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How Amazon Gives Home Businesses Room to Grow

By: Andrew Deen

 

How Amazon Gives Home Businesses Room to Grow

Budding businesspersons and seasoned entrepreneurs can give their businesses a boost by setting up shop on the Amazon marketplace.

Amazon is a powerful force in retailing. The online retail giant has affected commerce so much that watchdogs call the company’s influence the “Amazon Effect.”

By 2018, analysts estimated that United States consumers complete approximately 50% of all online purchases using the Amazon platform. Those transactions equate to 5% of all on- and off-line retail sales combined.

By finding creative ways to manage an Amazon storefront, businesses of all sizes can profit and grow.

Amazon’s a Great Way to Build (and Protect) Your Brand

If you’re a sole proprietor, and wearer of many hats and responsibilities, Amazon can offer you a robust backend infrastructure. The site’s resources may help you thrive in a competitive marketplace.

Some business owners with unique offerings may choose to forgo the Amazon marketplace. However, if you produce a product that consumers demand, it’s almost certain that an ambitious entrepreneur will buy your goods and list them on Amazon.

Essentially, that entrepreneur will capture profits that could have went directly to your company. The best way to stop this kind of activity from undermining your profits is to control your brand by entering the Amazon marketplace.

Amazon is more than a formidable e-commerce platform—it’s a behemoth among all retailers. While it’s still recommended that small business owners operate an independent e-commerce site, no other outlet will give your enterprise the exposure offered by Amazon.

The growth of Amazon is on a steady uphill climb. As Amazon gains more influence, it may soon become requisite for small retailers to use the platform—that is, if they want any hope of getting in front of consumers. Companies who don’t jump on board the Amazon bandwagon may find it challenging to attract enough buyers to survive on the retail landscape.

It’s Not All a Walk in the Park

There are few challenges in using the Amazon marketplace. Retailers must sacrifice some profit to use the platform. Amazon collects 6% to 15% of all sales, and if you use Amazon’s fulfillment service, there are additional fees.

Another drawback to the Amazon platform is that you’ll have little opportunity to build rapport with buyers or separate yourself from competitors. Amazon limits communications between buyers and sellers. Fundamentally, Amazon considers buyers as its customers, rather than yours.

Also, it’s difficult to build brand awareness on the platform. Resultantly, the selling environment may compel you to compete on price, which cuts into profit and diminishes the value of your offering.

Finally, there’s a lot of work involved in entering your company’s product information into the Amazon platform. Amazon enforces different rules for each product category, and those rules greatly influence the visibility of your goods. In the Amazon marketplace, higher visibility means more sales.

Still, the Amazon Marketplace Is a Boon for Home-Based Businesses

Despite the involved process of uploading product information, it’s a straightforward process to open an Amazon storefront. There are, however, a few categories where you must meet additional requirements to sell goods. For example, sellers must meet additional requirements to sell hoverboards, laser pointers or software.

Nevertheless, the Amazon platform makes it easy to reach a more extensive consumer base. Also, the marketplace simplifies the process of scaling up to meet increased consumer demand.

The Amazon platform provides you with all the infrastructure and tools you need to grow your retail operation. Using the marketplace, you can create product listings and even ship your inventory to Fulfillment by Amazon (FBA). After receiving your shipment, FBA will manage your warehousing and shipping logistics.

For the uninitiated, learning to use the Amazon marketplace can prove challenging. Fortunately, home-based entrepreneurs can quickly gear up to sell on Amazon’s online marketplace by taking advantage of online learning tools.

For example, you can get up to speed on the basics of online retailing by taking a Udemy e-commerce course. The Udemy platform will enable you to learn everything that you need to know about online retailing, such as advertising, planning and market research skills.

You can also learn how to manage an Amazon FBA account by taking a Udemy course from the comfort of home. Using the online learning platform, you can learn lessons from Amazon FBA experts.

When properly utilized, Amazon can play a vital role in your business strategy. If you want to avoid competing on price, however, you’ll also need to set up an independent e-commerce website.

Nevertheless, the Amazon marketplace can increase the visibility of your brand. For example, Amazon does permit limited engagement with consumers when they have questions or need product support. Herein lies the key to developing a strategy for offering value that’s not present on the Amazon platform.

Published: September 18, 2019
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Andrew Deen

Andrew Deen has been a consultant for startups in almost every industry from retail to medical devices and everything in between. He implements lean methodology and is currently writing a book about scaling up business. Twitter @AndrewDeen14.

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