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As one of the world’s biggest names in ecommerce, Amazon has no shortage of sellers who want to list their products and access a massive audience. But just like anything in life, if you plan on joining the marketplace, you’ll want to assess the pros and cons so you can make an informed decision. Ecommerce brands need to be aware of the limitations as selling on Amazon is very different from selling on a Shopify store, for example. Don’t get us wrong – we think Amazon is a great sales channel for ecommerce brands (at ShipBob, we have an integration to fulfill Amazon FBM orders in the United States, Canada, Mexico, Australia, United Kingdom, Germany, France, Spain, Italy, and Poland, along with FBA prep services). In this guide, we explore the pros and cons of selling on Amazon. More importantly, we also help you navigate how to overcome the biggest cons of Amazon and make the most of the platform. Let’s get into it. Omnichannel Logistics Explained How to centralize fulfillment and shipping across channels 3pl 5 pros of selling on Amazon First, let’s go over the top five benefits of selling on Amazon. Here are the reasons why fast-growing ecommerce businesses continue to join and sell on Amazon Marketplace. 1. Increased product visibility The biggest benefit of selling on Amazon is the ability to reach millions of global customers. In May 2022 alone, the website saw 2.4 billion visits on mobile and desktop combined, making it the most visited ecommerce site in the United States. Considering this high amount of traffic, there’s no denying that listing your product(s) on Amazon can bring significant visibility, getting your inventory in front of millions of established customers. 2. More customers and sales With greater visibility comes a better opportunity for sales. According to internal Amazon data, the platform boasts 300 million active customer accounts, with 6,500 American products sold every minute. That’s 300 million potential customers for your business. Listing your product on Amazon can significantly increase the chances of growing your sales. 3. Global reach Amazon is one of the biggest ecommerce websites in the world, and it gives sellers the opportunity to reach customers in 180 countries. This type of global reach makes the platform ideal for businesses that want to tap into global markets and expand their reach on an international scale. 4. Generates trust Amazon is already an established name in the ecommerce industry. Most ecommerce buyers already know and trust the platform. Amazon’s excellent ecommerce return policies, fast and affordable shipping options, and product reviews give customers the assurance to complete their purchases on the website. So when you sell on Amazon, you can take advantage of their established presence and gain instant trust with your target audience. This makes it particularly advantageous for brands that are just entering the market. Consumers are more likely to buy from Amazon than from a website that they’ve never heard of before. 5. Easy to get started Amazon offers a plug-and-play ecommerce solution, allowing you to start selling even without the technical knowledge or resources typically needed for ecommerce sellers. You don’t have to build and maintain your own website or create an intricate logistics network. Instead, you just need to start listing products on the Amazon website. You can even leverage Amazon’s fulfillment service (or third-party fulfillment players like ShipBob), so logistics experts can fulfill orders on your behalf. 8 biggest cons of selling on Amazon Now that we’ve gone over the top benefits, it’s time to weigh them against the cons. This will help you make an informed decision, so you can overcome some of the challenges of selling on Amazon. Here are some of disadvantages of Amazon. 1. High competition Although selling on Amazon gives you access to a massive audience, it also sets you up for higher competition as many businesses try to leverage the platform to generate more sales. According to the internal data cited above, the platform currently boasts 1.9 million selling partners all over the world. This leaves the platform densely populated, making it challenging for startups and smaller businesses to stand out. This is particularly true considering how Amazon works. If you have the same or similar product listed as other sellers, the platform will decide which seller is most suitable to get the coveted Buy Box (the “Add to Cart” and “Buy Now” section of the product listing). When a customer decides to buy something, the product sold by the featured seller will automatically be added to their cart. As such, it can be particularly difficult to get customers on the platform if you don’t have the Buy Box (though not possible). 2. High selling fees While Amazon offers a ton of benefits, those benefits come with a price tag. There are several fees associated with selling on Amazon. First, you have to pay to maintain your seller account. Amazon offers two selling plans: the Individual plan and the Professional plan. While you don’t have to pay a monthly subscription fee for the Individual plan, you would need to pay USD $0.99 for every item sold. Meanwhile, the Professional plan would cost you USD $39.99 per month, regardless of whether you make a sale or not. On top of this, Amazon also charges referral fees, typically ranging between 8% and 20% depending on the product category. So if you’re selling a t-shirt that costs $150, Amazon would charge you a 17% referral fee, meaning you’d have to pay $25.50 to the platform. That’s in addition to other fees that are associated with selling on Amazon. Beyond this, if you plan on using Fulfillment by Amazon (FBA), there are also unique FBA fees for fulfillment services. Some sellers may even pay for additional services such as long-term storage, advertising, etc. Taking the t-shirt example from above, if you’re letting Amazon fulfill your orders, you’d end up paying well over $30 to sell that single $150 t-shirt. 3. Complex order management Amazon’s order management system can be a bit… chaotic. Sellers have to manually and constantly ensure their Amazon orders are updated into their systems. Moreover, it may not necessarily integrate with your store, which can complicate things if you’re selling your products through multiple channels. Without a proper integration to your store, stock levels are not automatically updated, so you could be selling something that you’ve already run out of stock for. Plus, you’d have to deal with two different inventory management and fulfillment systems (thought tools like ShipBob can help in this area). This complex order management process could deter many sellers from listing their products on the platform. 4. Lack of control and ownership Sellers are often at the mercy of Amazon. Since you don’t have ownership of the channel, you have little control over branding and narrative. On Amazon, the name of the seller hardly gets noticed, which means that although you’re making a sale, your brand name might remain largely unrecognizable. The lack of control also extends to other aspects of your business. Any decision by Amazon to change its algorithm or its rules and approach could have a detrimental impact on your business. 5. No insight into customer data When you’re selling on your own website, you get access to valuable first-party data that you can use to inform your decisions. The richer your customer data is, the better you can get at targeting your customers with offers that appeal to them. However, selling on Amazon limits your access to this type of data. Whatever data is available will be solely accessible by Amazon, and it can be challenging to extract out of the Amazon UI. 6. Risk of scams Amazon is particularly prone to scams, leaving your business vulnerable to malicious parties. For example, a common scam involves a consumer cleaning out your inventory by placing a large order and then returning all of it (after your competitor gets other sales and you’re left with returned items). This type of scam is particularly common during peak sales seasons. Another common scam involves stealing a merchant’s listing, which would allow malicious sellers to take control of other sellers’ listings. Amazon hasn’t come up with a viable solution to address this problem yet that we know of. 7. Limited warehouse space If you plan on using Amazon’s FBA service, it’s important to note that Amazon often limits warehouse space during peak season. This means that you won’t be able to maintain as much inventory as you’d like, preventing your business from operating at 100%. As a result, you might end up losing out on potential sales due to low inventory levels. They also often increase warehousing fees in Q4 so be sure to calculate and forecast costs accordingly. 8. No control over customer care and satisfaction When you sell on Amazon, the platform acts as an intermediary between you and your customers. That means customers don’t really interact with your brand except in certain situations. For certain types of sellers, Amazon also takes over the entire customer care process. As a result, you have no control over how customers are handled, leaving you at risk of disappointing customers. You give up the ability to offer personalized customer support, leaving you unable to influence customer satisfaction. For many people, brand and support go hand in hand, so be sure to account for a third-party handling your customer service matters. How ShipBob helps boost your Amazon sales If you want to take advantage of Amazon’s established audience base but are hesitant of the various drawbacks, working with an omnichannel fulfillment provider like ShipBob can help. With world-leading fulfillment capabilities, including an an advanced fulfillment platform, ShipBob reduces the stress of selling on Amazon, so you can focus on other aspects of your business. Here are some of the selling, fulfilling, and shipping solutions that ShipBob offers for merchants that need help managing a multichannel ecommerce business. Omnichannel fulfillment ShipBob’s omnichannel fulfillment capabilities make it easy to run a multichannel retail strategy, so you can generate more sales across channels while also maintaining a streamlined fulfillment operation. ShipBob’s fulfillment platform integrates with your Amazon storefront, so you can make the switch from Amazon to ShipBob by taking advantage of our Fulfillment by Merchant (FBM) services. With ShipBob, you can fulfill Amazon FBM orders globally in the United States, Canada, Mexico, Australia, United Kingdom, Germany, France, Spain, Italy, and Poland. As a value-added service, ShipBob also offers FBA prep services for brands shipping at least 400 orders/month through ShipBob. “While we initially used ShipBob exclusively for our retail fulfillment, we quickly outsourced DTC fulfillment to them as well once we experienced how easy and effective it was. ShipBob’s omnifulfillment solution could handle every sort of order we had, including retail, DTC, and B2B, and had no qualms whatsoever about facilitating our FBA prep orders for Amazon. Multichannel fulfillment with ShipBob is affordable, too, as not having to do any shipping ourselves enables us to keep low overhead, and ShipBob’s transparent pricing across channels provides even more cost-savings.” Nathan Garrison, Co-Founder and CEO of Sharkbanz Distributed inventory With ShipBob, you can confidently sell on Amazon (FBM), while storing inventory across our global fulfillment network. ShipBob will then fulfill your Amazon orders for you from the fulfillment center closest to the delivery address. Note: For your website and channels like Walmart, ShipBob offers 2-Day Express Shipping that provides 100% 2-day coverage in the continental US, even if you’re using only one ShipBob fulfillment center. “Fulfilling orders quickly through our site and marketplaces is a must-have, not a nice-to-have for our business. From the beginning, we knew that the early Chewy orders would need to go through our fulfillment partner — all of our retail distribution orders from Chewy go through ShipBob’s fulfillment centers today. Selling on marketplaces is challenging enough, and ShipBob’s ability to service both D2C and B2B has enabled us to build more consistent procedures and practices across our different sales channels.” Stephanie Lee, COO at PetLab Fulfillment software ShipBob’s fulfillment software simplifies your fulfillment process by automating time-consuming tasks to improve supply chain efficiency. Once you integrate your store(s) with ShipBob’s technology, including marketplaces like Amazon, you can ship inventory to one or more of ShipBob’s fulfillment center locations. Once an order comes in it, it is automatically routed to the nearest fulfillment center location to be picked, pack, and shipped. From the ShipBob platform, you can manage inventory across locations and sales channels with real-time inventory tracking and SKU management tools. You can even use historical order data to decide when it’s best to replenish inventory and set up automatic alerts when inventory is running low. “This year alone we introduced 17 new SKUs. We’re launching them on Target, Ulta, Amazon, and selling them DTC. Each channel has its own complexities so having reliable partners to manage the launches is absolutely key. Overall, the goal is to be truly omnichannel. Acne doesn’t discriminate. It impacts people of all ages and walks of life and so it’s important that our products be easily accessible.” Dwight Lee, co-founder and COO of Hero Cosmetics Discounted shipping ShipBob partners with leading shipping carriers to provide discounted rates, evening offering affordable 2-Day Express Shipping that provides 100% coverage in the continental US, even if you’re using only one ShipBob fulfillment center. Branded packaging To address the lack of ownership that often comes with selling on Amazon, ShipBob lets you take control of your branding with custom packaging solutions. You can leverage ShipBob’s Customization Suite to have your orders ship in branded packaging, with marketing inserts, and even printed gift notes to deliver a personalized experience. ShipBob also offers an FBA Prep services for those who already outsource fulfillment to ShipBob, so you can easily transfer your inventory from ShipBob’s fulfillment centers to an FBA facility, making ShipBob your centralized distribution hub. Before the orders go out, ShipBob will prep them with the appropriate FBA item labels and packaging. Direct customer support If you need any help, ShipBob’s Merchant Care team can offer well-rounded support. You can reach out to them through chat, email, or phone to answer your questions or provide help when needed. To learn more about ShipBob’s omnichannel fulfillment services, click the button below. Request Fulfillment Pricing Amazon cons FAQs Below are answers to the most common questions about Amazons cons when it comes to selling. Who is Amazon good for? Amazon is a good option for sellers of all sizes. Merchants who are just starting can build an audience base, accessing Amazon’s massive and established customer base. Similarly, more well-known brands may have customers that go to Amazon to search for their product by name, because that’s their preferred sales channel. With the option to have Amazon fulfill orders, it’s also an excellent solution for sellers that lack the resources needed to fulfill orders fast and accurately. However, 3PL’s like ShipBob offer Fulfillment by Merchant (FBM) services (non-Prime orders), which allows ecommerce businesses to have more control over the fulfillment process. Is Amazon to be trusted? As the leading retailer in the world, Amazon is considered a trustworthy platform for consumers and sellers alike. However, consumers and merchants should also be aware that since Amazon is a free market, there’s still a need to watch out for scams, counterfeit products, and bad actors. How much does it cost to sell on Amazon? The actual cost to sell on Amazon depends on a variety of factors such as your selling plan, your monthly sales, your product category, and your choice of value-added services. Amazon’s selling plan includes the Individual plan, which doesn’t have a subscription fee but requires $0.99 per item. The Professional plan will cost you $39.99 per month regardless of how many items you sold. In addition, Amazon charges a referral fee ranging anywhere between 8% and 20% depending on the product category. If you’re leveraging the FBA service, there will also be additional costs for storage and fulfillment. Written By: Kristina Lopienski Kristina is the Director of Marketing Communications at ShipBob, where she writes various articles, case studies, and other resources to help ecommerce brands grow their business. Read all posts written by Hamza masood GET IN TOUCH WITH SHIPBOB Looking for a fulfillment solution? ShipBob Picked, packed, and shipped. 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Although Amazon is one of the best platforms to shop from, it still has some weaknesses because there is always a room for improvement. Since it is such a huge multinational platform, it has many offices around the globe and sometimes there may be some miscommunication between them which can directly affect the customer experience. There are not just a multitude of Amazon offices around the globe but there are even more brands on the platform which offer their products to the customers. This, sometimes adds to the difficulty of managing orders efficiently and then choosing problem solving strategies accordingly. More often than not, there are customer complaints which need to be dealt with. Such wide variety of products and offices across a country can produce a lot of confusion and hence result in spoiling the reputation of the platform. When a customer is purchasing a product online, there is always this worry that the product will not be as good as the picture shown on Amazon and in case this actually ends up happening, customers tend to file an official complaint. Due to some mismanagement across different offices, that complaint can get lost and result in further disappoint for the customer. Amazon has been facing with such issues lately and this can solely be reverted back to its increasing growth in the last couple of years. If one is ordering from amazon, they need to make sure that they are placing an order from a prime supplier to avoid such quality problems and always receive the best quality. Moving one, Amazon promises safe and secure delivery of the product but sometimes they fall back on their promise which causes huge losses to the customer. Due to it being a huge platform, recovering that price or receiving a refund can also take up a lot of time. Since one can find potentially everything on Amazon, people tend to order the most expensive products from the platform. Due to inefficient delivery, the product received can sometimes be broken or just not the quality which was promised. Since Amazon does not only deal with reputed brands but instead allows many individual business owners to set up their online business on their platform, there is a rush of vendors for one product. Although this can prove to be very beneficial for the customers in terms of comparing prices, it can also take an opposite turn and cause more harm than good. Some vendors amongst them may be scammers or just people who are claiming to sell new products but in reality, they are doing the opposite and supplying knockoffs. This one problem is faced by increasing number of Amazon shoppers lately hence demotivating them from shopping from Amazon and instead opting for traditional shopping methods instead. One more big concern which comes with Amazon shopping is that people are still sceptical about ordering clothes and expensive products such as makeup or accessories from Amazon. This is because no matter how efficient an online shopping platform is, it still cannot offer the same satisfaction of being able to know touch the product and feel the quality of it in real time as tangible ones. There is still a lot of doubts when it comes to that which is why Amazon shopping may not exactly be the best option if a person needs that certainty from their products. It is definitely a better option for them to choose traditional shopping methods and gauge the quality before purchasing. It can be said that with Amazon shopping, one needs to be able to take somewhat of a risk because in the end, one may never know if they will actually receive the exact same type of product that they ordered. It is quite possible that one perceives a product in a certain way but it does not meet their expectations when they receive them. Online shopping from Amazon offers great convenience but it does indeed have many cons as well. Although Amazon works tirelessly to offer the most exclusive customer experience, it is lately falling behind due to various management issues. With customer complaints taking months to get resolved and delivery getting delayed by weeks without any prior notice, there are many people who are beginning to doubt the online experience Amazon guarantees to offer. Moreover, more and more customers are getting sceptical of the vendors present on the platform. It would prove to be extremely beneficial if the regulatory system of all vendors on Amazon can be made stricter to eliminate any possibility of a scam and allow for a more financially secure buyer experience.