CAN I SELL ON AMAZON WITHOUT RUINING MY EXISTING BUSINESS?
If you don't understand the details of your business you are going to fail. -Jeff Bezos
Recall the latest “Doomsday” scenarios hyped up in every media outlet along the lines of Y2K, Swine Flu, or Africanized Killer Bees. The fallacy ignored, likely for the sake of ratings or eyeballs, in all of these situations was that they were all or nothing scenarios. The idea that because these things could be an issue that then inevitably meant that they would be world shattering events.
Although not as threatening as robots taking over the world or a worldwide pandemic, many brand owners and retailers view Amazon as such a threat. Its size and perceived complexity creates a looming atmosphere of gloom and worry. This perceived threat to the success of their business is really a set of three completely different issues.
The first issue is the most obvious: Amazon, the competitor, eats away at the customer base of the retailer by offering a different combination of value along with the same products. Similarly, for the brand owner, Amazon sheer size and ubiquity throws a wrench in the best laid plans and distribution system that may have been decades in the making. However, these worries are easily debunked for those willing to “play the Amazon game.”
At its core, Amazon is primarily a marketplace--like a mall, it is a place people go to shop. Bringing the mall comparison forward, the “Amazon Mall” has the added feature of the anchor stores being owned and operated by the mall owner itself and often selling the same products as other independent stores in the mall. With these prime locations the mall is both an independent mall store’s landlord and competitor. This puts the other mall stores at a disadvantage, especially those selling like items to the anchor stores. Unfortunately, this is where many retailers and brand owners give up. They see themselves as one of those independent mall stores that have significant disadvantages in this set up and therefore decide to leave the mall, or in other words, rebuff Amazon entirely.
However, the correct way for the retailer and brand owner to view this scenario is to turn it toward their advantage. Except in the rarest of items, Amazon does not have its own products. In order for Amazon, owner of those anchor stores in our example, to sell they must source products to offer from somewhere. These items are still rarely sourced directly from the manufacturer and almost never offered on Amazon by only the manufacturer. Therefore, by joining with Amazon and supplying them the products the brand owner or retailer already offers they turn the inherent advantage Amazon has to their advantage. Clearly, the suppliers to those mall owned anchor stores are not complaining about the marked advantage their products are given by being in those stores. They have joined the “winning” team and reap the rewards. How to do this is forthcoming, but there are a variety of ways to turn Amazon from a competitor to a savior.
Of course, after realizing that adding Amazon may be a boon as a new channel instead of a competitor, the second major reason for reluctance to get on board appears: what will selling on Amazon do to my existing distribution network and/or brand? For many mid-market companies their distribution network or brand is the key driver of value for their whole business. Making Amazon part of their business has an unknown effect on how their current customers will react and this concern is often enough to cause otherwise enthusiastic business owners to freeze.
However, like with the seemingly disastrous situations in the past that begun this chapter, many people do not take the time to realize that Amazon is a not an all-or-nothing proposition. For example, a retailer or brand owner can decide to offer just one or a handful of products to be sold on Amazon. This method of dipping in their toes allows a company to familiarize themselves with the experience of selling on Amazon and prove that it is the right fit for their company without putting in a bunch of administrative work or processes ahead of time. If things work out and it creates additional sales with minimal disruption to their existing customers then the business can continue adding incrementally to their offering. If they decide that the amount of sales does not warranty the backlash from their distribution network they can easily scale back down or exit Amazon. Since many products were unaffected with the Amazon affair it will be minimally disruptive to the business in general and result in no lasting harm.
To a similar degree, many companies concoct alternate product bundles or private label versions of their items to eliminate direct competition with their current sales channels. This method allows companies desiring to jump all-in into Amazon a way to do that without directly impacting their current customer base. As a bonus, these Amazon-only packages or products have the secondary benefit of allowing the seller to confirm that Amazon is driving new sales and not simply cannibalizing sales that would have occurred elsewhere.
There are many ways to incorporate Amazon into a business. It just needs to be done purposely and creatively. A business needs to decide what their major concerns are and then combat those issues by molding their Amazon strategy to fit those objectives. It may take a little investigation, joining a forum or hiring a consultant, but fairly quickly many companies can determine a strategy that is all reward, no risk.
Of course, in addition to the perceived risk to one’s market, the additional concern for many businesses, especially smaller ones, is how to handle any new administrative duties. Expedited shipping, feedback, ratings, optimization, and sponsored search are often new frontiers for retailers or brand owners. These are all legitimate and demand a new Amazon seller’s attention, but wonderfully there are many solutions to these problems. Outsourcing these activities that are highly unlikely to be a strength for new Amazon sellers is not only affordable, but effective. In the same way Amazon let’s you outsource the promotion and customer acquisition of your products, these service let you outsource the activities that are specific to the Amazon marketplace.
No one knows the business better than the business itself. Joining the Goliath that is Amazon can be intimidating, but by sculpting how one enters the Amazon marketplace in a way that fits its goals and company structure it can be done with limited risk. Once the business is up and running then many programs can be used to simplify the selling process. With these strategies and services available to limit downside risk there is plenty of upside to cause many businesses to join one of the largest markets in the world.
Amazon Selling - If You Can't Beat Them, Join Them is a book authored by Andrew Tjernlund which will be released as a series of blog posts on AMZHelp.com. If you have any questions about our services or wish to sign up, please reach out.
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