How to know if you should be selling on Amazon, or if a third-party seller would suit you better
For businesses wishing to reach a wider market with their products, selling online can seem intimidating. Selling with an established company like Amazon can make things easier, but knowing who to sell with can be difficult. So to help you be sure you're putting your product where it will do the best, here's a quick and dirty guide to third-party selling.
The Benefits of Amazon
Above all else, Amazon has a big share of the market. As of 2015, Amazon had a base of over 300 million active customers. They count a customer as active if they have a profile on Amazon, and have made a purchase in the last 12 months. That means that Amazon has accumulated-and kept-a number of customers roughly equal to the population of the whole U.S.
Other options don't have quite the same scope: eBay, for example, has a little less than half the number of customers that Amazon does. The advantage, then, of selling on Amazon is tapping into that established infrastructure and list of clientele. Amazon does much of the work for you, giving you access to millions of potential customers.
Amazon also offers a robust marketing engine. Features like Amazon reviews and "customers also bought" can do wonders for your marketing efforts. So if what you're looking for is the widest possible customer base, it's hard to ignore Amazon's influence over the masses.
The Benefits of Third-Party Sellers
Amazon does have a few drawbacks that may make it less appealing to some sellers. For one, Amazon competes with its own third-party sellers. If you have a product that's doing well, and it's not unique, it's possible that Amazon will undercut your price, and begin promoting their product. The problem is that since you're offloading the marketing effort to Amazon, they hold all the marketing power. They can promote what they want, while other things flounder in obscurity.
Most customers, when searching for your product, will find the cheaper price because it's being promoted by the marketing engine. They will then usually make a decision based on that lower price (especially after considering free Prime shipping). And Amazon, who can afford slimmer profit margins by selling larger quantities, will reap the revenues you had been hoping for.
There are a few other concerns. For instance, Amazon can ban your products, or you as a seller. They hold all the cards in the relationship, so you are effectively at their mercy. For some, this may be an undesirable relationship.
Of course, there are other third-parties marketplaces besides Amazon. Sites like ASOS, Rakuten, Etsy, Newegg, and eBay also host independent sellers. As mentioned above, these sites sell to significantly smaller markets. But those niche markets may be exactly what you're looking for.
Where Amazon is a catch-all for a wide variety of customers, companies like Newegg attract a particular type of clientele who have a much better idea what they're looking for. What's more, there's less competition: as Amazon is the "everything store," they understandably sell a lot of things from a lot of different sellers. These third-party sellers host fewer sellers, thus giving you less competition.
Another benefit is that you have control over the product that's shipped to the customer. With Amazon, they ship from the closest location to the customer, which can often mean shipping an identical product from a supplier other than you (even though you made the sale). This makes it hard to maintain quality control over products, as you don't prepare and ship the package.
Many third-party marketplaces also offer a sense of community-most have active forums that encourage business-customer and customer-customer interaction. It's a great way to be involved with the customers and the market as a whole.
The bottom line here is that the decision isn't just a straightforward "what will get me the most customers?" For many businesses, the frustrations with Amazon may outweigh the promised marketing benefits of working with a larger customer base. So be sure you do your research, and make the decision according to the unique needs of your company.