbacks. You have access to an internationally trusted organization, so you can expand your business, and enjoy a continued customer outreach program.

However, Amazon eats into your profits by charging you fees. It also inhibits the control you have over your brand image and decreases the face time you have with your customers. Thus, if you’re a small business, you need to decide whether the Amazon route makes the most sense for your business.

Examine your profit margin and your inventory process. You should also check to see what tools you can use to potentially ease your burden. If you have a high-profit margin and you don’t want the hassle of dealing with private storage, becoming a private Amazon seller might be your best option.

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