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  • Craig Gedey

Should my business Sell on Amazon?

It is a measure of the size and scale that Amazon has become that one of the key questions for many new and old businesses now is whether they should start operating a Seller account on the site.

The variety of products offered by the online giant means that a high percentage of businesses can now sell their items on Amazon and immediately become part of a huge market place.

But is it right for every business and is it right for yours? Thompson and Holt managing partner Craig Gedey, a former Amazon Seller himself, looks at the pros and cons of opening an account.

Gedey explained: “A quick look at some of the stats surrounding Amazon makes it clear why it is so appealing for so many businesses. Amazon was responsible for 45 percent of US ecommerce spending in 2019, a figure that is expected to have risen last year. Amazon’s net revenue in 2019 was a staggering $280.5 billion, with one in three Americans believed to have a Prime account. And that’s before you look look outside of the USA - according to Amazon’s reports there were 225,000 Sellers with over $100,000 in sales around the world in 2019.

“On that basis it’s easy to see why so many businesses see Amazon as a way to expand. They have a ready-made audience, and the start up costs for becoming an Amazon Seller - compared to if you constructed your own ecommerce website - are cheap, plus it’s a relatively easy process. Manufacturers can also take they product directly to the consumer while minimising the risk of alienating trade customers and distributors.

“But there are other factors to consider before you make the move. There are costs involved - Amazon make that perfectly clear. In addition to charging a £25 (ex VAT) per month for a seller subscription, they also charge what they call a referral fee for each transaction which varies by category. To determine how much that would be for you, look at Amazon’s own calculator here:

“Another element is the massive competition to be found on the site. Keeping your prices low and competitive can lead to minimal profit margins compared to other platforms. And to compete as a best seller on the site, it’s almost certain that you would need to invest in Amazon Ads. You need to build your product sales and customer reviews to maximise the opportunities on Amazon, and that can often mean paying for sponsored products.

“You also have to factor in that you are handing a large element of control over to a third party, and that you run the risk of suspension if you don’t follow Amazon’s guidelines. That is where Thompson and Holt can help you get back online as quickly as possible - but is certainly something you should be aware of.

“Amazon have also been accused by many manufacturers of infringing on their intellectual property to create competing products, using data from Seller accounts to identify popular products which they then produce themselves.

“Ultimately, you have to weigh up all of the above, doing as much research as possible, and then decide whether Amazon is the right fit for your business. In the correct circumstances, it can be a source for significant growth.

“But that won’t come just by signing up and adding a few pictures of your product - it takes an acceptance of how Amazon works and an understanding that you have to play by their rules in order to be successful.”

If you do decide that your business is going to sell on Amazon then here is the link to start your Amazon journey We wish you luck!

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