August 9, 2016
Recently I read that Amazon Marketplace was attending the furniture market looking for retailers to place a store and/or products in their market place. My question: WHY?
Here are a few thoughts, or rants if you like, about selling on Amazon, Wayfair and Overstock. First, let’s take a snapshot on what happens when you sell on Amazon.
Selling on these market places requires that you the seller are responsible for everything — defects, damages, delivery, everything — and you hold it all harmless for everything. Plus with Amazon, you must deliver the product to either to its distribution centers or to the consumer, another “real cost.”
And these resellers will not share with you any analytics or information about anything!
But that’s only the beginning. Amazon will charge you a commission of 15%. Yep, you read correctly. This is what my friend showed me that Amazon charges him on an item that he retails at $1,199 on Amazon:
Amazon referral fee - $179.85
Per item fee - $0.99
Sub Total - $180.84
And if you want to advertise it with free shipping, add another $86.99 to the above cost, another 7.2%. That brings the grand total to $267.83 or 22.3% of the sale. Of course, you could add the shipping costs to the consumer at checkout, but we all know consumers HATE shipping costs added to the sale.
So why would a retailer want to pay a third party 15%-plus of anything when it, on average, only spends 5% on advertising? I know. It’s about that huge marketplace you can now advertise on. But remember this, when someone clicks on your product on Amazon, dozens and dozens of comparable products from your competitors show up, and I’ll bet they are better deals, which sort of takes the wind out of your sails, right? It’s like you offering your competitors products on your website. I don’t get it.
You spend 5% of your retail budget on marketing but 15%-plus on Amazon? Why not spend 15% of your retail ad budget on YOUR STORE and see what happens?
None of this makes sense to me. Because 85% of consumers search for local businesses, and 88% want to buy local. The only reason these huge e-tailers exist is because they know most small medium and even some large retailers have sub-standard websites, and they rushed in to fix that problem … for consumers at a profit for themselves and at YOUR expense.
But the smart retailers, they show everything, everything they have in-stock and everything they have open to buy. Some websites I’ve found have more than 100,000-plus indexed pages on their websites.
Consider this: Amazon, Wayfair and Houzz have, combined, more than 23,784,000 pages indexed on their websites for home furnishings.
Catch my drift here?
Remember what I said, 88% of consumers search and shop local. The reason the big guys show up and sell so much stuff is because YOU DON’T.
So what’s a consumer going to do?
She’ll default to what she wants, when she wants it, where she wants and how she wants it, and you won’t be in the “want” category.
My summation: FIND YOUR TAIL, as in the long tail, and be the wolf, not the sheep.