- Posted on
- • March 23, 2021
“Should we fear it? Should we love it? I think it’s like a fearful respect. It’s amazing in some ways terrifying and others, but it’s definitely not something you can ignore.”
That’s Tim Jordan, host of the AM/PM podcast, entrepreneurial guru, and master Amazon strategist, assessing the evolving mood of sellers around the Amazon platform.
The massive cultural and financial shifts the past year served to the ecommerce industry are not reflected anywhere quite so dramatically as on Amazon, which posted 38% revenue growth and $386 billion in GMV in 2020. These shocking statistics bring two questions to the fore for all independent ecommerce businesses…what does it mean to be a diversified seller in a now undeniably omnichannel world and is it too late for established direct sellers to take advantage of the Amazon opportunity?
Tim, who began selling on Amazon in 2015 and posted his first million in sales there just 7 months later, joined Rick Wilson on this week’s Dragonproof Pod to speak to sellers’ justified skittishness around the platform. While extreme competition has now made Amazon substantially harder to launch a brand and products on than just a few years ago, Tim argues that it still should be a part of every business’ ecosystem, provided they reach for new techniques for finding products, identifying keywords, being first to market, and most importantly, have a strong enough independent online presence to succeed despite some of the common challenges involved with selling on Amazon:
1. “Amazon keeps my customer data (and my customers) for itself.”
An independent seller opening an Amazon shop will not have total control over crucial customer information for marketing, planning, and the investment it takes to build that customer base. However, the jaw-dropping reality of nearly 2.4 billion site visits per month in late 2020 makes the data tradeoff worth it. This vast untapped audience is full of potential new customers which a brand would otherwise never have access to.
2. “Amazon’s opaque controls mean I could lose my revenue at any time.”
It’s true that over-dependence on Amazon as a primary sales channel opens businesses up to catastrophe, should Amazon suddenly suspend an account, raise fees, or even poach products. But these are arguments for why it’s always important to diversify channels. With a balanced sales portfolio, no one channel has the power to tank a brand, but all have the potential to grow it.
3. “Adding an Amazon presence will dilute my brand.”
The key mindset change here is thinking of Amazon as sales in addition to the primary ecommerce site, part of your total brand strategy—not the competitor to that home base.
Getting started on Amazon requires help from some unlikely sources
As more and more sellers try to enter the Amazon marketplace, we’ve seen a dramatic uptick in expensive “point-and-click” courses for instant success on the platform. These claims tend to undersell the complex skills which are now required–sellers who have primarily succeeded by managing their supply chain, customer service, desktop shopping experience, and traditional marketing now find they must become masters of the arcane art of keyword positioning.
Signing on with a digital agency can jumpstart the process, for the price of about half of a seller’s margin. Tim suggests this is a good option to gain traction in the space, provided the merchant transitions to in-house support quickly. A great untapped resource is the army of young entrepreneurs fresh out of school who are making a killing on the platform, discovering and creating sales hacks which would never occur to an established “conventional” ecommerce seller. Facebook is loaded with Amazon-centric groups comprised of this new generation seller, many of whom will gladly take on consulting work—all you have to do is ask.
Choosing products and where to sell them
While Amazon is the most popular marketplace, there are a number of established and emerging marketplaces that can also serve as excellent channels for certain products. Pairing the right product with the right venue is crucial. “I’m not going to try to sell tennis shoes on Wayfair,” Tim says, “I’m going to sell furniture and home accessories.” The two key points are: find a marketplace which is oriented to the exact product category for your product, and then look for gaps in what’s available on those marketplaces, relative to what customers are searching for.
This is somewhat opposed to the “stick to passion products” approach. It’s more pragmatic when selling on marketplaces to choose in-demand products with lower competition for relevant keywords, than to try to painstakingly recreate your brand’s total product vision on Amazon. The shift is to aim for creating revenue with products that work for a given marketplace, vs. creating a brand via products. Independent websites are far better equipped for complex brand-building.
Marketplaces can unlock global sales
By handling the endless headaches of selling internationally, Amazon can provide an entry-point for U.S. sellers abroad. Know how to set up offshore business accounts, configure VAT, and distribute products to international warehouses for fulfilment? Amazon EU or AUS can remove these barriers and even offer incentives in the form of PPC credits and other perks to help US businesses get set up. These areas represent vast selling opportunities which are worth taking advantage of.
Core advice for all ecommerce sellers
Ultimately, the rapid growth of ecommerce post-2020 provides a new challenge-point for sellers who have been nervous about the threat of Amazon, or are unwilling to deal with its steep learning curve.
“What’s amazing about ecommerce right now,” says Tim, “is that you can start easily… and pivot massively.” This is the advice he gives to students in his Amazon mastermind training groups, and it’s just as relevant to established merchants looking for new ways to drive online sales. Starting at a very small scale—with just a few unique products—can teach sellers the ropes of listing, keywords, and basic logistics, especially if they have previously focused only on running an independent site. Once simple sales have been established, it’s easier to expand the catalogue and bring in more and more branded items.
There is undoubtedly a new gold rush underway as more sellers try to get a piece of the ecommerce juggernaut. As in all aspects of business, great opportunity lies in unexplored places. By revising the view of Amazon from “threat” to “opportunity,” merchants at every scale stand to gain.
For the full podcast audio of this conversation, click here: https://apple.co/36gHY6v
