Why You Should Sell on Amazon

24 Mar

Should We Sell Our Products On Amazon?

The best solution to generate profits with the e-commerce surge that has taken over retail marketing currently is partnering with Amazon. This is currently the biggest online marketplace, with over five million sellers in 2019 and about a million joining it annually. In 2017, Amazon sales were more than $177.9 billion, and they have been on a steady increase since then.

If you are still unsure that you should tap into these sales and the available market, here are tidbits to help you understand the two ways of selling on Amazon.

1P Vendor

This is meant for entrepreneurs with fast-selling products. As a 1P vendor, Amazon directly buys your products in large orders for a 15-20% discounted price then sells them to your target market. After selling, you will get paid within 60-90 days.

The following are the primary benefits of becoming a 1P Amazon vendor;

  • Products get to your client within a few days.
  • You tap into the millions of Amazon clients within a short time.
  • Amazon takes over your products’ advertisement, selling, shipping, returns, and sales and pricing forecasting.
  • You get increased customer engagement.

Even so, here are a few drawbacks that might come with being a 1P Amazon vendor;

  • Minimal pricing control.
  • Lower profits.
  • Poor communication between your company and amazon.
  • Chargebacks for rejected goods and client payment disputes.

3P Vendor

With this alternative, you sell your products to clients through a third-party partner. You can use as many sellers as you want to push your products. The best approach, however, is to work with the least possible number of sellers, so you maximize your returns.

The pros of 3P vendors include:

  1. Maintaining control of your product pricing and generating retail rather than wholesale margins
  2. Optimal control of your brand’s promotion, information, and presence

The drawbacks you face as a 3P vendor include;

  • Being subject to marketplace expenses like referral, shipping, and variable closing costs.
  • You will not enjoy Amazon’s 100% rating and thus primarily rely on your brand’s reputation for sales.

Even with the right choice from the above for selling on Amazon, some business owners make mistakes that lead to low conversion rates. Some, for instance, are focusing their energies on the wrong products or bidding for low-performing keywords on Amazon. Others have disorganized product catalogs, package designs unsuitable for e-commerce, and a passive customer service experience. You need right information to succeed in this market.

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