Amazon – The Call of The Sirens

In Greek mythology, the Sirens were beautiful women who would lure boats to their doom with their seductive voices promising of treasure.

For eCommerce merchants, today’s Siren could well be listing products on Amazon.

Now before you think I’ve gone crazy, let me explain.

Once I explain, I think you will also see the similarities between Amazon and the mythological Sirens and why eCommerce business owners need to focus their resources building their own brand and promoting their own website.

The Lure of Amazon‘s Siren Call

Amazon offers easy access to their shopping portal. In fact, it has never been easier than now for eCommerce merchants to list their products to the millions of potential buyers who search Amazon each and every day.

This is Amazon’s song of treasure rings out for all to hear!

Merchants who decide to list their products on Amazon are given a couple of choices. They can either ship their products themselves (FBM) or even easier they can send their products to one of Amazon’s warehouses and have Amazon ship their products for them (FBA).

When a product is sold, Amazon charges the buyer’s payment method and coordinates the delivery of the order between the merchant and the customer.

For this service, Amazon takes a commission (approximately 15%) plus a fee for shipping if fulfilled by Amazon plus additional storage fees along with a few other miscellaneous fees.

These fees are just for items that sell when randomly appearing on the Amazon platform. In order to gain premium placement, Amazon allows merchants to purchase where they would like to appear within Amazon and for which search terms using a pay-per-click model.

These paid placements can appear either appear as displaying your products (sponsored product ads) or as banners above product listings (sponsored brand ads).

When running ads, there is no upper limits to the fees an advertiser can be charged for these premium placements within Amazon.

You would be surprised. I’ve managed accounts in highly competitive product lines within Amazon for companies initially launching where the ad fees for product placements have exceeded their total sales generated.

In all these fees Amazon charges, lies the untold dangers of listing your products on Amazon!

How Exactly Amazon Can Be Your Doom?

It is important to remember a couple of facts when selling your products on Amazon:

First and foremost, the customer does not have the relationship with the seller. Instead they have a relationship with Amazon. You as the seller is interchangeable to the customer.

Don’t believe me? Just think.

How often have you heard “I purchased that new stapler from Amazon” compared to “I bought that new stapler from Joe Blow Stapler company off Amazon”.

With Amazon orders, the merchant, whose product it is, is not allowed to communicate directly with the customer. In fact, the merchant receives a coded Amazon email that forwards to the customer’s email just to make sure they aren’t tempted.

In addition, merchants are not allowed to add promotional material to their orders.

And, maybe most important, merchants are not able to market in the future to those customers who purchase their products from Amazon.

Second, as a merchant listing your products on Amazon, you are at the mercy of Amazon!

If merchants violate any of Amazon’s policies, their products can be removed from Amazon with little to no warning.

If Amazon changes their algorithm that changes the order in which they list products, well a merchant may find their traffic instantly evaporate with no recourse.

Finally, unless you sell your own private labeled merchandise there is nothing preventing other merchants including Amazon from competing directly against you purely on price. In fact, this is what has made Amazon such a behemoth!

And these facts of doom are what makes the strategy of listing on Amazon eventually destroy the boats of many eCommerce merchants!

Building Your Own Brand Outside Amazon

Without a doubt building your own brand is much harder to build using your own website compared with simply listing your products on Amazon.

However, for all the reasons we just discussed it is an absolute must. Especially if you want to not just survive, but survive and thrive long term in the world of eCommerce.

This all sounds good, but you may be asking how should you go about building your own brand outside Amazon?

I have broken it down into 3 main ways:

First, find a reliable and predictable source of traffic that you can scale.

Second, ensure you are able to effectively compete with your competitors including Amazon.

 Third, build a loyal customer base.

Finding Your Traffic Source

From the time that eCommerce has started in the late 1990’s through today finding a predictable traffic source has been the most important determinant of success selling products online.

In fact, it is why it is so tempting to be lured into Amazon’s call of the Sirens.

However, there are other good options beyond Amazon although they take some more legwork.

For my private clients, Google Ads and specifically Google Shopping continues to provide customers with substantial profitability selling products.

In addition, Bing/Microsoft Advertising can generate profitable traffic as well as Facebook. Even good old organic traffic generated through optimizing the pages of your website – aka – SEO can work to drive your own brand.

Effectively Competing With Your Competitors

When it comes to effectively competing in eCommerce, I’m not merely referring to price. If it were just about price, then it would be nothing other than a race to the lowest price for a product and your Amazon and Walmart stores would be the only ones left when the race is over.

Now you don’t have to necessarily have to be the lowest for price. Instead you can work with your product offerings to show they are worth a premium.

Even if you sell the exact same item as others, there are ways such as bundling that will allow you to create a package offer that will support a premium price.

However, generally you do need to be at least in the ballpark when it comes to your shipping.

Amazon has changed the landscape with customers in regards to shipping. Customers thanks mostly to Amazon have grown accustomed to receiving their orders 1-2 days after their order is placed.

Today, for a customer to be willing to wait to receive their order more than 2 days , you are going to have to make sure your products either are worth them waiting or you will need to make sure you deliver it in the timely manner they have come to expect.

Building A Loyal Customer Base

Once you have determined your price and shipping strategies it is important to think about what sets your business and products apart from the competition.

Think about what you can give your customers that no one else can.

Is it a community, it is expert knowledge, is it keeping them informed on the best and newest products in a vertical that they are interested?

One steadfast technique to keep your customers engaged is constant communication.

Through email, through mailed catalogs or even through a newsletter or Facebook group, constant communication will keep your customers loyal, keep them engaged and keep them referring you to their friends and family.

The bottom line is in order to succeed, make your website and your product offerings different and of value compared to all of your competitors including Amazon.

Final Word

Selling products on Amazon is an effective way to promote your product line. However, with listing fees and advertising fees it can be quite expensive. In addition, there are downfalls and other warnings that suggest that it may not be a viable long-term strategy for many companies.

Given this it is puzzling to me how much attention companies will sometimes spend prioritizing their product listings and advertising with Amazon.

I’ve worked with quite a few companies that will spend all their time optimizing Amazon product pages while not working to promote their own website or optimizing their own product pages. In fact, occasionally they don’t even have a website to promote!

Don’t misinterpret what I’m saying. I believe that Amazon can be a nice supplemental revenue stream. Especially for companies just starting that need to quickly grow their brand recognition, Amazon can work wonders.

However, I also believe that it is more important to work on growing your brand outside Amazon in order for the merchant to have the relationship with the customer.

Because growing your business is almost all about the relationships that you are building with your customer base.

The current 2020 COVID pandemic is predicted to rapidly accelerate the growth of eCommerce. Many baby boomers and even generation Xers that did little to no online purchases have been left with no other choice then to shop online.

When things return to normal and they will eventually return to normal, it is predicted that much of these online shopping habits will remain.

The question you must ask yourself is will you be ready?

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Happy Marketing!
Andy Splichal

ABOUT THE AUTHOR

Andy Splichal is the founder of True Online Presence, the founder of The Academy of Internet Marketing, author and certified online marketing strategist with twenty plus years of experience helping companies increase their online presence and profitable revenues. To find more information on Andy Splichal, visit www.trueonlinepresence.com or read The Full Story on his blog, blog.trueonlinepresence.com.