The popularity of online shopping has exploded over the last few decades. Surveys show that consumers now conduct the majority of their shopping over the internet.
ECommerce is not just for large chains and big box stores, either. Many small businesses and independent retailers have implemented an eCommerce strategy to reach customers online.
That said, there are many costs associated with eCommerce, including web hosting, shipping, and fulfillment. These logistical challenges can make it difficult for small businesses to develop a successful eCommerce strategy.
This is why incorporating a site like Amazon into your multichannel eCommerce strategy can be a good approach. Let’s look at how Amazon can elevate the success of your business.
Before we discuss how Amazon can enhance your eCommerce strategy, let’s look at some background information about what Amazon is.
Amazon.com is a profitable eCommerce platform founded in 1994. Amazon brings in millions of visitors every month, making it one of the highest traffic websites in the world.
Recently, Amazon announced that they will be launching an Amazon Australia site in 2018. But even without the dedicated site, Amazon still has been profitable in Australia. Currently, Amazon is one of the top 25 most visited websites in Australia.
The Amazon Marketplace
In addition to selling its own products, Amazon also provides selling space to third-party vendors. This service is available through the Amazon marketplace.
Amazon’s marketplace features more than 30 selling categories, ranging from technology to home goods. These products are sold by a wide variety of sellers.
How the Marketplace Works
To sell on Amazon’s marketplace, vendors pay a monthly fee of $39.95. This fee essentially allows vendors to rent space on Amazon’s site for their online store.
Vendors also pay what is called a “Referral Fee,” which is typically 8-15% of their profits. This fee is in return for the publicity the vendor gets by selling on Amazon. Given the high traffic that Amazon gets, this can be seen as a form of advertising for your business.
Why Choose the Marketplace?
In return for these costs, vendors receive many benefits in selling on Amazon. Amazon’s name recognition brings in many visitors. This exposes their products to a much wider audience than they would likely get on their own.
Additionally, selling on Amazon can be part of your business’s omnichannel eCommerce strategy. The purpose of an omnichannel approach is to reach customers where they are already at.
Since the web is overloaded with thousands of eCommerce options. For this reason, it can be hard for small businesses and startups to persuade new customers to visit their site and purchase from them.
By contrast, an omnichannel approach makes your product available on the channels that your customers already frequent. If a customer sees your product on Amazon, this can help them see your brand as more trustworthy and credible.
Who Can Sell on Amazon?
Apart from the membership and referral fees, there are few restrictions on who can sell on the marketplace. Sellers range from small business owners to individuals looking to make extra income.
Some businesses sell on Amazon to supplement sales from another platform. For instance, your business might have a dedicated online store, and then also have an Amazon marketplace account to gain more traffic and visibility. Other businesses do their primary sales through a brick and mortar store and then sell additional products online through Amazon.
That said, many businesses conduct their eCommerce strategy exclusively through Amazon. This can be a good option if you are just getting started, and want an option with low overhead expenses.
Fulfillment by Amazon
Another benefit of selling on the Amazon Marketplace is access to fulfillment by Amazon services. This service can help small business to grow their eCommerce strategy more quickly.
What is Fulfillment by Amazon?
In order to offer customers convenient and inexpensive shipping, Amazon maintains warehouses all over the world. With Fulfillment by Amazon, Amazon Marketplace sellers have the option to take advantage of these warehouses for their own shipping needs.
How Does Fulfillment by Amazon Work?
When an Amazon Marketplace seller chooses Fulfillment by Amazon, they send their stock of products to Amazon to warehouse them. Then, Amazon handles shipping your products to customers who purchase them. Additionally, if your customers need to return a product, Amazon will handle this as well.
With this service, you will not have to worry about packing or mailing items to customers. And, because of Amazon’s complex shipping network, they can ship products faster and more inexpensively than they could on their own.
This is especially true if your customers have Amazon Prime. This is an Amazon subscription service that gives customers free 2-day shipping. If your products are available on Amazon Prime, customers will have an extra incentive to choose them.
Of course, choosing Fulfilment by Amazon will involve extra costs in addition to your membership and referral fees. Ultimately, however, the benefit of not handling your own shipping outweighs this expense. This is particularly important if you sell a product that is difficult to ship, like a heavy item or a fragile one.
Fulfillment by Amazon and International Sales
One of the biggest benefits of selling on Amazon is having access to their global customer base. Since Australia has a relatively small population, it can be extremely helpful for your eCommerce business strategy to include a global component. But if you sell a product to an international customer, how does Amazon handle that exchange?
Amazon allows Marketplace sellers to associate multiple bank accounts with their profile. Linking a World First account to your profile will allow your international sales to be easily converted, allowing you to benefit from exchange rates.
Developing a Successful ECommerce Strategy
Because of its recognizable brand name and convenient services, incorporating Amazon into your eCommerce strategy can be a great choice for your business.
If you would like to learn more about how you can build your eCommerce business plan, contact us. We will work with you to find the right tools to grow your profitability.